<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 24, 2000 Commission File No. 0-25087
HOST MARRIOTT, L.P.
10400 Fernwood Road
Bethesda, Maryland 20817
(301) 380-9000
Delaware 52-2095412
- -------------------------- ---------------------
(State of Incorporation) (I.R.S. Employer
Identification Number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
----- ____
Units outstanding
Class at May 1, 2000
- --------------------- --------------
Units of limited partnership interest 283,564,759
================================================================================
<PAGE>
INDEX
-----
<TABLE>
<CAPTION>
Part I. FINANCIAL INFORMATION (Unaudited): Page No.
- ------ -------
<S> <C> <C>
Condensed Consolidated Balance Sheets-
March 24, 2000 and December 31, 1999 3
Condensed Consolidated Statements of Operations-
Twelve Weeks Ended March 24, 2000 and March 26, 1999 4
Condensed Consolidated Statements of Cash Flows-
Twelve Weeks Ended March 24, 2000 and March 26, 1999 5
Notes to Condensed Consolidated Financial Statements 6
Management's Discussion and Analysis of Results of
Operations and Financial Condition 17
Quantitative and Qualitative Disclosures about Market Risk 21
PART II. OTHER INFORMATION AND SIGNATURE 22
</TABLE>
2
<PAGE>
HOST MARRIOTT, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
<TABLE>
<CAPTION>
March 24, December 31,
2000 1999
--------- -----------
(unaudited)
<S> <C> <C>
ASSETS
------
Property and equipment, net............................................................. $ 7,120 $ 7,108
Notes and other receivables (including amounts due from
affiliates of $128 million and $127 million, respectively).......................... 176 175
Rent receivable......................................................................... 84 72
Investments in affiliates............................................................... 49 49
Other assets............................................................................ 525 515
Cash and cash equivalents............................................................... 126 277
--------- ---------
$ 8,080 $ 8,196
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Debt
Senior notes........................................................................ $ 2,539 $ 2,539
Mortgage debt....................................................................... 2,304 2,309
Convertible debt obligation to Host Marriott........................................ 492 514
Other............................................................................... 221 221
--------- ---------
5,556 5,583
Accounts payable and accrued expenses................................................... 144 148
Deferred income taxes................................................................... 49 49
Deferred rent........................................................................... 123 --
Other liabilities....................................................................... 397 426
--------- ---------
Total liabilities.................................................................. 6,269 6,206
--------- ---------
Minority interest....................................................................... 137 136
Cumulative redeemable preferred limited partnership interests of third parties at
redemption value ("Preferred OP Units") (representing 0.6 million units)............ 5 5
Limited partnership interests of third parties at redemption value
(representing 63.6 million units and 64.0 million units at March 24, 2000
and December 31, 1999, respectively)................................................ 565 528
Partners' Capital
General partner..................................................................... 1 1
Cumulative redeemable preferred limited partner..................................... 196 196
Limited partner..................................................................... 904 1,120
Accumulated other comprehensive income.............................................. 3 4
--------- ---------
Total partners' capital........................................................... 1,104 1,321
--------- ---------
$ 8,080 $ 8,196
========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
-3-
<PAGE>
HOST MARRIOTT, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Twelve weeks ended March 24, 2000 and March 26, 1999
(unaudited, in millions, except per unit amounts)
<TABLE>
<CAPTION>
2000 1999
--------- ----------
<S> <C> <C>
REVENUES
Rental income....................................................................... $ 173 $ 171
Interest income..................................................................... 9 8
Net gains on property transactions.................................................. 1 12
Equity in earnings of affiliates.................................................... -- 1
Other............................................................................... 2 --
--------- ---------
Total revenues.................................................................... 185 192
--------- ---------
EXPENSES
Depreciation and amortization....................................................... 74 68
Property-level owner expenses....................................................... 59 58
Minority interest................................................................... 5 4
Interest expense.................................................................... 104 108
Corporate expenses.................................................................. 10 7
Other expenses...................................................................... 6 2
--------- ---------
Total expenses.................................................................... 258 247
--------- ---------
LOSS FROM OPERATIONS BEFORE INCOME TAXES................................................ (73) (55)
