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 Host Marriott Acquiring 38 Luxury and Upscale Hotels
from Starwood for Approximately $4.04 billion
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November 14, 2005 - Host Marriott Corporation announced today that it has signed a definitive merger agreement to acquire 38 luxury and upper upscale hotels from Starwood Hotels and Resorts ("Starwood") for approximately $4.04 billion. The portfolio consists of 25 domestic and 13 international properties and a total of 18,964 rooms managed under the Westin(R), Sheraton(R), W Hotels(R), The Luxury Collection(R) and St. Regis(R) brands*. As part of this transaction, the Company expects to assume approximately $700 million of debt and to issue approximately $2.3 billion of equity (133,529,412 common shares at the exchange price of $17.00 per share) to Starwood stockholders. The remainder of the purchase price will be paid in cash. The transaction is expected to close in the first quarter of 2006, and is subject to the approval of the Company's stockholders, as well as other closing conditions. The boards of directors of both companies have approved the proposed transaction.

Christopher J. Nassetta, president and chief executive officer, stated, "We are thrilled to announce this acquisition. We believe these assets represent one of the highest quality lodging portfolios available and they will complement our existing portfolio of outstanding hotels. We also believe that we acquired the portfolio at an attractive price that will be accretive to both our earnings and our credit and will add to the short-term and long- term value of the Company." Nassetta also added, "We are very excited about the opportunity to enhance and grow our relationship with Starwood, one of the premier innovative operating and brand companies in the lodging industry. We look forward to working with Starwood to maximize the value of these properties and intend to find additional opportunities that will benefit both companies shareholders."

Strong Portfolio

The portfolio assets are high-quality, luxury and upper upscale hotels with an average size of approximately 500 rooms and an expected RevPAR of $117 for 2005. Approximately 80% of the portfolio revenues are from properties in urban, convention or resort locations, six of which are city-center hotels with over 750 rooms. The portfolio is geographically diverse, with most assets located in markets with strong growth profiles and limited near-term supply. In addition, the Company is launching its expansion into Europe and increasing its presence in key domestic markets such as New York, Boston, San Diego and Seattle as a result of this acquisition.

"The Starwood portfolio fits our stated strategy of owning irreplaceable assets in premier markets with strong growth profiles and limited near-term supply," said James F. Risoleo, executive vice president of acquisitions and development.
 

Starwood Portfolio Asset Listing
(including # of rooms)

1  Sheraton New York Hotel New York NY USA 1,746
2  Sheraton Centre Toronto Hotel Toronto Canada 1,377
3  Sheraton Boston Hotel Boston MA USA 1,216
4  Sheraton San Diego Hotel & Marina San Diego CA USA 1,044
5  The Westin Seattle Seattle WA USA 891
6  Le Centre Sheraton Montreal Hotel Montreal Canada 825
7  The Westin Los Angeles Airport Los Angeles CA USA 740
8  W New York New York NY USA 688
9  Sheraton Roma Hotel & Conference Center Rome Italy 634
10 The Westin Indianapolis Indianapolis IN USA 573
11 Sheraton Indianapolis Hotel & Suites Indianapolis IN USA 560
12 The Westin Mission Hills Resort & Rancho Spa Mirage CA USA 512
13 The Westin Palace, Madrid, a Luxury Collection Hotel Madrid Spain 468
14 The Westin Cincinnati Cincinnati OH USA 456
15 Sheraton Stamford Hotel Stamford CT USA 448
16 The Westin Tabor Center Denver CO USA 430
17 W Seattle Seattle WA USA 426
18 The Westin South Coast Plaza Costa Mesa CA USA 390
19 Sheraton Milwaukee Brookfield Hotel Brookfield WI USA 389
20 Sheraton Santiago Hotel and Convention Center Santiago Chile 379
21 Sheraton Braintree Hotel Braintree MA USA 374
22 Sheraton Parsippany Hotel Parsippany NJ USA 370
23 Sheraton Skyline Hotel & Hayes United Conference Centre Kingdom 350
24 Sheraton Warsaw Hotel & Towers Warsaw Poland 350
25 The Westin Waltham-Boston Waltham MA USA 346
26 Sheraton Hamilton Hotel Hamilton Canada 301
27 Sheraton Fiji Resort Nadi Fiji 281
28 The Westin Royal Denarau Resort Nadi Fiji 273
29 The Westin Grand, Washington, D.C. Washington D.C. USA 263
30 Sheraton Suites Tampa Airport Tampa FL USA 259
31 Sheraton Needham Hotel Needham MA USA 247
32 St. Regis Hotel, Houston Houston TX USA 232
33 The Westin Palace, Milan, a Luxury Collection Hotel Milan Italy 228
34 Sheraton Tucson Hotel & Suites Tucson AZ USA 216
35 Sheraton Providence Airport Hotel Warwick RI USA 206
36 The Westin Europa & Regina, Venice Venice Italy 185
37 Capitol Hill Suites Washington D.C. USA 152
38 San Cristobal Tower a Luxury Collection Hotel Santiago Chile 139

