New Mexico Educational Retirement Board Sells 4,400 Shares Of Host Hotels And Resorts Inc (HST)

The following discussion and analysis should be read in conjunction with the
unaudited condensed consolidated financial statements and related notes included
elsewhere in this report. Host Inc. operates as a self-managed and
self-administered REIT. Host Inc. is the sole general partner of Host L.P. and
holds approximately 99% of its partnership interests. Host L.P. is a limited
partnership operating through an umbrella partnership structure. The remaining
common OP units are owned by various unaffiliated limited partners.

Forward-Looking Statements

In this report on Form 10-Q, we make forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are identified by their use of terms and phrases such
as "anticipate," "believe," "could," "expect," "may," "intend," "predict,"
"project," "plan," "will," "estimate" and other similar terms and phrases,
including references to assumptions and forecasts of future results.
Forward-looking statements are based on management's current expectations and
assumptions and are not guarantees of future performance. Forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause our actual results to differ materially from those anticipated
at the time the forward-looking statements are made.

The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:

• the effect on lodging demand of (i) changes in national and local economic

and business conditions, including concerns about the duration and

strength of U.S. economic growth, global economic prospects, consumer

confidence and the value of the U.S. dollar, and (ii) factors that may

shape public perception of travel to a particular location such as natural

disasters, weather, pandemics, changes in the international political

climate, and the occurrence or potential occurrence of terrorist attacks,

all of which will affect occupancy rates at our hotels and the demand for

hotel products and services;

• the impact of geopolitical developments outside the United States, such as

the pace of the economic recovery in Europe, the effects of the United

Kingdom's referendum to withdraw from the European Union, the slowing of

growth in markets such as China and Brazil, or unrest in the Middle East,

all of which could affect the relative volatility of global credit markets

generally, global travel and lodging demand, including with respect to our

foreign hotel properties;

• risks that the recent travel ban to the United States and proposed

immigration policies will suppress international travel to the United

        States generally;


    •   volatility in global financial and credit markets, and the impact of

budget deficits and potential U.S. governmental action to address such

deficits through reductions in spending and similar austerity measures,

which could materially adversely affect U.S. and global economic

conditions, business activity, credit availability, borrowing costs, and

lodging demand;

• operating risks associated with the hotel business, including the effect

of increasing operating or labor costs or changes in workplace rules that

affect labor costs;

• the effect of rating agency downgrades of our debt securities on the cost

and availability of new debt financings;

• the reduction in our operating flexibility and the limitation on our

ability to pay dividends and make distributions resulting from restrictive

covenants in our debt agreements, which limit the amount of distributions

from Host L.P. to Host Inc., and other risks associated with the amount of

        our indebtedness or related to restrictive covenants in our debt
        agreements, including the risk that a default could occur;

• our ability to maintain our properties in a first-class manner, including

meeting capital expenditures requirements, and the effect of renovations,

        including temporary closures, on our hotel occupancy and financial
        results;

• the ability of our hotels to compete effectively against other lodging

businesses in the highly competitive markets in which we operate in terms

of access, location, quality of accommodations and room rate structures;

• our ability to acquire or develop additional properties and the risk that

potential acquisitions or developments may not perform in accordance with

our expectations;

• relationships with property managers and joint venture partners and our

        ability to realize the expected benefits of our joint ventures and other
        strategic relationships;

• risks associated with a single manager, Marriott International, managing a

significant portion of our properties;

• changes in the desirability of the geographic regions of the hotels in our

        portfolio or in the travel patterns of hotel customers;


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• the ability of third-party internet and other travel intermediaries to

attract and retain customers;

• our ability to recover fully under our existing insurance policies for

terrorist acts and our ability to maintain adequate or full replacement

        cost "all-risk" property insurance policies on our properties on
        commercially reasonable terms;

• the effect of a data breach or significant disruption of hotel operator

information technology networks as a result of cyber attacks;


    •   the effects of tax legislative action and other changes in laws and
        regulations, or the interpretation thereof, including the need for
        compliance with new environmental and safety requirements;

• the ability of Host Inc. and each of the REITs acquired, established or to

        be established by Host Inc. to continue to satisfy complex rules in order
        to qualify as REITs for federal income tax purposes and Host Inc.'s and

Host L.P.'s ability and the ability of our subsidiaries, and similar

entities to be acquired or established by us, to operate effectively

        within the limitations imposed by these rules; and


    •   risks associated with our ability to execute our dividend policy,

including factors such as investment activity, operating results and the

economic outlook, any or all of which may influence the decision of our

board of directors as to whether to pay future dividends at levels

previously disclosed or to use available cash to pay special dividends.


We undertake no obligation to publicly update forward-looking statements,
whether as a result of new information, future events, or otherwise. Achievement
of future results is subject to risks, uncertainties and potentially inaccurate
assumptions, including those risk factors discussed in our Annual Report on Form
10-K for the year ended December 31, 2016 and in other filings with the
Securities and Exchange Commission ("SEC"). Although we believe that the
expectations reflected in such forward-looking statements are based upon
reasonable assumptions, we can give no assurance that we will attain these
expectations or that any deviations will not be material.

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Operating Results and Outlook

Operating Results

The following table reflects certain line items from our statements of operations and significant operating statistics (in millions, except per share and hotel statistics):


Historical Income
Statement Data:
                                Quarter ended September 30,                

Year-to-date ended September 30,

                                 2017                 2016         Change              2017                      2016           Change
Total revenues               $      1,254$      1,295        (3.2 )%     $         4,043           $         4,093        (1.2 )%
Net income                            105                  108        (2.8 )%                 478                       643       (25.7 )%
Operating profit                      127                  144       (11.8 )%                 542                       534         1.5 %
Operating profit margin
under GAAP                           10.1 %               11.1 %      (100 bps)              13.4 %                    13.0 %        40 bps
Adjusted EBITDA (1)          $        317$        342        (7.3 )%     $         1,128           $         1,123         0.4 %

Diluted earnings per share           0.14                 0.14           -                   0.64                      0.85       (24.7 )%
NAREIT FFO and Adjusted
FFO per
   diluted share (1)                 0.33                 0.37       (10.8 )%                1.27                      1.28        (0.8 )%


Comparable Hotel Data:
                                                                     2017 Comparable Hotels (2)
                                Quarter ended September 30,                

Year-to-date ended September 30,

                                 2017                 2016         Change              2017                      2016           Change
Comparable hotel revenues
(1)                          $      1,136$      1,166        (2.6 )%     $         3,621           $         3,616         0.1 %
Comparable hotel EBITDA
(1)                                   296                  313        (5.3 )%               1,015                     1,010         0.5 %
Comparable hotel EBITDA
margin (1)                           26.1 %              26.85 %       (75 bps)              28.0 %                    27.9 %        10 bps
Change in comparable hotel
RevPAR -
   Constant US$                      (1.8 )%                                                  1.0 %
Change in comparable hotel
RevPAR -
   Nominal US$                       (1.7 )%                                                  1.1 %
Change in comparable
domestic RevPAR                      (0.7 )%                                                  1.6 %
Change in comparable
international
   RevPAR - Constant US$            (31.0 )%                                                (17.6 )%
___________



(1) Adjusted EBITDA, NAREIT FFO and Adjusted FFO per diluted share and comparable

hotel operating results (including comparable hotel revenues and comparable

hotel EBITDA and margins) are non-GAAP (U.S. generally accepted accounting

principles) financial measures within the meaning of the rules of the SEC.

See "Non-GAAP Financial Measures" for more information on these measures,

    including why we believe that these supplemental measures are useful,
    reconciliations to the most directly comparable GAAP measure, and the
    limitations on the use of these supplemental measures.

(2) Comparable hotel operating statistics for 2017 and 2016 are based on 87

hotels as of September 30, 2017.


The third quarter was negatively affected by weakness in group revenue due to
the shift of the Jewish holidays into the quarter and significant declines at
our Brazil properties in comparison to the results during the Olympics in 2016.
In addition to the anticipated weakness due to the difficult
quarter-over-quarter comparisons, 13 properties were affected by Hurricanes
Harvey and Irma in August and September 2017, respectively, which negatively
affected total revenues by approximately $12 million this quarter, with
approximately 65% of the revenue lost coming from a decline in food and beverage
revenues. These factors led to decreased RevPAR for the quarter, as well as a
reduction in F&B revenues and profits, as both the decline in group revenue, and
the shift in the mix of business due to the hurricanes, led to a reduction in
F&B banquet and outlet business overall.

Revenue per Available Room ("RevPAR")

Comparable RevPAR on a constant US$ basis decreased 1.8% for the third quarter,
due to a 30 basis point decrease in occupancy and a 1.5% decrease in average
room rate. Year-to-date, comparable RevPAR on a constant US$ basis improved 1.0%
as a result of a 40 basis point increase in occupancy and a 0.6% increase in
average room rate. Comparable RevPAR for the quarter was negatively impacted 110
basis points as a result of difficult year-over-year comparisons in Brazil
(discussed below). Results were

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mixed across our remaining portfolio for the quarter, as declines in our
Florida, Atlanta and Chicago markets were partially offset by strong
performances in our Phoenix, Seattle, and San Francisco markets. In addition to
the negative effect of the holiday shift in the third quarter of 2017, the
disruption in business from the hurricanes are estimated to have reduced
Comparable RevPAR by approximately 45 basis points for the third quarter based
on pre-hurricane forecasts.

On a constant US$ basis, RevPAR at our comparable international properties
decreased 31.0% for the third quarter and 17.6% year-to-date. The decline was
due to the highly unfavorable comparison to the prior year, when Brazil hosted
the 2016 Olympics and Paralympics, as well as economic and over-supply issues in
Brazil.

