Good day, and welcome to the Host Hotels & Resorts, Incorporated Fourth Quarter and Full Year 2016 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Gee Lingberg, Vice President. Please go ahead, ma'am. Gee Lingberg - Host Hotels & Resorts, Inc.: Thanks, Cathy. Good morning, everyone. Welcome to the Host Hotels & Resorts' fourth quarter 2016 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 publicly 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 8-K filed with the SEC, and the supplemental financial information on our website at hosthotels.com. This morning, Jim Risoleo, our President and Chief Executive Officer will begin by providing some thoughts on his transition, then will provide an overview of our fourth quarter and full-year results, discuss our recent transaction, and conclude with his outlook for 2017. Greg Larson, our Chief Financial Officer, will then provide greater detail on our fourth quarter performance by markets, margins, balance sheet, and our guidance for 2017. Following their remarks, will be available to respond to your questions. And now, I'd like to turn the call over to Jim. James F. Risoleo - Host Hotels & Resorts, Inc.: Thanks, Gee. Good morning, everyone, and thank…

And we'll go first to Anthony Powell from Barclays.

First, a clarification on the EBITDA impact of the acquisitions you announced today and the disposition. If you isolate the Don CeSar, JW Marriott and the unidentified deal, what is the EBITDA total change from those three transactions? Gregory J. Larson - Host Hotels & Resorts, Inc.: Hey, Anthony, this is Greg. So I think if you remember from prior conversations last year, obviously, we sold 10 hotels last year for approximately $500 million. And as we talked about, those hotels generated $13 million in 2016 and that will not be replicated in 2017. So that's a minus $13 million. The acquisitions that Jim talked about today, the Don, the unidentified asset and the disposition of Desert Springs, those three things combined results in plus $3 million of EBITDA. So if you take the minus $13 million from the 2016 disposition, combine with the plus $3 million, that gives you the minus $10 million that I talked about in the bridge.

Right, that's very helpful. And just going to the overall acquisition and transaction philosophy, Jim, you sold an asset and you're buying two. Are you a net buyer, or seller and how do you approach the leverage at this point in the cycle? James F. Risoleo - Host Hotels & Resorts, Inc.: Anthony, I think that's a great question. We are going to be opportunistic and as I mentioned in my prepared remarks, we will look for transactions that create shareholder value. We are not interested in buying assets just for the sake of growth. We underwrite every transaction in a disciplined manner. We underwrite each deal to a 800 basis point increase, plus over our cost of capital and if the right opportunities present themselves, we will pursue them. That goes on the sales side as well. As I mentioned, we are not implementing a systematic sales program in 2017, but every asset in the portfolio is for sale. If we get an offer that is truly accretive to shareholder value, we're not going to be shy or bashful about pulling the trigger and selling a hotel. So to say today that we're going to be a net buyer or a net seller, I really can't – I can't give you a definitive answer on that, because I just don't know how the year is going to unfold. I will tell you that we are working on a number of opportunities and if they pencil, we would intend to pursue them, but at this point in time, the only thing I can refer to is the guidance we've given.

All right. That's it for me. Thank you. Gregory J. Larson - Host Hotels & Resorts, Inc.: Thanks.

And our next question goes to Smedes Rose of Citi.

Hi. Thanks. Jim, you mentioned in your opening remarks the potential fall-off in international visitation, can you remind us what does international visitation comprise out of Host's overall demand at this point? James F. Risoleo - Host Hotels & Resorts, Inc.: Sure, Smedes. It's roughly 10%. And...

Portfolio-wide demand? James F. Risoleo - Host Hotels & Resorts, Inc.: Pardon.

I'm sorry. So portfolio-wide demand, 10% is driven by international visitation? Gregory J. Larson - Host Hotels & Resorts, Inc.: Correct James F. Risoleo - Host Hotels & Resorts, Inc.: That is correct. Gregory J. Larson - Host Hotels & Resorts, Inc.: As you realize, Smedes, I mean, certain market – it varies by market, right. New York certainly would be a market with more demand than 10% and there would be other markets with a lot less than that.

Okay. And then can I just slip in one more, your acquisition of the Don CeSar, could you talk about, obviously, we can look at the per key, but what sort of EBITDA multiple or cap rate was that and where do you think its stabilizes when you've managed to exploit some of the opportunities you mentioned? James F. Risoleo - Host Hotels & Resorts, Inc.: Well, we think that Don is a terrific acquisition. It's just the kind of asset that works for Host for a lot of reasons. First of all, it is truly iconic, it's on one of the best beaches in America. We were able to buy that asset at a price that puts it in the top 10 on an EBITDA per key basis today within our portfolio as it is. Bringing in Davidson Hotels and implementing a strategic capital plan, as well as using our proprietary internal benchmarking that we have, given our broad resort exposure, we believe is going to allow us to meaningfully increase the net cash-on-cash return and the EBITDA, as if that we're open and operating today. So roughly the going in cap rate is 6.5% to 7%. We think we can meaningfully increase that return over the next several years.

