Welcome to the Host Hotels & Resorts Incorporated fourth quarter and full year 2014 earnings conference call. Today’s conference is being recorded. At this time I would like to turn the conference over to Gee Lingberg, Vice President.

Welcome to the Host Hotels & Resorts fourth quarter 2014 earnings call. Before we begin, I’d like to remind everyone that many of the comments made today are considered to be forward-looking statements under Federal Securities laws. As described in our filings with the SEC, these statements are subject to numerous risks and uncertainties that could cause future results to differ from those expressed and we are not obligated to publically update or revise these forward-looking statements. In addition, on today’s call we will discuss certain non-GAAP financial information such as FFO, adjusted EBITDA and comparable hotel results. You can find this information together with reconciliations to the most directly comparable GAAP information in today’s earnings press release, in our 8K filed with the SEC and on our website at www.HostHotels.com. In our efforts to continually improve on our disclosures, we have added an EBITDA by market supplement to our website. You can find this information on our investor relations section of our website under financial information. We hope that this information is valuable in understanding and analyzing our company. Now with me on the call today is Ed Walter, our President and Chief Executive Officer and Greg Larson, our Chief Financial Officer. This morning, Ed will provide a brief overview of our fourth quarter results and then will describe the current operating environment as well as the company’s outlook for 2015. Greg will then provide greater detail on our fourth quarter performance by market and discuss our margin results. Following the remarks, we will be available to respond to your questions. Now, here’s Ed.

As we predicted in October, our fourth quarter results were impacted by a combination of weaker group activity and disruption from renovations. Overall, we were pleased to record another very positive year for our company. Revenue growth was strong and superior cost controls led to another year of excellent margin improvement. In addition, we made significant progress on several value enhancement projects and on our asset sales initiative. Before we get into the details, let’s review our results for the quarter and the year. Adjusted EBITDA was $351 million for the quarter and $1.402 billion for the full year, representing a 7.4% increase over the prior year. Our adjusted FFO per diluted share was $0.40 for the fourth quarter and $1.50 for the full year exceeding consensus estimates and reflecting a 14.5% increase over 2013. These results were impacted by several factors. For the full year, our portfolio achieved a 77% average occupancy allowing our hotels to drive rate increases of nearly 5% resulting in an improvement in comparable hotel RevPAR of 5.7%. For the quarter comparable hotel RevPAR increased 3.2% due entirely to rate growth as occupancy declined by .6 points. As outlined in our press release, we had a large number of room and meeting space renovations that began in the fourth quarter. These projects reduced our capacity to attract our customary level of corporate group business as well as some of our higher priced transient customers. Overall, we estimate that our renovation activity reduced our quarterly RevPAR by 160 basis points. More specifically, demand in our group segment declined more than 1% in the fourth quarter but was largely offset by a 1% increase in average rate. As we explained in October, the timing of the Jewish holidays clearly accelerated association business into the third quarter which…

Our hotels in the west continue to lead the portfolio in RevPAR growth. Excellent results from our properties in Hawaii, San Francisco, Florida, and Phoenix were offset by weaker results at our urban New York, DC, and Boston hotels. One thing to note, our urban assets, especially those in New York, are operating at very high occupancies and as such RevPAR growth has been limited to increases in average rates. With the abundant supply in New York, the growth in average rate has flowed and the flat room revenues at our hotels in New York impacted our portfolio RevPAR growth by 100 basis points in the quarter. In addition, as discussed during our third quarter call, a larger share of the renovations for 2014 occurred in the fourth quarter and the impact of those reservations have been greater than anticipated. While these capital improvements strengthen and create long term value in the portfolio, the negatively impacted the fourth quarter RevPAR growth results by approximately 160 basis points. Many of the disruptive renovations will continue into 2015 and will adversely impact our short term results. Let me now provide some commentary around our markets. We posted very strong results at our Hawaiian hotels as the Hyatt Regency Maui strategically reduced group volumes as well as higher rate transient room nights [indiscernible] our owners. This contributed to an increase in occupancy of three percentage points and growth of ADR of 10.5% resulting in impressive RevPAR growth of 15%. Our hotels in San Francisco grew occupancy 2.3 percentage points and grew average rate 8.5% resulting in RevPAR growth of 12% in the quarter. All five of our comparable hotels in San Francisco posted double digit RevPAR growth benefitting from the strong group demand in the market this quarter. Corporate group ADR increased 14%…

[Operator Instructions] Your first question comes from Smedes Rose – Citigroup.

