Park Hotels & Resorts Inc.

- Operating Model and Valuation

($ USD in Millions Except Per Share and Per Unit Amounts in USD as Stated)

Operating Assumptions: Units:

Company Name: Name Park Hotels & Resorts Inc. Current Equity Value: $ 5,487
Ticker: Name PK (-) Cash & Cash-Equivalents: (293)
Company Type: Name Hotel REIT (+) Total Debt: 3,222
Last Historical Year: Year 2016-12-31 (+) Preferred Stock: -
(+) Noncontrolling Interests: (49)
Valuation Date: Date 2017-01-27 Current Enterprise Value: $ 8,367
Current Share Price: $ as Stated $ 27.77
Shares Outstanding: Millions 197.605

Months in Year: # 12
Conversion Units: # 1,000,000
Minimum Cash Balance % Operating Expenses: % 5.0%

Future Funding Requirements - % Debt: % 50.0%

Future Funding Requirements - % Equity: % 50.0%

Historical: Projected:
Income Statement: Units: FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21

Total Revenue: $M $ 2,513 $ 2,688 $ 2,727 $ 2,819 $ 2,903 $ 3,045 $ 3,194 $ 3,340

Operating Expenses:
(-) Property-Level Expenses: $M (1,758) (1,862) (1,909) (1,981) (2,050) (2,156) (2,271) (2,385)
(-) Impairment Loss: $M - - (15) - - - - -
(-) Depreciation & Amortization: $M (248) (287) (300) (316) (331) (353) (377) (401)
(-) Corporate & Other: $M (67) (96) (85) (88) (91) (95) (100) (104)
Total Operating Expenses: $M (2,073) (2,245) (2,309) (2,385) (2,471) (2,604) (2,748) (2,890)

(+) Gain / (-) Loss on Sale of Assets, Net: $M - 143 - (30) (29) (27) (26) (24)

Operating Income: $M 440 586 418 404 403 413 421 426

(-) Net Interest Expense: $M (185) (185) (179) (119) (117) (115) (120) (122)
(+/-) Other Items: $M 43 16 (19) - - - - -

Pre-Tax Income: $M 298 417 220 285 286 299 301 305
(-) Income Taxes: $M (117) (118) (82) - - - - -
Net Income: $M 181 299 138 285 286 299 301 305
(-) Net Income Attributable to NCI: $M (5) (7) (6) (6) (6) (6) (6) (6)
Net Income Attributable to Parent: $M $ 176 $ 292 $ 132 $ 279 $ 280 $ 293 $ 295 $ 299

Historical: Projected:
Income Statement Drivers: Units: FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21

Depreciation & Amortization % Revenue: % 9.9% 10.7% 11.0% 11.2% 11.4% 11.6% 11.8% 12.0%
Corporate & Other % Revenue: % 2.7% 3.6% 3.1% 3.1% 3.1% 3.1% 3.1% 3.1%

Weighted Average Interest Rate on Debt: % 4.4% 4.3% 4.4% 3.7% 3.7% 3.6% 3.6% 3.5%

Income Tax Rate: % 39.3% 28.3% 37.3% - - - - -

 Historical: Projected:
Balance Sheet: Units: FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21
ASSETS:
Gross Real Estate Assets: $M $ 8,318 $ 10,353 $ 10,413 $ 10,520 $ 10,898 $ 11,328 $ 11,810 $ 12,320
(-) Accumulated Depreciation: $M (1,407) (1,677) (1,872) (2,188) (2,519) (2,872) (3,249) (3,650)
Net Real Estate Assets: $M 6,911 8,676 8,541 8,332 8,379 8,456 8,562 8,671

Cash & Cash-Equivalents: $M 42 72 293 296 124 130 137 144

Accounts Receivable: $M 99 122 130 141 148 158 169 180
Goodwill & Other Intangibles: $M 857 669 648 648 648 648 648 648
Other Assets: $M 1,805 248 222 226 229 237 246 254

TOTAL ASSETS: $M $ 9,714 $ 9,787 $ 9,834 $ 9,642 $ 9,528 $ 9,630 $ 9,762 $ 9,897

LIABILITIES & EQUITY:

Debt & Other Borrowings: $M 4,253 4,109 3,222 3,167 3,185 3,320 3,474 3,276
Accounts Payable: $M 146 171 167 174 180 190 201 211
Other Liabilities: $M 2,722 2,710 2,622 2,623 2,620 2,604 2,583 2,543
Total Liabilities: $M 7,121 6,990 6,011 5,964 5,985 6,115 6,257 6,030

Common Shareholders' Equity: $M 2,617 2,821 3,872 3,721 3,580 3,546 3,530 3,887
(+) Noncontrolling Interests (NCI): $M (24) (24) (49) (43) (37) (31) (25) (19)
Total Equity: $M 2,593 2,797 3,823 3,678 3,543 3,515 3,505 3,868

TOTAL LIABILITIES & EQUITY: $M $ 9,714 $ 9,787 $ 9,834 $ 9,642 $ 9,528 $ 9,630 $ 9,762 $ 9,897

Balance Check: OK! OK! OK! OK! OK! OK! OK! OK!