Operating profit

Operating profit margins (calculated based on GAAP operating profit as a
percentage of GAAP revenues) decreased 100 basis points, to 10.1%, for the third
quarter and increased 40 basis points, to 13.4%, year-to-date. These operating
profit margins are affected significantly by several items, including
dispositions, depreciation and corporate expenses. Our comparable hotel EBITDA
margins, which exclude these items, decreased 75 basis points, to 26.1%, for the
third quarter and increased 10 basis points, to 28.0%, year-to-date. For the
quarter, approximately 85% of the decline was due to the performance of the
properties in Brazil and the effects of the hurricanes described above.
Year-to-date, we continue to see labor productivity improvements at certain of
our properties, which are reflective of the time and motion studies we have
initiated at some of our largest hotels over the past two years and continue to
implement at our medium and smaller-sized hotels. These studies have resulted in
hotel managers establishing more accurate labor model standards and improved and
expanded forecasting tools, which allow them to more effectively schedule labor
based on demand and to minimize excess staffing, thereby reducing costs.

Net income, Adjusted EBITDA and Adjusted FFO per Diluted Share

Net income for the quarter decreased $3 million due to a decline in operating
profit of 11.8%, partially offset by the increase in gain on sale of assets, net
of tax. Year-to-date, net income decreased $165 million, primarily due to a
decrease in gain on sale of assets, net of tax. Adjusted EBITDA decreased
$25 million for the quarter due to a decrease in gain on business interruption
settlements and a decline in operations. Year-to-date, Adjusted EBITDA increased
$5 million. Based on actual results compared to the anticipated results for the
quarter, we estimate that the impact of the hurricanes was approximately $7
million in the quarter for both net income and Adjusted EBITDA. These changes
resulted in no change in earnings per diluted share for the quarter and a
decrease of $0.21, or 24.7%, year-to-date. Adjusted FFO per diluted share
decreased $0.04, or 10.8%, in the quarter and $0.01, or 0.8%, for year-to-date,
reflecting the operating results described above as well as an increase in
interest expense.

The trends and transactions described for Host Inc. affected similarly the
operating results for Host L.P., as the only significant difference between the
Host Inc. and the Host L.P. statements of operations relates to the treatment of
income attributable to the third party limited partners of Host L.P.

Outlook

Forecasts for the United States economy continue to be cautiously optimistic for
the remainder of 2017, as the country continues to experience low unemployment
rates, corporate profits have improved and business investment has accelerated.
While discussions on tax reform have picked up, the timing and economic impact
of any legislation remains uncertain though we remain hopeful it will benefit
the lodging industry.

While the industry has experienced slightly above average supply growth in 2017,
demand growth has outpaced supply, and the majority of markets are operating at
peak occupancy levels. Yet, some of our markets, such as New York and Houston,
have continued to experience above-average supply growth in 2017 that has
exceeded demand growth, which has made it more challenging for our operators to
grow average rates. However, demand growth in these markets has remained strong
overall and we continue to focus on shifting the mix of business toward more
profitable channels.

Our operations were affected by Hurricanes Harvey and Irma during the third
quarter and continue to be impacted by damages sustained during the storms. All
four of our hotels in Houston were able to remain operational during the
hurricane. In Florida, due to evacuation mandates, seven of our nine
consolidated properties were temporarily closed; however, all have since
reopened, although approximately 320 rooms remain out of service. Based on the
operating readiness and level of property damage sustained, we did not remove
any properties from our comparable operations for the quarter and full year
forecast. As a result, we estimate that comparable RevPAR growth for full year
2017 will be between 1.15% and 1.35% on a constant US$ basis. Additionally, we
have recorded an insurance receivable of $31 million; however, we are still
evaluating the complete property and business interruption impacts of the
storms.

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The current outlook for the lodging industry is uncertain; therefore, there can
be no assurances that any increases in hotel revenues or earnings will continue
for any number of reasons, including, but not limited to, slower than
anticipated growth in the economy, changes in travel patterns, and international
economic and political instability.

Strategic Initiatives

Portfolio

Dispositions. During the quarter, we sold The Hilton Melbourne South Wharf for
A$230 million ($184 million) and the Sheraton Indianapolis Hotel at Keystone
Crossing for $66 million. We also reached an agreement to sell the Key Bridge
Marriott for $190 million, including $8 million of FF&E replacement funds, and
as of September 30, 2017, it has been classified as held for sale. We expect the
sale to be completed no later than the first quarter of 2018, subject to
customary closing conditions. Subsequent to quarter end, we also sold a parcel
of excess land at the previously sold Chicago Marriott O'Hare for approximately
$10 million.

Balance Sheet

Debt transactions. During the quarter, in connection with the sale of the Hilton
Melbourne South Wharf hotel, we repaid the A$86 million ($69 million) mortgage
loan secured by the property and repaid A$50 million ($39 million) under the
revolver portion of our credit facility. As of September 30, 2017, we had
$807 million of available capacity remaining under the revolver portion of our
credit facility.

Capital Investments

Value enhancements. During the quarter, subject to customary appeals, we
received approvals for the rezoning of the golf course land at The Phoenician, A
Luxury Collection Resort. The revised plan includes an 18-hole golf course, new
tennis complex and activity center and allows for 60 acres of residential
development. The approved plan allows for a mix of single-family, townhome and
condominium units with approximately 360 units. The property is being marketed
to third parties for the residential development.

In addition, we negotiated new management agreements for two properties in the
third quarter, including the re-branding of The Ritz-Carlton, Buckhead in
Atlanta to The Whitley, a Luxury Collection Hotel that will be managed by HEI
Hotels & Resorts.

Redevelopment and Return on Investment Capital Expenditures. Redevelopment and
return on investment ("ROI") projects primarily consist of large-scale
redevelopment projects designed to increase cash flow and improve profitability
by capitalizing on changing market conditions and the favorable locations of our
properties, including projects such as the redevelopment of a hotel, the
repositioning of a hotel restaurant, the installation of energy efficient
systems or the conversion of underutilized space to more profitable uses.
Additionally, in conjunction with the acquisition of a property, we prepare
capital and operational improvement plans designed to maximize profitability.
During the third quarter, we completed the pool renovation and restaurant
repositioning at The Phoenician as part of a multi-year project, as well as the
redesign of restaurant and meeting space at The Ritz-Carlton, Buckhead. We
deployed approximately $53 million for these projects during the first three
quarters of 2017.

We expect that redevelopment and ROI projects for full year 2017 will be approximately $90 million to $100 million.

Renewal and Replacement Capital Expenditures. These expenditures are designed to
ensure that our standards for product quality are maintained and to enhance the
overall competitiveness of our properties in the marketplace. We deployed
$155 million on renewal and replacement capital expenditures during the first
three quarters of 2017. During the third quarter, we completed the renovation of
the 48,000-square foot ballroom at the New Orleans Marriott, as well as ballroom
renovations at the JW Marriott Hotel Mexico City, the JW Marriott Atlanta
Buckhead and The Ritz-Carlton, Naples. We expect that our investment in renewal
and replacement expenditures in full year 2017 will total approximately
$270 million to $300 million, which includes additional expected spend of
approximately $55 million related to replacements for hurricane damage.

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Results of Operations

The following table reflects certain line items from our statements of operations (in millions, except percentages):

                              Quarter ended September 30,                   

Year-to-date ended September 30,

                               2017                2016           Change             2017                     2016            Change
Total revenues             $       1,254$       1,295         (3.2 )%   $          4,043         $          4,093         (1.2 )%
Operating costs and
expenses:
Property-level costs (1)           1,104               1,135         (2.7 )               3,428                    3,492         (1.8 )
Corporate and other
expenses                              24                  28        (14.3 )                  79                       82         (3.7 )
Gain on insurance and
business
   interruption
settlements                            1                  12        (91.7 )                   6                       15        (60.0 )
Operating profit                     127                 144        (11.8 )                 542                      534          1.5
Interest expense                      43                  38         13.2                   125                      116          7.8
Gain on sale of assets                59                  14        321.4                   105                      245        (57.1 )
Provision for income
taxes                                 42                  19        121.1                    63                       42         50.0

Host Inc.:
Net income attributable
to non-
   controlling interests               1                   1            -                     6                        7        (14.3 )
Net income attributable
to Host Inc.                         104                 107         (2.8 )                 472                      636        (25.8 )

Host L.P.:
Net loss attributable to
non-controlling
   interests                          (1 )                 -          N/M                     -                       (1 )        N/M
Net income attributable
to Host L.P.                         106                 108         (1.9 )                 478                      644        (25.8 )
___________

(1) Amount represents total operating costs and expenses from our unaudited

condensed consolidated statements of operations, less corporate and other

expenses and gain on insurance and business interruption settlements.

N/M=Not meaningful.

Statement of Operations Results and Trends

For the third quarter and year-to-date 2017, the results of hotels acquired or
sold during the comparable periods (collectively, our "Recent Acquisitions and
Dispositions") reduced our year-over-year comparisons. Comparisons of our
operations were affected by the acquisition of two hotels during the first
quarter 2017: the W Hollywood acquired in March 2017 and The Don CeSar and Beach
House Suites complex acquired in February 2017. However, dispositions include
the sale of four hotels in 2017 and ten hotels in 2016, which led to an overall
net reduction in results. The table below presents the effects on earnings from
our Recent Acquisitions and Dispositions (in millions, increase (decrease)):



                             Quarter ended
                             September 30,                              

Year-to-date ended September 30,

                         2017             2016          Change            2017                      2016             Change
Revenues:
Acquisitions          $       24       $        -     $       24     $            65           $             -     $       65
Dispositions                   6               45            (39 )                46                       203           (157 )
Total revenues        $       30$       45$      (15 )   $           111           $           203     $      (92 )
Net income (excluding gain on
sale, net of tax):
Acquisitions          $        3       $        -     $        3     $            14           $             -     $       14
Dispositions                   3                -              3                   8                        20            (12 )
Net income
(excluding gain on
sale, net of tax):    $        6       $        -     $        6     $            22           $            20     $        2


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Hotel Sales Overview

The following table presents total revenues in accordance with GAAP and includes both comparable and non-comparable hotels (in millions, except percentages):



                         Quarter ended
                         September 30,                              

Year-to-date ended September 30,

                      2017          2016          Change              2017                     2016             Change
Revenues:
Rooms               $     860$     879           (2.2 )%   $          2,643         $          2,655           (0.5 )%
Food and beverage         314           336           (6.5 )               1,152                    1,183           (2.6 )
Other                      80            80              -                   248                      255           (2.7 )
Total revenues      $   1,254$   1,295           (3.2 )    $          4,043         $          4,093           (1.2 )


Rooms. Total rooms revenues decreased 2.2% and 0.5% for the quarter and
year-to-date, respectively. For our comparable hotels, rooms revenues decreased
1.7% for the quarter, as an unfavorable holiday shift resulted in a decrease in
group business, which led to declines in both average room rate and occupancy.
Year-to-date, comparable rooms revenues increased 0.8% reflecting increases in
both average room rate and occupancy. The net effects of our Recent Acquisitions
and Dispositions reduced rooms revenues by $8 million for the quarter and
$52 million for the year-to-date.