Total Portfolio 18,964 rooms

Enhanced Brand Diversification and Growth Potential

As part of this transaction, the Company is expanding an important relationship with Starwood, and thereby diversifying its brand representation. Westin(R), the high-performing and innovative upper-upscale brand that continues to gain market share, accounts for 33% of the portfolio revenues (comprised of 25% domestic and 8% international). Sheraton(R), a brand the Company believes has significant growth potential driven by recently implemented improvements in its product and service, accounts for 55% of the portfolio (comprised of 35% domestic and 20% international). W Hotels(R), a brand that is emerging as the top hotel choice among young professionals and gen-Xers, accounts for 9% of the portfolio. In addition, the Company expects to work with Starwood to add value to the portfolio through aggressive asset management and believes that its expanded relationship with Starwood will foster additional growth opportunities for both companies in the future.

International Platform

The transaction expands the Company's geographic distribution into new markets outside of the United States. Six hotels representing 15% of the portfolio are located in Europe, and three hotels representing 10% of the portfolio are in Canada. Additional hotels are located in Fiji and Chile. Many of these international markets are in the early stages of lodging recovery, offering the opportunity for additional growth outside of the domestic lodging cycle.

Company Profile

Upon completion of the acquisition, the Company expects to have a total enterprise value of approximately $16 billion(1), making it the largest lodging company in the U.S. and the sixth-largest public REIT. Upon completion of the transaction, the Company will have 145 upper upscale and luxury hotels with over 74,000 rooms that are affiliated with 17 brands located in over 50 markets in nine countries.

Financial Considerations

The Company expects the portfolio to generate $355 million to $365 million of Earnings before Interest Expense, Taxes and Depreciation and Amortization (EBITDA) in calendar year 2006 on a stand-alone basis.

On a full-year 2006 basis, this transaction would be $.03 to $.05 accretive to the Company's Funds From Operations (FFO) per diluted share. Taking into consideration the shares expected to be issued in the transaction and the issuance and assumption of debt to finance the transaction, the Starwood portfolio is expected to generate FFO per diluted share of $1.56 to $1.64 for calendar year 2006 on a stand-alone basis(2). The transaction is also expected to modestly improve the Company's leverage and coverage ratios.

W. Edward Walter, executive vice president and chief financial officer, stated, "We worked diligently with Starwood to structure a transaction that is strategically and financially sound for both parties. Although we have arranged a bridge loan commitment with Goldman, Sachs & Co. and Deutsche Bank Securities Inc., we expect to obtain permanent financing through a variety of attractive options including unsecured and secured debt, asset sales, and potentially arranging a third party joint venture for the European assets."

EBITDA and FFO per diluted share are non-GAAP financial measures within the meaning of the rules of the Securities and Exchange Commission (SEC). See the discussion included in this press release for information regarding the non-GAAP financial measures.

Transaction Advisors

Goldman, Sachs & Co. served as financial advisor to the Company; Latham & Watkins LLP served as the Company's lead transaction counsel. Additionally, Goldman, Sachs & Co. and Deutsche Bank Securities, Inc. are acting as co-lead arrangers and joint book running managers for the Company for the bridge loan.

