Item 8. Financial Statements and Supplementary Data

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Item 8. Financial Statements and Supplementary Data

The following financial information is included on the pages indicated:

Host Hotels & Resorts, Inc. & Host Hotels & Resorts, L.P.


			Page
Reports of Independent Registered Public Accounting Firm (Host Hotels & Resorts, Inc.)			70
Report of Independent Registered Public Accounting Firm (Host Hotels & Resorts, L.P.)			72
Financial Statements of Host Hotels & Resorts, Inc.:			75
Consolidated Balance Sheets as of December 31, 2023 and 2022			75
Consolidated Statements of Operations for the Years Ended December 31, 2023, 2022 and 2021			76
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2023, 2022 and 2021			77
Consolidated Statements of Equity for the Years Ended December 31, 2023, 2022 and 2021			78
Consolidated Statements of Cash Flows for the Years Ended December 31, 2023, 2022 and 2021			79
Financial Statements of Host Hotels & Resorts, L.P.:			81
Consolidated Balance Sheets as of December 31, 2023 and 2022			81
Consolidated Statements of Operations for the Years Ended December 31, 2023, 2022 and 2021			82
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2023, 2022 and 2021			83
Consolidated Statements of Capital for the Years Ended December 31, 2023, 2022 and 2021			84
Consolidated Statements of Cash Flows for the Years Ended December 31, 2023, 2022 and 2021			85
Notes to Consolidated Financial Statements (Host Hotels & Resorts, Inc. and Host Hotels & Resorts, L.P.)			87

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

Host Hotels & Resorts, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Host Hotels & Resorts, Inc. and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes and financial statement schedule III (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 28, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of hotel properties for impairment

As discussed in Notes 1 and 3 to the consolidated financial statements, property and equipment, less accumulated depreciation and amortization as of December 31, 2023, was $9,624 million. The Company assesses its property and equipment, primarily comprised of hotel properties, for impairment when events or changes in circumstances occur that indicate the carrying value may not be recoverable. If such events or changes in circumstances are identified, the Company performs a recoverability analysis to compare the carrying amount of the hotel property to its expected undiscounted future cash flows over its remaining useful life.

We identified the evaluation of hotel properties for impairment as a critical audit matter. Subjective auditor judgment was required to assess the events or changes in circumstances that the Company used to evaluate its expected hold period. In addition, subjective auditor judgment was required to evaluate the key assumptions used by the Company in the recoverability analysis for a certain hotel property. The key assumptions included the undiscounted future cash flows and the expected hold period of this hotel property. Additionally, the audit effort associated with the evaluation of the undiscounted future cash flows for this hotel property required specialized skills and knowledge.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the impairment process. This included controls over the identification and assessment of expected hold periods for certain hotel properties and over the undiscounted future cash flows used by the Company in the recoverability analysis for a certain hotel property. We evaluated the expected hold periods, by:

● inquiring of management and obtaining written representations regarding potential property disposal plans, if any

● reading minutes of the meetings of the Company’s board of directors

● inquiring about the Company’s plans with those in the organization who are responsible for, and have authority over, potential disposition activities

● comparing management’s assessment of properties with potential shortened expected hold periods to information obtained from those in the organization responsible for disposition activity, and

● inspecting listings from external sources of real estate properties for sale by the Company.

We also involved valuation professionals with specialized skills and knowledge who assisted in evaluating the undiscounted future cash flows of a certain hotel property by comparing the cash flows to publicly available market data.

/s/ KPMG LLP

We have served as the Company’s auditor since 2002.

McLean, Virginia

February 28, 2024

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

Host Hotels & Resorts, Inc.:

Opinion on Internal Control Over Financial Reporting

We have audited Host Hotels & Resorts, Inc. and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes and financial statement schedule III (collectively, the consolidated financial statements), and our report dated February 28, 2024 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG LLP

McLean, Virginia

February 28, 2024

Report of Independent Registered Public Accounting Firm

To the Partners of Host Hotels & Resorts, L.P. and Board of Directors of Host Hotels & Resorts, Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Host Hotels & Resorts, L.P. and subsidiaries (the Partnership) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), capital, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes and financial statement schedule III (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These consolidated financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

Evaluation of hotel properties for impairment

As discussed in Notes 1 and 3 to the consolidated financial statements, property and equipment, less accumulated depreciation and amortization as of December 31, 2023, was $9,624 million. The Partnership assesses its property and equipment, primarily comprised of hotel properties, for impairment when events or changes in circumstances occur that indicate the carrying value may not be recoverable. If such events or changes in circumstances are identified, the Partnership performs a recoverability analysis to compare the carrying amount of the hotel property to its expected undiscounted future cash flows over its remaining useful life.

We identified the evaluation of hotel properties for impairment as a critical audit matter. Subjective auditor judgment was required to assess the events or changes in circumstances that the Partnership used to evaluate its expected hold period. In addition, subjective auditor judgment was required to evaluate the key assumptions used by the Partnership in the recoverability analysis for a certain hotel property. The key assumptions included the undiscounted future cash flows and the expected hold period of this hotel property. Additionally, the audit effort associated with the evaluation of the undiscounted future cash flows for this hotel property required specialized skills and knowledge.

flows used by the Partnership in the recoverability analysis for a certain hotel property. We evaluated the expected hold periods, by:

● inquiring of management and obtaining written representations regarding potential property disposal plans, if any

● reading minutes of the meetings of Host Hotels & Resorts, Inc.’s board of directors

● inquiring about the Partnership’s plans with those in the organization who are responsible for, and have authority over, potential disposition activities

● comparing management’s assessment of properties with potential shortened expected hold periods to information obtained from those in the organization responsible for disposition activity, and

● inspecting listings from external sources of real estate properties for sale by the Partnership.

/s/ KPMG LLP

We have served as the Partnership’s auditor since 2002.

McLean, Virginia

February 28, 2024

HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2023 and 2022

(in millions, except per share amounts)


	December 31, 2023		December 31, 2022

ASSETS
Property and equipment, net	$	9,624	$	9,748
Right-of-use assets	550		556
Due from managers	128		94
Advances to and investments in affiliates	126		132
Furniture, fixtures and equipment replacement fund	217		200
Notes receivable	72		413
Other	382		459
Cash and cash equivalents	1,144		667
Total assets	$	12,243	$	12,269

LIABILITIES, NON-CONTROLLING INTERESTS AND EQUITY
Debt
Senior notes	$	3,120	$	3,115
Credit facility, including the term loans of $997 and $998, respectively	989		994
Mortgage and other debt	100		106
Total debt	4,209		4,215
Lease liabilities	563		568
Accounts payable and accrued expenses	408		372
Due to managers	64		67
Other	173		168
Total liabilities	5,417		5,390

Redeemable non-controlling interests - Host Hotels & Resorts, L.P.	189		164

Host Hotels & Resorts, Inc. stockholders’ equity:
Common stock, par value $0.01, 1,050 million shares authorized, 703.6 million shares and 713.4 million shares issued and outstanding, respectively	7		7
Additional paid-in capital	7,535		7,717
Accumulated other comprehensive loss	(70)		(75)
Deficit	(839)		(939)
Total equity of Host Hotels & Resorts, Inc. stockholders	6,633		6,710
Non-redeemable non-controlling interests—other consolidated partnerships	4		5
Total equity	6,637		6,715
Total liabilities, non-controlling interests and equity	$	12,243	$	12,269

See Notes to Consolidated Financial Statements.

HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended December 31, 2023, 2022 and 2021

(in millions, except per common share amounts)



	2023		2022		2021
REVENUES
Rooms	$	3,244	$	3,014	$	1,858
Food and beverage	1,582		1,418		674
Other	485		475		358
Total revenues	5,311		4,907		2,890
EXPENSES
Rooms	787		727		488
Food and beverage	1,042		928		505
Other departmental and support expenses	1,280		1,181		890
Management fees	249		217		97
Other property-level expenses	383		325		307
Depreciation and amortization	697		664		762
Corporate and other expenses	132		107		99
Gain on insurance settlements	(86)		(17)		(8)
Total operating costs and expenses	4,484		4,132		3,140
OPERATING PROFIT (LOSS)	827		775		(250)
Interest income	75		30		2
Interest expense	(191)		(156)		(191)
Other gains	71		17		306
Equity in earnings of affiliates	6		3		31
INCOME (LOSS) BEFORE INCOME TAXES	788		669		(102)
Benefit (provision) for income taxes	(36)		(26)		91
NET INCOME (LOSS)	752		643		(11)
Less: Net income attributable to non-controlling interests	(12)		(10)		—
NET INCOME (LOSS) ATTRIBUTABLE TO HOST HOTELS & RESORTS, INC.	$	740	$	633	$	(11)
Basic earnings (loss) per common share	$	1.04	$	0.89	$	(0.02)
Diluted earnings (loss) per common share	$	1.04	$	0.88	$	(0.02)

See Notes to Consolidated Financial Statements.

HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Years Ended December 31, 2023, 2022 and 2021

(in millions)


	2023		2022		2021
NET INCOME (LOSS)	$	752	$	643	$	(11)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Foreign currency translation and other comprehensive income (loss) of unconsolidated affiliates	6		(2)		(2)
Change in fair value of derivative instruments	(1)		2		—
Amounts reclassified from other comprehensive income (loss)	—		1		—
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:	5		1		(2)
COMPREHENSIVE INCOME (LOSS)	757		644		(13)
Less: Comprehensive income attributable to non-controlling interests	(12)		(10)		—
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO HOST HOTELS & RESORTS, INC.	$	745	$	634	$	(13)

See Notes to Consolidated Financial Statements.

HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

Years Ended December 31, 2023, 2022 and 2021

(in millions)


Common Shares Outstanding		Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings / (Deficit)		Non-redeemable non-controlling Interests of Other Consolidated Partnerships		Total Equity		Redeemable non-controlling Interests of Host Hotels & Resorts, L.P.
705.4	Balance, December 31, 2020	$	7	$	7,568	$	(74)	$	(1,180)	$	5	$	6,326	$	108
—	Net income (loss)	—		—		—		(11)		1		(10)		(1)
—	Other changes in ownership	—		(20)		—		(1)		(1)		(22)		21
—	Foreign currency translation and other comprehensive income (loss) of unconsolidated affiliates	—		—		(2)		—		—		(2)		—


7.8	Common stock issuances	—		138		—		—		—		138		—
0.8	Comprehensive stock and employee stock purchase plans	—		14		—		—		—		14		—

0.1	Redemptions of limited partner interests for common stock	—		2		—		—		—		2		(2)


714.1	Balance, December 31, 2021	$	7	$	7,702	$	(76)	$	(1,192)	$	5	$	6,446	$	126
—	Net income	—		—		—		633		1		634		9
—	Other changes in ownership	—		16		—		—		—		16		(17)
—	Foreign currency translation and other comprehensive income (loss) of unconsolidated affiliates	—		—		(2)		—		—		(2)		—

—	Change in fair value of derivative instruments	—		—		2		—		—		2		—
—	Amounts reclassified from Other Comprehensive Income	—		—		1		—		—		1		—
0.7	Comprehensive stock and employee stock purchase plans	—		21		—		—		—		21		—
—	Common stock dividends	—		—		—		(380)		—		(380)		—
—	Common OP unit issuances	—		—		—		—		—		—		56
0.3	Redemptions of limited partner interests for common stock	—		5		—		—		—		5		(5)

—	Distributions to non-controlling interests	—		—		—		—		(1)		(1)		(5)
(1.7)	Repurchase of common stock	—		(27)		—		—		—		(27)		—
713.4	Balance, December 31, 2022	$	7	$	7,717	$	(75)	$	(939)	$	5	$	6,715	$	164
—	Net income	—		—		—		740		1		741		11
—	Other changes in ownership	—		(30)		—		—		—		(30)		31
—	Foreign currency translation and other comprehensive income (loss) of unconsolidated affiliates	—		—		6		—		—		6		—
—	Change in fair value of derivative instruments	—		—		(1)		—		—		(1)		—


1.1	Comprehensive stock and employee stock purchase plans	—		22		—		—		—		22		—
—	Common stock dividends	—		—		—		(640)		—		(640)		—
0.5	Redemptions of limited partner interests for common stock	—		8		—		—		—		8		(8)
—	Distributions to non-controlling interests	—		—		—		—		(2)		(2)		(9)
(11.4)	Repurchase of common stock	—		(182)		—		—		—		(182)		—
703.6	Balance, December 31, 2023	$	7	$	7,535	$	(70)	$	(839)	$	4	$	6,637	$	189

See Notes to Consolidated Financial Statements.

HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31, 2023, 2022, and 2021

(in millions)


	2023		2022		2021
OPERATING ACTIVITIES
Net income (loss)	$	752	$	643	$	(11)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	697		664		762
Amortization of finance costs, discounts and premiums, net	9		10		10
Loss on extinguishment of debt	4		—		23
Stock compensation expense	30		26		18
Deferred income taxes	26		20		(93)
Other gains	(71)		(17)		(306)
Gain on property insurance settlement	(3)		(6)		—
Equity in earnings of affiliates	(6)		(3)		(31)
Change in due from/to managers	(40)		15		(151)
Distributions from investments in affiliates	31		30		21
Property insurance proceeds - remediation costs	101		—		—
Payments for inventory costs	(15)		—		—
Changes in other assets	(3)		20		10
Changes in other liabilities	(71)		14		40
Net cash provided by operating activities	1,441		1,416		292

INVESTING ACTIVITIES
Proceeds from sales of assets, net	34		236		729
Proceeds from loan receivable	413		—		9
Return of investments in affiliates	5		—		—
Advances to and investments in affiliates	(25)		(60)		(11)
Acquisitions	—		(301)		(1,458)
Capital expenditures:
Renewals and replacements	(451)		(197)		(134)
Return on investment	(195)		(307)		(293)
Property insurance proceeds	36		11		—
Net cash used in investing activities	(183)		(618)		(1,158)

FINANCING ACTIVITIES
Financing costs	(10)		(1)		(8)
Issuances of debt	—		—		443

Repayment of credit facility	—		(683)		(800)
Repurchase/redemption of senior notes	—		—		(400)

Mortgage debt and other prepayments and scheduled maturities	(7)		(2)		—
Debt extinguishment costs	(3)		—		(22)
Issuance of common stock	1		1		138
Common stock repurchases	(182)		(27)		—
Dividends on common stock	(547)		(150)		—
Distributions and payments to non-controlling interests	(10)		(3)		—
Other financing activities	(13)		(9)		(8)
Net cash used in financing activities	(771)		(874)		(657)
Effects of exchange rate changes on cash held	2		(3)		—
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	489		(79)		(1,523)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD	874		953		2,476
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD	$	1,363	$	874	$	953

See Notes to Consolidated Financial Statements.

HOST HOTELS & RESORTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

Years Ended December 31, 2023, 2022, and 2021

(in millions)

Supplemental disclosure of cash flow information (in millions):

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported on the balance sheet to the amount shown on the statements of cash flows:


	2023		2022		2021
Cash and cash equivalents	$	1,144	$	667	$	807
Restricted cash (included in other assets)	2		7		2
Cash included in furniture, fixtures and equipment replacement fund	217		200		144
Total cash and cash equivalents and restricted cash shown in the statements of cash flows	$	1,363	$	874	$	953

Supplemental schedule of noncash investing and financing activities:

During 2023, 2022, and 2021, Host Inc. issued approximately 0.5 million, 0.3 million and 0.1 million shares of common stock, respectively, upon the conversion of Host L.P. units, or OP units, held by non-controlling interests valued at $8 million, $5 million and $2 million, respectively.

During 2023, the intent for a land parcel adjacent to the Four Seasons Orland at Walt Disney World® Resort changed from "held for use" to "used for the development of inventory". As a result, we have reclassified $30 million from property and equipment to other assets.

On January 20, 2022, we entered into definitive agreements with Noble Investment Group, LLC, and certain other entities and persons related to Noble Investment Group, LLC, pursuant to which we made an investment in a joint venture with Noble Investment Group. In connection with the investment, Host L.P. issued approximately 3.2 million OP units valued at approximately $56 million.

In connection with the sales of The Camby, Autograph Collection in March 2023, the Sheraton Boston Hotel in February 2022 and the Sheraton New York Times Square Hotel in April 2022, we issued bridge loans to the buyers for $72 million, $163 million and $250 million, respectively. The proceeds received from the sales are net of the loans.

In 2022 and 2021, non-cash consideration for the acquisitions of Four Seasons Resort and Residences Jackson Hole and Four Seasons Resort Orlando at Walt Disney World® Resort included the assumption of hotel level liabilities of approximately $19 million and $24 million, respectively, consisting primarily of advance deposits received from guests for future stays that were retained by the seller.

In 2021, non-cash consideration for the acquisition of the Hotel Van Zandt included the assumption of a $102 million mortgage loan.

See Notes to Consolidated Financial Statements.

HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2023 and 2022

(in millions)


	December 31, 2023		December 31, 2022

ASSETS
Property and equipment, net	$	9,624	$	9,748
Right-of-use assets	550		556
Due from managers	128		94
Advances to and investments in affiliates	126		132
Furniture, fixtures and equipment replacement fund	217		200
Notes receivable	72		413
Other	382		459
Cash and cash equivalents	1,144		667
Total assets	$	12,243	$	12,269

LIABILITIES, LIMITED PARTNERSHIP INTERESTS OF THIRD PARTIES AND CAPITAL
Debt
Senior notes	$	3,120	$	3,115
Credit facility, including the term loans of $997 and $998, respectively	989		994
Mortgage and other debt	100		106
Total debt	4,209		4,215
Lease liabilities	563		568
Accounts payable and accrued expenses	408		372
Due to managers	64		67
Other	173		168
Total liabilities	5,417		5,390

Limited partnership interests of third parties	189		164

Host Hotels & Resorts, L.P. capital:
General partner	1		1
Limited partner	6,702		6,784
Accumulated other comprehensive loss	(70)		(75)
Total Host Hotels & Resorts, L.P. capital	6,633		6,710
Non-controlling interests—consolidated partnerships	4		5
Total capital	6,637		6,715
Total liabilities, limited partnership interests of third parties and capital	$	12,243	$	12,269

See Notes to Consolidated Financial Statements.

HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended December 31, 2023, 2022 and 2021

(in millions, except per common unit amounts)



	2023		2022		2021
REVENUES
Rooms	$	3,244	$	3,014	$	1,858
Food and beverage	1,582		1,418		674
Other	485		475		358
Total revenues	5,311		4,907		2,890
EXPENSES
Rooms	787		727		488
Food and beverage	1,042		928		505
Other departmental and support expenses	1,280		1,181		890
Management fees	249		217		97
Other property-level expenses	383		325		307
Depreciation and amortization	697		664		762
Corporate and other expenses	132		107		99
Gain on insurance settlements	(86)		(17)		(8)
Total operating costs and expenses	4,484		4,132		3,140
OPERATING PROFIT (LOSS)	827		775		(250)
Interest income	75		30		2
Interest expense	(191)		(156)		(191)
Other gains	71		17		306
Equity in earnings of affiliates	6		3		31
INCOME (LOSS) BEFORE INCOME TAXES	788		669		(102)
Benefit (provision) for income taxes	(36)		(26)		91
NET INCOME (LOSS)	752		643		(11)
Less: Net income attributable to non-controlling interests	(1)		(1)		(1)
NET INCOME (LOSS) ATTRIBUTABLE TO HOST HOTELS & RESORTS, L.P.	$	751	$	642	$	(12)
Basic earnings (loss) per common unit	$	1.07	$	0.91	$	(0.02)
Diluted earnings (loss) per common unit	$	1.06	$	0.90	$	(0.02)

See Notes to Consolidated Financial Statements.

HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Years Ended December 31, 2023, 2022 and 2021

(in millions)


	2023		2022		2021
NET INCOME (LOSS)	$	752	$	643	$	(11)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Foreign currency translation and other comprehensive income (loss) of unconsolidated affiliates	6		(2)		(2)
Change in fair value of derivative instruments	(1)		2		—
Amounts reclassified from other comprehensive income (loss)	—		1		—
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:	5		1		(2)
COMPREHENSIVE INCOME (LOSS)	757		644		(13)
Less: Comprehensive income attributable to non-controlling interests	(1)		(1)		(1)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO HOST HOTELS & RESORTS, L.P.	$	756	$	643	$	(14)

See Notes to Consolidated Financial Statements.

HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CAPITAL

Years Ended December 31, 2023, 2022, and 2021

(in millions)


Common OP Units Outstanding		General Partner		Limited Partner		Accumulated Other Comprehensive Income (Loss)		Non-controlling Interests of Consolidated Partnerships		Total Capital		Limited Partnership Interests of Third Parties
690.5	Balance, December 31, 2020	$	1	$	6,394	$	(74)	$	5	$	6,326	$	108
—	Net income (loss)	—		(11)		—		1		(10)		(1)
—	Other changes in ownership	—		(21)		—		(1)		(22)		21
—	Foreign currency translation and other comprehensive income (loss) of unconsolidated affiliates	—		—		(2)		—		(2)		—


7.6	Common OP unit issuances	—		138		—		—		138		—
0.8	Units issued to Host Inc. for the comprehensive stock and employee stock purchase plans	—		14		—		—		14		—

0.1	Redemptions of limited partner interests for common stock	—		2		—		—		2		(2)

699.0	Balance, December 31, 2021	$	1	$	6,516	$	(76)	$	5	$	6,446	$	126
—	Net income	—		633		—		1		634		9
—	Other changes in ownership	—		16		—		—		16		(17)
—	Foreign currency translation and other comprehensive income (loss) of unconsolidated affiliates	—		—		(2)		—		(2)		—
—	Change in fair value of derivative instruments	—		—		2		—		2		—
—	Amounts reclassified from Other Comprehensive Income	—		—		1		—		1		—
—	Common OP unit issuances	—		—		—		—		—		56
0.7	Units issued to Host Inc. for the comprehensive stock and employee stock purchase plans	—		21		—		—		21		—
—	Distributions on common OP units	—		(380)		—		—		(380)		(5)
0.3	Redemptions of limited partner interests for common stock	—		5		—		—		5		(5)
—	Distributions to non-controlling interests	—		—		—		(1)		(1)		—
(1.6)	Repurchase of common OP units	—		(27)		—		—		(27)		—
698.4	Balance, December 31, 2022	$	1	$	6,784	$	(75)	$	5	$	6,715	$	164
—	Net income	—		740		—		1		741		11
—	Other changes in ownership	—		(30)		—		—		(30)		31
—	Foreign currency translation and other comprehensive income (loss) of unconsolidated affiliates	—		—		6		—		6		—
—	Change in fair value of derivative instruments	—		—		(1)		—		(1)		—


1.1	Units issued to Host Inc. for the comprehensive stock and employee stock purchase plans	—		22		—		—		22		—
—	Distributions on common OP units	—		(640)		—		—		(640)		(9)
0.5	Redemptions of limited partner interests for common stock	—		8		—		—		8		(8)
—	Distributions to non-controlling interests	—		—		—		(2)		(2)		—
(11.2)	Repurchase of common OP units	—		(182)		—		—		(182)		—
688.8	Balance, December 31, 2023	$	1	$	6,702	$	(70)	$	4	$	6,637	$	189

See Notes to Consolidated Financial Statements.

HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31, 2023, 2022, and 2021

(in millions)


	2023		2022		2021
OPERATING ACTIVITIES
Net income (loss)	$	752	$	643	$	(11)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	697		664		762
Amortization of finance costs, discounts and premiums, net	9		10		10
Loss on extinguishment of debt	4		—		23
Stock compensation expense	30		26		18
Deferred income taxes	26		20		(93)
Other gains	(71)		(17)		(306)
Gain on property insurance settlement	(3)		(6)		—
Equity in earnings of affiliates	(6)		(3)		(31)
Change in due from/to managers	(40)		15		(151)
Distributions from investments in affiliates	31		30		21
Property insurance proceeds - remediation costs	101		—		—
Payments for inventory costs	(15)		—		—
Changes in other assets	(3)		20		10
Changes in other liabilities	(71)		14		40
Net cash provided by operating activities	1,441		1,416		292

INVESTING ACTIVITIES
Proceeds from sales of assets, net	34		236		729
Proceeds from loan receivable	413		—		9
Return of investments in affiliates	5		—		—
Advances to and investments in affiliates	(25)		(60)		(11)
Acquisitions	—		(301)		(1,458)
Capital expenditures:
Renewals and replacements	(451)		(197)		(134)
Return on investment	(195)		(307)		(293)
Property insurance proceeds	36		11		—
Net cash used in investing activities	(183)		(618)		(1,158)

FINANCING ACTIVITIES
Financing costs	(10)		(1)		(8)
Issuances of debt	—		—		443

Repayment of credit facility	—		(683)		(800)
Repurchase/redemption of senior notes	—		—		(400)

Mortgage debt and other prepayments and scheduled maturities	(7)		(2)		—
Debt extinguishment costs	(3)		—		(22)
Issuance of common OP units	1		1		138
Repurchase of common OP units	(182)		(27)		—
Distributions on common OP units	(555)		(152)		—
Distributions and payments to non-controlling interests	(2)		(1)		—
Other financing activities	(13)		(9)		(8)
Net cash used in financing activities	(771)		(874)		(657)
Effects of exchange rate changes on cash held	2		(3)		—
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	489		(79)		(1,523)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD	874		953		2,476
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD	$	1,363	$	874	$	953

See Notes to Consolidated Financial Statements.

HOST HOTELS & RESORTS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

Years Ended December 31, 2023, 2022, and 2021

(in millions)

Supplemental disclosure of cash flow information (in millions):

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported on the balance sheet to the amount shown on the statements of cash flows:


	2023		2022		2021
Cash and cash equivalents	$	1,144	$	667	$	807
Restricted cash (included in other assets)	2		7		2
Cash included in furniture, fixtures and equipment replacement fund	217		200		144
Total cash and cash equivalents and restricted cash shown in the statements of cash flows	$	1,363	$	874	$	953

Supplemental schedule of noncash investing and financing activities:

During 2023, 2022, and 2021, non-controlling partners converted common operating partnership units (“OP units”) valued at $8 million, $5 million and $2 million, respectively, in exchange for 0.5 million, 0.3 million and 0.1 million shares, respectively, of Host Inc. common stock.

In 2021, non-cash consideration for the acquisition of the Hotel Van Zandt included the assumption of a $102 million mortgage loan.

See Notes to Consolidated Financial Statements.

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

Description of Business

Host Hotels & Resorts, Inc. operates as a self-managed and self-administered real estate investment trust, or REIT, with its operations conducted solely through Host Hotels & Resorts, L.P. Host Hotels & Resorts, L.P., a Delaware limited partnership, operates through an umbrella partnership structure, with Host Hotels & Resorts, Inc., a Maryland corporation, as its sole general partner. In the notes to the consolidated financial statements, we use the terms “we” or “our” to refer to Host Hotels & Resorts, Inc. and Host Hotels & Resorts, L.P. together, unless the context indicates otherwise. We also use the term “Host Inc.” to refer specifically to Host Hotels & Resorts, Inc. and the term “Host L.P.” to refer specifically to Host Hotels & Resorts, L.P. in cases where it is important to distinguish between Host Inc. and Host L.P. Host Inc. holds approximately 99% of Host L.P.’s partnership interests, or OP units.

Consolidated Portfolio

As of December 31, 2023, the hotels in our consolidated portfolio are in the following countries:


			Hotels
United States			72
Brazil			3
Canada			2
Total			77

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements include the consolidated accounts of Host Inc., Host L.P. and their subsidiaries and controlled affiliates, including joint ventures and partnerships. We consolidate subsidiaries when we have the ability to control them. For the majority of our hotel and real estate investments, we consider those control rights to be (i) approval or amendment of developments plans, (ii) financing decisions, (iii) approval or amendments of operating budgets, and (iv) investment strategy decisions.

We also evaluate our subsidiaries to determine if they are variable interest entities (“VIEs”). If a subsidiary is a VIE, it is subject to the consolidation framework specifically for VIEs. Typically, the entity that has the power to direct the activities that most significantly impact economic performance consolidates the VIE. We consider an entity to be a VIE if equity investors own an interest therein that does not have the characteristics of a controlling financial interest or if such investors do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. We review our subsidiaries and affiliates at least annually to determine (i) if they should be considered VIEs, and (ii) whether we should change our consolidation determination based on changes in the characteristics thereof.

Four partnerships are considered VIE’s, as the general partner of these partnerships maintains control over the decisions that most significantly impact the partnerships. The first VIE is the operating partnership, Host L.P., which is consolidated by Host Inc., of which Host Inc. is the general partner and holds 99% of the limited partner interests. Host Inc.’s sole significant asset is its investment in Host L.P. and substantially all of Host Inc.’s assets and liabilities represent assets and liabilities of Host L.P. All of Host Inc.’s debt is an obligation of Host L.P. and may be settled only with assets of Host L.P. The consolidated partnership that owns the Houston Airport Marriott at George Bush Intercontinental, of which we are the general partner and hold 85% of the partnership interests, also is a VIE. The total assets of this VIE at December 31, 2023 are $50 million and consist primarily of cash, a right-of-use (“ROU”) asset and property and equipment. Liabilities for the VIE total $27 million and primarily consist of a lease liability and accounts payable. Two unconsolidated partnerships that own hotel properties, of which we hold limited partner interests ranging from 11% - 21%, also are VIEs. The combined carrying amount of our investments in these entities at December 31, 2023 is $23 million and is included in advances to and investments in affiliates. The mortgage debt held by these VIEs is non-recourse to us.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with U.S. generally accepted accounting principles, or GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Cash and Cash Equivalents

We consider all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents.

Property and Equipment

Generally, property and equipment is recorded at cost. For hotels that we develop, cost includes interest, property insurance and real estate taxes incurred during construction. For property and equipment acquired in a business combination, we record the assets acquired based on their fair value as of the acquisition date. Replacements and improvements and finance leases are capitalized, while repairs and maintenance are expensed as incurred.

Properties acquired in an asset acquisition are recorded at cost. The acquisition cost is allocated to land, buildings, improvements, furniture, fixtures and equipment, as well as identifiable intangible and lease assets and liabilities. Acquisition cost is allocated using relative fair values. We evaluate several factors, including weighted market data for similar assets, expected future cash flows discounted at risk adjusted rates, and replacement costs for assets to determine an appropriate exit cost when evaluating the fair values.

We capitalize certain inventory (such as china, glass, silver, and linen) at the time of a hotel opening or acquisition, or when significant inventory is purchased (in conjunction with a major rooms renovation or when the number of rooms or meeting space at a hotel is expanded). These amounts then are amortized over the estimated useful life of three years. Subsequent replacement purchases are expensed when placed in service.

We maintain a furniture, fixtures and equipment replacement fund for renewal and replacement capital expenditures at our hotels, which generally is funded with 5% of property revenues.

Impairment testing. We analyze our consolidated hotels for impairment throughout the year when events or circumstances occur that indicate the carrying amount may not be recoverable. We test for impairment in several situations, including:

when a hotel has a current or projected loss from operations;
when management’s intent or ability to hold a property for a period that recovers its carrying value changes, making it more likely than not that a hotel will be sold before the end of its previously estimated useful life and therefore reducing the expected hold period, and the anticipated sales price is at or below the book value; or
when other events, trends, contingencies or changes in circumstances indicate that a triggering event has occurred and the carrying amount of an asset may not be recoverable.

To the extent that a hotel has a substantial remaining estimated useful life and management does not believe that it is more likely than not that it will be sold prior to the end thereof, it would be unusual for undiscounted cash flows to be insufficient to recover the property’s carrying amount. In the absence of other factors, we assume that the estimated useful life is equal to the remaining GAAP depreciable life because of the continuous property maintenance and improvement capital expenditures required under our management agreements. We adjust our assumptions with respect to the remaining useful life of the property if situations dictate otherwise, such as an expiring ground lease, or that it is more likely than not that the asset will be sold prior to the end of its previously expected useful life. We also consider the effect of regular renewal and replacement capital expenditures on the estimated useful life of our properties, including critical infrastructure, which regularly is maintained and then replaced at the end of its useful life.

In 2023, we identified one property that required further consideration of property and market specific conditions or factors to determine if the property was impaired using an undiscounted cash flow analysis. Based on this testing, no impairment was necessary, and no further analysis was required.

In 2022 and 2021, due to the impact of the COVID-19 pandemic on operations, we performed recoverability tests on certain of our properties. No properties were impaired as a result of a decline in operations due to the pandemic. During

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2021, as a result of the reduction in expected hold periods during the year, the book value for certain property and equipment exceeded its undiscounted future cash flows. Therefore, we recorded impairment expense of $92 million for the year ended December 31, 2021.

Classification of Assets as Held for Sale. We will classify a hotel as held for sale when its sale is probable, will be completed within one year and actions to complete the sale are unlikely to change or it is unlikely that the sale will not occur. This policy is consistent with our experience with real estate transactions under which the timing and final terms of a sale frequently are not known until purchase agreements are executed, the buyer has a significant deposit at risk and no financing contingencies exist that could prevent the transaction from being completed in a timely manner. We typically classify hotels as held for sale when all the following conditions are met:

Host Inc.’s Board of Directors has approved the sale (to the extent that the dollar amount of the sale requires Board approval);
a binding agreement to sell the property has been signed under which the buyer has deposited a significant amount of nonrefundable cash; and
no significant financing or legal contingencies exist that could prevent the transaction from being completed in a timely manner.

If these criteria are met, we will cease recording depreciation expense and will record an impairment expense if the fair value less costs to sell is less than the carrying amount of the hotel. We will classify the assets and related liabilities as held for sale on the balance sheet. Gains on sales of properties are recognized at the time of sale or are deferred and recognized as income in subsequent periods as conditions requiring deferral are satisfied or expire without further cost to us.

Discontinued Operations. We generally include the operations of a hotel that was sold or a hotel that has been classified as held for sale in continuing operations, including the gain or loss on the sale, unless the sale represents a strategic shift that will have a major impact on our future operations and financial results.

Asset retirement obligations. We recognize the fair value of any liability for conditional asset retirement obligations, including environmental remediation liabilities, when incurred, which generally is upon acquisition, construction, or development and/or through the normal operation of the asset, if information exists with which to reasonably estimate the fair value of the obligation.

Depreciation and Amortization Expense. We depreciate our property and equipment using the straight-line method. Depreciation expense is based on the estimated useful life of our assets and amortization expense for leasehold improvements is based on the shorter of the lease term or the estimated useful life of the related assets. The useful lives of the assets are based on several assumptions, including cost and timing of capital expenditures to maintain and refurbish the assets, as well as specific market and economic conditions. While management believes its estimates are reasonable, a change in the estimated useful lives could affect depreciation expense and net income or the gain or loss on the sale of any of our hotels.