Provision for income taxes.............................................................. (1) (1)
--------- ---------
LOSS FROM OPERATIONS BEFORE EXTRAORDINARY ITEM.......................................... (74) (56)
Extraordinary gain, net of income tax expense of $1 million............................. 5 --
--------- ---------
NET LOSS................................................................................ $ (69) $ (56)
========= =========
Less: Distributions on preferred limited partner units to Host Marriott................ (5) --
--------- ---------
NET LOSS AVAILABLE TO COMMON UNITHOLDERS................................................ $ (74) $ (56)
========= =========
BASIC LOSS PER UNIT:
Loss before extraordinary item.......................................................... $ (0.28) $ (0.19)
Extraordinary gain (net of income taxes)................................................ 0.02 --
--------- ---------
BASIC LOSS PER UNIT..................................................................... $ (0.26) $ (0.19)
========= =========
DILUTED LOSS PER UNIT:
Loss before extraordinary item.......................................................... $ (0.28) $ (0.19)
Extraordinary gain (net of income taxes)................................................ 0.02 --
--------- ---------
DILUTED LOSS PER UNIT................................................................... $ (0.26) $ (0.19)
========= =========
</TABLE>
See Notes to Consolidated Financial Statements
-4-
<PAGE>
HOST MARRIOTT, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Twelve weeks ended March 24, 2000 and March 26, 1999
(unaudited, in millions)
<TABLE>
<CAPTION>
2000 1999
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES
Loss from operations before extraordinary item.......................................... $ (74) $ (56)
Adjustments to reconcile to cash from operations:
Depreciation and amortization....................................................... 74 68
Income taxes........................................................................ (21) (4)
Deferred contingent rental income................................................... 123 115
Net gains on property transactions.................................................. (1) (12)
Equity in earnings of affiliates.................................................... -- (1)
Changes in operating accounts....................................................... (26) (123)
Other............................................................................... 7 17
--------- ---------
Cash from operations............................................................. 82 4
--------- ---------
INVESTING ACTIVITIES
Proceeds from sales of assets........................................................... -- 36
Acquisitions............................................................................ -- (4)
Capital expenditures:
Capital expenditures for renewals and replacements.................................. (54) (50)
New investment capital expenditures................................................. (34) (20)
Other investments................................................................... (11) (6)
Note receivable collections, net........................................................ -- 2
--------- ---------
Cash used in investing activities................................................ (99) (42)
--------- ---------
FINANCING ACTIVITIES
Issuances of debt, net.................................................................. 83 299
Scheduled principal repayments.......................................................... (9) (12)
Debt prepayments........................................................................ (80) (323)
Issuances of common units............................................................... 1 --
Distributions........................................................................... (65) (69)
Redemption or repurchase of OP Units for cash........................................... (47) (4)
Repurchases of Convertible Preferred Securities......................................... (15) --
Other................................................................................... (2) (5)
--------- ---------
Cash used in financing activities................................................ (134) (114)
--------- ---------
DECREASE IN CASH AND CASH EQUIVALENTS................................................... $ (151) $ (152)
========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
-5-
<PAGE>
HOST MARRIOTT, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Organization
Host Marriott Corporation ("Host REIT"), a Maryland corporation formerly
named HMC Merger Corporation, operating through an umbrella partnership
structure, is a self-managed and self-administered real estate investment
trust ("REIT") with its operations conducted solely through an operating
partnership, Host Marriott, L.P. (the "Operating Partnership" or "Host
LP") and its subsidiaries. As REITs are not currently permitted to derive
revenues directly from the operations of hotels, Host REIT leases all of
the hotels to subsidiaries of Crestline Capital Corporation ("Crestline")
or other lessees (collectively the "Lessee").
In these condensed consolidated financial statements, the "Company" or
"Host Marriott" refers to Host Marriott Corporation before, and Host
Marriott, L.P., after Host Marriott Corporation's conversion to a REIT
(the "REIT Conversion"). Host Marriott Corporation is presented as the
predecessor to the Operating Partnership since the Operating Partnership
and its subsidiaries received substantially all of the continuing
operations, assets and liabilities of Host Marriott Corporation and its
subsidiaries.