Food and beverage. Total food and beverage ("F&B") revenues decreased 6.5% for
the quarter and 2.6% year-to-date, reflecting the reduction in group business,
which led to decreases in both outlet and banquet and audio visual revenue, as
well as the negative impact of Hurricanes Harvey and Irma. Comparable F&B
revenues decreased 5.6% for the quarter and 1.6% year-to-date. The net effect of
our Recent Acquisitions and Dispositions reduced F&B revenues by $7 million for
the quarter and $33 million for the year-to-date.

Other revenues. Total other revenues were flat for the quarter and decreased
2.7% year-to-date, primarily due to the net effect of our Recent Acquisitions
and Dispositions, which did not materially impact other revenues for the quarter
but reduced other revenues by $7 million year-to-date. At our comparable hotels,
other revenues increased 0.8% for the quarter and 1.1% year-to-date as an
increase in rental income at the New York Marriott Marquis offset a decline in
attrition and cancellation revenues.

Property-level Operating Expenses

The following table presents property-level operating expenses in accordance
with GAAP and includes both comparable and non-comparable hotels (in millions,
except percentages):



                              Quarter ended
                              September 30,                            

Year-to-date ended September 30,

                           2017          2016          Change             2017                     2016             Change
Expenses:
Rooms                    $     227$     225            0.9 %   $            676         $            674            0.3 %
Food and beverage              242           257           (5.8 )                794                      830           (4.3 )
Other departmental and
   support expenses            309           321           (3.7 )                952                      981           (3.0 )
Management fees                 53            54           (1.9 )                178                      177            0.6
Other property-level
   expenses                     97            96            1.0                  294                      289            1.7
Depreciation and
   amortization                176           182           (3.3 )                534                      541           (1.3 )
Total property-level
  operating expenses     $   1,104$   1,135           (2.7 )   $          3,428         $          3,492           (1.8 )




Our operating costs and expenses, which have both fixed and variable components,
are affected by changes in occupancy, inflation, and revenues (which affect
management fees), though the effect on specific costs will differ. Our wages and
benefits account for approximately 57% of the operating expenses at our hotels
(excluding depreciation). Other property-level expenses consist of property
taxes, the amounts and structure of which are highly dependent on local
jurisdiction taxing authorities, and property and general liability insurance,
all of which do not necessarily increase or decrease based on similar changes in
revenues at our hotels.

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Rooms. Rooms expenses increased 0.9% and 0.3% for the third quarter and year-to-date 2017, respectively, which reflects an increase of 1.6% and 2.0% for the quarter and year-to-date, respectively, at our comparable hotels. The increase was driven by overall growth in wage rates. The net effect of our Recent Acquisitions and Dispositions reduced rooms expenses $3 million and $14 million for the quarter and year to date, respectively.

Food and beverage. F&B expenses decreased 5.8% for the quarter and 4.3%
year-to-date. The net effect of our Recent Acquisitions and Dispositions reduced
F&B expenses by $5 million and $23 million for the quarter and year-to-date,
respectively. For our comparable hotels, F&B expenses decreased 5.2% for the
quarter and 3.0% year-to-date, consistent with the decline in comparable F&B
revenues.

Other departmental and support expenses. Other departmental and support expenses
decreased $12 million for the third quarter and $29 million year-to-date,
primarily due to a decrease of $7 million for the quarter and $31 million
year-to-date from the net effect of our Recent Acquisitions and Dispositions. On
a comparable hotel basis, other departmental and support expenses decreased
$5 million for the quarter and were flat year-to-date.

Management fees. Base management fees, which generally are calculated as a
percentage of total revenues, decreased $2 million in the third quarter and $4
million year-to-date, due primarily to the net effect of our Recent Acquisitions
and Dispositions. Incentive management fees, which are generally based on the
level of operating profit at each property after we receive a priority return on
our investment, increased $1 million for the third quarter and $4 million
year-to-date.

Other property-level expenses. These expenses generally do not vary
significantly based on occupancy and include expenses such as property taxes and
insurance. Other property level expenses increased $1 million for the third
quarter and $5 million year-to-date. Other property-level expenses at our
comparable hotels were flat for the quarter. Year-to-date, comparable other
property-level expenses increased 2.7% year-to-date, primarily due to increases
in property taxes and ground rent, partially offset by a decrease in insurance
expense. The net effect of our Recent Acquisitions and Dispositions reduced
other property-level expenses by $1 million for the quarter and $6 million
year-to-date.

Other Income and Expense

Corporate and other expenses. The following table details our corporate and other expenses for the quarter and year-to-date (in millions):

                                              Quarter ended                    Year-to-date ended
                                              September 30,                       September 30,
                                         2017              2016             2017                 2016

General and administrative costs $ 21$ 26 $

       70         $         74
Non-cash stock-based compensation               3                 2                8                    8

expense

Litigation accruals and acquisition
costs, net                                      -                 -                1                    -
    Total                             $        24$        28     $         79         $         82


Interest expense. Interest expense increased due to the issuance of the Series G
senior notes in the first quarter 2017. The following table details our interest
expense for the quarter and year-to-date (in millions):



                                       Quarter ended           Year-to-date ended
                                       September 30,              September 30,
                                     2017         2016        2017            2016
        Cash interest expense(1)    $    41$  35$     120$     110
        Non-cash interest expense         2           3             5               6
        Total interest expense      $    43$  38$     125$     116
        ___________

(1) Including the change in accrued interest, total cash interest paid was

$108 million and $105 million for year-to-date 2017 and 2016, respectively.


Gain on sale of assets. During the third quarter and year-to-date 2017, we
recognized a gain on sale of assets of $59 million and $105 million,
respectively, due primarily to the sale of two hotels in the third quarter and
four hotels year-to-date. We recognized a gain on sale of assets of $14 million
and $245 million during the third quarter and year-to-date 2016, respectively,
due to the sale of two hotels during the third quarter and ten hotels
year-to-date.

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Equity in earnings of affiliates. Equity in earnings of affiliates decreased $4 million for the quarter, reflecting a decline in net income at our European joint venture and a decrease in operations at the Philadelphia Marriott Downtown. Year-to-date, equity in earnings of affiliates remained flat.

Provision for income taxes. We lease substantially all our properties to
consolidated subsidiaries designated as taxable REIT subsidiaries ("TRS") for
federal income tax purposes. The difference between hotel-level operating cash
flow and the aggregate rent paid to Host L.P. by the TRS represents its taxable
income or loss, with regard to which we record an income tax provision or
benefit. The increase in the income tax provision recorded in the third quarter
and year-to-date 2017 compared to the same periods in 2016 relates to an
increase of taxable income of the TRS and the Australian capital gains tax
(approximately $22 million) associated with the sale of the Hilton Melbourne
South Wharf on July 28, 2017.

Comparable Hotel RevPAR Overview

We discuss operating results for our hotels on a comparable basis. Comparable
hotels are those properties that we have consolidated for the entirety of the
reporting periods being compared. Comparable hotels do not include the results
of hotels acquired or sold, that incurred significant property damage or
business interruption, or have undergone large scale capital projects during
these periods. As of September 30, 2017, 87 of our 94 owned hotels are
classified as comparable hotels. See "Comparable Hotel Operating Statistics" for
a complete description of our comparable hotels. We also discuss our comparable
RevPAR results by geographic market and mix of business (i.e. transient, group,
or contract).

                                       27
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Comparable Hotel RevPAR by Geographic Market

The following tables set forth performance information for our comparable hotels by geographic market as of September 30, 2017 and 2016, respectively:

            Comparable Hotels by Market in Constant US$ (by RevPAR)
                       As of September 30, 2017             Quarter ended September 30, 2017                 Quarter ended September 30, 2016
                                                                           Average                                          Average                       Percent
                        No. of           No. of         Average           Occupancy                      Average           Occupancy                     Change in
Market                Properties          Rooms        Room Rate         
Percentage       RevPAR       Room Rate          Percentage       RevPAR        RevPAR
Hawaii                          3           1,682     $     325.44               92.4 %   $ 300.75$     316.67               92.5 %   $ 292.77             2.7 %
Seattle                         2           1,315           267.84               93.6       250.75           258.78               90.9       235.26             6.6
New York                        8           6,961           271.00               91.3       247.53           280.23               89.8       251.75            (1.7 )
San Francisco                   4           2,912           256.52               89.4       229.21           252.99               86.8       219.71             4.3
Boston                          4           3,185           244.72               88.5       216.68           242.48               90.5       219.42            (1.2 )
San Diego                       3           2,981           225.90               86.5       195.47           213.13               91.4       194.80             0.3
Los Angeles                     7           2,843           214.72               87.7       188.40           216.17               86.9       187.75             0.3
Chicago                         6           2,392           204.47               88.5       180.94           216.88               87.0       188.71            (4.1 )
Denver                          2             735           190.27               88.6       168.50           189.33               85.5       161.91             4.1
Washington, D.C.               12           6,024           193.93               82.5       160.05           193.50               81.4       157.43             1.7
Atlanta                         5           1,939           189.32               75.9       143.69           189.85               80.3       152.43            (5.7 )
Florida                         8           4,559           181.83               62.1       112.92           182.06               68.0       123.72            (8.7 )
Houston                         4           1,716           168.11               66.3       111.49           167.78               67.7       113.58            (1.8 )
Phoenix                         4           1,518           142.34               65.7        93.47           147.53               58.0        85.57             9.2
Other                           9           5,784           160.58               71.9       115.42           169.12               71.5       120.96            (4.6 )
Domestic                       81          46,546           219.88               81.6       179.38           221.01               81.8       180.69            (0.7 )