Historical: Projected:
Balance Sheet Drivers: Units: FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21

Accounts Receivable % Revenue: % 3.9% 4.5% 4.8% 5.0% 5.1% 5.2% 5.3% 5.4%
Other Assets % Revenue: % 71.8% 9.2% 8.1% 8.0% 7.9% 7.8% 7.7% 7.6%

Accounts Payable % Operating Expenses: % 7.0% 7.6% 7.2% 7.3% 7.3% 7.3% 7.3% 7.3%
Other Liabilities % Operating Expenses: % 131.3% 120.7% 113.6% 110.0% 106.0% 100.0% 94.0% 88.0%
 Historical: Projected:
Cash Flow Statement: Units: FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21
Cash Flow from Operations:
(+) Net Income Attributable to Parent: $M $ 176 $ 292 $ 132 $ 279 $ 280 $ 293 $ 295 $ 299
(+) Net Income Attributable to NCI: $M 5 7 6 6 6 6 6 6
(+) Depreciation & Amortization: $M 248 287 300 316 331 353 377 401
(+) Impairment Loss: $M - - 15 - - - - -
(-) Gain / (+) Loss on Sale of Assets, Net: $M - (143) - 30 29 27 26 24
(+/-) Changes in Goodwill & Intangibles: $M - - - - - - - -
(+/-) Other Items, Net: $M 75 15 (17) - - - - -
(+/-) Change in Working Capital: $M 12 61 (37) (6) (8) (24) (31) (48)
Cash Flow from Operations: $M $ 516 $ 519 $ 399 $ 624 $ 637 $ 655 $ 673 $ 681

Cash Flow from Investing:

(-) Recurring Maintenance CapEx: $M $ (171) $ (226) $ (227) (237) (247) (262) (278) (294)
(-) Acquisitions, Net of Cash Acquired: $M - (1,410) - - (250) (275) (300) (300)
(-) Developments & Redevelopments: $M - - - (50) (60) (70) (80) (90)
(-) Proceeds from Asset Dispositions: $M 15 1,866 - 150 150 150 150 150
(+/-) Other Items, Net: $M 36 - 17 - - - - -
Cash Flow from Investing: $M $ (120) $ 230 $ (210) (137) (407) (457) (508) (534)

Cash Flow from Financing:

(+/-) Change in Debt: $M $ (14) $ (612) $ (765) (55) 18 135 154 (198)
(+) Stock Issuances / (-) Repurchases: $M - - - - 18 135 166 552
(+) Cash Contribution from Parent: $M - - 987 - - - - -
(-) Cash Dividends Paid to Parent: $M (351) (81) (180) - - - - -
(-) Cash Dividends to Shareholders: $M - - - (429) (439) (460) (476) (493)
(+/-) Other Items, Net: $M (36) (22) (12) - - - - -
Cash Flow from Financing: $M $ (401) $ (715) $ 30 $ (484) $ (402) $ (190) $ (157) $ (139)

Effect of FX Rate Effects: $M (1) (4) 2 (1) (1) (1) (1) (1)

(+) Net Change in Cash & Cash-Equivalents: $M (6) 30 221 3 (172) 7 7 7

(+) Beginning Cash: $M 48 42 72 293 296 124 130 137
Ending Cash: $M $ 42 $ 72 $ 293 $ 296 $ 124 $ 130 $ 137 $ 144

Historical: Projected:
Cash Flow Statement Drivers: Units: FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21

Recurring Maintenance CapEx % Revenue: % 6.8% 8.4% 8.3% 8.4% 8.5% 8.6% 8.7% 8.8%

(+) Net Income Attributable to Parent: $M $ 176 $ 292 $ 132 $ 279 $ 280 $ 293 $ 295 $ 299
(+) Depreciation & Amortization: $M 248 287 300 316 331 353 377 401
(+) Impairment Loss: $M - - 15 - - - - -
(-) Gain / (+) Loss on Sale of Assets, Net: $M - (143) - 30 29 27 26 24
(+/-) Other Adjustments: $M - 18 35 35 35 35 35 35
Funds from Operations (FFO): $M $ 424 $ 454 $ 482 $ 659 $ 675 $ 708 $ 733 $ 758