Intangible Assets and Acquired Liabilities

In conjunction with our acquisitions, we may identify intangible assets and other liabilities. These identifiable intangible assets and other liabilities typically include above- and below-market contracts, including ground and retail leases and management and franchise agreements, which are recorded at fair value in a business combination and at its relative fair value in an asset acquisition. These contract values are based on the present value of the difference between contractual amounts to be paid pursuant to the contracts acquired and our estimate of the fair value of terms and conditions for similar contracts measured over the period equal to the remaining non-cancelable term of the contract. Intangible assets and other liabilities are amortized using the straight-line method over the remaining non-cancelable term of the related agreements.

Non-Controlling Interests

Host Inc.’s treatment of the non-controlling interests of Host L.P. Host Inc. adjusts the non-controlling interests of Host L.P. each period so that the amount presented equals the greater of its carrying amount based on its historical cost

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

or its redemption value. The historical cost is based on the proportional relationship between the historical cost of equity held by our common stockholders relative to that of the unitholders of Host L.P. The redemption value is based on the amount of cash or Host Inc. common stock, at our option, that would be paid to the non-controlling interests of Host L.P. if it were terminated. We have estimated that the redemption value is equivalent to the number of shares issuable upon conversion of the OP units currently owned by unaffiliated limited partners (one OP unit may be exchanged for 1.021494 shares of Host Inc. common stock) valued at the market price of Host Inc. common stock at the balance sheet date. Redeemable non-controlling interests of Host L.P. are classified in the mezzanine section of the balance sheet as they do not meet the requirements for equity classification because the redemption feature requires the delivery of registered shares.

The table below details the historical cost and redemption values for the non-controlling interests of Host L.P.:


	As of December 31,
	2023		2022
Common OP units outstanding (millions)	9.5		10.0
Market price per Host Inc. common share	$	19.47	$	16.05
Shares issuable upon conversion of one common OP unit	1.021494		1.021494
Redemption value (millions)	$	189	$	164
Historical cost (millions)	93		97
Book value (millions) ⁽¹⁾	189		164

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

Net income (loss) is allocated to the non-controlling interests of Host L.P. based on their weighted average ownership percentage during the period. Net income (loss) attributable to Host Inc. has been reduced by the amount attributable to non-controlling interests in Host L.P., which totaled $11 million, $9 million and $(1) million for 2023, 2022 and 2021, respectively.

Other Consolidated Partnerships. Non-redeemable non-controlling interests - other consolidated partnerships on the consolidated balance sheets consists of the third party partnership interest of one majority-owned partnership.

Investments in Affiliates

Distributions from Investments in Affiliates. We classify the distributions from our equity investments in the statements of cash flows based upon an evaluation of the specific facts and circumstances of each distribution. For example, distributions of cash that were generated by property operations are classified as cash flows from operating activities. However, distributions of cash that were generated by property sales and certain other transactions are classified as cash flows from investing activities.

Income Taxes

Host Inc. elected to be treated as a REIT effective January 1, 1999 pursuant to the U.S. Internal Revenue Code of 1986, as amended. It is our intention to continue to comply with the REIT qualification requirements and to maintain our qualification for treatment as a REIT. A corporation that elects REIT status and meets certain tax law requirements regarding the distribution of its taxable income to its stockholders as prescribed by applicable tax laws and that complies with certain other requirements (relating primarily to the composition of its assets and the sources of its gross income) generally is not subject to federal and state corporate income taxation on its operating income that is distributed to its stockholders. As a partnership for federal income tax purposes, Host L.P. is not subject to federal income tax. Host L.P. is, however, subject to state, local and foreign income and franchise tax in certain jurisdictions. Additionally, each of the Host L.P. taxable REIT subsidiaries is taxable as a C corporation, and is subject to federal, state and foreign corporate income tax. Our consolidated income tax provision (benefit) includes the income tax provision (benefit) related to the operations of our taxable REIT subsidiaries, and state, local, and foreign income taxes incurred by Host L.P. and its subsidiaries.

Deferred Tax Assets and Liabilities. Pursuant to its partnership agreement, Host L.P. generally is required to reimburse Host Inc. for any tax payments it is required to make. Accordingly, the tax information included herein represents disclosures regarding Host Inc. and its subsidiaries. Deferred tax assets and liabilities are recognized for the

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for net operating loss, general business credit, and capital loss carryovers. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which such amounts are expected to be realized or settled. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in earnings in the period when the new rate is enacted. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of available evidence, including future reversals of existing taxable temporary differences, future projected taxable income and tax planning strategies.

GAAP prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken in a tax return. We must determine whether it is “more-likely-than-not” that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Once it is determined that a position meets the more-likely-than-not recognition threshold, the position is measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement to determine the amount of benefit to recognize in the financial statements. This accounting standard applies to all tax positions related to income taxes. We recognize any accrued interest related to unrecognized tax benefits in interest expense and penalties in operating expenses.

Deferred Charges

Financing costs related to long-term debt are deferred and amortized over the remaining life of the debt using the effective interest method. These costs are presented as a direct deduction from the related long-term debt on the balance sheets.

Foreign Currency Translation

As of December 31, 2023, our foreign operations consist of hotels located in Brazil and Canada, as well as an investment in a joint venture that indirectly owns hotels in India. The financial statements of these hotels and our investments therein are maintained in their functional currency, which generally is the local currency, and their operations are translated to U.S. dollars using the average exchange rates for the period. The assets and liabilities of the hotels and the investments therein are translated to U.S. dollars using the exchange rate in effect at the balance sheet date. The resulting translation adjustments are reflected in other comprehensive income (loss).

Foreign currency transactions are recorded in the functional currency for each applicable foreign entity using the exchange rates prevailing at the dates of the transactions. Assets and liabilities denominated in foreign currencies are remeasured at period end exchange rates. The resulting exchange differences are recorded in other gains (losses) on the accompanying consolidated statements of operations, except when recorded in other comprehensive income (loss) as qualifying net investment hedges.

Accumulated Other Comprehensive Income (Loss)

The components of total accumulated other comprehensive income (loss) in the balance sheets are as follows (in millions):


	As of December 31,
	2023		2022
Gain on foreign currency forward contracts	$	3	$	4
Loss on interest rate swap cash flow hedges	(1)		(1)
Foreign currency translation	(73)		(79)
Other comprehensive loss attributable to non-controlling interests	1		1
Total accumulated other comprehensive loss	$	(70)	$	(75)

No material amounts were reclassified from accumulated other comprehensive loss in 2023 or 2022.

Revenues

Substantially all of our operating results represent revenues and expenses generated by property-level operations. Payments are due from customers when services are provided to them. Due to the short-term nature of our contracts and the

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

almost concurrent receipt of payment, we have no material unearned revenues at year end. We collect sales, use, occupancy and similar taxes at our hotels, which we present on a net basis (excluded from revenues) on our statements of operations. Revenues are recognized as follows:


Income statement line item						Recognition method
Rooms revenues						Rooms revenues represent revenues from the occupancy of our hotel rooms and are driven by the occupancy and average daily rate charged. Rooms revenues do not include ancillary services or fees charged. The contracts for room stays with customers generally are very short term in duration and revenues are recognized over the course of the hotel stay.
Food and beverage revenues						Food and beverage revenues consist of revenues from group functions, which may include banquet revenues and audio-visual revenues, as well as outlet revenues from the restaurants and lounges at our properties. Revenues are recognized as the services or products are provided. Our hotels may employ third parties to provide certain services, for example, audio and visual services. These contracts are evaluated to determine if the hotel is the principal or the agent in the transaction and we record the revenues as appropriate (i.e., gross vs. net).
Other revenues						Other revenues consist of ancillary revenues at the hotel, including attrition and cancelation fees, golf courses, resort and destination fees, spas, entertainment and other guest services, as well as rental revenues; primarily consisting of leased retail outlets. Other revenues generally are recognized as the services or products are provided. Attrition and cancelation fees are recognized for non-cancelable deposits when the customer provides notification of cancelation or is a no-show for the specified date, whichever comes first.

Fair Value Measurement

In evaluating the fair value of both financial and non-financial assets and liabilities, GAAP outlines a valuation framework and creates a fair value hierarchy that distinguishes between market assumptions based on market data (“observable inputs”) and a reporting entity’s own assumptions about market data (“unobservable inputs”). Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability at the measurement date in an orderly transaction (an “exit price”). Assets and liabilities are measured using inputs from three levels of the fair value hierarchy. The three levels are as follows:

Level 1 — Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access at the measurement date. An active market is defined as a market in which transactions occur with sufficient frequency and volume to provide pricing on an ongoing basis.

Level 2 — Inputs include quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active (markets with few transactions), inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data correlation or other means.

Level 3 — Unobservable inputs reflect our assumptions about the pricing of an asset or liability when observable inputs are not available.

Earnings (Loss) Per Common Share (Unit)

Basic earnings (loss) per common share (unit) is computed by dividing net income (loss) attributable to common stockholders (unitholders) by the weighted average number of shares of Host Inc. common stock or Host L.P. common

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

units outstanding. Diluted earnings (loss) per common share (unit) is computed by dividing net income (loss) attributable to common stockholders (unitholders), as adjusted for potentially dilutive securities, by the weighted average number of shares of Host Inc. common stock or Host L.P. common units outstanding plus other potentially dilutive securities. Dilutive securities may include shares granted under comprehensive stock plans or the common OP units distributed to Host Inc. to support such shares granted, and other non-controlling interests that have the option to convert their limited partner interests to common OP units. No effect is shown for any securities that are anti-dilutive. There are 9.5 million Host L.P. common units, which are convertible into 9.7 million Host Inc. common shares, that are not included in Host Inc.'s calculation of earnings (loss) per share as their effect is not dilutive.

The calculation of Host Inc. basic and diluted earnings (loss) per common share is shown below (in millions, except per share amounts):


	Year ended December 31,
	2023		2022		2021
Net income (loss)	$	752	$	643	$	(11)
Less: Net income attributable to non-controlling interests	(12)		(10)		—
Net income (loss) attributable to Host Hotels & Resorts, inc.	$	740	$	633	$	(11)

Basic weighted average shares outstanding	709.7		714.7		710.3
Assuming distribution of common shares granted under the comprehensive stock plans, less shares assumed purchased at market	3.1		2.8		—
Diluted weighted average shares outstanding	712.8		717.5		710.3
Basic earnings (loss) per common share	$	1.04	$	0.89	$	(0.02)
Diluted earnings (loss) per common share	$	1.04	$	0.88	$	(0.02)

The calculation of Host L.P. basic and diluted earnings (loss) per common unit is shown below (in millions, except per unit amounts):


	Year ended December 31,
	2023		2022		2021
Net income (loss)	$	752	$	643	$	(11)
Less: Net income attributable to non-controlling interests	(1)		(1)		(1)
Net income (loss) attributable to Host Hotels & Resorts, L.P.	$	751	$	642	$	(12)

Basic weighted average units outstanding	704.5		709.7		702.5
Assuming distribution of common units granted under the comprehensive stock plans, less units assumed purchased at market	3.0		2.7		—
Diluted weighted average units outstanding	707.5		712.4		702.5
Basic earnings (loss) per common unit	$	1.07	$	0.91	$	(0.02)
Diluted earnings (loss) per common unit	$	1.06	$	0.90	$	(0.02)

Share-Based Payments

Upon the issuance of Host’s common stock under the compensation plans, Host L.P. will issue to Host Inc. common OP units of an equivalent value. These liabilities are included in the consolidated financial statements for Host Inc. and Host L.P.

We recognize costs resulting from Host Inc.’s share-based payment transactions over their vesting periods. We classify share-based payment awards granted in exchange for employee services either as equity-classified awards or

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liability-classified awards. Equity-classified awards are measured based on the fair value on the date of grant. Liability-classified awards are remeasured to fair value each reporting period. The plan includes awards that vest over a one-year, two-year and three-year period. For performance-based awards, compensation cost will be recognized during the requisite service period based on the performance condition that is the most likely outcome. No compensation cost is recognized for awards for which employees do not render the requisite services.