Okay. Thank you.

Our next question comes from Shaun Kelley from Bank of America.

Hey. Good morning. Jim, also in the prepared remarks, you mentioned sort of the willingness to kind of move outside of the top, I think you said, 10 to 20 markets. Could you just elaborate a little bit on that? That's not really been where many of the public, full service retail have focused, and does this mean we'd expect to see generally smaller transaction sizes versus some of the big flagship Phoenician style group properties that Host has often specialized in the past? James F. Risoleo - Host Hotels & Resorts, Inc.: Sure, Shaun. I think it's – we're currently operating in the top 10 to 12 markets. We are prepared to look beyond those 10 to 12 markets and to opportunistically acquire assets where the opportunities are. I would point out that The Phoenician was not in one of the top 10 to 12 markets when we made a decision to acquire that asset in mid-2015. Similarly, the Don really wasn't in one of our top 10 to 12 markets, but we saw opportunity in both of those deals. Our ideal preference would be to acquire bigger, chunkier assets where we can use our scale and our information to add value. That is the focus that we're going to have going forward.

Thank you very much.

And our next question goes to Stephen Grambling of Goldman Sachs. Stephen Grambling - Goldman Sachs & Co.: Thanks. Good morning. Just on the guidance, could you just provide a little bit more color on some of the cost savings that you've implemented, I guess, that will occur this year in the back half that they impact next year and some of the offsets that you anticipate? Thanks. Gregory J. Larson - Host Hotels & Resorts, Inc.: Sure. So I think when I think of business over long periods of time, I think, in the past, I probably would have said that, that breakeven on the margin front would have probably been at 2.5% to 3% RevPAR growth. Obviously, last year was sort of a unique and powerful year with 2.7% RevPAR growth, we are able to achieve 80 basis points in margin growth and some of that is because of the things we talked about, the time, motion studies with some of the bigger hotels, better productivity, some of the benefits we've seen on technology, we've also reduced insurance costs by over 10% and utility costs, because of our energy ROI projects reduced utilities as well. So, all those things came together to produce, really, I think record level margin growth for us with that level of RevPAR. I think, when I think about 2017, some of those things will still benefit us. We renew our insurance once a year in June and so that double-digit decline in insurance will certainly benefit us for the first six months of 2017. We continue to implement additional energy ROI projects. So even though it's sort of hard today to predict utility cost, I do think we will continue to have benefit from the energy ROI projects that will help us. And…

And our next question comes from Robin Farley with UBS.

Great. Yeah. Just to get a little more color around – it sounds like you are shifting more to being acquirer of assets rather than a seller. Are you leading towards more of single assets you mentioned, some example of single asset acquisitions outside the top 10 to 12 markets or more portfolio, or actually even potentially a smaller cap REIT overall, I guess, just to think about how you think about those different options? James F. Risoleo - Host Hotels & Resorts, Inc.: I think we think about all the options in the same way, Robin. If the transactions are accretive to shareholder value, if they're going to drive growth, profit and value for our shareholders, we will opportunistically pursue them. So it's difficult to really go beyond that at this point in time. I think we're very open-minded, and we are going to evaluate the opportunities as we see them and as they are presented to us.

So yesterday, there was a little bit of activity from others in the market, and if we think about a REIT that might interest you, maybe before your comments today about looking outside of the top 10 to 12 markets that you're already in, we might have thought there are certain REITs that you wouldn't be interested in. But could it be of interest to you now a REIT that is in maybe some more of those secondary markets than what you've typically looked at? James F. Risoleo - Host Hotels & Resorts, Inc.: I think it's premature for me to speculate on anything along those lines at this point in time.

Okay, all righty. Thank you very much. Gregory J. Larson - Host Hotels & Resorts, Inc.: Thanks. James F. Risoleo - Host Hotels & Resorts, Inc.: Thank you.

Our next question comes from Rich Hightower from Evercore.

Hi. Good morning, guys. And... Gregory J. Larson - Host Hotels & Resorts, Inc.: Morning. James F. Risoleo - Host Hotels & Resorts, Inc.: Morning, Rich.