I wanted to ask just a little bit around the renovations having kind of an outsized impact for this year. When you think about that and the timing around renovations are they market dependent so the asset is just considered on its own and you need to do what you need to do, or can you look kind of holistically across the portfolio and maybe mitigate the impact better? I’m just kind of curious how you think about that? It just seems you have a lot going on this year and I’m just kind of wondering how you came about the timing on that?

I think it sort of breaks into two categories. The first is where the redevelopment, the conversions of properties such as what we’re doing in San Francisco and what we intend to do at the Philadelphia Four Seasons and hopefully with a couple of other hotels, with those I think it really – we see such an opportunity to improve the cash flow from those assets that the timing simply was driven as much from the acquisition or in the case of the Marriott Hall it was when we were able to get the approvals to start the ballroom. In the case of Philadelphia it was both resolving contractual issues with the Four Seasons originally and then ultimately having the opportunity to have flexibility to change the brand and change the hotel. I think in those cases to some degree I look at those similar to an acquisition that the timing was right, the opportunity was great, and so we moved forward with those as expeditiously as possible. We do take into account with those – we try to look at what’s the best timing in the year to commence the renovations. One of the reasons why – the timing in Philadelphia is to close in June is to take advantage of the spring season including the May wedding season and then we will roll into the renovation with the goal being done for the fall. In the case of the San Diego ballroom, we’ve actually had the approval to build that ballroom for quite some time now but we made a conscious decision to really plan far out in advance for when we would demolish the original ballroom and start to build the new one to give the hotel the ability to plan as much as possible around that…

The only thing I would add is we’re also fortunate enough, we have a tremendous amount of work going on both in Houston and Calgary and both of those markets were going to be fairly weak in 2015 so we’re fortunate on that front.

Then just as you look at the potential sale candidates, are you able to negotiate these franchise conversion rights or is that kind of played out now? It seems that that makes the properties easier to sell?

It certainly does and we’ve referenced the fact that we have probably about 40% of our portfolio by number has some sort of contract flexibility. The bulk of that flexibility exists in assets that we have would generally be on, not necessarily specifically on sale lists today, but certainly covers most of the assets that we are targeting for sale. We have a lot more opportunity on that front.

Your next question comes from Steven Kent – Goldman Sachs. Steven Kent – Goldman Sachs: A couple of questions from the results, first just the strategic nature of New York City, and even DC for that matter, I get it from a long term perspective but the supply issues aren’t going to go away and they’re actually going to accelerate so is this a onetime event, or should we look at this as this could be pulling you down for a couple of years? Then, staying with that theme, have you started to see any impact of fx on visitation into DC or New York City, especially amongst the international leisure traveler?

Let me answer the second question first. We are certainly concerned about the impact of the stronger dollar on international travel. Clearly, international travel has been a driver in what we view as stronger than anticipated demand growth over the course of this cycle so that I think that is something to be watching. So far, we have not seen an impact from that in New York. Some of that I would say we consciously sought out international business because we were trying to replace the hole that existed at those hotels from having had had the Super Bowl there the prior year, knowing that that was not going to repeat and there was also, I’m not remembering which one it was, but there was a fairly large group event too that was in town in January or early February of last year that also was not repeating. So, we had sought out additional international business and we were able to get that extra international business primarily through foreign travel. What we’re hearing so far from the properties is that their international business has continued to be maintained strong. I think we’ll have to watch that as the year progresses because a lot of these sorts of international trips are planned way in advance so we’ll have to see if that situation remains the same as we work our way into the spring. DC is frankly, less affected by international travel. We’re actually part of a group in DC that’s working to try to encourage incremental travel to DC from international locations and so I don’t think we’ve noticed anything in Washington that would suggest that had softened at all. With respect to the two markets, you’re right the supply especially, in New York, I don’t know that we’re worried…

I think the only thing I would add and you probably know this as well, DC was actually a really strong market in the fourth quarter with RevPAR for the industry up over 8%. Unfortunately for us, because we have two very large hotels in renovation, our RevPAR growth was only 2.5%. But, I agree with Ed, when you look at the future of group bookings pace in ’16, ’17, and beyond it looks pretty exciting and as Ed said, supply growth in DC remains at 2% or below for the next couple of years so we do feel pretty good about DC especially once our hotels are fully renovated. Steven Kent – Goldman Sachs: Just one separate note and aside, I’m intrigued by the move, the changing of the Four Seasons in Philadelphia, and I know you announced it a couple of months ago, but could you see yourself doing more and more of that or was this just a one off? I’m just intrigued by how you’re thinking about the portfolio and brand affiliation versus non-brand affiliation.