On December 15, 1998, shareholders of Host Marriott Corporation approved a
plan to reorganize Host Marriott's business operations through the
spin-off of Host Marriott's senior living business as part of Crestline
and the contribution of Host Marriott's hotels and certain other assets
and liabilities to a newly formed Delaware limited partnership, Host
Marriott, L.P. Host Marriott merged into HMC Merger Corporation (the
"Merger"), a newly formed Maryland corporation (renamed Host Marriott
Corporation) which intends to qualify, effective January 1, 1999, as a
REIT and is the sole general partner of the Operating Partnership. On
December 29, 1998, Host Marriott completed the previously announced
spin-off of Crestline through a taxable stock dividend to its
shareholders. Each Host Marriott shareholder of record on December 28,
1998 received one share of Crestline for every ten shares of Host Marriott
Corporation owned. In connection with the REIT Conversion, Host Marriott
contributed its hotels and substantially all of its other assets and
liabilities to the Operating Partnership and subsidiaries (the
"Contribution") in exchange for units of partnership interest in the
Operating Partnership. The Contribution was accounted for at Host
Marriott's historical basis. As of March 24, 2000, Host REIT owned
approximately 77% of the Operating Partnership.
2. Summary of Significant Accounting Policies
The accompanying unaudited condensed consolidated financial statements of
the Company and its subsidiaries have been prepared without audit. Certain
information and footnote disclosures normally included in financial
statements presented in accordance with accounting principles generally
accepted in the United States have been condensed or omitted. The Company
believes the disclosures made are adequate to make the information
presented not misleading. However, the unaudited condensed consolidated
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's annual
report on Form 10-K for the fiscal year ended December 31, 1999.
In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments necessary to
present fairly the financial position of the Company as March 24, 2000 and
December 31, 1999, and the results of operations and cash flows for the
twelve weeks ended March 24, 2000 and March 26, 1999. Interim results are
not necessarily indicative of fiscal year performance because of the
impact of seasonal and short-term variations.
-6-
<PAGE>
HOST MARRIOTT, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Certain reclassifications were made to the prior year financial statements
to conform to the new presentation.
The Company's leases have remaining terms ranging from 2 to 10 years,
subject to earlier termination upon the occurrence of certain
contingencies, as defined. Effective November 15, 1999, the leases with
Crestline were amended to give Crestline the right to renew each of these
leases for up to four additional terms of seven years each at a fair
rental value. The rent due under each lease is the greater of base rent or
percentage rent, as defined. Percentage rent applicable to room, food and
beverage and other types of hotel sales varies by lease and is calculated
by multiplying fixed percentages by the total amounts of such revenues
over specified threshold amounts. Both the minimum rent and the revenue
thresholds used in computing percentage rents are subject to annual
adjustments based on increases in the United States Consumer Price Index
and the Labor Index, as defined.
The Company recognizes percentage rent when all contingencies have been
met, that is, when annual thresholds for percentage rent have been met or
exceeded. Percentage rent received pursuant to the leases but not
recognized is included on the balance sheet as deferred rent. Contingent
rental revenue of $123 million and $115 million, respectively, for the
twelve weeks ended March 24, 2000 and March 26, 1999 have been deferred.
3. Earnings Per Unit
Basic earnings per common unit is computed by dividing net income
available to common unitholders by the weighted average number of common
units outstanding. Diluted earnings per unit is computed by dividing net
income available to common unitholders as adjusted for potentially
dilutive securities, by the weighted average number of common units
outstanding plus other potentially dilutive securities. Dilutive
securities may include units distributed to Host Marriott Corporation for
Host Marriott Corporation common shares granted under comprehensive stock
plans and the Convertible Preferred Securities. Dilutive securities may
also include those common and preferred Operating Partnership Units ("OP
Units") issuable or outstanding that are held by minority partners which
are assumed to be converted. No effect is shown for securities if they are
anti-dilutive.