Dividends % FFO: % 65.0% 65.0% 65.0% 65.0% 65.0%

Planned Dividends: $M 429 439 460 476 493
Scheduled Debt Maturities: $M 55 - - 12 750

Minimum Cash Balance: $M 119 124 130 137 144

Cash Balance Before Debt/Equity Financing: $M 296 87 (140) (194) (959)
Debt/Equity Funding Required: $M - 37 270 331 1,104

Debt Issued: $M - 18 135 166 552

Equity Issued: $M - 18 135 166 552

Share Count: # Millions 197.605 197.605 198.263 203.122 209.083 228.959

Historical: Projected:
Key Metrics and Ratios: Units: FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21

EBITDA: $M $ 688 $ 730 $ 733 $ 750 $ 763 $ 793 $ 823 $ 851

EBITDA Growth: % N/A 6.1% 0.4% 2.3% 1.8% 4.0% 3.8% 3.4%
EBITDA Margin: % 27.4% 27.2% 26.9% 26.6% 26.3% 26.1% 25.8% 25.5%

Net Operating Income (NOI): $M 755 826 818 838 853 888 923 955
NOI Growth: % N/A 9.4% (1.0%) 2.4% 1.9% 4.1% 3.9% 3.5%

Forward Cap Rate Based on Gross RE Assets: % 9.9% 7.9% 8.0% 8.1% 8.2% 8.1% 8.1%

Dividends per Share: $ as Stated $ 2.17 $ 2.21 $ 2.26 $ 2.28 $ 2.15

Dividend Yield: % 7.8% 8.0% 8.2% 8.2% 7.8%

Debt / EBITDA: x 6.18 x 5.63 x 4.40 x 4.22 x 4.18 x 4.19 x 4.22 x 3.85 x
Net Debt / EBITDA: x 6.12 x 5.53 x 4.00 x 3.83 x 4.01 x 4.02 x 4.05 x 3.68 x
EBITDA / Interest: x 3.72 x 3.95 x 4.09 x 6.29 x 6.51 x 6.92 x 6.89 x 7.00 x

Total Debt / Total Equity: % 164.0% 146.9% 84.3% 86.1% 89.9% 94.4% 99.1% 84.7%
Total Debt / Total Assets: % 43.8% 42.0% 32.8% 32.8% 33.4% 34.5% 35.6% 33.1%

EV / EBITDA: x 11.4 x 11.2 x 11.0 x 10.5 x 10.2 x 9.8 x

P / FFO: x 11.4 x 8.3 x 8.1 x 7.8 x 7.5 x 7.2 x
Park Hotels & Resorts Inc. - Revenue and Expense Projections
($ USD in Millions Except Per Share and Per Unit Amounts in USD as Stated)

Historical: Projected:
Consolidated Hotels: Units: FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21

Revenue:
(+) Rooms: $M $ 1,679 $ 1,783 $ 1,795 $ 1,848 $ 1,899 $ 1,951 $ 2,001 $ 2,040
(+) Food & Beverage: $M 644 691 719 751 783 813 841 866
(+) Other: $M 190 214 213 219 225 232 237 242
(+) Revenue from Acquired Hotels: $M - - - - - 52 109 172
(+) Revenue from Developed/Redeveloped Hotels: $M - - - - 29 64 105 152
(-) Lost Revenue from Disposed Hotels: $M - - - - (34) (67) (100) (133)
Total Revenue: $M 2,513 2,688 2,727 2,819 2,903 3,045 3,194 3,340

Property-Level Expenses:
(-) Rooms: $M (457) (456) (466) (479) (490) (502) (512) (520)
(-) Food & Beverage: $M (454) (487) (503) (525) (548) (568) (589) (606)
(-) Other Property-Level: $M (770) (830) (849) (883) (918) (950) (984) (1,013)
(-) Management Fees: $M (77) (89) (91) (94) (97) (102) (107) (111)
(-) Expenses from Acquired Hotels: $M - - - - - (36) (77) (121)
(-) Expenses from Developed/Redeveloped Hotels: $M - - - - (20) (45) (74) (106)
(+) Expenses from Disposed Hotels: $M - - - - 24 47 70 93
Total Property-Level Expenses: $M (1,758) (1,862) (1,909) (1,981) (2,050) (2,156) (2,271) (2,385)