Canada                          2             849           192.87               79.4       153.11           198.84               76.7       152.45             0.4
Latin America                   4             962           167.13               58.7        98.08           299.89               67.9       203.58           (51.8 )
International                   6           1,811           181.13               68.4       123.87           249.47               72.0       179.62           (31.0 )
All Markets -
Constant US$                   87          48,357           218.65               81.1       177.30           221.95               81.4       180.65            (1.8 )

                                                                 Comparable Hotels in Nominal US$
                       As of September 30, 2017             Quarter ended September 30, 2017                 Quarter ended September 30, 2016
                                                                           Average                                          Average                       Percent
                        No. of           No. of         Average           Occupancy                      Average           Occupancy                     Change in
                      Properties          Rooms        Room Rate         
Percentage       RevPAR       Room Rate          Percentage       RevPAR        RevPAR
Canada                          2             849     $     192.87               79.4 %   $ 153.11$     191.03               76.7 %   $ 146.46             4.5 %
Latin America                   4             962           167.13               58.7        98.08           290.57               67.9       197.25           (50.3 )
International                   6           1,811           181.13               68.4       123.87           240.91               72.0       173.45           (28.6 )
Domestic                       81          46,546           219.88               81.6       179.38           221.01               81.8       180.69            (0.7 )
All Markets                    87          48,357           218.65               81.1       177.30           221.67               81.4       180.41            (1.7 )


                                       28
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            Comparable Hotels by Market in Constant US$ (by RevPAR)

                       As of September 30, 2017            Year-to-date ended September 30, 2017                Year-to-date ended September 30, 2016
                                                                            Average                                              Average                          Percent
                        No. of           No. of          Average           Occupancy                          Average           Occupancy                        Change in
Market                Properties          Rooms         Room Rate          Percentage         RevPAR         Room Rate          Percentage         RevPAR         RevPAR
Hawaii                          3           1,682     $      339.86               90.9 %     $  308.79$      326.28               91.4 %     $  298.38             3.5 %
New York                        8           6,961            263.14               86.7          228.26            268.49               86.4          232.10            (1.7 )
San Francisco                   4           2,912            260.60               84.6          220.45            264.71               84.7          224.10            (1.6 )
Seattle                         2           1,315            242.23               86.8          210.24            226.40               81.8          185.30            13.5
Boston                          4           3,185            237.07               82.5          195.54            231.85               82.1          190.45             2.7
San Diego                       3           2,981            223.18               84.3          188.08            210.42               86.0          181.05             3.9
Washington, D.C.               12           6,024            224.01               80.8          181.02            212.48               79.6          169.20             7.0
Los Angeles                     7           2,843            208.11               85.1          177.05            206.35               84.5          174.42             1.5
Florida                         8           4,559            235.84               73.2          172.56            230.87               75.5          174.35            (1.0 )
Chicago                         6           2,392            197.01               79.6          156.82            201.88               77.6          156.57             0.2
Phoenix                         4           1,518            208.06               74.1          154.14            213.44               68.4          146.04             5.5
Atlanta                         5           1,939            192.65               78.1          150.46            192.39               79.4          152.70            (1.5 )
Denver                          2             735            181.43               82.1          149.03            181.35               76.0          137.85             8.1
Houston                         4           1,716            179.40               71.8          128.87            182.61               73.6          134.44            (4.1 )
Other                           9           5,784            177.70               74.2          131.85            180.51               72.4          130.72             0.9
Domestic                       81          46,546            228.30               80.8          184.44            226.16               80.3          181.55             1.6

Canada                          2             849            179.33               65.9          118.18            176.57               63.9          112.79             4.8
Latin America                   4             962            177.99               59.2          105.44            232.98               66.5          154.82           (31.9 )
International                   6           1,811            178.65               62.4          111.41            207.10               65.2          135.13           (17.6 )
All Markets -
Constant US$                   87          48,357            226.85               80.1          181.70            225.58               79.7          179.81             1.0

                                                                    

Comparable Hotels in Nominal US$

                       As of September 30, 2017            Year-to-date ended September 30, 2017                Year-to-date ended September 30, 2016
                                                                            Average                                              Average                          Percent
                        No. of           No. of          Average           Occupancy                          Average           Occupancy                        Change in
                      Properties          Rooms         Room Rate          Percentage         RevPAR         Room Rate          Percentage         RevPAR         RevPAR
Canada                          2             849     $      179.33               65.9 %     $  118.18$      174.32               63.9 %     $  111.35             6.1 %
Latin America                   4             962            177.99               59.2          105.44            223.43               66.5          148.48           (29.0 )
International                   6           1,811            178.65               62.4          111.41            200.90               65.2          131.08           (15.0 )
Domestic                       81          46,546            228.30               80.8          184.44            226.16               80.3          181.55             1.6
All Markets                    87          48,357            226.85               80.1          181.70            225.39               79.7          179.66             1.1


Our top performing domestic markets for the quarter were Phoenix and Seattle,
with RevPAR growth of 9.2% and 6.6%, respectively. In Phoenix, growth was led by
a 12.1% increase in RevPAR at The Westin Kierland Resort & Spa, driven by strong
corporate group room nights. Seattle saw gains in both occupancy and rate, with
the W Seattle continuing to experience positive effects from the completed rooms
renovation last year.

In the southern and central United States, our Florida properties were
negatively affected by Hurricane Irma, as just two of our Florida assets
remained open throughout the storm. Likewise, our Houston properties were
impacted by Hurricane Harvey. RevPAR declined 1.8% due to a shift from transient
to group business, mainly related to recovery efforts. Atlanta underperformed
the market due to an occupancy decline of 440 basis points, largely due to
renovations at three of our properties. Chicago underperformed the portfolio due
to soft transient demand and fewer city-wide events.

In the west region, our San Francisco and Denver markets outperformed the
portfolio. The San Francisco RevPAR growth was primarily driven by occupancy
gains at the San Francisco Marriott Marquis and the San Francisco Marriott
Fisherman's Wharf. RevPAR at our Denver properties increased due to strong group
volume. In Hawaii, group and transient rate gains at the Hyatt Regency Maui
Resort & Spa were the primary contributor to the RevPAR growth in the market.

On the east coast, our Washington, D.C. properties outperformed the portfolio,
while our New York properties were in-line with the portfolio. In Washington,
D.C., the RevPAR growth of 1.7% mainly was due to occupancy gains from strong
city-wide events. In New York, RevPAR decreased due to rate declines across all
the assets, despite an increase in occupancy.

                                       29

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On a constant dollar basis, our international markets experienced a decline in
RevPAR of 31.0% for the quarter. The decline was primarily due to the highly
unfavorable comparison to the prior year, when Brazil hosted the 2016 Olympics
and Paralympics, as well as economic and over-supply issues in Brazil.

Hotels Sales by Business Mix

The majority of our customers fall into three broad categories: transient,
group, and contract business. The information below is derived from business mix
data for 87 of our hotels for which business mix data is available from our
managers. For additional detail on our business mix, see "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in our
most recent Annual Report on Form 10­K.

For the third quarter, our revenue decline was driven by a decrease in group
revenue of 7.0%, with a decline in room nights sold of 6.9% and a decline in
average rate of 0.2%. Group volume was negatively impacted by the shift of both
Jewish holidays into the third quarter in 2017, as well as the difficult
comparison with the Olympics in the third quarter of 2016 for our properties in
Brazil. Transient revenue declined 1.0%, despite a 1.3% increase in room nights,
as hotels sought to replace lost group rooms through discount channels. Contract
business was our strongest performing segment with a 20.2% increase in revenue
due to a 21.8% increase in room nights. This performance was due to additional
airline contracts at hotels in markets where new supply or demand concerns
warranted negotiating multi-year contracts at favorable rates.

Year-to-date, group and transient revenue declined by 0.5% and 0.1%, respectively. The decline in group revenue was driven by a 1.9% decrease in corporate groups and a 0.5% decrease in association group, partially offset by an increase in other group, which includes social, military, education, religious, fraternal and youth and amateur sports teams. Our strongest performing segment year-to-date was contract business, which grew 19.7%.

Liquidity and Capital Resources

Liquidity and Capital Resources of Host Inc. and Host L.P. The liquidity and
capital resources of Host Inc. and Host L.P. are derived primarily from the
activities of Host L.P., which generates the capital required by our business
from hotel operations, the incurrence of debt, the issuance of OP units or the
sale of properties. Host Inc. is a REIT and its only significant asset is the
ownership of partnership interests of Host L.P.; therefore, its financing and
investing activities are conducted through Host L.P., except for the issuance of
its common and preferred stock. Proceeds from stock issuances by Host Inc. are
contributed to Host L.P. in exchange for OP units. Additionally, funds used by
Host Inc. to pay dividends or to repurchase its stock are provided by Host L.P.
Therefore, while we have noted those areas in which it is important to
distinguish between Host Inc. and Host L.P., we have not included a separate
discussion of liquidity and capital resources as the discussion below applies to
both Host Inc. and Host L.P.

Overview. We look to maintain a capital structure and liquidity profile with an
appropriate balance of cash, debt, and equity in order to provide financial
flexibility given the inherent volatility of the lodging industry. We believe
this strategy will result in a lower overall cost of capital, allow us to
complete opportunistic investments and acquisitions and will position us to
manage potential declines in operations throughout the lodging cycle. Over the
past several years, we have decreased our leverage as measured by our net
debt-to-EBITDA ratio and reduced our debt service obligations, leading to an
increase in our fixed charge coverage ratio.