Concentrations of Credit Risk

Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents. We are exposed to credit risk with respect to cash held at various financial institutions and access to our credit facility, however, this cash balance is spread among a diversified group of investment grade financial institutions.

Acquisitions and Business Combinations

When acquiring an asset, we determine whether the acquisition is an asset acquisition or a business combination based on whether the fair value of the gross assets acquired is concentrated in a single (group of similar) identifiable assets, resulting in an asset acquisition or, if not, resulting in a business combination. If treated as an asset acquisition, the asset is recorded in accordance with our property and equipment policy and related acquisition costs are capitalized as part of the asset.

In a business combination, we recognize identifiable assets acquired, liabilities assumed, and non-controlling interests at their fair values at the acquisition date based on the exit price (i.e., the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date). We evaluate several factors, including market data for similar assets, expected cash flows discounted at risk adjusted rates and replacement cost for the assets to determine an appropriate exit cost when evaluating the fair value of our assets and liabilities acquired. Property and equipment are recorded at fair value and such fair value is allocated to land, buildings, improvements, furniture, fixtures and equipment using appraisals and valuations performed by management and independent third parties. Acquisition-related costs, such as due diligence, legal and accounting fees, are not capitalized or applied in determining the fair value of the acquired assets.

Other items that we evaluate include identifiable intangible assets, lease assets and liabilities and, in a business combination, goodwill. Identifiable intangible assets typically consist of assumed contracts, including ground and retail leases and management and franchise agreements, which are recorded at fair value. Finance lease obligations that are assumed as part of the acquisition of a leasehold interest are measured at fair value and are included as debt on the accompanying balance sheet and we record the corresponding right-of-use assets. Classification of a lease does not change if it is part of an asset acquisition or a business combination. In making estimates of fair values for purposes of allocating purchase price, we may utilize a number of sources that arise in connection with the acquisition or financing of a property and other market data, including third-party appraisals and valuations. In certain situations, and usually only in connection with the acquisition of a foreign hotel, a deferred tax liability is recognized due to the difference between the fair value and the tax basis of the acquired assets at the acquisition date. In a business combination, any consideration paid in excess of the net fair value of the identifiable assets and liabilities acquired would be recorded to goodwill. In very limited circumstances, we may record a bargain purchase gain if the consideration paid is less than the net fair value of the assets and liabilities acquired.

Leases

We consider an arrangement to contain a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for compensation. All leases pursuant to which we are the lessee, including operating leases, are recognized as lease assets and lease liabilities on the balance sheet. Right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent the present value of our fixed payment obligations. Leases with a term of 12 months or less are not recorded on the balance sheet. We use our estimated incremental borrowing rate to determine the present value of our lease obligations at initiation or modification. Our operating leases may require fixed payments, variable payments based on a percentage of revenue or income, or payments equal to the greater of a fixed or variable payment. Variable payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation is incurred. Operating lease expense is recognized on a straight-line basis over the lease term. Our lease terms include renewal options that we are reasonably certain to exercise, and renewal options controlled by the lessor.

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Notes Receivable

At December 31, 2023, our notes receivable consists of one outstanding loan issued in connection with a hotel sale. In conjunction with our dispositions, we may issue a loan to the purchaser to facilitate the sale. The loan is collateralized by the corresponding sold hotel and, in the event of a default of the loan, we would seek to enforce our rights against the collateral in accordance with the terms of the loan agreement. The loan is recorded at amortized cost, on an individual asset basis. We recognize interest as it is earned and include accrued interest receivable in other assets on the balance sheets. We individually assess our notes receivable for credit losses quarterly and estimate any credit losses based on an analysis of several factors, primarily the value of the hotel collateral, as well as current economic conditions and historical trends.

New Accounting Standards

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The standard requires additional information to be disclosed with regards to segments, including significant expense categories, identifying the Chief Operating Decision Maker ("CODM"), and additional interim disclosures. The standard also requires that public entities with a single reportable segment disclose all of the required segment disclosures under the previous ASC 280 guidance in addition to the new disclosures required under ASU No. 2023-07. As noted in Note 16, we report on one segment, and therefore, upon adoption of the new standard, we will begin providing the required disclosures, however we are still evaluating the level of disclosure that will be required. This standard is to be applied on a retrospective basis for all prior periods presented in the financial statements. The standard is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The standard requires additional disclosures about income taxes, including specific categories in the rate reconciliation and disaggregated information on income taxes paid and income from continuing operations. The standard also eliminates the requirement to disclose an estimated range of the reasonably possible change in unrecognized tax benefits in the next 12 months. We are still evaluating the level of disclosure that will be required. This standard is to be applied on a prospective basis and is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

2. Revenues

Substantially all our operating results represent revenues and expenses generated by property-level operations. Payments are due from customers when services are provided to them. Due to the short-term nature of our contracts and the almost concurrent receipt of payment, we have no material unearned revenue at quarter end. We collect sales, use, occupancy and similar taxes from our customers, which we present on a net basis (excluded from revenues) on our statements of operations.

Disaggregation of Revenues**.** While we do not consider the following disclosure of hotel revenues by location to consist of reportable segments, we have disaggregated hotel revenues by market location. Our revenues also are presented by country in Note 16 – Geographic and Business Segment Information.

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

By Location. The following table presents hotel revenues for each of the geographic locations in our consolidated hotel portfolio (in millions):


	Year ended December 31,
Location	2023		2022		2021
San Diego	$	498	$	446	$	217
Orlando	466		455		173
Maui/Oahu	449		473		372
New York	374		336		169
San Francisco/San Jose	371		322		129
Phoenix	366		378		260
Florida Gulf Coast	339		344		298
Washington, D.C. (Central Business District)	331		273		109
Miami	243		253		215
Boston	151		108		78
Los Angeles/Orange County	141		131		116
Houston	139		116		76
Chicago	136		129		63
Jacksonville	128		122		99
San Antonio	117		114		59
Seattle	105		90		36
New Orleans	99		96		41
Northern Virginia	90		76		55
Denver	89		80		43
Austin	87		91		24
Philadelphia	85		80		50
Atlanta	67		61		67
Other	348		262		117
Domestic	5,219		4,836		2,866
International	92		71		24
Total	$	5,311	$	4,907	$	2,890

3. Property and Equipment

Property and equipment consists of the following (in millions):


	As of December 31,
	2023		2022
Land and land improvements	$	1,981	$	2,020
Buildings and leasehold improvements	14,253		13,849
Furniture and equipment	2,331		2,249
Construction in progress	237		313
	18,802		18,431
Less accumulated depreciation and amortization	(9,178)		(8,683)
	$	9,624	$	9,748

The aggregate cost of real estate for federal income tax purposes is approximately $10.3 billion at December 31, 2023.

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. Investments in Affiliates

We own investments in joint ventures for which the equity method of accounting is used. The debt of our joint ventures, if any, is non-recourse to, and not guaranteed by, us, and a default of such debt does not trigger a default under any of our debt instruments. We carry our investments at historical cost which, due to debt restructurings or distributions, may result in a negative investment balance. However, a negative investment balance does not represent a funding obligation for us or for our partners. Investments in affiliates consist of the following (in millions):


	As of December 31, 2023
	Ownership Interests		Our Investment		Our Portion of Debt		Total Debt		Distributions received in 2023 ⁽¹⁾		Assets
Asia/Pacific JV	25	%	$	9	$	—	$	—	$	—	A 36% interest in seven hotels and an office building in India
Maui JV	67	%	28		16		23		8		131-unit vacation ownership project in Maui, HI
Hyatt Place JV	50	%	(15)		30		60		2		One hotel in Nashville, TN
Harbor Beach JV	49.9	%	(45)		75		150		11		One hotel in Fort Lauderdale, FL
Philadelphia Marriott Downtown JV⁽²⁾	11	%	(8)		23		213		6		One hotel in Philadelphia, PA
Noble JV	21.15 - 49%		121		64		300		7		Asset management and general partner of real estate fund; select-service and extended stay hotels in the United States
Fifth Wall Ventures			28		—		—		2		Real estate industry technology investment
Other investments			8		—		—		—
Total			$	126	$	208	$	746	$	36


	As of December 31, 2022
	Ownership Interests		Our Investment		Our Portion of Debt		Total Debt		Distributions received in 2022 ⁽¹⁾		Assets
Asia/Pacific JV	25	%	$	8	$	—	$	—	$	—	A 36% interest in seven hotels and an office building in India
Maui JV	67	%	38		16		24		11		131-unit vacation ownership project in Maui, HI
Hyatt Place JV	50	%	(15)		30		60		5		One hotel in Nashville, TN
Harbor Beach JV	49.9	%	(39)		75		150		8		One hotel in Fort Lauderdale, FL
Philadelphia Marriott Downtown JV	11	%	(6)		21		195		—		One hotel in Philadelphia, PA
Noble JV	19 - 49%		107		63		329		3		Asset management and general partner of real estate fund; select-service and extended stay hotels in the United States
Fifth Wall Ventures			31		—		—		3		Real estate industry technology investment
Other investments			8		—		—		—
Total			$	132	$	205	$	758	$	30

(1)Distributions received were funded by cash from operations unless otherwise noted.

(2)Distributions received from Philadelphia Marriott Downtown JV in 2023 include $5 million related to loan refinancing proceeds.

As part of our investment in the Noble JV, we have made a $211.5 million capital commitment to Noble Hospitality Fund V, L.P., which represents a 21.15% ownership interest in the fund. As of December 31, 2023, we have funded $33 million to this fund.

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. Debt

Debt consists of the following (in millions):


	As of December 31,
	2023		2022

Series E senior notes, with a rate of 4% due June 2025	$	499	$	499
Series F senior notes, with a rate of 4½% due February 2026	399		399
Series G senior notes, with a rate of 3⅞% due April 2024	400		399
Series H senior notes, with a rate of 3⅜% due December 2029	643		642
Series I senior notes, with a rate of 3½% due September 2030	738		736
Series J senior notes, with a rate of 2.9% due December 2031	441		440
Total senior notes	3,120		3,115
Credit facility revolver ⁽¹⁾	(8)		(4)
Credit facility term loan due January 2027	499		499
Credit facility term loan due January 2028	498		499
Mortgage and other debt, with an average interest rate of 4.67% and 4.9% at December 31, 2023 and 2022, respectively, maturing through November 2027	100		106
Total debt	$	4,209	$	4,215

_____________

(1)There were no outstanding credit facility borrowings at December 31, 2023 or 2022. Amount shown represents deferred financing costs related to the credit facility revolver.

Senior Notes

General. Under the terms of our senior notes indenture, our senior notes are equal in right of payment with all our unsubordinated indebtedness and senior to all our subordinated obligations. The face amount of our senior notes at both December 31, 2023 and 2022 was $3.2 billion. The senior notes balances as of December 31, 2023 and 2022 are net of unamortized discounts and deferred financing costs of approximately $30 million and $35 million, respectively. We pay interest on each series of our senior notes semi-annually in arrears at the respective annual rates indicated in the table above.

Under the terms of the senior notes indenture, our ability to incur indebtedness is subject to restrictions and the satisfaction of various conditions. As of December 31, 2023, we are in compliance with all of these covenants.

Authorization for Repurchase of Senior Notes. In February 2023, Host Inc.’s Board of Directors authorized repurchases of up to $1 billion of senior notes (other than in accordance with their terms) through February 2026. No repurchases occurred in 2023 under this program.