Additional Information about the Proposed Transaction and Where to Find It

In connection with the proposed transaction, the Company will file a proxy statement/prospectus as part of a registration statement on Form S-4 and other documents regarding the proposed transaction with the Securities and Exchange Commission ("SEC"). Investors and security holders are urged to read the proxy statement/prospectus when it becomes available because it will contain important information about the Company, Starwood Hotels & Resorts and the proposed acquisition. A definitive proxy statement/prospectus will be sent to stockholders of the Company seeking their approval of the issuance of Host Marriott Corporation common stock in the transactions contemplated by the master agreement. Investors and security holders may obtain a free copy of the definitive proxy statement/prospectus (when available) and other documents filed by the Company with the SEC at the SEC's web site at http://www.sec.gov/. The definitive proxy statement/prospectus and other relevant documents may also be obtained, when available, free of cost by directing a request to Host Marriott Corporation, 6903 Rockledge Drive, Suite 1500, Bethesda, MD 20817, Attention Investor Relations, (telephone 240-744-1000). Investors and security holders are urged to read the proxy statement/prospectus and other relevant material when they become available before making any voting or investment decisions with respect to the proposed transaction.

The Company and its directors and executive officers may be deemed, under SEC rules, to be participants in the solicitation of proxies from the stockholders of Host Marriott Corporation in respect of the proposed transaction. Information about the Company and its directors and executive officers, and their ownership of securities in the Company, is set forth in the proxy statement for Host Marriott Corporation's 2005 Annual Meeting of Stockholders, which was filed with the SEC on April 11, 2005. Additional information regarding the direct and indirect interests of those persons may be obtained by reading the proxy statement/prospectus regarding the proposed transaction when it becomes available.

This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

About Host Marriott

Host Marriott is a Fortune 500 lodging real estate company that currently owns or holds controlling interests in 107 upper upscale and luxury hotel properties primarily operated under premium brands, such as Marriott(R), Ritz- Carlton(R), Hyatt(R), Four Seasons(R), Fairmont(R), Hilton(R) and Westin(R) (*). For further information, please visit the Company's website at http://www.hostmarriott.com/.

Cautionary Language Concerning Forward-Looking Statements

This press release contains forward-looking statements within the meaning of federal securities regulations. These forward-looking statements are identified by their use of terms and phrases such as "anticipate," "believe," "could," estimate," "expect," "intend," "may," "plan," predict," "project," "will," "continue" and other similar terms and phrases, including references to assumption and forecasts of future results, statements about the expected scope and timing of the acquisition, expected earnings, FFO per diluted share and credit effects of the acquisition, consequences of management efforts, opportunities for growth and expectations as to timing, nature and terms of financing and other sources of funds. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made. These risks include, but are not limited to: national and local economic and business conditions, including the potential for terrorist attacks, that will affect occupancy rates at our hotels and the demand for hotel products and services; operating risks associated with the hotel business; risks associated with the level of our indebtedness and our ability to meet covenants in our debt agreements; relationships with property managers; our ability to maintain our properties in a first-class manner, including meeting capital expenditure requirements; our ability to compete effectively in areas such as access, location, quality of accommodations and room rate structures; changes in travel patterns, taxes and government regulations which influence or determine wages, prices, construction procedures and costs; our ability to complete pending acquisitions and dispositions; and our ability to continue to satisfy complex rules in order for us to qualify as a real estate investment trust for federal income tax purposes and other risks and uncertainties associated with our business described in the Company's filings with the SEC. The completion of the transaction with Starwood (either in whole or in part relating to the acquisition of certain hotels) is subject to numerous closing conditions and there can be no assurances that the transactions as a whole, or portions of it will be completed. These closing conditions include, but are not limited to: the Company receiving approval from its stockholders to issue shares to Starwood's Class B holders, obtaining various lender consents and regulatory approvals, the accuracy of representations and warranties and compliance with covenants, the absence of material events or conditions, and other customary closing conditions. Our expectations as to the financial consequences of the acquisition may be affected by the risks noted above and factors unique to acquisitions, including the timing and successful integration these hotels into our portfolio and the number and location of the hotels we ultimately acquire with the acquisition. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. All information in this release is as of November 13, 2005, and the Company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.

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Contact:

Host Marriott Corporation
Kevin J. Jacobs
Vice President
+1-240-744-5212
http://www.hostmarriott.com

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Also See: Host Marriott Reports 4th Qtr 2004 Profit of $61 million Compared with a Profit of $150 million a Year Earlier; Hotel RevPAR Up 8.6% / Hotel Operating Statistics / February 2005

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