Net Operating Income (NOI): $M 755 826 818 838 853 888 923 955
NOI Margin: % 30.0% 30.7% 30.0% 29.7% 29.4% 29.2% 28.9% 28.6%

Gross Real Estate Assets: $M 8,318 10,353 10,413 10,520 10,898 11,328 11,810 12,320
Cap Rate: % 9.9% 7.9% 8.0% 8.1% 8.2% 8.1% 8.1%

Historical: Projected:
Existing Hotels - Revenue and Expenses: Units: FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21

Average Room Count: # Rooms 30,668 30,652 30,485 30,485 30,485 30,485 30,485 30,485

Occupancy Rate: % 80.9% 81.9% 81.0% 81.2% 81.4% 81.6% 81.8% 82.0%
Days in Period: # Days 365 365 366 365 365 365 366 365

Average Daily Rate (ADR): $ / Room Night $ 185.41 $ 194.59 $ 198.62 $ 204.58 $ 209.69 $ 214.93 $ 219.23 $ 223.62
ADR Growth %: % 4.2% 5.0% 2.1% 3.0% 2.5% 2.5% 2.0% 2.0%

Revenue per Available Room (RevPAR): $ / Room Night $ 149.99 $ 159.37 $ 160.88 $ 166.12 $ 170.69 $ 175.39 $ 179.33 $ 183.37

Available Room Nights: # Room Nights 11,193,820 11,187,798 11,157,327 11,126,843 11,126,843 11,126,843 11,157,327 11,126,843
Occupied Room Nights: # Room Nights 9,055,800 9,162,806 9,037,435 9,034,996 9,057,250 9,079,503 9,126,693 9,124,011

F&B Revenue per Occupied Room Night: $ / Room Night $ 71.11 $ 75.41 $ 79.56 $ 83.14 $ 86.46 $ 89.49 $ 92.17 $ 94.94
F&B Revenue Growth %: % 3.5% 6.0% 5.5% 4.5% 4.0% 3.5% 3.0% 3.0%

Other Revenue per Occupied Room Night: $ / Room Night $ 20.98 $ 23.36 $ 23.57 $ 24.28 $ 24.88 $ 25.50 $ 26.01 $ 26.54
Other Revenue Growth %: % 5.6% 11.3% 0.9% 3.0% 2.5% 2.5% 2.0% 2.0%

Room Margin: % 72.8% 74.4% 74.0% 74.1% 74.2% 74.3% 74.4% 74.5%
Food & Beverage Margin: % 29.5% 29.5% 30.0% 30.0% 30.0% 30.0% 30.0% 30.0%

Other Property-Level Expenses per Available Room: $ / Room $ 25,108 $ 27,079 $ 27,850 $ 28,964 $ 30,123 $ 31,177 $ 32,268 $ 33,236
Property-Level Expenses Growth %: % 4.9% 7.9% 2.8% 4.0% 4.0% 3.5% 3.5% 3.0%

Management Fees % Revenue: % 3.1% 3.3% 3.3% 3.3% 3.3% 3.3% 3.3% 3.3%
 Historical: Projected:
Acquisitions: Units: FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21

Acquisitions, Net of Cash Acquired: $M $ - $ 1,410 $ - $ - $ 250 $ 275 $ 300 $ 300

Cap Rate: % 6.1% 6.1% 6.2% 6.3% 6.3% 6.4%

Incremental Annual NOI: $M - - 16 17 19

NOI Margin: % 30.0% 30.0% 30.0% 30.0% 30.0%

Incremental Annual Revenue: $M - - 52 58 63

Historical: Projected:
Development & Redevelopment: Units: FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21

Renovation Spending: $M $ - $ - $ - $ 50 $ 60 $ 70 $ 80 $ 90
Yield on Renovation Spending: % 17.5% 17.5% 17.5% 17.5% 17.5% 17.5%

Incremental Annual NOI: $M - 9 11 12 14

NOI Margin: % 30.0% 30.0% 30.0% 30.0% 30.0%

Incremental Annual Revenue: $M - 29 35 41 47

Historical: Projected:
Dispositions: Units: FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21

Proceeds from Asset Dispositions: $M $ 15 $ 1,866 $ - $ 150 $ 150 $ 150 $ 150 $ 150
Gain / (Loss) on Sale of Real Estate Assets: $M - 143 - (30) (29) (27) (26) (24)
Gain / (Loss) % Asset Proceeds: % 0.0% 7.7% 0.0% (20.0%) (19.0%) (18.0%) (17.0%) (16.0%)