Credit Facility. On January 4, 2023, we entered into the sixth amended and restated senior revolving credit and term loan facility, with Bank of America, N.A., as administrative agent, Wells Fargo Bank, N.A. and JPMorgan Chase Bank, N.A. as co-syndication agents, and certain other agents and lenders. The credit facility allows for revolving borrowings in an aggregate principal amount of up to $1.5 billion. The revolver also includes a foreign currency subfacility for Canadian dollars, Australian dollars, Euros, British pounds sterling and, if available to the lenders, Mexican pesos, of up to the foreign currency equivalent of $500 million, subject to a lower amount in the case of Mexican peso borrowings. The credit facility also provides for a term loan facility of $1 billion (which is fully utilized), a subfacility of up to $100 million for swingline borrowings in currencies other than U.S. dollars and a subfacility of up to $100 million for issuances of letters of credit. Host L.P. also has the option to add in the future $500 million of commitments which may be used for additional revolving credit facility borrowings and/or term loans, subject to obtaining additional loan commitments (which we have not currently obtained) and the satisfaction of certain conditions.

The revolving credit facility has an initial scheduled maturity date of January 4, 2027, which date may be extended by up to a year by the exercise of either a 1-year extension option or two 6-month extension options, each of

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

which is subject to certain conditions, including the payment of an extension fee and the accuracy of representations and warranties. One $500 million term loan tranche has an initial maturity date of January 4, 2027, which date may be extended up to a year by the exercise of one 1-year extension option, which is subject to certain conditions, including the payment of an extension fee; and the second $500 million term loan tranche has a maturity date of January 4, 2028, which date may not be extended.

The amendment also converted the underlying reference rate from LIBOR to SOFR plus a credit spread adjustment of 10 basis points. We pay interest on U.S. dollar revolver borrowings under the credit facility at floating rates equal to SOFR (plus a credit spread adjustment of 10 basis points) plus a margin ranging from 72.5 to 140 basis points (depending on Host L.P.’s unsecured long-term debt rating). We also pay a facility fee on the total $1.5 billion revolver commitment ranging from 12.5 to 30 basis points, depending on our rating and regardless of usage. The credit facility includes a sustainability pricing adjustment that can result in a change in the interest rate applicable to borrowings. The adjustment can result in an increase or decrease of the interest rate for revolving loans of up to 4 basis points and an increase or decrease of the facility fee of up to 1 basis point. In the case of the term loans, the adjustment can result in an increase or decrease of the interest rate applicable of up to 5 basis points. The adjustments will be determined annually on the basis of an annual audited report of Host L.P.’s performance against targets established in the credit facility for (1) the percentage of our consolidated portfolio with green building certifications and (2) the percentage of electricity used at all our consolidated properties that is generated by renewable resources. Effective June 30, 2023, we achieved a milestone in the progress towards our renewable energy goal, resulting in the applicable basis point reduction in the interest rate on borrowings under the credit facility. Based on Host L.P.’s unsecured long-term debt rating as of December 31, 2023, we are able to borrow on the revolver at a rate of adjusted SOFR plus 85 basis points less 2 basis points for meeting sustainability milestones for an all-in rate of 6.29% and pay a facility fee of 19.5 basis points.

Interest on the term loans consists of floating rates equal to SOFR (plus a credit spread adjustment of 10 basis points) plus a margin ranging from 80 to 160 basis points (depending on Host L.P.’s unsecured long-term debt rating) and adjusted for sustainability pricing. Based on Host L.P.’s long-term debt rating as of December 31, 2023, our applicable margin on SOFR loans under both term loans is 95 basis points less 2.5 basis points for meeting sustainability milestones, for an all-in rate of 6.39%. We also may elect to pay interest on revolver and term loan borrowings using a base rate plus a margin that is similarly determined based on Host L.P.’s unsecured long-term debt rating.

Net repayments under the credit facility were $683 million in 2022. As of December 31, 2023, we have $1.5 billion of available capacity under the revolver portion of our credit facility.

Financial Covenants. The credit facility contains covenants concerning allowable leverage, fixed charge coverage and unsecured interest coverage (as defined in our credit facility). We are permitted to borrow and maintain amounts outstanding under the credit facility so long as our ratio of consolidated total debt to consolidated EBITDA (“leverage ratio”) is not in excess of 7.25x, our unsecured coverage ratio is not less than 1.75x and our fixed charge coverage ratio is not less than 1.25x. These calculations are performed based on pro forma results for the prior four fiscal quarters, giving effect to transactions such as acquisitions, dispositions and financings as if they had occurred at the beginning of the period. Under the terms of the credit facility, interest expense excludes items such as gains and losses on the extinguishment of debt, deferred financing costs related to the senior notes or the credit facility, and non-cash interest expense, all of which are or have been included in interest expense on our consolidated statements of operations. Additionally, 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. As of December 31, 2023, we are in compliance with all of these covenants.

Guarantees**.** The credit facility requires all Host L.P. subsidiaries which guarantee Host L.P. debt to similarly guarantee obligations under the credit facility. Currently, there are no such guarantees.

Other Covenants and Events of Default**.** The credit facility contains restrictive covenants on customary matters. Certain covenants are less restrictive at any time that our leverage ratio is below 6.0x. At any time that our leverage ratio is below 6.0x, acquisitions, investments and dividends generally are permitted except where they would result in a breach of the financial covenants, calculated on a pro forma basis. Additionally, the credit facility’s restrictions on the incurrence of debt incorporate the same financial covenant as set forth in our senior notes indenture. Our senior notes and credit facility have cross default provisions that would trigger a default under those agreements if we were to have a payment default or an acceleration prior to maturity of other debt of Host L.P. or its subsidiaries. The amount of other debt in default needs to

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

exceed certain thresholds in order to trigger a cross default and the thresholds are greater for secured debt than for unsecured debt. The credit facility also includes usual and customary events of default for facilities of this nature, and provides that, upon the occurrence and continuance of an event of default, payment of all amounts due under the credit facility may be accelerated, and the lenders’ commitments may be terminated. In addition, upon the occurrence of certain insolvency or bankruptcy related events of default, all amounts owed under the credit facility will become due and payable and the lenders’ commitments will terminate.

Mortgage Debt

Our mortgage debt is recourse solely to specific assets, except for environmental liabilities, fraud, misapplication of funds and other customary recourse provisions. As of December 31, 2023, we have mortgage debt secured by one asset, with an interest rate of 4.67%, which mortgage debt matures in November 2027. The loan is amortizing, with principal and interest payable monthly. As of December 31, 2023, we are in compliance with the covenants under our mortgage debt obligation. We made mortgage debt repayments of $2 million in each of 2023 and 2022.

Aggregate Debt Maturities

Aggregate debt maturities, including principal amortization, are as follows (in millions):


	As of December 31, 2023
2024	$	402
2025	502
2026	402
2027	592
2028	500
Thereafter	1,850
	4,248
Deferred financing costs	(25)
Unamortized discounts, net	(14)
Total debt	$	4,209

Interest

The following is a reconciliation between interest expense and cash interest paid (in millions):


	Year ended December 31,
	2023		2022		2021 ⁽²⁾
Interest expense	$	191	$	156	$	191
Amortization of debt premiums/discounts, net	(2)		(2)		(2)
Amortization of deferred financing costs	(7)		(8)		(8)
Non-cash losses on debt extinguishment	(1)		—		(1)
Change in accrued interest	2		(4)		3
Interest paid ⁽¹⁾	$	183	$	142	$	183

(1)Does not include capitalized interest of $10 million, $10 million and $4 million for 2023, 2022 and 2021, respectively.

(2)Interest expense and interest paid includes cash prepayment premiums of approximately $22 million in 2021.

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

Equity of Host Inc.

Host Inc. has authorized 1,050 million shares of common stock, with a par value of $0.01 per share, of which 703.6 million and 713.4 million were outstanding as of December 31, 2023 and 2022, respectively. Fifty million shares of

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

no par value preferred stock are authorized; none of such preferred shares was outstanding as of December 31, 2023 and 2022.

Capital of Host L.P.

As of December 31, 2023, Host Inc. is the owner of approximately 99% of Host L.P.’s common OP units. The remaining common OP units are owned by unaffiliated limited partners. Each common OP unit may be redeemed for cash or, at the election of Host Inc., Host Inc. common stock, based on the conversion ratio of 1.021494 shares of Host Inc. common stock for each OP unit. In exchange for any shares issued by Host Inc., Host L.P. will issue common OP units based on the applicable conversion ratio. As of December 31, 2023 and 2022, Host L.P. had 698.3 million and 708.4 million OP units outstanding, respectively, of which Host Inc. held 688.8 million and 698.4 million, respectively.

Repurchases and Issuances of Common Stock and Common OP Units

On August 3, 2022, Host Inc.'s Board of Directors authorized an increase in our share repurchase program from the existing $371 million remaining under the prior Board authorization to $1 billion. In 2023, we repurchased 11.4 million shares at an average price of $15.93 per share, exclusive of commissions, for a total of $181 million. In 2022, we repurchased 1.7 million shares at an average price of $15.93 per share, exclusive of commissions, for a total of $27 million. As of December 31, 2023, we have $792 million available for repurchase under the program.

On May 31, 2023, we entered into a distribution agreement with J. P. Morgan Securities LLC, BofA Securities, Inc., Goldman Sachs & Co. LLC, Jefferies LLC, Morgan Stanley & Co. LLC, Scotia Capital (USA) Inc., Truist Securities, Inc. and Wells Fargo Securities, LLC, as sales agents pursuant to which Host Inc. may offer and sell, from time to time, shares of Host Inc. common stock having an aggregate offering price of up to $600 million. The sales will be made in transactions that are deemed to be “at the market” offerings under the SEC rules. We may sell shares of Host Inc. common stock under this program from time to time based on market conditions, although we are not under an obligation to sell any shares. The agreement also contemplates that, in addition to the offering and sale of shares to or through the sales agents, we may enter into separate forward sale agreements with each of the forward purchasers named in the agreement. There have been no shares issued in 2023. As of December 31, 2023, there was $600 million of remaining capacity under the agreement.

Dividends/Distributions

Host Inc. is required to distribute at least 90% of its annual taxable income, excluding net capital gains, to its stockholders in order to maintain its qualification as a REIT. Funds used by Host Inc. to pay dividends on its common stock are provided by distributions from Host L.P. The amount of any future dividends will be determined by Host Inc.’s Board of Directors.

As part of our response to COVID-19 and in order to preserve cash and future financial flexibility, we temporarily suspended our regular quarterly common cash dividends, commencing with the second quarter 2020 dividend through year end 2021. We reinstated a quarterly common cash dividend beginning in the first quarter of 2022. The dividends that were taxable to our stockholders in 2023 are considered 91.8% ordinary and 8.2% unrecaptured Section 1250 gain. The dividends that were taxable to our stockholders in 2022 are considered 78.1% ordinary and 21.9% unrecaptured Section 1250 gain. The 2023 and 2022 ordinary dividends are eligible for the 20% deduction provided by Section 199A. The table below presents the amount of common dividends declared per share and common distributions per unit as follows:


	Year ended December 31,
	2023		2022		2021
Common stock	$	0.90	$	0.53	$	—
Common OP units	0.919		0.541		—

On February 21, 2024, Host Inc.'s Board of Directors announced a regular quarterly cash dividend of $0.20 per share on its common stock. The dividend will be paid on April 15, 2024 to stockholders of record as of March 28, 2024.

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. Income Taxes

We elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code commencing with our taxable year beginning January 1, 1999. To continue to qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute at least 90% of our annual taxable income to our stockholders, excluding net capital gain. As a REIT, generally we will not be subject to U.S. federal and state corporate income taxes on that portion of our annual taxable income that is distributed to our stockholders. If we fail to qualify for taxation as a REIT in any taxable year, we will be subject to U.S. federal and state corporate income taxes at regular corporate income tax rates and may not be able to qualify as a REIT for four subsequent taxable years. Even if we qualify to be treated as a REIT, we may be subject to certain state, local and foreign taxes on our income and property, and to U.S. federal and state corporate income and excise taxes on our undistributed taxable income.