We intend to use available cash predominantly for acquisitions or other
investments in our portfolio. If we are unable to find appropriate investment
opportunities, we will consider other uses for our cash, such as a return of
capital through dividends or common stock repurchases, the amounts of which will
be determined by our operations and other market factors. Significant factors we
review to determine the amount and timing of common stock repurchases include
our current stock price compared to our determination of the underlying value of
our assets, current and forecast operating results and the completion of hotel
sales.

We have structured our debt profile to maintain a balanced maturity schedule and
to minimize the number of assets that are encumbered by mortgage debt.
Currently, none of our consolidated hotels are encumbered by mortgage debt. We
have access to multiple types of financing, as all of our debt consists of
senior notes and borrowings under our credit facility, none of which are
collateralized by specific hotels. We believe that we have sufficient liquidity
and access to capital markets in order to take advantage of opportunities to
enhance our portfolio, withstand declines in operating cash flow, pay near-term
debt maturities, and fund our capital expenditures programs. We may continue to
access capital markets if favorable conditions exist in order to enhance our
liquidity and to fund cash needs.

Cash Requirements. We use cash for acquisitions, capital expenditures, debt
payments, operating costs, and corporate and other expenses, as well as for
dividends and distributions to stockholders and OP unitholders and stock and OP
unit repurchases. As a REIT, Host Inc. is required to distribute to its
stockholders at least 90% of its taxable income, excluding net capital gain, on
an annual basis. On October 16, 2017, we paid a dividend of $0.20 per share on
Host Inc.'s common stock, which totaled approximately $148 million.

                                       30

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Capital Resources. As of September 30, 2017, we had $789 million of cash and
cash equivalents. We depend primarily on external sources of capital to finance
growth, including acquisitions. As a result, the liquidity and debt capacity
provided by our credit facility and the ability to issue senior unsecured debt
are key components of our capital structure. Our financial flexibility
(including our ability to incur debt, make distributions and make investments)
is contingent on our ability to maintain compliance with the financial covenants
of such indebtedness, which include, among other things, the allowable amounts
of leverage, interest coverage and fixed charges.

If, at any time, we determine that market conditions are favorable, after taking
into account our liquidity requirements, we may cause Host L.P. to issue senior
notes or debentures exchangeable for shares of Host Inc. common stock. Given the
total amount of our debt and our maturity schedule, we will continue to redeem
or refinance senior notes and mortgage debt from time to time, taking advantage
of favorable market conditions. In February 2017, Host Inc.'s Board of Directors
authorized repurchases of up to $250 million of senior notes and mortgage debt
other than in accordance with its terms, of which the entire amount remains
available under this authority. We may purchase senior notes for cash through
open market purchases, privately negotiated transactions, a tender offer or, in
some cases, through the early redemption of such securities pursuant to their
terms. Repurchases of debt will depend on prevailing market conditions, our
liquidity requirements, contractual restrictions and other factors. Any
refinancing or retirement before the maturity date will affect earnings and
NAREIT FFO per diluted share as a result of the payment of any applicable call
premiums and the acceleration of previously deferred financing costs. In
addition, while we intend to use any available cash predominantly for
acquisitions or other investments in our hotel portfolio, to the extent we do
not identify appropriate investments, we may elect in the future to use
available cash for other purposes, including share repurchases, subject to
market conditions. Accordingly, in light of our priorities in managing our
capital structure and liquidity profile and given prevailing conditions and
relative pricing in the capital markets, we may, at any time, subject to
applicable securities laws, be considering, or be in discussions with respect to
the repurchase or issuance of exchangeable debentures and/or senior notes or the
repurchase or sale of common stock. Any such transactions may, subject to
applicable securities laws, occur simultaneously.

Additionally, in February 2017, Host Inc.'s Board of Directors authorized a new
program to repurchase up to $500 million of Host Inc. common stock. The common
stock may be purchased from time to time depending upon market conditions, and
may be purchased in the open market or through private transactions or by other
means, including principal transactions with various financial institutions,
like accelerated share repurchases, forwards, options and similar transactions
and through one or more trading plans designed to comply with Rule 10b5-1 under
the Securities Exchange Act of 1934, as amended. The plan does not obligate us
to repurchase any specific number or any specific dollar amount of shares and
may be suspended at any time at our discretion. We have not repurchased any
shares under this program.

Sources and Uses of Cash. Our sources of cash include cash from operations, proceeds from debt and equity issuances, and proceeds from asset sales. Uses of cash include acquisitions, investments in our joint ventures, capital expenditures, operating costs, debt repayments, and repurchases of and distributions to equity holders.

Cash Provided by Operations. Our cash provided by operations decreased $51 million to $864 million for the year-to-date ended September 30, 2017 compared to the same period of 2016, due to an increase in interest expense and taxes paid.

Cash Provided by (Used in) Investing Activities. Net cash used in investing
activities was $200 million during the first three quarters of 2017 compared to
net cash provided by investing activities of $15 million for the first three
quarters of 2016. Cash used in investing activities primarily consisted of
capital expenditures for our existing portfolio and the acquisition of The Don
CeSar, W Hollywood and the Miami Marriott Biscayne Bay ground lease in 2017.
Cash used for renewal and replacement capital expenditures for the first three
quarters of 2017 and 2016 was $155 million and $222 million, respectively, while
cash used for capital expenditures invested in ROI/redevelopment projects and
acquisition capital expenditures during the same period was $53 million and
$192 million, respectively. This use of cash was offset partially by proceeds
from the sale of four hotels in 2017 and ten hotels in 2016.

                                       31

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The following tables summarize significant acquisitions and dispositions that have been completed as of October 31, 2017 (in millions):




Transaction Date            Description of Transaction                                 Investment
Acquisitions
March        2017   Acquisition of the Miami Marriott Biscayne
                    Bay ground lease                                                  $        (38 )
March        2017   Acquisition of the W Hollywood                                            (219 )
February     2017   Acquisition of The Don CeSar and Beach
                    House Suites complex                                                      (214 )
                    Total acquisitions                                                $       (471 )

Transaction Date            Description of Transaction             Net Proceeds(1)    Sales Price
Dispositions
September    2017   Disposition of Sheraton Indianapolis at
                    Keystone Crossing                             $              64   $         66
July         2017   Disposition of the Hilton Melbourne South
                    Wharf(2)                                                    182            184
April        2017   Disposition of Sheraton Memphis Downtown                     66             67
January      2017   Disposition of JW Marriott Desert Springs
                    Resort & Spa                                                160            172
                    Total dispositions                            $             472
___________

(1) Proceeds are net of transfer taxes, other sales costs and FF&E replacement

funds deposited directly to the property or hotel manager by the purchaser.

(2) Immediately prior to the sale, we acquired the 25% interest from the

non-controlling partner for $27 million.


Cash Used in Financing Activities. Year-to-date 2017, net cash used in financing
activities was $244 million compared to net cash used of $789 million for the
year-to-date 2016. Cash provided by financing activities in 2017 included the
issuance of the Series G senior notes. Cash used in financing activities in 2017
primarily consisted of dividend payments and the repayment of mortgage debt,
while 2016 also included the repurchase of Host Inc. common stock.

The following tables summarize significant issuances, net of deferred financing
costs and issuance discounts, or repayments of debt, including premiums, that
have been completed through October 31, 2017 (in millions):



Transaction Date                   Description of Transaction              Net Proceeds
Debt Issuances
March            2017   Proceeds from the issuance of $400 million
                        3.875% Series G senior notes                       $         395
                        Total issuances                                    $         395




                                                                         Transaction
 Transaction
    Date                        Description of Transaction                 Amount
Debt
Repayments

July 2017 Repayment of A$86 mortgage loan on the Hilton

                     Melbourne South Wharf                              $         (69 )
January -     2017   Net repayment on the revolver portion of credit
September            facility                                                     (39 )
                     Total cash repayments                              $        (108 )

The following table summarizes significant equity transactions that have been completed through October 31, 2017 (in millions):


                                                                      Transaction
    Transaction Date               Description of Transaction           Amount
   Equity of Host Inc.
   January - October   2017   Dividend payments (1)(2)               $        (628 )
                              Cash payments on equity transactions   $        (628 )
   ___________

(1) In connection with the dividends, Host L.P. made distributions of $635

million to its common OP unit holders.

(2) Includes the cash payment for the fourth quarter 2016 dividend that was paid

    in January 2017.


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Debt

As of September 30, 2017, our total debt was $4.0 billion, with an average
interest rate of 3.9% and an average maturity of 5.4 years. Additionally, 70% of
our debt has a fixed rate of interest and none of our hotels are encumbered by
mortgage debt.

Financial Covenants

Credit Facility Covenants. Our credit facility contains certain important
financial covenants concerning allowable leverage, unsecured interest coverage,
and required fixed charge coverage. There were no changes to these financial
covenants in connection with the May 2017 amendment and restatement of the
credit facility. Total debt used in the calculation of our leverage ratio is
based on a "net debt" concept, under which cash and cash equivalents in excess
of $100 million are deducted from our total debt balance for purposes of
measuring compliance. To the extent that no amounts are outstanding under the
credit facility, breaching these covenants is not an event of default
thereunder.

We are in compliance with all of our financial covenants under the credit facility. The following table summarizes the results of the financial tests required by the credit facility as of September 30, 2017:


                                                              Covenant Requirement
                                           Actual Ratio          for all years
   Leverage ratio                                    2.3 x   Maximum ratio of 7.25x
   Fixed charge coverage ratio                       6.5 x   Minimum ratio 

of 1.25x

   Unsecured interest coverage ratio (1)             9.6 x   Minimum ratio of 1.75x
   ___________



(1) If, at any time, our leverage ratio exceeds 7.0x, our minimum unsecured

interest coverage ratio will be reduced to 1.5x.