Book Value of Dispositions: $M 15 1,723 - 180 179 177 176 174

Cap Rate: % 5.6% 5.6% 5.6% 5.6% 5.6% 5.6%

Incremental Annual NOI Reduction: $M - 10 10 10 10

NOI Margin: % 30.0% 30.0% 30.0% 30.0% 30.0%

Incremental Annual Revenue Reduction: $M - 34 33 33 33

Park Hotels & Resorts Inc. - Net Asset Value (NAV) Model
($ USD in Millions Except Per Share and Per Unit Amounts in USD as Stated)

Historical: Projected:
Balance Sheet: Units: FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21
ASSETS:
Forward Property Net Operating Income (NOI): $M $ 838
(÷) Assumed Cap Rate: % 7.5%
Market Value of Gross Real Estate Operating Assets: $M $ 11,168

Construction-in-Progress: $M 79
(x) Market Value Adjustment: % 120.0%
Market Value of Construction-in-Progress: $M 95

Cash & Cash-Equivalents: $M 293

Accounts Receivable: $M 130

Goodwill & Other Intangibles: $M 648

(x) Market Value Adjustment: % -
Market Value of Goodwill & Other Intangibles: $M -

Other Assets: $M 222

Total Market Value of Assets: $M $ 11,908

LIABILITIES & EQUITY:

Debt & Other Borrowings: $M (3,222)
(x) Market Value Adjustment: % 100.5%
Market Value of Debt & Other Borrowings: $M (3,238)

Accounts Payable: $M (167)

Other Liabilities: $M (2,622)
Noncontrolling Interests (NCI): $M 49

Net Asset Value (NAV): $M $ 5,930

NAV per Share: $ as Stated $ 30.01
Current Share Price: $ as Stated $ 27.77

NAV per Share Premium / (Discount) to Current: % 8.1%

Cap Rate Implied by Current Share Price: % 7.8%

Sensitivity Analysis - NAV per Share:

Assumed Cap Rate:

$ 30.01 7.0% 7.1% 7.2% 7.3% 7.4% 7.5% 7.6% 7.7% 7.8% 7.9% 8.0%
$ 850
845
840
838
835
Forward Property Net Operating Income (NOI):
830
825
820
815
810
Discounted Cash Flow Analysis - Park Hotels & Resorts Inc. (Unlevered DCF)
($ USD in Millions Except Per Share and Per Unit Amounts in USD as Stated)

DCF Assumptions & Output: Units:

Risk-Free Rate: % 2.49%

Equity Risk Premium: % 5.91% Terminal Value - Multiples Method: Terminal Value - Perpetuity Growth Method:
Median Levered Beta from Comps: # 1.18
Cost of Equity: % 9.46% Median EV / EBITDA of Comps: 12.1 x Expected Long-Term GDP Growth: 2.0%

Planned Debt-to-Total-Capital Ratio: % 50.0% Baseline Terminal EBITDA Multiple: 11.0 x Baseline Terminal FCF Growth Rate: 1.5%
Cost of Debt: % 3.50% Baseline Terminal Value: $ 13,780 Baseline Terminal Value: $ 13,780
Discount Rate (WACC): % 6.48% Implied Terminal FCF Growth Rate: 1.5% Implied Terminal EBITDA Multiple: 11.0 x

PV of Future Stock Issuances: $M $ 984 (+) PV of Terminal Value: $ 7,354 (+) PV of Terminal Value: $ 7,354
PV of Terminal Value of Stock Issuances: $M 852 (+) Sum of PV of Free Cash Flows: 3,185 (+) Sum of PV of Free Cash Flows: 3,185
Estimated # of Future Shares to Be Issued: # Millions 66.112 Implied Enterprise Value: 10,538 Implied Enterprise Value: 10,538
Total Shares Outstanding: # Millions 263.717
% of Implied EV from Terminal Value: 69.8% % of Implied EV from Terminal Value: 69.8%
Current Equity Value: $ 5,487
(-) Cash & Cash-Equivalents: (293) (+) Cash & Cash-Equivalents: 293 (+) Cash & Cash-Equivalents: $ 293
(+) Total Debt: 3,222 (-) Total Debt: (3,222) (-) Total Debt: (3,222)
(+) Preferred Stock: - (-) Preferred Stock: - (-) Preferred Stock: -
(+) Noncontrolling Interests: (49) (-) Noncontrolling Interests: 49 (-) Noncontrolling Interests: 49
Current Enterprise Value: 8,367 Implied Equity Value: 7,658 Implied Equity Value: 7,658

