Host Marriott Corporation today announced the settlement of the
outstanding matters relating to the terrorist attacks of September 11,
2001 affecting the New York World Trade Center Marriott and New York
Marriott Financial Center hotels with the hotels` insurer and the hotels`
manager, as well as with the Port Authority of New York and New Jersey. As
a result of these settlements, the Company received net insurance proceeds
of approximately $370 million. A portion of the proceeds was used to repay
the $65 million debt incurred upon acquisition of the World Trade Center
Marriott hotel. The remaining proceeds will be used to pay down debt,
acquire new properties or for general corporate purposes.

Under its agreement with the Port Authority, the Company surrendered the
site where the hotel was located and terminated a ground lease that would
have run until 2094. As a result, the Company is no longer obligated to
rebuild at the site, but received a right of first offer through 2023 with
respect to hotel development on the World Trade Center site. “We are very
pleased to have reached an agreement with all parties. This allows the
Port Authority to pursue its goal of redeveloping the World Trade Center
site in accordance with the master plan and assists us in our goal of
enhancing our balance sheet and overall financial flexibility,” said
Christopher J. Nassetta, president and chief executive officer of Host
Marriott.
Based on current estimates, receipt of the settlement proceeds on the
hotels should produce sufficient taxable income to allow the Company to
pay the fourth quarter 2003 dividend on its preferred stock. Taxable
income generated by the insurance recovery may also be sufficient to allow
the Company to pay up to the first three quarters of dividends on its
preferred stock in 2004. Preferred dividend payments beyond those
supported by the taxable income generated by this settlement will depend
on, among other factors, taxable income or loss from operations in 2004 or
the Company`s ability to meet a minimum EBITDA to interest coverage ratio
(both as required by the senior notes indenture).

As a result of this settlement, the Company will record a one-time gain of
approximately $210 million, as well as approximately $17 million of 2003
net business interruption proceeds, which will be reflected in net income
in the Company`s 2003 financial statements. The $210 million gain is
comprised of approximately $155 million in post-2003 business interruption
proceeds and approximately $55 million from the disposition of the World
Trade Center hotel. The settlement will increase the Company`s previous
guidance issued on November 10, 2003 with respect to net income (loss),
diluted loss per share, and Funds From Operations (as defined by NAREIT),
or FFO, per diluted share. The one-time gain will be excluded from
Adjusted Earnings Before Interest Expense, Taxes, Depreciation and
Amortization and other items, or Adjusted EBITDA, and the Company`s
previous guidance with respect to Adjusted EBITDA remains unchanged.
Accordingly, the Company is issuing the following updated guidance for the
full year 2003 to reflect the one-time gain (the approximate $17 million
in 2003 business interruption proceeds was included in the Company`s
previous guidance):
* Net income should be approximately $11 million to $25 million; * Diluted
loss available to common shareholders per share should improve
approximately $.70 to a range of $(.08) to $(.03); * FFO per diluted share
should increase approximately $.50 to a range of $1.01 to $1.05; and *
Adjusted EBITDA should continue to be approximately $715 million to $730
million.

See schedules below for a reconciliation of the net loss available to
common stockholders to FFO per diluted share and a reconciliation of net
income to Adjusted EBITDA, both of which are non-GAAP financial measures
within the meaning of the Securities and Exchange Commission, or SEC,
rules.
This press release contains forward-looking statements within the meaning
of federal securities regulations. 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 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 cost;
and our ability to continue to satisfy complex rules in order for us to
qualify as a REIT for federal income tax purposes. For further information
regarding risks and uncertainties associated with our business, please
refer to the Company`s filings with the Securities and Exchange
Commission. 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
December 2, 2003 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.
Host Marriott is a Fortune 500 lodging real estate company, which owns 120
upscale and luxury full-service hotel properties primarily operated under
Marriott, Ritz-Carlton, Four Seasons, Hyatt and Hilton brand names.

——-