I think you should assume that we’re going to try to do more of these types of projects. The one that we referenced that is premature to announce would be somewhat similar in approach and I think as we look at how we would like to invest we would look at both opportunities in the portfolio where we have flexibility to convert to this type of approach, or certainly to acquire new assets that are either independent or soft branded already, or have the potential to be that.

Your next question comes from Richard Hightower – Evercore ISI.

A couple of questions here. The first one is a follow up on New York, I think a lot of the REITs this quarter and previous quarters have kind of made the same point, the fundamentals are opportunely going to underperform but cap rates continue to fall in the market yet no one seems to be interested in selling anything and I’m wondering if you guys have an opinion on that? Then my second question is in the release I think you mentioned some incentive fee changes in a handful of contracts and also some ground lease renegotiations that helped EBITDA. I’m wondering if you can quantify maybe what the potential opportunities in the rest of the portfolio are on that front?

As it relates to New York I’d say we certainly each year go through the portfolio and think about what the best strategy is for each individual asset and we certainly doing that on an ongoing basis, looking at our assets in New York to determine if now would be a good time to sell them. The number of cases in our New York assets, we have different elements of them that we’re working on where we think we can enhance value. There also are some things happening within the city with respect to rezoning opportunities which can potentially be beneficially value to the hotels too. I think we like the exposure that we have in New York although we obviously wish that the performance was a little bit stronger. As I said, we are comfortable on the valuation side. I wouldn’t say that we’re necessarily looking at those values saying, “Now, is the right time to sell those assets,” but that’s an ongoing conversation within the company and we’ll continue to look at that opportunity. As it relates to the management fee side, I would say that we were able to, on several assets, negotiate as part of broader considerations whether it was extension of an agreement, whether it was part of a capital plan, and a desire on the part of the operator to have us invest and on our part to invest more in the asset or other circumstances to meaningful reduce our incentive management fees in 2014. Now, as we go through 2015 we still retain the benefit of those negotiations. We’ve effectively reset our incentive management fees at a lower level as a result of those negotiations. We’ll get the benefit of that in ’15 but in ’15 we are returning to a more normal growth rate and incentive management fees based on the growth rate in EBITDA in the hotels. I would say that there are probably going to be opportunities to do this. I don’t know that I can see on any the horizon immediately but part of the benefit of having a broad portfolio and broad relationships with operators is that overtime these sorts of opportunities present themselves and when we’re there we try to take advantage of them.

We did mention a couple of ground leases that we’ve been working on and we’re working on several others as well, but what we really did is one ground lease we extended by 30 years so that’ll just make it much easier to sell that asset one day, when we elect to do that. Then on another ground lease we actually fired the lease and so again, that will make it much easier for us to sell that asset going forward.

Your next question comes from Anthony Powell – Barclays Capital Management.

Just watching on the timing of the renovations given some of the positive views that we’ve heard from you and others on the [indiscernible] cycle for this year and ’16, why not maybe wait on some of these renovations and take advantage of the overall positive environment that we’re seeing right now?

I think that’s a fair question and to be honest, we are doing that with some hotels. As we’re thinking through the capital plan for hotels, we’re going to be thoughtful about which of the renovations it makes sense to do now and which of the renovations that we should try to postpone. To some degree, the existing condition of the hotel drives part of that answer. If we feel that we are not benefitting fully from the market in our current condition, given the fact that we remain confident about the outlook for the lodging cycle for the next two years, this isn’t sort of the decision where you’re sitting here saying, “Well, don’t do it in ’15 because you can do it in ’16 or do it in ’17,” because we’re not looking at the outlook thinking that there’s going to be some drop off in that time period. The postponement decision is more than just a year or so. In some cases too, like with what we’re doing in Washington, the reality is that we knew group bookings were not as strong in ’15 as they were going to be in ’16 so this was the right time to go ahead and do the room renovations at the JW Marriott and to tear up the lobby and transform the lobby at the Grand Hyatt. It is going to hurt us, it hurt us in the fourth quarter, it will hurt us in the first quarter, but as we get into the second half of this year and as we get into next year in DC, we’re going to have fully renovated hotels that are going to be, I think, doing quite well in what will be a stronger market.

Kind of along the same lines you seem to be changing a lot of the management contracts into third-party, you’re going more independent, do you mean to do that on a larger scale across your portfolio and if so, what kind of long term cap ex spend do you believe will be associated with that?