Implied Share Price from DCF: $ 29.04 Implied Share Price from DCF: $ 29.04
Premium / (Discount) to Current: 4.6% Premium / (Discount) to Current: 4.6%
 Historical: Projected:
Free Cash Flow Projections: Units: FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26

Revenue: $M $ 2,513 $ 2,688 $ 2,727 $ 2,819 $ 2,903 $ 3,045 $ 3,194 $ 3,340 $ 3,510 $ 3,686 $ 3,866 $ 4,052 $ 4,247
Revenue Growth Rate: % N/A 7.0% 1.5% 3.4% 3.0% 4.9% 4.9% 4.6% 5.1% 5.0% 4.9% 4.8% 4.8%

(-) Normalized Operating Expenses: $M (2,073) (2,245) (2,294) (2,385) (2,471) (2,604) (2,748) (2,890) (3,019) (3,133) (3,248) (3,363) (3,525)
% Revenue: % (82.5%) (83.5%) (84.1%) (84.6%) (85.1%) (85.5%) (86.0%) (86.5%) (86.0%) (85.0%) (84.0%) (83.0%) (83.0%)

Operating Income (EBIT): $M 440 443 433 434 432 440 446 450 491 553 619 689 722
Operating Margin: % 17.5% 16.5% 15.9% 15.4% 14.9% 14.5% 14.0% 13.5% 14.0% 15.0% 16.0% 17.0% 17.0%
Growth Rate: % N/A 0.7% (2.3%) 0.2% (0.5%) 1.9% 1.4% 0.8% 9.2% 12.5% 11.9% 11.4% 4.8%

Adjustments for Non-Cash Charges:

(+) Depreciation & Amortization: $M 248 287 300 316 331 353 377 401 425 450 476 502 531
% Revenue: % 9.9% 10.7% 11.0% 11.2% 11.4% 11.6% 11.8% 12.0% 12.1% 12.2% 12.3% 12.4% 12.5%

(+/-) Change in Working Capital: $M 12 61 (37) (6) (8) (24) (31) (48) (55) (52) (49) (46) (49)
% Change in Revenue: % N/A 34.9% (94.9%) (6.6%) (9.8%) (17.0%) (20.4%) (33.1%) (32.0%) (29.5%) (27.0%) (25.0%) (25.0%)
% Revenue: % 0.5% 2.3% (1.4%) (0.2%) (0.3%) (0.8%) (1.0%) (1.4%) (1.6%) (1.4%) (1.3%) (1.1%) (1.1%)

(-) Recurring Maintenance CapEx: $M (171) (226) (227) (237) (247) (262) (278) (294) (305) (317) (329) (344) (361)
% Revenue: % (6.8%) (8.4%) (8.3%) (8.4%) (8.5%) (8.6%) (8.7%) (8.8%) (8.7%) (8.6%) (8.5%) (8.5%) (8.5%)

(-) Acquisitions, Net of Cash Acquired: $M - (1,410) - - (250) (275) (300) (300) (263) (203) (193) (203) (212)
% Revenue: % 0.0% (52.5%) 0.0% 0.0% (8.6%) (9.0%) (9.4%) (9.0%) (7.5%) (5.5%) (5.0%) (5.0%) (5.0%)

(-) Developments & Redevelopments: $M - - - (50) (60) (70) (80) (90) (91) (88) (85) (81) (85)
% Revenue: % 0.0% 0.0% 0.0% (1.8%) (2.1%) (2.3%) (2.5%) (2.7%) (2.6%) (2.4%) (2.2%) (2.0%) (2.0%)

(-) Proceeds from Asset Dispositions: $M 15 1,866 - 150 150 150 150 150 147 144 139 134 127
% Revenue: % 0.6% 69.4% 0.0% 5.3% 5.2% 4.9% 4.7% 4.5% 4.2% 3.9% 3.6% 3.3% 3.0%

Unlevered Free Cash Flow: $M $ 544 $ 1,021 $ 469 $ 607 $ 348 $ 312 $ 285 $ 269 $ 349 $ 486 $ 578 $ 651 $ 673
Growth Rate: % N/A 87.7% (54.1%) 29.4% (42.7%) (10.2%) (8.8%) (5.7%) 29.9% 39.3% 18.8% 12.6% 3.5%