Senior Notes Indenture Covenants

Covenants for Senior Notes Issued After We Attained an Investment Grade Rating

We are in compliance with all of the financial covenants applicable to our Series D, Series E, Series F and Series G senior notes. The following table summarizes the results of the financial tests required by the senior notes indentures for our Series D, Series E, Series F and Series G senior notes and our actual credit ratios as of September 30, 2017:



                                           Actual Ratio      Covenant 

Requirement

    Unencumbered assets tests                        493 %   Minimum ratio 

of 150%

    Total indebtedness to total assets                20 %   Maximum ratio 

of 65%

    Secured indebtedness to total assets              <1 %   Maximum ratio 

of 40%

    EBITDA-to-interest coverage ratio                9.1 x   Minimum ratio 

of 1.5x

Covenants for Senior Notes Issued Before We Attained an Investment Grade Rating

The terms of our senior notes that were issued before we attained an investment
grade rating contained provisions providing that many of the restrictive
covenants in the senior notes indenture would not apply should Host L.P. attain
an investment grade rating. Accordingly, because our senior notes currently are
rated investment grade by both Moody's and Standard & Poor's, the covenants in
our senior notes indenture (for all series prior to the Series D senior notes)
that previously limited our ability to incur indebtedness or pay dividends no
longer are applicable. Even if we were to lose the investment grade rating,
however, we would be in compliance with all of our financial covenants under the
senior notes indenture. The following table summarizes the actual credit ratios
for our existing senior notes (other than the Series D, Series E, Series F and
Series G senior notes) as of September 30, 2017 and the covenant requirements
contained in the senior notes indenture that would be applicable at such times
as our existing senior notes no longer are rated investment grade by either
Moody's or Standard & Poor's:



                                           Actual Ratio*      Covenant 

Requirement

   Unencumbered assets tests                          499 %   Minimum ratio 

of 125%

   Total indebtedness to total assets                  20 %   Maximum ratio 

of 65%

   Secured indebtedness to total assets                <1 %   Maximum ratio 

of 45%

   EBITDA-to-interest coverage ratio                  9.1 x   Minimum ratio of 2.0x
   ___________




                                       33
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* Because of differences in the calculation methodology between our Series D,

Series E, Series F and Series G senior notes and our other senior notes with

respect to covenant ratios, our actual ratios for the two sets of senior notes

are slightly different.

For additional detail on our credit facility and senior notes, see our Annual Report on Form 10-K for the year ended December 31, 2016.

Dividend Policy

Host Inc. is required to distribute at least 90% of its annual taxable income,
excluding net capital gain, 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. As of September 30, 2017, Host Inc. is the owner of approximately
99% of the Host L.P. common OP units. The remaining common OP units are owned by
third party limited partners. Each Host L.P. OP unit may be redeemed for cash
or, at the election of Host Inc., Host Inc. common stock based on the conversion
ratio. The conversion ratio is 1.021494 shares of Host Inc. common stock for
each Host L.P. OP unit.

Investors should take into account the non-controlling interest in the Host L.P.
common OP units when analyzing common dividend payments by Host Inc. to its
stockholders, as these common OP unitholders share, on a pro rata basis, in cash
distributed by Host L.P. to all of its common OP unitholders. For example, if
Host Inc. paid a $1 per share dividend on its common stock, it would be based on
the payment of a $1.021494 per common OP unit distribution by Host L.P. to Host
Inc., as well as to the other Host L.P. common OP unitholders.

Host Inc.'s policy on common dividends generally is to distribute, over time,
100% of its taxable income, which is dependent primarily on Host Inc.'s results
of operations, as well as gains and losses on property sales. Host Inc. paid a
regular quarterly cash dividend of $0.20 per share on its common stock on
October 16, 2017 to stockholders of record on September 29, 2017. All future
dividends are subject to approval by Host Inc.'s Board of Directors. While Host
Inc. intends to use available cash predominantly for acquisitions or other
investments in its portfolio, to the extent that we do not identify appropriate
investments, we may decide in the future to use available cash for other items,
such as common stock repurchases or increased dividends, the amount of which
dividends could be in excess of taxable income.

European Joint Venture

At September 30, 2017, hotel investments by the Euro JV total approximately
€1.5 billion, with €0.7 billion of mortgage debt. All of the mortgage debt of
the Euro JV is non-recourse to us and our partners and a default thereunder does
not trigger a default under any of our debt. Our investment, total partners'
funding, and debt outstanding as of September 30, 2017 are as follows:



                                                                                                                  Host's
                                                                                                                Portion of
                        Host's Net         Total Partner                                                       Non-Recourse
                        Investment            Funding          % of Total Commitment         Debt balance          Debt
                      (in millions)        (in millions)                                    (in millions)      (in millions)
Euro JV Fund I       €            124     €            463                         67 % (1) €          305     €          98
Euro JV Fund II                    91                  301                         67 %                394               132
                     €            215     €            764                                  €          699     €         230
___________

(1) The remaining commitment for Fund I is limited to investments in the current

portfolio of hotels, including capital expenditures and debt repayments.




The following table sets forth operating statistics for the 10 Euro JV hotels
consisting of 3,902 rooms as of September 30, 2017 and 2016, all of which are
comparable:

                                               Comparable Euro JV Hotels in Constant Euros
                         Quarter ended
                         September 30,                            

Year-to-date ended September 30,

                      2017          2016          Change              2017                  2016             Change
Average room rate   €  222.07     €  223.65           (0.7 )%    €        217.66       €        215.71            0.9 %
Average occupancy        81.9 %        78.8 %          310 bps              78.3 %                74.3 %          410 bps
RevPAR              €  181.94     €  176.25            3.2 %     €        170.48       €        160.18            6.4 %



                                       34
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The Euro JV's comparable hotel RevPAR increased approximately 3.2% and 6.4% on a constant Euro basis for the third quarter and year-to-date, respectively, primarily due to improvement in occupancy driven by group performance.

Critical Accounting Policies

Our unaudited condensed consolidated financial statements have been prepared in
conformity with GAAP, which requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of our financial statements and the reported amounts of revenues and
expenses during the reporting period. While we do not believe that the reported
amounts would be materially different, application of these policies involves
the exercise of judgment and the use of assumptions as to future uncertainties
and, as a result, actual results could differ from these estimates. We evaluate
our estimates and judgments on an ongoing basis. We base our estimates on
experience and on various other assumptions that we believe to be reasonable
under the circumstances. All of our significant accounting policies, including
certain critical accounting policies, are disclosed in our Annual Report on Form
10-K for the year ended December 31, 2016. For a detailed discussion of the new
accounting standards, see "Note 2. Summary of Significant Accounting Policies"
in this quarterly report.

Comparable Hotel Operating Statistics

To facilitate a quarter-to-quarter comparison of our operations, we present certain operating statistics (i.e., RevPAR, average daily rate and average occupancy) and operating results (revenues, expenses, hotel EBITDA and associated margins) for the periods included in this report on a comparable hotel basis in order to enable our investors to better evaluate our operating performance.

Because these statistics and operating results relate only to our hotel properties, they exclude results for our non-hotel properties and other real estate investments. We define our comparable hotels as properties:

(i) that are owned or leased by us and the operations of which are

            included in our consolidated results for the entirety of the reporting
            periods being compared; and


        (ii) that have not sustained substantial property damage or business
             interruption, or undergone large-scale capital projects (as defined
             further below) during the reporting periods being compared.


The hotel business is capital-intensive and renovations are a regular part of
the business. Generally, hotels under renovation remain comparable hotels. A
large scale capital project that would cause a hotel to be excluded from our
comparable hotel set is an extensive renovation of several core aspects of the
hotel, such as rooms, meeting space, lobby, bars, restaurants, and other public
spaces. Both quantitative and qualitative factors are taken into consideration
in determining if the renovation would cause a hotel to be removed from the
comparable hotel set, including unusual or exceptional circumstances such as: a
reduction or increase in room count, rebranding, a significant alteration of the
business operations, or the closing of the hotel during the renovation.

We do not include an acquired hotel in our comparable hotel set until the
operating results for that hotel have been included in our consolidated results
for one full calendar year. For example, we acquired The Don CeSar in February
of 2017. The hotel will not be included in our comparable hotel set until
January 1, 2019. Hotels that we sell are excluded from the comparable hotel set
once the transaction has closed. Similarly, hotels are excluded from our
comparable hotel set from the date that they sustain substantial property damage
or business interruption or commence a large-scale capital project. In each
case, these hotels are returned to the comparable hotel set when the operations
of the hotel have been included in our consolidated results for one full
calendar year after completion of the repair of the property damage or cessation
of the business interruption, or the completion of large-scale capital projects,
as applicable.

Of the 94 hotels that we owned on September 30, 2017, 87 have been classified as
comparable hotels. The operating results of the following hotels that we owned
as of September 30, 2017 are excluded from comparable hotel results for these
periods:

        •   The Denver Marriott Tech Center, removed in the first quarter of 2016
            (business disruption due to extensive renovations, including
            conversion of 64 rooms to 41 suites, conversion of the concierge
            lounge into three meeting rooms, and the repositioning of the public
            space and food and beverage areas);


        •   The Hyatt Regency San Francisco Airport, removed in the first quarter
            of 2016 (business disruption due to extensive renovations, including
            all guestrooms and bathrooms, meeting space, the repositioning of the
            atrium into a new restaurant and lounge, and conversion of the
            existing restaurant to additional meeting space);

Marriott Marquis San Diego Marina, removed in the first quarter of

            2015 (business interruption due to the demolition of the existing
            conference center and construction of the new exhibit hall);


                                       35
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• The Phoenician (acquired in June 2015 and, beginning in the second

            quarter of 2016, business disruption due to extensive 

renovations,

            including all guestrooms and suites, a redesign of the lobby 

and

            public areas, renovation of pools, recreation areas and a

restaurant

            and a re-configured spa and fitness center);


Axiom Hotel (acquired as the Powell Hotel in January 2014, then closed

            during 2015 for extensive renovations and reopened in January 

2016);

• The Don CeSar and Beach House Suites complex (acquired February 2017); and

W Hollywood (acquired March 2017).


The operating results of 14 hotels disposed of in 2017 and 2016 are not included
in comparable hotel results for the periods presented herein. None of our hotels
have been excluded from our comparable hotel results due to Hurricanes Harvey or
Irma.