I would say we are going to continue to look at opportunities to switch from – what we’re trying to do across the board here is match the right operator and the right brand with the right hotel. So, with large hotels we continue to be comfortable that the major brand operators are the best solutions for those type of hotels. They have the best marketing platform, the best sales platform to drive large groups into our larger hotels. As we look at some of our smaller hotels we’re not always convinced that they’re the best solution and so that’s why in Denver we made the solution to convert to a Marriott franchise and brought in Sage Hospitality which is a very strong operator based in Denver, knows the market extremely well to run that hotel. We have some flexibility through the portfolio to take similar type steps. I wouldn’t say that we’re talking about dozens of opportunities like that, but we have, I would say, it’s probably somewhere in the five to 10 hotel opportunities to do things like this in the next three to five years. We’ll continue to look at those opportunities as to whether or not that’s the best solution for that individual hotel. Depending upon what we chose to do in connection with that conversion, there may be a renovation that’s timed with that. In some cases the renovation is a good way to sort of announce the arrival of a new operator and new approach to the hotel. But I don’t know that in the grand scheme of things that’s going to radically cause a big change in our overall cap ex program.

[Operator Instructions] Your next question comes from Shaun Kelley – Bank of America Merrill Lynch.

I just wanted to ask for the Hawaiian timeshare development which you guys called out as contributing around $7 million, if I caught it correctly, for 2014. Do you have a general estimate of what’s kind of built into your guidance or a range of what’s built into the guidance for 2015 that you could share with us?

Just over $12 million.

What’s the general life cycle here? How long would that project last for sellout? Is it a couple of years or is it going to be more front end loaded?

I think it’s going to be right around four years for us. It’s going to depend on obviously, the pace of sales but I think right around four years for us.

Then my other questions would be obviously, New York and DC have sort of dominated the discussions but you guys also called out Houston and Calgary given some of the oil exposures. Could you give us just a little bit of a sense of A) how much earnings contribution or revenue contribution you’re getting to be from what you consider oil sensitive markets and B) just what you’re seeing in behavior in some of those hotels, bookings, cancellations, are you seeing outsized moves at this point or would you say that it’s just a little bit lackluster and people are more in wait and see?

I don’t know that right off the top of our head we have a Calgary or Houston number although, intriguingly the additional disclosures we provided will give you some insight into that. I think it’s probably about 4% to 5% would probably be roughly what we get from there. We have seen in those markets some general weakness, but I’ve got to be honest, with the level of capital that we’ve been – the fact that we’ve had room renovations going on at those hotels and both of those room renovations have involved bathroom renovations, which as I described in my comments, are just more impactful and more time consuming, the bulk of what we have seen in terms of weak operating results we are attributing to the renovation disruption.

I agree. In Houston for fourth quarter for the industry RevPAR was up over 8.5% and our Houston properties had a decline over 5% because of the disruption that Ed mentioned.

I think the sense that we have from talking to the GMs there is that there is – it has gotten weaker, there is some reduction in corporate level activity. It doesn’t feel like the bottom is dropping out of the market by any means, but Houston has had an incredible run over the last four or five years. It’s really been one of our strongest markets in terms of performance. It will not be one of those this year.

Your next question comes from Bill Crow – Raymond James & Associates.

If I go back to your analyst investor day I think you talked about the conundrum of getting net debt to EBITDA down to like 1.5 turns by mid ’16 and $700 million of free cash flow before the dividend if those numbers are in the ballpark and here we are, we’ve gone through another year and the 800 pound gorilla has sat out the dance again from an acquisition perspective and that seems to be a pretty consistent theme throughout this cycle relative to your size and the size of your peers and we haven’t heard anything about repurchasing the stock. You’re down 6%, 7% year-to-date, worse performer in the group today of course, and I’m just wondering what your thought process is from the allocation of capital perspective and returning capital to shareholders?