Discount Period: # 1 2 3 4 5 6 7 8 9 10
WACC: % 6.48% 6.48% 6.48% 6.48% 6.48% 6.48% 6.48% 6.48% 6.48% 6.48%
WACC - Cumulative Discount Factor: # 0.939 0.882 0.828 0.778 0.731 0.686 0.644 0.605 0.568 0.534

PV of Unlevered FCF: $M $ 570 $ 307 $ 259 $ 222 $ 196 $ 240 $ 313 $ 349 $ 370 $ 359

EBITDA: $M $ 688 $ 730 $ 733 $ 750 $ 763 $ 793 $ 823 $ 851 $ 916 $ 1,003 $ 1,094 $ 1,191 $ 1,253
Growth Rate: % N/A 6.1% 0.4% 2.3% 1.8% 4.0% 3.8% 3.4% 7.7% 9.4% 9.1% 8.9% 5.2%

Stock Issuances: $M - 18 135 166 552 179 158 154 158 165
% Total Capital Costs: % 0.0% 4.5% 29.5% 32.6% 103.4% 35.0% 34.0% 33.0% 32.0% 31.0%
Growth Rate: % N/A N/A 638.2% 22.7% 233.4% (67.5%) (12.0%) (2.2%) 2.5% 4.0%

Cost of Equity: % 9.46% 9.46% 9.46% 9.46% 9.46% 9.46% 9.46% 9.46% 9.46% 9.46%
Cost of Equity - Cumulative Discount Factor: # 0.914 0.835 0.762 0.696 0.636 0.581 0.531 0.485 0.443 0.405

PV of Future Stock Issuances: $M - 15 103 115 351 104 84 75 70 67

Sensitivity Analyses:

Weighted Average Cost of Capital (WACC):

$ 29.04 5.25% 5.50% 5.75% 6.00% 6.25% 6.50% 6.75% 7.00% 7.25% 7.50% 7.75%
12.00 x
Terminal EV / 11.75 x
EBITDA 11.50 x
Multiple
(Terminal 11.25 x
Value 11.00 x
Calculated 10.75 x
Using the
Multiples 10.50 x
Method): 10.25 x
10.00 x

Weighted Average Cost of Capital (WACC):

$ 29.04 5.25% 5.50% 5.75% 6.00% 6.25% 6.50% 6.75% 7.00% 7.25% 7.50% 7.75%
1.70%
Terminal FCF 1.65%
Growth Rate 1.60%
(Terminal
Value 1.55%
Calculated 1.50%
Using the 1.45%
Gordon
Growth 1.40%
Method): 1.35%
1.30%
Comparable Companies - Independent, U.S.-Based Hotel REITs with Gross Real Estate Assets Above $3 Billion
($ USD in Millions Except Per Share and Per Unit Amounts in USD as Stated)

Operating Statistics: Capitalization Gross Leverage Projected Projected

Equity Enterprise Real Estate Portfolio (Debt to EBITDA Funds from Operations (FFO) EBITDA FFO
Company Name Value Value Assets Cap Rate Total Assets) FY16 FY17 FY18 FY16 FY17 FY18 Growth Growth
Host Hotels & Resorts, Inc. $ 13,743 $ 17,224 $ 17,993 8.8% 32.0% $ 1,424 $ 1,470 $ 1,455 $ 1,257 $ 1,279 $ 1,251 (1.0%) (2.2%)
Apple Hospitality REIT, Inc. 4,561 5,895 5,381 9.2% 26.9% 375 436 443 298 366 367 1.5% 0.3%
Ashford Hospitality Trust, Inc. 795 4,303 5,055 9.6% 76.1% 410 414 420 130 137 143 1.5% 4.6%
LaSalle Hotel Properties 3,548 4,582 5,049 7.5% 29.6% 389 346 328 281 260 249 (5.3%) (4.0%)
RLJ Lodging Trust 2,994 4,138 4,324 10.4% 39.6% 383 419 575 318 352 489 37.2% 38.8%
Sunstone Hotel Investors, Inc. 3,339 4,155 4,257 8.6% 25.3% 336 334 342 259 248 257 2.3% 3.7%
DiamondRock Hospitality Company 2,366 3,044 3,382 8.1% 30.0% 253 246 253 203 195 203 2.8% 4.1%
Ryman Hospitality Properties, Inc. 3,191 4,634 3,319 11.5% 62.5% 319 356 378 268 301 321 6.2% 6.8%
Xenia Hotels & Resorts, Inc. 2,019 2,897 3,064 9.7% 37.7% 276 263 285 218 195 214 8.4% 9.9%
Pebblebrook Hotel Trust 2,261 3,227 3,031 8.5% 35.5% 252 231 236 191 173 178 2.3% 3.0%