CONSTANT US$, NOMINAL US$ AND CONSTANT EUROS

Operating results denominated in foreign currencies are translated using the
prevailing exchange rates on the date of the transaction, or monthly based on
the weighted average exchange rate for the period. For comparative purposes, we
also present the RevPAR results for the prior year assuming the results of our
foreign operations were translated using the same exchange rates that were
effective for the comparable periods in the current year, thereby eliminating
the effect of currency fluctuation for the year-over-year comparisons. We
believe that this presentation is useful to investors as it provides clarity
with respect to the growth in RevPAR in the local currency of the hotel
consistent with the manner in which we would evaluate our domestic portfolio.
However, the estimated effect of changes in foreign currency has been reflected
in the actual and forecast results of net income, EBITDA, earnings per diluted
share and Adjusted FFO per diluted share. Nominal US$ results include the effect
of currency fluctuations, consistent with our financial statement presentation.

We present RevPAR results for our joint venture in Europe in constant Euros using the same methodology as used for the constant US$ presentation.

Non-GAAP Financial Measures

We use certain "non-GAAP financial measures," which are measures of our historical or future financial performance that are not calculated and presented in accordance with GAAP, within the meaning of applicable SEC rules. These measures include the following:

        •   Earnings Before Interest Expense, Income Taxes, Depreciation and
            Amortization ("EBITDA") and Adjusted EBITDA, as a measure of
            performance for Host Inc. and Host L.P.,


        •   Funds From Operations ("FFO") and FFO per diluted share, both
            calculated in accordance with National Association of Real Estate
            Investment Trusts ("NAREIT") guidelines and with certain

adjustments

            from those guidelines, as a measure of performance for Host 

Inc., and

• Comparable hotel operating results, as a measure of performance for

            Host Inc. and Host L.P.

The following discussion defines these measures and presents why we believe they are useful supplemental measures of our performance.

Set forth below for each such non-GAAP financial measure is a reconciliation of
the measure with the financial measure calculated and presented in accordance
with GAAP that we consider most directly comparable thereto. We also have
included in "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Non-GAAP Financial Measures" in our Annual Report on
Form 10-K for the year ended December 31, 2016, further explanations of the
adjustments being made, a statement disclosing the reasons why we believe the
presentation of each of the non-GAAP financial measures provide useful
information to investors regarding our financial condition and results of
operations, the additional purposes for which we use the non-GAAP financial
measures and limitations on their use.

EBITDA and Adjusted EBITDA

Earnings before Interest Expense, Income Taxes, Depreciation and Amortization
("EBITDA") is a commonly used measure of performance in many industries.
Management believes EBITDA provides useful information to investors regarding
our results of operations because it helps us and our investors evaluate the
ongoing operating performance of our properties after removing the impact of our
capital structure (primarily interest expense) and our asset base (primarily
depreciation and amortization). Management

                                       36

--------------------------------------------------------------------------------


also believes the use of EBITDA facilitates comparisons between us and other
lodging REITs, hotel owners who are not REITs and other capital-intensive
companies. Management uses EBITDA to evaluate property-level results and as one
measure in determining the value of acquisitions and dispositions and, like FFO
and Adjusted FFO per diluted share, it is widely used by management in the
annual budget process and for compensation programs.

Adjusted EBITDA

Historically, management has adjusted EBITDA when evaluating our performance
because we believe that the exclusion of certain additional items described
below provides useful supplemental information to investors regarding our
ongoing operating performance and that the presentation of Adjusted EBITDA, when
combined with the primary GAAP presentation of net income (loss), is beneficial
to an investor's complete understanding of our operating performance. Adjusted
EBITDA also is a relevant measure in calculating certain credit ratios. We
adjust EBITDA for the following items, which may occur in any period, and refer
to this measure as Adjusted EBITDA:

• Real Estate Transactions - We exclude the effect of gains and losses,

            including the amortization of deferred gains, recorded on the
            disposition or acquisition of depreciable assets and property
            insurance gains in our consolidated statement of operations 

because we

            believe that including them in Adjusted EBITDA is not 

consistent with

            reflecting the ongoing performance of our assets. In addition,
            material gains or losses from the depreciated value of the 

disposed

            assets could be less important to investors given that the 

depreciated

            asset book value often does not reflect its market value (as noted
            below for FFO).

• Equity Investment Adjustments - We exclude the equity in earnings

            (losses) of unconsolidated investments in partnerships and 

joint

            ventures as presented in our consolidated statement of 

operations

            because it includes our pro rata portion of depreciation,

amortization

            and interest expense, which are excluded from EBITDA. We

include our

            pro rata share of the Adjusted EBITDA of our equity investments as we
            believe this more accurately reflects the performance of our
            investments. The pro rata Adjusted EBITDA of equity investments is
            defined as the EBITDA of our equity investments, adjusted for any
            gains or losses on property transactions, multiplied by our

percentage

            ownership in the partnership or joint venture.


• Consolidated Partnership Adjustments - We deduct the non-controlling

            partners' pro rata share of the Adjusted EBITDA of our 

consolidated

            partnerships as this reflects the non-controlling owners'

interest in

            the EBITDA of our consolidated partnerships. The pro rata Adjusted
            EBITDA of non-controlling partners is defined as the EBITDA of our
            consolidated partnerships, adjusted for any gains or losses on
            property transactions, multiplied by the non-controlling partners'
            percentage ownership in the partnership or joint venture.

• Cumulative Effect of a Change in Accounting Principle - Infrequently,

            the Financial Accounting Standards Board ("FASB") promulgates 

new

            accounting standards that require the consolidated statement of
            operations to reflect the cumulative effect of a change in 

accounting

            principle. We exclude these one-time adjustments because they do not
            reflect our actual performance for that period.


        •   Impairment Losses - We exclude the effect of impairment expense
            recorded because we believe that including it in Adjusted EBITDA is
            not consistent with reflecting the ongoing performance of our assets.
            In addition, we believe that impairment expense, which is based on
            historical cost book values, is similar to gains (losses) on
            dispositions and depreciation expense, both of which also are excluded
            from EBITDA.

• Acquisition Costs - Under GAAP, costs associated with completed

            property acquisitions are expensed in the year incurred. We 

exclude

            the effect of these costs because we believe they are not

reflective

            of the ongoing performance of the company.


        •   Litigation Gains and Losses - We exclude the effect of gains or losses
            associated with litigation recorded under GAAP that we consider
            outside the ordinary course of business. We believe that including
            these items is not consistent with our ongoing operating

performance.


In unusual circumstances, we also may adjust EBITDA for gains or losses that
management believes are not representative of our current operating performance.
The last such adjustment was in 2013.

                                       37

--------------------------------------------------------------------------------

The following table provides a reconciliation of the differences between EBITDA and Adjusted EBITDA and net income, the financial measure calculated and presented in accordance with GAAP that we consider the most directly comparable:

  Reconciliation of Net Income to EBITDA and Adjusted EBITDA for Host Inc. and
                                   Host L.P.

                                 (in millions)



                                           Quarter ended                Year-to-date ended
                                           September 30,                   September 30,
                                       2017             2016           2017             2016
Net income (1)                      $       105$      108$       478$      643
Interest expense                             43              38             125             116
Depreciation and amortization               176             182             534             541
Income taxes                                 42              19              63              42
EBITDA (1)                                  366             347           1,200           1,342
Gain on dispositions (2)                    (58 )           (12 )          (101 )          (242 )
Gain on property insurance
settlement                                   (1 )             -              (1 )            (1 )
Acquisition costs                             -               -               1               -
Equity investment adjustments:
Equity in earnings of affiliates             (4 )            (8 )           (19 )           (19 )
Pro rata Adjusted EBITDA of
equity investments                           16              17              55              51
Consolidated partnership
adjustments:
Pro rata Adjusted EBITDA
attributable to non-
   controlling partners in other
consolidated
   partnerships                              (2 )            (2 )            (7 )            (8 )
Adjusted EBITDA (1)                 $       317$      342$     1,128$    1,123
___________

(1) Net Income, EBITDA, Adjusted EBITDA, NAREIT FFO and Adjusted FFO include a

gain of $1 million for the quarter ended September 30, 2016, and $1 million

and $2 million for the year-to-date periods ended September 30, 2017 and

2016, respectively, for the sale of the portion of land attributable to

individual units sold by the Maui timeshare joint venture.

(2) Reflects the sale of four hotels in 2017 and ten hotels in 2016.



FFO Measures

We present NAREIT FFO and NAREIT FFO per diluted share as non-GAAP measures of
our performance in addition to our earnings (loss) per share (calculated in
accordance with GAAP). We calculate NAREIT FFO per diluted share as our NAREIT
FFO (defined as set forth below) for a given operating period, as adjusted for
the effect of dilutive securities, divided by the number of fully diluted shares
outstanding during such period in accordance with NAREIT guidelines. NAREIT
defines FFO as net income (loss) (calculated in accordance with GAAP), excluding
gains (losses) from sales of real estate, the cumulative effect of changes in
accounting principles, real estate-related depreciation, amortization and
impairments, and adjustments for unconsolidated partnerships and joint ventures.
Adjustments for unconsolidated partnerships and joint ventures are calculated to
reflect our pro rata share of the FFO of those entities on the same basis.

                                       38

--------------------------------------------------------------------------------


We also present Adjusted FFO per diluted share when evaluating our performance
because management believes that the exclusion of certain additional items
described below provides useful supplemental information to investors regarding
our ongoing operating performance. Management historically has made the
adjustments detailed below in evaluating our performance, in our annual budget
process, and for our compensation programs. We believe that the presentation of
Adjusted FFO per diluted share, when combined with both the primary GAAP
presentation of earnings per share and FFO per diluted share as defined by
NAREIT, provides useful supplemental information that is beneficial to an
investor's complete understanding of our operating performance. We adjust NAREIT
FFO per diluted share for the following items, which may occur in any period,
and refer to this measure as Adjusted FFO per diluted share:

• Gains and Losses on the Extinguishment of Debt - We exclude the effect

            of finance charges and premiums associated with the 

extinguishment of

            debt, including the acceleration of the write-off of deferred
            financing costs from the original issuance of the debt being redeemed
            or retired and incremental interest expense incurred during the
            refinancing period. We also exclude the gains on debt

repurchases and

            the original issuance costs associated with the retirement of
            preferred stock. We believe that these items are not reflective of our
            ongoing finance costs.