-7-
<PAGE>
HOST MARRIOTT, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
<TABLE>
<CAPTION>
Twelve weeks ended
-----------------------------------------------------------------------
March 24, 2000 March 26, 1999
--------------------------------- -----------------------------------
Income Units Per Unit Income Units Per Unit
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
<S> <C> <C> <C> <C> <C> <C>
Net Loss..................................... $ (69) 285.2 $ (.24) $ (56) 291.5 $ (.19)
Distributions on preferred limited partner
units and preferred OP Units............... (5) -- (.02) -- -- --
-------- ----- ------- -------- ------ ---------
Basic loss available to common
uniholders per unit......................... (74) 285.2 (.26) (56) 291.5 (.19)
Assuming distribution of units to Host
Marriott Corporation for host Marriott
Corporation common shares granted under
the Host Marriott comprehensive stock
plan, less shares assumed purchased at
average market price....................... -- -- -- -- -- --
Assuming conversion of Preferred OP
Units...................................... -- -- -- -- -- --
Assuming issuance of minority OP Units
issuable under certain purchase
agreements................................. -- -- -- -- -- --
Assuming conversion of Convertible
Preferred Securities....................... -- -- -- -- -- --
-------- ----- -------- -------- ------ ---------
Diluted Loss per Unit........................ $ (74) 285.2 $ (.26) $ (56) 291.5 $ (.19)
======== ====== ======== ======== ===== =========
</TABLE>
4. Stock Repurchases
In September 1999, the Board of Directors of Host Marriott Corporation
approved the repurchase, from time to time on the open market and/or in
privately negotiated transactions, of up to 22 million of the outstanding
shares of Host REIT common stock, OP Units, or a corresponding amount
(based on the appropriate conversion ratio) of Host REIT's Convertible
Preferred Securities. Additionally, under the terms of the partnership
agreement, an equivalent number of OP units will also be repurchased on a
one-for-one basis from Host Marriott Corporation. Such repurchases will be
made at management's discretion, subject to market conditions, and may be
suspended at any time at Host Marriott Corporation's discretion. During
the twelve weeks ended March 24, 2000, Host Marriott repurchased
approximately 4.9 million common shares, 325,000 OP Units, and 435,000
shares of the Convertible Preferred Securities for a total investment of
$62 million. Since inception of the program through May 1, 2000, Host
Marriott has spent, in the aggregate, approximately $150 million to
repurchase 16.2 million equivalent shares.
5. Dividends and Distributions Payable
On March 23, 2000, the Board of Directors of Host Marriott declared a cash
dividend of $0.21 per share of Host Marriott Corporation common stock and
a corresponding distribution of $0.21 per common OP Unit. The first
quarter dividend and distribution were paid on April 14, 2000 to
shareholders and unitholders of record on March 31, 2000.
On March 23, 2000, Host Marriott declared a quarterly distribution of
$0.625 per preferred limited partner unit, which was paid on April 14,
2000 to unitholders of record on March 31, 2000.
-8-
<PAGE>
HOST MARRIOTT, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
6. Development
In February 2000, construction of the 717-room Tampa Waterside Marriott
adjacent to the convention center in downtown Tampa, Florida was completed
at a total development cost of approximately $104 million, not including a
$16 million tax subsidy provided by the City of Tampa.
7. Debt Issuances and Refinancing
In February 2000, the Company refinanced the $80 million mortgage on
Marriott's Harbor Beach Resort property in Fort Lauderdale, Florida. The
new mortgage is for $84 million, at a rate of 8.58%, and matures in March
2007.
8. Geographic Information
As of March 24, 2000, the Company's foreign operations consisted of four
hotel properties located in Canada. There were no intercompany sales
between the properties and the Company. The following table presents
revenues for each of the geographical areas in which the Company owns
hotels (in millions):
<TABLE>
<CAPTION>
Twelve Weeks Ended
-------------------------------
March 24, 2000 March 26, 1999
--------------- --------------
<S> <C> <C>
United States........................................................... $ 182 $ 189
International........................................................... 3 3
------ ------
Total............................................................... $ 185 $ 192
====== ======
</TABLE>
9. Other Comprehensive Income
The Company's other comprehensive income consists of unrealized gains and
losses on foreign currency translation adjustments and the right to
receive cash from Host Marriott Services Corporation subsequent to the
exercise of the options held by certain former and current employees of
Marriott International, pursuant to the distribution agreement between the
Company and Host Marriott Services Corporation. For the twelve weeks ended
March 24, 2000 and March 26, 1999, the comprehensive loss totaled $70
million and $57 million, respectively. As of March 24, 2000 and December
31, 1999, the Company's accumulated other comprehensive income was $3
million and $4 million, respectively.