Maximum $ 13,743 $ 17,224 $ 17,993 11.5% 76.1% $ 1,424 $ 1,470 $ 1,455 $ 1,257 $ 1,279 $ 1,251 37.2% 38.8%
75th Percentile 3,495 4,621 5,053 9.6% 39.1% 387 418 437 294 339 356 5.3% 6.3%
Median $ 3,092 $ 4,229 $ 4,291 9.0% 33.7% $ 355 $ 351 $ 360 $ 263 $ 254 $ 253 2.3% 3.9%
25th Percentile 2,287 3,455 3,335 8.5% 29.7% 287 281 296 207 195 205 1.5% 1.0%
Minimum 795 2,897 3,031 7.5% 25.3% 252 231 236 130 137 143 (5.3%) (4.0%)

Park Hotels & Resorts Inc. $ 5,487 $ 8,367 $ 10,413 8.0% 32.8% $ 733 $ 750 $ 763 $ 482 $ 659 $ 675 1.8% 2.3%

Valuation Statistics: Capitalization Gross Leverage Enterprise Value / Equity Value /

Equity Enterprise Real Estate Portfolio (Debt to EBITDA FFO
Company Name Value Value Assets Cap Rate Total Assets) FY16 FY17 FY18 FY16 FY17 FY18
Host Hotels & Resorts, Inc. $ 13,743 $ 17,224 $ 17,993 8.8% 32.0% 12.1 x 11.7 x 11.8 x 10.9 x 10.7 x 11.0 x
Apple Hospitality REIT, Inc. 4,561 5,895 5,381 9.2% 26.9% 15.7 x 13.5 x 13.3 x 15.3 x 12.4 x 12.4 x
Ashford Hospitality Trust, Inc. 795 4,303 5,055 9.6% 76.1% 10.5 x 10.4 x 10.2 x 6.1 x 5.8 x 5.6 x
LaSalle Hotel Properties 3,548 4,582 5,049 7.5% 29.6% 11.8 x 13.2 x 14.0 x 12.6 x 13.7 x 14.2 x
RLJ Lodging Trust 2,994 4,138 4,324 10.4% 39.6% 10.8 x 9.9 x 7.2 x 9.4 x 8.5 x 6.1 x
Sunstone Hotel Investors, Inc. 3,339 4,155 4,257 8.6% 25.3% 12.4 x 12.4 x 12.1 x 12.9 x 13.5 x 13.0 x
DiamondRock Hospitality Company 2,366 3,044 3,382 8.1% 30.0% 12.1 x 12.4 x 12.0 x 11.7 x 12.2 x 11.7 x
Ryman Hospitality Properties, Inc. 3,191 4,634 3,319 11.5% 62.5% 14.5 x 13.0 x 12.3 x 11.9 x 10.6 x 9.9 x
Xenia Hotels & Resorts, Inc. 2,019 2,897 3,064 9.7% 37.7% 10.5 x 11.0 x 10.2 x 9.3 x 10.4 x 9.4 x
Pebblebrook Hotel Trust 2,261 3,227 3,031 8.5% 35.5% 12.8 x 14.0 x 13.7 x 11.9 x 13.1 x 12.7 x

Maximum $ 13,743 $ 17,224 $ 17,993 11.5% 76.1% 15.7 x 14.0 x 14.0 x 15.3 x 13.7 x 14.2 x
75th Percentile 3,495 4,621 5,053 9.6% 39.1% 12.7 x 13.2 x 13.1 x 12.4 x 12.9 x 12.6 x
Median $ 3,092 $ 4,229 $ 4,291 9.0% 33.7% 12.1 x 12.4 x 12.1 x 11.8 x 11.4 x 11.3 x
25th Percentile 2,287 3,455 3,335 8.5% 29.7% 11.1 x 11.2 x 10.6 x 9.8 x 10.4 x 9.6 x
Minimum 795 2,897 3,031 7.5% 25.3% 10.5 x 9.9 x 7.2 x 6.1 x 5.8 x 5.6 x

Park Hotels & Resorts Inc. $ 5,487 $ 8,367 $ 10,413 8.0% 32.8% 11.4 x 11.2 x 11.0 x 11.4 x 8.3 x 8.1 x