...sort of along similar line of questioning here. Just with respect to maybe the change in investment strategy and focus, so let's assume that hurdle rates and the spread versus your cost of capital haven't changed over time, can you give us a sense, maybe an example, a post-mortem of sorts of yields that you had looked at in the past, but maybe weren't as attractive under the old regime or the old paradigm that you think maybe would be a good fit under the new paradigm, for instance? James F. Risoleo - Host Hotels & Resorts, Inc.: Yeah, Rich, that's a good question. And I just want to reiterate that we have a fantastic company here. We have a truly iconic portfolio of hotels, well diversified across the United States. We have scale and flexibility, which gives us the ability to buy larger complex deals. We have unparalleled information and insight based on the portfolio that we have in the proprietary systems we put in place. And we have a strong balance sheet, which we intend to exploit going forward within reason. We're not talking about going beyond our investment grade category. I'm looking to the future and that's where I'm focused right now. Gregory J. Larson - Host Hotels & Resorts, Inc.: Yeah. I think that's right. And obviously, as we mentioned today, and as Jim has already mentioned, right, that Don is a great example of an asset that's outside of the top 10, 12 markets, the Phoenician was too. In fact, both of those hotels are resorts and as you know, Rich, the nice thing about resorts when you look at supply growth over the next three years, supply growth in the resort segment is half a percent or less. So obviously, sort of very compelling to us.

Okay. Fair enough. Thanks, guys.

Our next question comes from Thomas Allen with Morgan Stanley. Thomas G. Allen - Morgan Stanley & Co. LLC: Hi. Yeah. Just two questions on RevPAR. First, just a clarification, you said that January RevPAR growth was very strong. Can you actually quantify it? And then second, just on the fourth quarter transient result, you said there have been some transient weakness, was that just a result of group replacing it, or – so higher-quality business replacing it or was that some corporate demand weakness as well? Thanks. Gregory J. Larson - Host Hotels & Resorts, Inc.: Hey, Thomas. This is Greg. So obviously, we had a fantastic January for a number of reasons, but primarily because one of our largest markets for us is D.C., and D.C. had really a spectacular January. And so for us, our January RevPAR was north of 7%. So a great way to start off the year. I mean, that certainly beat our internal expectations and it certainly beat our managers' expectations for our portfolio. So that is a great way to start out the year. I think, when we were talking about some of that weakness in transient, I think what we were talking about, you've seen it – we witnessed this all of last year is, all of the companies including Host, we're really in a sort of record occupancy levels, we know leisure business has been very strong on the transient side, group business has been very strong, but the one customer that has been a little bit weaker is the corporate, the corporate transient customer. And so, we saw some of that weakness in October, certainly, in fact, in October of last year, we actually missed our forecast because of that. I think the good news from our perspective is…

Our next question comes from Wes Golladay with RBC Capital Markets.

Yeah, good morning, everyone. Gregory J. Larson - Host Hotels & Resorts, Inc.: Good morning.

Sticking with that corporate travel, what level of demand do you need to see from that customer in order to get that up-mix at the hotel? Gregory J. Larson - Host Hotels & Resorts, Inc.: What's interesting about it, as I mentioned, right, our group business has been good, the leisure segment of transient has been strong. Obviously, in 2016, the weak segment is this corporate business traveler that we're talking about. But what's happened is, if you look at the average rate for that traveler, our highest rated customer and compare that to special corporate discount, there is a big rate delta there, right, between our highest rated customer and special corporate, it's about a $60 delta between our highest rated customer and our discounted segment, it's about – it's approximately a $100 discount. And so, what happened in 2016 is, even though it was very easy for Host and other lodging companies to replace that customer with other forms of business, whether it was government business, contract business, or group business, there was sort of a negative mix shift that was occurring while we were replacing our highest rated customer with the lower rated customer, and so that put pressure on rates. I think what – not to get too optimistic about 2017, but what's interesting is, if we can get that customer back in 2017 and if we can have this, a positive mix shift, I think that could be a pretty, powerful thing for 2017.

So maybe if that customer grows faster than the supply growth around 3%, should be able to get that mix? Gregory J. Larson - Host Hotels & Resorts, Inc.: Yeah. No. I think, look at, we already have strong occupancy. So I think if we can get customer back, I think even with the supply growth in 2017, that would look really good.

Okay. Thanks a lot. Gregory J. Larson - Host Hotels & Resorts, Inc.: And one other thing. Look, we're speculating on that today. It's hard to know if that customer is coming back. I do think there are a couple of metrics that we always look at that that again if they come true for 2017 will be useful for us, right. One thing we always look at is business investment and if you look at the business investment stat for 2017 compared to 2016, they are up about 350 basis points on a year-over-year basis. Same thing for corporate profits, right, corporate profits declined in 2016 and they are expected to be up over 5% in 2017. So again, on a relative basis, that could be meaningful for 2017. James F. Risoleo - Host Hotels & Resorts, Inc.: I think the way I would describe it is cautious optimism at this point. The forecasts are looking great, but we haven't seen it borne (57:04) on the numbers just yet.