Well, that’s a great question. I think I would say the net debt to EBITDA number that you quoted is where things would happen were we not to do anything because certainly our net debt to EBITDA is nowhere near that level right now, I think it’s more around 2.5 times which is a level that we’re certainly very comfortable at. As you’ve seen us do, we’ve increased the dividend pretty materially over the course of 2014. As we generate cash flow from operations, as we generate cash from sales, I’d say I think our answer to this is going to be consistent to what we said in the past which is the first thing we’d like to do is invest that either in our existing assets, as you can tell from everything we’ve talked about today whether in our comments or our press release, there’s a fair amount of that happening already. We’re putting a lot of capital to work and we’re putting it to work in areas that we think will frankly drive better performance than what we would expect to get out of an acquisition. But in addition to doing those types of investments, we would like to acquire additional assets. You could say we’ve sat out the dance and I would say to some degree we’re trying to be thoughtful about underwriting and recognize that cycles do come to an end and take that into account in our underwriting and I think some of the folks that we’re competing with may have a slightly different perspective about how to approach that. The bottom line is that we certainly feel good about our overall portfolio and are only looking for opportunities to enhance it as opposed to being worried about just getting bigger. As we generate those extra proceeds from sales and/or from operations I’d say first of all we would look to enhance the dividend in part because the dividend will probably, if it comes from sales will be generating incremental taxable income from those sales which [indiscernible] some incremental distributions and that’s part of the reason why we had to do the special dividend as part of our most recent distribution, is because we did have taxable income that had to be distributed. Buying back stock is something that is clearly something we’re looking at. I think we have a few things that we have in the pipeline right now that we would like to see how they play out, but we are certainly open to buying back stocks. We’ve done it in the past and [indiscernible] a more productive use of the capital then we would intend to return it one way or the other. I think then the issue there just becomes trying to understand what might generate the best long term return to the shareholders, whether it’s through a dividend or whether it’s through buying back the stock.

Or, really a combination of both a strong dividend and buying back the stock.

Your next question comes from Harry Curtis – Nomura Securities.

Can you talk about or give a little bit more color on when you believe that your current renovation program will result in stabilized EBITDA going forward? Is it the end of 2015, is it the middle of ’16, and what are the odds that you do, at that point, begin to layer in other renovation projects?

I guess as we look at the major renovations that we were talking about, the ones that really are causing the $25 million worth of disruption, with the exception of the San Diego ballroom, I think most of those projects are going to be completed at some point this year. In general, I would be expecting that the loss in EBITDA that we’re experiencing in ’15 will be restored in ’16 by virtue of the fact that those properties will be open and operating. Over the course of ’16 and into early ’17, we would expect to see meaningful EBITDA enhancements from all the investments that we’ve made that would then start to kick in and we’d start to get the benefit out of the investment activity that we’ve had. Without putting too fine number on it, if we’re going to suffer $25 million of displacement this year, we would expect to make that up and our outlook for ’16 and ’17 is we recruit at least that incremental.

Then the follow up is, in the fourth quarter with New York City occupancy at roughly 88%, what is it that your managers are nervous about when driving rate more aggressively? It would seem that despite the capacity growth at 88% occupancy one would think there would be a greater opportunity to push rate?

I would agree with you, it would seem that the level – I think some of the – our world has gotten a little bit more transparent in terms of pricing over the last decade and the reality is that because the New York market – a sizeable component of it is driven by leisure, people are quick to price compare. So, what we’ve been finding is that when properties try to push rate, they have to be very thoughtful and sort of tactical about how to do that. At times of the week, at times of the month we are able to drive month but you’ll find that people do move as they start to see rates push beyond certain levels and our world’s gotten easier for people to do that to be honest.

Your next question comes from Thomas Allen – Morgan Stanley.

Can you help us with color on what your EBITDA exposure was to each of your major markets in 2014?

I don’t have that information right in front of me, but that’s exactly what our new disclosure is designed to provide you so if you go to the website you’ll be able to get a pretty good insight into that.

Then just on your Hawaii business, you highlighted it was strong in the fourth quarter, it seems like that’s getting the benefit of the rooms that were converted into timeshare, but we’re getting mixed messages from companies on the potential strength of Hawaii in 2015 just given everything that’s going on with the weakening yen and that market being driven by Japanese customers. Can you just help us how to think about that market?

I think you’re right that that’s one of those markets that is susceptible to challenges based upon the strength in currency. I think in our Waikiki asset we have seen some signs there that Japanese travel has not been perhaps as strong as it has been in the past. Having said that, our outlook for Hawaii this year is right down the middle in the portfolio in terms of RevPAR growth. I think where we’re being helped is Maui is more US focused than internationally focused. Our booking pace at our hotels is up very strongly in ’15 and also is up quite strong in ’16. I’d say that Waikiki and Oahu is probably a little bit more exposed to some of the challenges from international travel, but Maui is looking quite strong this year.

You’re correct, fourth quarter was extremely strong for us in Hawaii with RevPAR up almost 15%, but you’re also right about 2015 that when we look at Hawaii I think it will be a good year but it won’t be that strong. I think RevPAR growth in Hawaii next year will be right within our domestic overall portfolio.

That concludes today’s question and answer session. Mr. Walter, at this time I will turn the conference back to you for any additional or closing remarks.

Thank you for joining us on the call today. We appreciate the opportunity to discuss our year end results and outlook with you. We look forward to talking with you in the spring to discuss our fourth quarter results and to provide more insight into how 2015 is playing out. Thanks everybody.