Set forth below is a table that documents our domestic and foreign income tax attributes at December 31, 2023:


Type	Jurisdiction	Amount (in millions)		Tax Year Expiration
Net operating loss	U.S. Federal	$	649	None
Capital loss	U.S. Federal and States	32		2023

Net operating loss	U.S. States	974		Various
Net operating loss	Brazil	18		None
Net operating loss	Canada	9		Through 2042
Capital loss	Canada	5		None

We have recorded a 100% valuation allowance of approximately $8 million against the deferred tax asset related to our domestic capital loss carryover, which expires following the 2023 tax year, and a valuation allowance of approximately $5 million against the deferred tax asset related to certain of our foreign net operating loss and capital loss carryovers as of December 31, 2023. We also have recorded a valuation allowance of approximately $5 million against the deferred tax asset related to our accumulated other comprehensive income (“AOCI”) foreign exchange net losses. There has been no increase or decrease of our valuation allowance for the year ended December 31, 2023 from the year ended December 31, 2022.

The primary components of our net deferred tax assets are as follows (in millions):


	As of December 31,
	2023		2022
Deferred tax assets
Net operating losses, general business credits, and capital loss carryovers	$	205	$	238
Property and equipment	3		3
Deferred revenue and expenses	20		15
Foreign exchange net losses (AOCI)	12		12
Total gross deferred tax assets	240		268
Less: Valuation allowance	(18)		(18)
Total deferred tax assets, net of valuation allowance	$	222	$	250
Deferred tax liabilities
Investments in domestic affiliates	(1)		(4)
Total gross deferred tax liabilities	(1)		(4)
Net deferred tax assets	$	221	$	246

We believe that it is more likely than not that the results of future operations will generate sufficient taxable income in order to realize our total deferred tax assets, net of a valuation allowance of $18 million, of $222 million.

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Our U.S. and foreign income (loss) from continuing operations before income taxes were as follows (in millions):


	Year ended December 31,
	2023		2022		2021
U.S. income (loss)	$	768	$	659	$	(89)
Foreign income (loss)	20		10		(13)
Total	$	788	$	669	$	(102)

Income tax provision (benefit) for continuing operations consists of (in millions):


		Year ended December 31,
		2023		2022		2021
Current	—Federal	$	3	$	3	$	1
	—State	3		2		1
	—Foreign	4		1		—
		10		6		2
Deferred	—Federal	15		13		(66)
	—State	10		5		(24)
	—Foreign	1		2		(3)
		26		20		(93)
Income tax provision (benefit) – continuing operations		$	36	$	26	$	(91)

The differences between the income tax provision (benefit) calculated at the statutory U.S. federal corporate income tax rate of 21% and the actual income tax provision (benefit) recorded for continuing operations are as follows (in millions):


	Year ended December 31,
	2023		2022		2021
Statutory federal income tax provision (benefit)	$	165	$	140	$	(21)
Adjustment for nontaxable income of Host Inc.	(147)		(124)		(40)
State income tax provision (benefit), net	13		7		(23)
Change to uncertain tax provision	—		—		(4)
Foreign income tax provision (benefit)	5		3		(3)
Total	$	36	$	26	$	(91)

Cash taxes activity included a net payment of $12 million in 2023, and a net refund of $19 million and $34 million in 2022 and 2021, respectively.

Our unrecognized tax benefits remained unchanged at $1 million for each of the years ended December 31, 2023 and 2022. All of such uncertain tax position amounts, if recognized, would impact our reconciliation between the income tax provision (benefit) calculated at the statutory U.S. federal corporate income tax rate of 21% and the actual income tax provision (benefit) recorded each year.

As of December 31, 2023, the tax years that remain subject to examination by major tax jurisdictions generally include 2020-2023. There were no material interest or penalties recorded for the years ended December 31, 2023, 2022 and 2021.

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. Leases

Taxable REIT Subsidiaries Leases

We lease substantially all our hotels to a wholly owned subsidiary that qualifies as a taxable REIT subsidiary due to the U.S. federal income tax prohibition on the ability of a REIT to derive revenues directly from the operations of a hotel.

Ground Leases

As of December 31, 2023, all or a portion of 19 of our hotels are subject to ground leases, generally with multiple renewal options, all of which are accounted for as operating leases. Payments for ground leases account for approximately 74% of our 2023 minimum lease payments and 96% of our total future minimum lease payments. For lease agreements with scheduled rent increases, we recognize the fixed portion of the lease expense ratably over the term of the lease. As the exercise of the renewal options were determined to be reasonably certain, the payments associated with the renewals have been included in the measurement of the lease liability and ROU asset. Contingent rental payments based on a percentage of sales in excess of stipulated amounts are not included in the measurement of the lease liability and ROU asset but will be recognized as variable lease expense if and when they are incurred. However, certain of these leases contain provisions that increase the minimum lease payments based on an average of the variable lease payments made over the previous years, for which we will reevaluate the lease liability and ROU asset as these payments represent an increase in the minimum payments for the remainder of the lease term. Certain of these leases also contain provisions that increase the minimum lease payments based on an index such as the Consumer Price Index. Such increases are not included in the measurement of the lease liability and ROU asset but will be recognized as variable lease expense if and when they are incurred. The discount rate used to calculate the lease liability and ROU asset is based on our incremental borrowing rate (“IBR”), as the rate implicit in each lease is not readily determinable. To calculate our IBR, we obtained a forward curve using LIBOR swap rates, with terms ranging from one to fifty years, as well as corresponding bond spreads based on the terms of the leases and our credit risk. The resulting discount rates for our ground leases range from 4.3% to 5.7%.

Office Leases and Other

We have office leases for our headquarters office in Bethesda, which expires in 2036, as well as a satellite office in Miami, which lease expires in 2025, with no renewal options.

We also have leases on facilities used in our former restaurant business, all of which we subsequently subleased. These leases and subleases contain one or more renewal options, generally for five- or ten-year periods. The restaurant leases are accounted for as operating leases. Our contingent liability related to these leases is $1.1 million and $1.6 million as of December 31, 2023 and 2022, respectively. We, however, consider the likelihood of any material funding related to these leases to be remote. Our leasing activity also includes leases entered into by our hotels for various types of equipment, which may be accounted for either as operating or finance leases, depending upon the characteristics of the particular lease arrangement. Our finance leases total less than $1 million at December 31, 2023 and 2022.

The following table presents lease cost and other information (in millions):


	Year ended December 31,
	2023			2022			2021
Lease cost
Operating lease cost	$	42		$	41		$	43
Variable lease cost	35			27			7
Sublease income	(1)			(1)			(1)
Total lease cost	$	76		$	67		$	49

Other information
Operating cash flows used for operating leases	$	42		$	41		$	43
Weighted-average remaining lease term - operating leases	46 years			47 years			48 years
Weighted-average discount rate - operating leases	5.3		%	5.3		%	5.3		%

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents a reconciliation of the total amount of lease payments, on an undiscounted basis, to the lease liability on the balance sheet as of December 31, 2023 (in millions):


	As of December 31, 2023
	Ground Leases			Office Leases and Other			Total
Weighted-average discount rate - operating leases	5.4		%	3.7		%	5.3		%
2024	$	31		$	7		$	38
2025	31			6			37
2026	31			6			37
2027	31			5			36
2028	31			5			36
Thereafter	1,343			38			1,381
Total undiscounted cash flows	$	1,498		$	67		$	1,565

Present values
Long-term lease liabilities	$	511		$	52		$	563
Total lease liabilities	$	511		$	52		$	563
Difference between undiscounted cash flows and discounted cash flows	$	987		$	15		$	1,002

Minimum payments for the operating leases have not been reduced by aggregate minimum sublease rentals from restaurants of approximately $2.4 million that are payable to us under non-cancelable subleases.

9. Employee Stock Plans

Upon the issuance of Host Inc.’s common stock for stock-based compensation, Host L.P. issues to Host Inc. common OP units of an equivalent value. Accordingly, these awards and related disclosures are included in both Host Inc.’s and Host L.P.’s consolidated financial statements.

Host Inc. maintains two stock-based compensation plans, the Comprehensive Stock and Cash Incentive Plan (the “2020 Comprehensive Plan”), under which Host Inc. may award to participating employees restricted stock units (“RSUs”), and the Employee Stock Purchase Plan. At December 31, 2023, there were approximately three million shares of Host Inc.’s common stock reserved and available for issuance under the 2020 Comprehensive Plan.

We recognize costs resulting from share-based payments in our financial statements over their vesting periods. No compensation cost is recognized for awards for which employees do not render the requisite services. We classify share-based payment awards granted in exchange for employee services as either equity-classified or liability-classified awards. Equity-classified awards are measured based on their fair value as of the date of grant. In contrast, liability-classified awards are re-measured to fair value each reporting period.

During 2023, 2022 and 2021, we recorded stock-based compensation expense of approximately $30 million, $26 million and $18 million, respectively. Shares granted in 2023, 2022 and 2021 totaled 1.8 million, 1.8 million and 3.0 million, respectively, while 2.3 million, 1.5 million and 1.1 million shares, respectively, vested during those years.

Senior Executive Plan

During 2023, Host Inc. granted 1.6 million RSU awards under the 2020 Comprehensive Plan, which amount represents the maximum number of RSUs that can be earned during the period of 2023 through 2025 if performance is at the “high” level of achievement and, for time-based awards, the executive remains employed. The RSUs vest over a one, two or three-year period and 2.6 million RSUs were unvested at December 31, 2023. Total unrecognized compensation expense related to unvested RSU awards that vest through 2025 is approximately $19 million.

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RSU awards

Vesting of RSUs awarded in 2023 is based on (1) continued employment on the vesting date (“Time-Based Award”); (2) the achievement of relative total shareholder return (“TSR”); and (3) our Adjusted EBITDAre performance. Approximately 25% of the RSUs are Time-Based Awards and vest on an annual basis over three years; approximately 37.5% of the RSUs are based on the satisfaction of the TSR compared to the NAREIT Equity Lodging & Resort index that serves as a relevant industry/asset specific measurement to our competitors and vest following a three-year performance period; and the remaining 37.5% are based on Adjusted EBITDAre performance and vest following a three-year performance period. The RSUs granted are considered equity-classified awards. As a result, the fair value of these awards is based on the fair value on the grant date, and such grant date fair value is not adjusted for subsequent movements thereof.

We value the time-based awards using the closing stock price on the grant date multiplied by the percentage of shares expected to be released, which is 100% of the time based awards. We also value the Adjusted EBITDAre awards using the closing stock price on the grant date multiplied by the percentage of shares expected to be released; however, as a result of the Adjusted EBITDAre performance conditions, we reevaluate the percentage based on the probability of meeting the performance conditions each period. We value the TSR awards using the economic theory that is the basis for all valuation models, including Binominal, Black-Scholes, exotic options formulas, and Monte Carlo valuations. We valued the TSR awards with the following assumptions:


	NAREIT Lodging & Resorts Index
	2023 Award Grants			2022 Award Grants
Grant date stock price	$	18.55		$	18.45
Volatility	49.2		%	45.0		%
Beta	0.695			0.667
Risk-free rate - three year award	4.08		%	1.61		%

In making these assumptions, we base the expected volatility on the historical volatility over three years using daily stock price observations. The beta is calculated by comparing the risk of our stock to the risk of the applicable peer group index, using three years of daily price data. We base the risk-free rate on the Treasury bond yields corresponding to the length of each performance period as reported by the Federal Reserve.