Okay. And that's something you wait to bake in the guidance at a later point if it does occur. Did you kind of bake in in the status quo right now? Gregory J. Larson - Host Hotels & Resorts, Inc.: Yeah. Correct. James F. Risoleo - Host Hotels & Resorts, Inc.: Correct.

Right. Thank you.

Our next question is from Chris Woronka with Deutsche Bank.

Hey. Good morning, guys. James F. Risoleo - Host Hotels & Resorts, Inc.: Good morning, Chris.

Greg, I guess a question for you. I want to dig in a little bit on the non-comparable hotels, is that, I think you did a $150 million of EBTIDA in 2016 which is ahead of your initial guidance. I think you're saying, $148 million to $154 million this year. But is there – is that – I guess, how much surprise does there tend to be in the year on those non-comparable hotel results? Gregory J. Larson - Host Hotels & Resorts, Inc.: So the non-comp – you are referring to, when I mentioned that our non-comp hotels, we're expecting the EBITDA to increase by $22 million in 2017, is that what you are referring to?

Right, right. Gregory J. Larson - Host Hotels & Resorts, Inc.: Yeah. So, I think that – I think those just like any forecast, sometimes, you can beat it, sometimes, you miss it by a touch, but I think those are good forecasts. I think what's interesting about it, if you look at some of the hotels in the non-comps that, for instance, Denver Tech, and the Hyatt in San Francisco, is both of those hotels are in, what I would consider, sort of weaker markets for us this year. But because there was so much disruption last year, I think both of those hotels, Denver Tech looks fantastic, and sort of the San Francisco Hyatt, I think both of those hotels should have very strong EBITDA growth in 2017. And then, the other hotel that we're benefiting from in the non-comp set is our San Diego Marriott. The meeting space there looks outstanding, groups love the meeting space. They are booking that hotel in a very aggressive manner right now. And so, when I think about those – the hotels in the non-comp set, I think I feel very confident with that $22 million.

Okay, that's great. And just follow up on the prior, I guess, question about group and tie – tie and group – try to tie the group and transient conversation up. Do you think – do you have enough capacity kind of left in 2017 in terms of – I know there was talk last year of grouping up a little bit. I mean, do you think you have enough space left during peak periods of 2017 or is some of that already consumed by group? Gregory J. Larson - Host Hotels & Resorts, Inc.: I mean, look, some of it is consumed, right. I mean, as Jim mentioned, if we look at our group business today for 2017, I mean, we have over 75% of that booked today, but I still think it can be important going forward that the bookings in the year, for the year are strong. I mean, if you look back to our comments about January, right, in one month, we improved our group revenue pace for the full year from up 2%, up 3%. So those group bookings in the quarter sort of in the year, for the year are still important. James F. Risoleo - Host Hotels & Resorts, Inc.: The other thing I would add, Chris, is, while group is strong, we're hopeful that as the special corporate customer comes back, that we can see positive rate shift as opposed to negative, like we saw last year.

Sure. Understood, very good. Thanks, guys. James F. Risoleo - Host Hotels & Resorts, Inc.: Thanks.

Our next question comes from Michael Bellisario with Baird. Michael J. Bellisario - Robert W. Baird & Co., Inc.: Good morning, guys. Just one quick housekeeping question. The $22 million in uplift from the non-comp hotels, is that apples and oranges with what was in the non-comp set in 2016 versus what will be in the non-comp set in 2017, because the $150 million going to $148 million to $154 million doesn't add up? Gregory J. Larson - Host Hotels & Resorts, Inc.: Yeah, our non-comp set that – two of our hotels that we performed work on in 2015, The Logan and The Camby, are now in our comp set, right. And so, when I think about the non-comp growth of $22 million, it excludes Logan and Camby. However, when I think about those two hotels as we mentioned last year, they're still ramping up, right. So those two hotels combined are going to produce RevPAR growth of close to $8 million and in EBITDA. Michael J. Bellisario - Robert W. Baird & Co., Inc.: Your customer, especially at resorts, have you seen any change in demand or booking patterns from this customer, given the high levels of consumer confidence, then also maybe due to the brands' initiatives to book direct and book more prepaid rates earlier? Gregory J. Larson - Host Hotels & Resorts, Inc.: I think you broke out. We didn't hear the beginning of that question, sorry. Michael J. Bellisario - Robert W. Baird & Co., Inc.: On the leisure customer, have you seen any change in demand or booking patterns given the high levels of consumer confidence today? And then any impact from the brands' booking initiatives trying to get customers to book sooner and maybe some prepaid rates earlier? Gregory J. Larson - Host…

This concludes today's call. Thank you for your participation. You may now disconnect.