• Acquisition Costs - Under GAAP, costs associated with completed

            property acquisitions are expensed in the year incurred. We 

exclude

            the effect of these costs because we believe they are not

reflective

            of the ongoing performance of the company.


        •   Litigation Gains and Losses - We exclude the effect of gains or losses
            associated with litigation recorded under GAAP that we consider
            outside the ordinary course of business. We believe that including
            these items is not consistent with our ongoing operating

performance.


In unusual circumstances, we also may adjust NAREIT FFO for gains or losses that
management believes are not representative of our current operating performance.
The last such adjustment was in 2013.

                                       39

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The following table provides a reconciliation of the differences between our
non-GAAP financial measures, NAREIT FFO and Adjusted FFO (separately and on a
per diluted share basis), and net income, the financial measure calculated and
presented in accordance with GAAP that we consider most directly comparable:

                   Host Inc. Reconciliation of Net Income to

          NAREIT and Adjusted Funds From Operations per Diluted Share

                     (in millions, except per share amount)



                                          Quarter ended               Year-to-date ended
                                          September 30,                  September 30,
                                       2017           2016           2017             2016
Net income (1)                      $      105$      108$       478$      643
Less: Net income attributable to
non-controlling
   interests                                (1 )           (1 )            (6 )            (7 )
Net income attributable to Host
Inc.                                       104            107             472             636
Adjustments:
Gain on dispositions (2)                   (58 )          (12 )          (101 )          (242 )
Tax on dispositions                         22              -              22               9
Gain on property insurance
settlement                                  (1 )            -              (1 )            (1 )
Depreciation and amortization              175            181             532             538
Equity investment adjustments:
Equity in earnings of affiliates            (4 )           (8 )           (19 )           (19 )
Pro rata FFO of equity
investments                                 11             13              39              38
Consolidated partnership
adjustments:
FFO adjustment for
non-controlling partnerships                (1 )           (1 )            (2 )            (3 )
FFO adjustments for
non-controlling interests of
   Host L.P.                                (1 )           (2 )            (6 )            (3 )
NAREIT FFO (1)                             247            278             936             953
Adjustments to NAREIT FFO:
Acquisition costs                            -              -               1               -
Loss on debt extinguishment                  -              -               1               -
Adjusted FFO (1)                    $      247$      278$       938$      953

For calculation on a per share
basis(3):
Diluted weighted average shares
outstanding - EPS,
   NAREIT FFO and Adjusted FFO           739.0          741.1           738.7           745.2
NAREIT FFO and Adjusted FFO per
diluted share                       $      .33$      .37$      1.27$     1.28
___________



(1-2) Refer to the corresponding footnote on the Reconciliation of Net Income to

EBITDA and Adjusted EBITDA for Host Inc. and Host L.P.

(3) Earnings per diluted share and NAREIT FFO and Adjusted FFO per diluted share

are adjusted for the effects of dilutive securities. Dilutive securities may

include shares granted under comprehensive stock plans, preferred OP units

held by non-controlling partners, exchangeable debt securities and other

    non-controlling interests that have the option to convert their limited
    partner interests to common OP units. No effect is shown for securities if
    they are anti-dilutive.

Comparable Hotel Operating Results

We present certain operating results of our hotels, such as hotel revenues,
expenses, food and beverage profit and EBITDA (and the related margins), on a
comparable hotel, or "same store," basis as supplemental information for
investors. For an explanation of which properties we consider to be "comparable
hotels", see "Comparable Hotel Operating Statistics" above.

                                       40

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The following tables presents certain operating results and statistics for our
comparable hotels for the periods presented herein and a reconciliation of the
differences between comparable hotel EBITDA, a non-GAAP financial measure, and
net income, the financial measure calculated and presented in accordance with
GAAP that we consider most directly comparable. Similar reconciliations of the
differences between (i) comparable hotel revenues and (ii) our revenues as
calculated and presented in accordance with GAAP (each of which is used in the
applicable margin calculation), and between (iii) comparable hotel expenses and
(iv) operating costs and expenses as calculated and presented in accordance with
GAAP, are also included in the reconciliation:

              Comparable Hotel Results for Host Inc. and Host L.P.

                     (in millions, except hotel statistics)



                                          Quarter ended                Year-to-date ended
                                          September 30,                  September 30,
                                       2017            2016           2017            2016
Number of hotels                            87              87              87             87
Number of rooms                         48,357          48,357          48,357         48,357
Change in comparable hotel RevPAR
-
   Constant US$                           (1.8 )%            -             1.0 %            -
   Nominal US$                            (1.7 )%            -             1.1 %            -
Operating profit margin (1)               10.1 %          11.1 %          13.4 %         13.0 %
Comparable hotel EBITDA margin
(1)                                       26.1 %         26.85 %          28.0 %         27.9 %
Food and beverage profit margin
(1)                                       22.9 %          23.5 %          31.1 %         29.8 %
Comparable hotel food and
beverage profit margin (1)                22.9 %          23.3 %          30.9 %         29.9 %

Net income                          $      105$      108$       478$      643
Depreciation and amortization              176             182             534            541
Interest expense                            43              38             125            116
Provision for income taxes                  42              19              63             42
Gain on sale of property and
corporate level
   income/expense                          (39 )             7             (45 )         (185 )
Non-comparable hotel results, net
(2)                                        (31 )           (41 )          (140 )         (147 )
Comparable hotel EBITDA             $      296$      313$     1,015$    1,010








                                                             Quarter ended September 30, 2017                                                         

Quarter ended September 30, 2016

                                                                        Adjustments                                                                               Adjustments
                                                                                  Depreciation and                                                                          Depreciation and
                                                       Non-comparable hotel        corporate level         Comparable                            Non-comparable hotel        corporate level         Comparable
                                   GAAP Results           results, net(2)               items            Hotel Results       GAAP Results           results, net(2)               items            Hotel Results
Revenues
Room                               $         860       $                 (71 )   $                 -     $          789      $         879       $                 (76 )   $                 -     $          803
Food and beverage                            314                         (35 )                     -                279                336                         (40 )                     -                296
Other                                         80                         (12 )                     -                 68                 80                         (13 )                     -                 67
Total revenues                             1,254                        (118 )                     -              1,136              1,295                        (129 )                     -              1,166
Expenses
Room                                         227                         (18 )                     -                209                225                         (19 )                     -                206
Food and beverage                            242                         (27 )                     -                215                257                         (30 )                     -                227
Other                                        459                         (43 )                     -                416                471                         (51 )                     -                420
Depreciation and amortization                176                           -                    (176 )                -                182                           -                    (182 )                -
Corporate and other expenses                  24                           -                     (24 )                -                 28                           -                     (28 )                -

Gain on insurance and business

   interruption settlements                   (1 )                         1                       -                  -                (12 )                        12                       -                  -
Total expenses                             1,127                         (87 )                  (200 )              840              1,151                         (88 )                  (210 )              853

Operating Profit - Comparable

   Hotel EBITDA                    $         127       $                 (31 )   $               200     $          296      $         144       $                 (41 )   $               210     $          313







                                       41
--------------------------------------------------------------------------------


                                                         Year-to-date ended September 30, 2017

Year-to-date ended September 30, 2016

                                                                       Adjustments                                                                            Adjustments
                                                         Non-comparable        Depreciation and                                                 Non-comparable        Depreciation and
                                                         hotel results,         corporate level         Comparable                              hotel results,         corporate level         Comparable
                                    GAAP Results             net(2)                  items            Hotel Results        GAAP Results             net(2)                  items            Hotel Results
Revenues
Room                               $        2,643       $           (244 )    $                 -     $        2,399$        2,655       $           (275 )    $                 -     $        2,380
Food and beverage                           1,152                   (133 )                      -              1,019               1,183                   (148 )                      -              1,035
Other                                         248                    (45 )                      -                203                 255                    (54 )                      -                201
Total revenues                              4,043                   (422 )                      -              3,621               4,093                   (477 )                      -              3,616
Expenses
Room                                          676                    (58 )                      -                618                 674                    (68 )                      -                606
Food and beverage                             794                    (90 )                      -                704                 830                   (104 )                      -                726
Other                                       1,424                   (140 )                      -              1,284               1,447                   (173 )                      -              1,274
Depreciation and amortization                 534                      -                     (534 )                -                 541                      -                     (541 )                -
Corporate and other expenses                   79                      -                      (79 )                -                  82                      -                      (82 )                -

Gain on insurance and business

   interruption settlements                    (6 )                    6                        -                  -                 (15 )                   15                        -                  -
Total expenses                              3,501                   (282 )                   (613 )            2,606               3,559                   (330 )                   (623 )            2,606

Operating Profit - Comparable

   Hotel EBITDA                    $          542       $           (140 )    $               613     $        1,015      $          534       $           (147 )    $               623     $        1,010
___________

(1) Profit margins are calculated by dividing the applicable operating profit by

the related revenue amount. GAAP operating profit margins are calculated

using amounts presented in the consolidated statements of operations.

Comparable hotel margins are calculated using amounts presented in the above

tables.

(2) Non-comparable hotel results, net, includes the following items: (i) the

results of operations of our non-comparable hotels and sold hotels, which

operations are included in our consolidated statements of operations as

continuing operations, (ii) gains on insurance settlements and business

interruption proceeds, and (iii) the results of our office spaces and other

    non-hotel income.







                                       42

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New Mexico Educational Retirement Board Sells 4,400 Shares Of Host Hotels And Resorts Inc (HST)

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New Mexico Educational Retirement Board Sells 4,400 Shares Of Host Hotels And Resorts Inc (HST)