The payout schedule for the TSR awards is as follows, with linear interpolation for points between the 30th and 75th percentiles:


TSR Percentile Ranking	Payout (% of Maximum)
At or above 75th percentile	100	%
50th percentile	50	%
30th percentile	25	%
Below 30th percentile	—	%

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During 2023, 2022 and 2021, we recorded compensation expense of approximately $27 million, $23 million and $16 million, respectively, related to the RSU awards to senior executives. The following table is a summary of the status of our senior executive plans for the three years ended December 31, 2023:


	Year ended December 31,
	2023			2022			2021
	Shares (in millions)	Fair Value (per share)		Shares (in millions)	Fair Value (per share)		Shares (in millions)	Fair Value (per share)
Balance, at beginning of year	3.4	$	15	3.2	$	12	1.6	$	10
Granted	1.6	16		1.6	17		2.7	14
Vested (1)	(2.2)	19		(1.3)	16		(0.9)	17
Forfeited/expired	(0.2)	19		(0.1)	16		(0.2)	17
Balance, at end of year	2.6	17		3.4	15		3.2	12
Issued in calendar year ⁽²⁾	0.7	16		0.5	17		0.6	15

(1)Shares that vest at December 31 of each year are issued to the employees in the first quarter of the following year, although the requisite service period is complete. Accordingly, the 0.7 million shares issued in 2023 include shares vested at December 31, 2022, after adjusting for shares withheld to meet employee tax requirements. The shares withheld for employee tax requirements were valued at $11 million, $8 million and $7 million for 2023, 2022 and 2021, respectively.

Other Stock Plans

In addition to the share-based plans described above, we maintain an upper-middle management plan and an employee stock purchase plan. The upper-middle management awards are time-based, equity-classified awards that vest within three-years of the grant date and compensation expense is recognized over the life of the award based on the grant date fair value. Through the employee stock purchase plan, employees can purchase stock at a discount of 10% of the lower of the beginning and ending stock price each quarter. During 2023, 2022 and 2021, we granted a total of 0.2 million shares, 0.2 million shares and 0.3 million shares, respectively, under these two programs and recorded compensation expense of approximately $3 million, $3 million and $2 million, respectively.

10. Profit Sharing and Post-employment Benefit Plans

We contribute to defined contribution plans for the benefit of employees who meet certain eligibility requirements and who elect participation in the plans. The discretionary amount to be matched by us is determined annually by Host Inc.’s Board of Directors. Our liability recorded for this obligation is not material. Payments for these items were not material for the three years ended December 31, 2023.

11. Dispositions

We disposed of one hotel in 2023, four hotels in 2022, and six hotels in 2021, and recorded aggregate gains on sale of approximately $69 million, $18 million, and $305 million, respectively. The gain on sale of assets is included in other gains on the statement of operations.

In conjunction with the sale The Camby, Autograph Collection in 2023, we provided a $72 million loan to the buyer. The loan has an initial interest rate equal to Term SOFR plus 425 basis points and an initial scheduled maturity date of June 10, 2025, which date may be extended to March 10, 2026. Up to an additional $12 million in funding is available to the buyer under the loan for property improvement plan financing not to exceed a 65% loan to cost ratio. As of December 31, 2023, none of the additional funding has been borrowed. The outstanding loan is included in Notes Receivable on our balance sheets.

In connection with the sales of the Sheraton Boston Hotel and Sheraton New York Times Square Hotel in 2022, we provided loans to the buyers for $163 million and $250 million, respectively. These loans were repaid during 2023.

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12. Acquisitions

On November 1, 2022, we acquired the 125-room Four Seasons Resort and Residences Jackson Hole for a total purchase price of $315 million.

During 2021, we acquired the following assets:

the 448-room Hyatt Regency Austin for $161 million;
the 444-room Four Seasons Resort Orlando at Walt Disney World® Resort for $610 million;
the Royal Ka'anapali and Ka'anapali Kai golf courses, adjacent to the Hyatt Regency Maui hotel, for $28 million;
the 200-room Baker's Cay Resort Key Largo, Curio Collection by Hilton, for $200 million;
a 223-room luxury downtown Houston hotel, subsequently rebranded as The Laura Hotel, as part of the Autograph Collection by Marriott, for $65 million;
the 59-room Alila Ventana Big Sur for $150 million;
the 173-room Alida, Savannah, a Tribute Portfolio Hotel, for $103 million; and
the 319-room Hotel Van Zandt for $246 million, including $4 million for the FF&E replacement funds; in connection with the acquisition of the Hotel Van Zandt, we assumed a $102 million mortgage loan with a fair value of $105 million.

13. Fair Value Measurements

Other Liabilities

Fair Value of Other Financial Liabilities. We did not elect the fair value measurement option for any of our other financial assets or liabilities. The fair values of our notes receivable, secured debt and our credit facility are determined based on the expected future payments discounted at risk-adjusted rates. Senior notes are valued based on quoted market prices. The fair values of financial instruments not included in this table are estimated to be equal to their carrying amounts. The fair value of certain financial assets and financial liabilities is shown below (in millions):


	December 31, 2023				December 31, 2022
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets
Notes receivable (Level 2)	$	72	$	73	$	413	$	404
Financial liabilities
Senior notes (Level 1)	3,120		2,915		3,115		2,768
Credit facility (Level 2)	989		1,000		994		1,000
Mortgage debt (Level 2)	100		86		102		95

14. Relationship with Marriott International

We have entered into various agreements with Marriott, including those for the management or franchise of approximately 62% of our hotels (as measured by revenues) and certain limited administrative services.

In 2023, 2022 and 2021, we paid Marriott $168 million, $136 million and $53 million, respectively, of hotel management fees and approximately $8.1 million, $7.7 million, and $4.4 million, respectively, of franchise fees.

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

15. Hotel Management Agreements and Operating and License Agreements

All of our hotels are managed by third parties pursuant to management or operating agreements, with some of our hotels also being subject to separate license agreements addressing matters pertaining to operations under the designated brand. Hotels managed or franchised by Marriott and Hyatt represent approximately 62% and 20% of our total revenues, respectively. Under these agreements, the managers generally have sole responsibility for all activities necessary for the day-to-day operation of the hotels, including establishing room rates, processing reservations and promoting and publicizing the hotels. The managers also provide all employees for the hotels, prepare reports, budgets and projections, control the working capital, and provide other administrative and accounting support services to the hotels. Costs and expenses incurred by the managers are reimbursed by us. We have approval rights over budgets, capital expenditures, significant leases and contractual commitments, and various other matters.

The initial term of our agreements generally is 10 to 25 years, with one or more renewal terms at the option of the manager. The majority of our agreements condition the manager’s right to exercise options for renewal upon the satisfaction of specified economic performance criteria. The manager typically receives a base management fee, which is calculated as a percentage (generally 2-3%) of annual gross revenues, and an incentive management fee, which typically is calculated as a percentage (generally 10-20%) of operating profit after the owner has received a priority return on its investment. In the case of our hotels operating under the W®, Westin®, Sheraton®, Luxury Collection® and St. Regis® brands, the base management fee is 1% of annual gross revenues, but that amount is supplemented by license fees payable to Marriott under a separate license agreement pertaining to the designated brand, including rights to use trademarks, service marks and logos, matters relating to compliance with certain brand standards and policies, and the provision of certain system programs and centralized services. Under the license agreement, Marriott generally receives 5% of gross revenues attributable to room sales and 2% of gross revenues attributable to food and beverage sales in addition to the base management fee.

Pursuant to the agreements, the manager furnishes the hotels with certain chain services, which generally are provided on a central or regional basis to all hotels in the manager’s hotel system. Chain services include central training, advertising and promotion, national reservation systems, computerized payroll and accounting services, and such additional services as needed which may be more efficiently performed on a centralized basis. Costs and expenses incurred in providing such services are allocated among the hotels managed, owned or leased by the manager on a fair and equitable basis. In addition, our managers generally sponsor a guest rewards program, the costs of which are charged to all of the hotels that participate in such program.

We are obligated to provide the manager with sufficient funds, generally 4-5% of the revenues generated at the hotel, to cover the cost of (a) certain non-routine repairs and maintenance to the hotels which normally are capitalized, and (b) replacements and renewals to the hotels’ furniture, fixtures and equipment. Under certain circumstances, we will be required to establish escrow accounts for such purposes under terms outlined in the agreements.

We generally are limited in our ability to sell, lease or otherwise transfer our hotels unless the transferee assumes the related management agreement. However, most agreements include owner rights to terminate on the basis of the manager’s failure to meet certain performance-based metrics. Typically, these criteria are subject to the manager’s ability to ‘cure’ and avoid termination by payment to us of specified deficiency amounts (or, in some instances, waiver of the right to receive specified future management fees).

In addition to any performance-based or other termination rights, we have negotiated specific termination rights related to specific agreements. These termination rights can take a number of different forms, including termination of agreements upon sale that leave the property unencumbered by any agreement; termination upon sale provided that the property continues to be operated under a license or franchise agreement with continued brand affiliation; and termination without sale or other condition, which may require the payment of a fee.

16. Geographic and Business Segment Information

We consider each one of our hotels to be an operating segment, as we allocate resources and assess operating performance based on individual hotels. All of our hotels meet the aggregation criteria for segment reporting and our other real estate investment activities (primarily our retail spaces and office buildings) are immaterial. As such, we report one segment: hotel ownership. Our foreign operations consist of hotels in two countries as of December 31, 2023. There were

HOST HOTELS & RESORTS, INC., HOST HOTELS & RESORTS, L.P., AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

no intersegment sales during the periods presented. The following table presents revenues and long-lived assets for each of the geographical areas in which we operate (in millions):


	2023				2022				2021
	Revenues		Property and Equipment, net		Revenues		Property and Equipment, net		Revenues		Property and Equipment, net
United States	$	5,219	$	9,556	$	4,836	$	9,678	$	2,866	$	9,919
Brazil	22		35		17		33		8		30
Canada	70		33		54		37		16		45
Total	$	5,311	$	9,624	$	4,907	$	9,748	$	2,890	$	9,994

17. Legal Proceedings, Guarantees and Contingencies

Various legal proceedings arise in the ordinary course of our business regarding the operation of our hotels and company matters. To the extent not covered by insurance, these lawsuits generally fall into the following broad categories: disputes involving hotel-level contracts, employment litigation, compliance with laws such as the Americans with Disabilities Act, tax disputes and other general matters. Under our management agreements, our operators have broad latitude to resolve individual hotel-level claims for amounts generally less than $150,000. However, for matters exceeding such threshold, our operators may not settle claims without our consent.

Based on our analysis of legal proceedings with which the Company and our hotel managers are currently involved or of which we are aware and the resolution of similar claims in the past, we have recorded immaterial accruals as of December 31, 2023 related to such claims. We have estimated that, in the aggregate, our losses related to these proceedings will not be material. We are not aware of any other matters with a reasonably possible unfavorable outcome for which disclosure of a loss contingency is required. No assurances can be given as to the outcome of any pending legal proceedings.

Hurricane Loss Contingency

While the majority of our hotels in Florida were affected by Hurricane Ian, which made landfall on September 28, 2022, the most significant damage sustained during the storm occurred at The Ritz-Carlton, Naples and Hyatt Regency Coconut Point Resort and Spa. The Hyatt Regency Coconut Point reopened to guests in November 2022, with the final phase of reconstruction, the resort's waterpark, completed in June 2023. On July 6, 2023, The Ritz-Carlton, Naples reopened the guestrooms, suites and amenities, including the new tower expansion.

Our current estimate of the book value of the property and equipment written off and remediation costs is approximately $130 million, for which we recorded a corresponding insurance receivable. As of December 31, 2023, we have received $213 million of insurance proceeds related to these claims, of which $130 million reduced our receivable to zero, and, in 2023, $80 million was recognized as a gain on business interruption, and $3 million was recognized as a gain on property insurance, which are both included in gain on insurance settlements on our consolidated statements of operations.

Tax Indemnification Agreements

Because of certain federal and state income tax considerations of the former owners of two hotels currently owned by Host L.P., we have agreed to restrictions on selling such hotels, or repaying or refinancing mortgage debt, for varying periods. One of these agreements expires in 2028 and the other in 2031.

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