1061937--3/5/2010--HOST_HOTELS_&_RESORTS

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{operation, natural, condition}

{cost, contract, operation}

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Financial Risks and Risks of Operation Current economic conditions have already adversely affected and will continue to adversely affect our industry, business and results of operations. Current economic conditions have adversely effected the valuation of our hotels which may result in further impairment charges on our properties. Our revenues and the value of our properties are also subject to other conditions affecting the lodging industry. Disruptions in the financial markets may adversely affect our business and results of operations, our ability to obtain financing on reasonable and acceptable terms, our ability to hedge our foreign currency exchange risk and the value of our common OP units. We depend on external sources of capital for future growth and we may be unable to access capital when necessary. We have substantial debt and may incur additional debt. The terms of our debt place restrictions on us and our subsidiaries, which reduce our operational flexibility and create default risks. Our ability to make distributions may be limited or prohibited by the terms of our indebtedness or preferred OP units. Defaulting on our mortgage debt could adversely affect our business. Our mortgage debt contains provisions that may reduce our liquidity. An increase in interest rates would increase our interest costs on our credit facility and on any floating rate debt we incur and could adversely impact our ability to refinance existing debt or sell assets. Rating agency downgrades may increase our cost of capital. Our expenses may not decrease if our revenue decreases. Our acquisition of additional properties may have a significant effect on our business, liquidity, financial position and/or results of operations. We do not control our hotel operations and we are dependent on the managers of our hotels. We are subject to risks associated with the employment of hotel personnel, particularly with hotels that employ unionized labor. Our hotels have an ongoing need for renovations and potentially significant capital expenditures in order to remain competitive in the marketplace, maintain brand standards or to comply with applicable laws or regulations. The timing and costs of such renovations or improvements may result in reduced operating performance during construction and may not improve the return on these investments. The ownership of hotels outside the United States and the expansion of our business into new markets outside of the United States will expose us to risks relating to owning hotels in those international markets. We may acquire hotel properties through joint ventures with third parties that could result in conflicts. Our management agreements could affect the sale or financing of our hotels. Future terrorist attacks or changes in terror alert levels could adversely affect us. We may not be able to recover fully under our existing terrorism insurance for losses caused by some types of terrorist acts, and federal terrorism legislation does not ensure that we will be able to obtain terrorism insurance in adequate amounts or at acceptable premium levels in the future. We may be unable to satisfy the insurance requirements of our lenders. Some potential losses are not covered by insurance. Litigation judgments or settlements could have a significant adverse effect on our financial condition. We may be subject to unknown or contingent liabilities related to hotels or businesses we acquire. We depend on our key personnel. Exchange rate fluctuations could adversely affect our financial results. Applicable REIT laws may restrict certain business activities. We may be unable to sell properties because real estate investments are inherently illiquid. Our ground lease payments may increase faster than the revenues we receive on the hotels situated on the leased properties. Environmental problems are possible and can be costly. Compliance with other government regulations can be costly. The acquisition contracts relating to some hotels limit our ability to sell or refinance those hotels. Risks of Ownership of Host s Common Stock There are limitations on the acquisition of Host common stock and changes in control. Restrictions on transfer and ownership of Host s stock. Removal of Board of Directors Preferred shares; classification or reclassification of unissued shares of capital stock without stockholder approval. Maryland control share acquisition law. Maryland control share acquisition law. Merger, consolidation, share exchange and transfer of Host s assets. Certain charter and bylaw amendments. Shares of Host s common stock that are or become available for sale could affect the share price of Host s common stock. Our earnings and cash distributions will affect the market price of shares of Host s common stock. Market interest rates may affect the price of shares of Host s common stock. To qualify as a REIT, each of Host and its subsidiary REITs are required to distribute at least 90% of its taxable income, excluding net capital gain, regardless of available cash or outstanding obligations. Adverse tax consequences would apply if Host or any of its subsidiary REITs fail to qualify as a REIT. If our leases are not respected as true leases for federal income tax purposes, each of Host and its subsidiary REITs would fail to qualify as a REIT. If our affiliated lessees fail to qualify as taxable REIT subsidiaries, each of Host and its subsidiary REITs would fail to qualify as a REIT. Despite the REIT status of each of Host and its subsidiary REITs, we remain subject to various taxes. If the IRS were to challenge successfully Host LP s status as a partnership for federal income tax purposes, Host would cease to qualify as a REIT and suffer other adverse consequences. As a REIT, each of Host and its subsidiary REITs is subject to limitations on its ownership of debt and equity securities. Each of Host or its subsidiary REITs may be required to pay a penalty tax upon the sale of a hotel. Risks Relating to Redemption of OP Units A holder from whom we redeem OP units may have adverse tax consequences. If a holder of OP Units has OP Units redeemed, the original receipt of the OP Units may be subject to tax. Differences between an investment in shares of common stock and OP Units may affect redeemed holders of OP Units.

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1061937--3/5/2010--HOST_HOTELS_&_RESORTS_L.P.