10. Summarized Lease Pool Financial Statements
As discussed in Note 1, as of March 24, 2000, almost all the properties of
the Company and its subsidiaries were leased to Crestline. In conjunction
with these leases, Crestline and certain of its subsidiaries entered into
limited guarantees of the lease obligations of each lessee. The
full-service hotel leases are grouped into four lease pools, with
Crestline's guarantee limited to the greater of 10% of the aggregate rent
payable for the preceding year or 10% of the aggregate rent payable under
all leases in the respective pool. Additionally, the lessee's obligation
under each lease agreement is guaranteed by all other lessees in the
respective lease pool. As a result, the Company believes that the
operating results of each full-service lease pool may be material to the
Company's financial statements. Financial information of certain pools
related to the sublease agreements for limited service properties are not
presented, as the Company believes they are not material to the Company's
financial statements. Financial information of Crestline may be found in
its quarterly and annual filings with the Securities and Exchange
-9-
<PAGE>
HOST MARRIOTT, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Commission. Further information regarding these leases and Crestline's
limited guarantees may be found in the Company's annual report on Form
10-K for the fiscal year ended December 31, 1999. The results of
operations and summarized balance sheet data of the lease pools in which
the Company's hotels are organized are as follows (in millions):
<TABLE>
<CAPTION>
Twelve Weeks Ended March 24, 2000
---------------------------------
Pool 1 Pool 2 Pool 3 Pool 4 Combined
------ ------ ------ ------ --------
<S> <C> <C> <C> <C> <C>
Hotel Sales
Rooms..................................... $ 129 $ 143 $ 125 $ 133 $ 530
Food and beverage......................... 59 66 60 75 260
Other..................................... 14 13 19 19 65
----- ----- ----- ----- -----
Total hotel sales.................... 202 222 204 227 855
Operating Costs and Expenses
Rooms..................................... 31 37 28 29 125
Food and beverage......................... 44 50 44 51 189
Other..................................... 52 51 50 52 205
Management fees........................... 9 15 10 18 52
Lease expense............................. 62 66 69 75 272
----- ----- ----- ----- -----
Total operating expenses............. 198 219 201 225 843
----- ----- ----- ----- -----
Operating Profit............................... 4 3 3 2 12
Corporate and Interest Expenses................ (1) (1) -- -- (2)
----- ----- ----- ----- -----
Income before taxes....................... 3 2 3 2 10
Income taxes.............................. (1) (1) (1) (1) (4)
----- ----- ----- ----- -----
Net Income........................... $ 2 $ 1 $ 2 $ 1 $ 6
===== ===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
Twelve Weeks Ended March 26, 1999
---------------------------------
Pool 1 Pool 2 Pool 3 Pool 4 Combined
------ ------ ------ ------ --------
<S> <C> <C> <C> <C> <C>
Hotel Sales
Rooms..................................... $ 129 $ 137 $ 127 $ 128 $ 521
Food and beverage......................... 59 61 61 72 253
Other..................................... 14 13 19 15 61
----- ----- ----- ----- -----
Total hotel sales.................... 202 211 207 215 835
Operating Costs and Expenses
Rooms..................................... 31 32 29 27 119
Food and beverage......................... 46 47 44 48 185
Other..................................... 53 52 50 48 203
Management fees........................... 9 14 11 16 50
Lease expense............................. 61 64 70 74 269
----- ----- ----- ----- -----
Total operating expenses............. 200 209 204 213 826
----- ----- ----- ----- -----
Operating Profit............................... 2 2 3 2 9
Corporate and Interest Expenses................ (1) -- (1) (1) (3)
----- ----- ----- ----- -----
Income before taxes....................... 1 2 2 1 6
Income taxes.............................. -- (1) (1) (1) (3)
----- ----- ----- ----- -----
Net Income........................... $ 1 $ 1 $ 1 $ -- $ 3
===== ===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
As of March 24, 2000
--------------------
Pool 1 Pool 2 Pool 3 Pool 4 Combined
------ ------ ------ ------ --------
<S> <C> <C> <C> <C> <C>
Assets......................................... $ 46 $ 32 $ 46 $ 42 $ 166
Liabilities.................................... 41 30 43 41 155
Equity......................................... 5 2 3 1 11
</TABLE>
-10-
<PAGE>
HOST MARRIOTT, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
<TABLE>
<CAPTION>
As of December 31, 1999
-----------------------
Pool 1 Pool 2 Pool 3 Pool 4 Combined
------ ------ ------ ------ --------
<S> <C> <C> <C> <C> <C>
Assets......................................... $ 39 $ 37 $ 41 $ 38 $ 155
Liabilities.................................... 36 36 40 38 150
Equity......................................... 3 1 1 -- 5
</TABLE>
11. Supplemental Guarantor and Non-Guarantor Subsidiary Information
All subsidiaries of the operating partnership guarantee the Company's
senior notes except those among the twenty full service hotels listed
below and HMH HPT Residence Inn, LLC and HMH HPT Courtyard, LLC, the
lessees of the Residence Inn and Courtyard properties, respectively. The
separate financial statements of each guaranteeing subsidiary (each, a
"Guarantor Subsidiary") are not presented because management has concluded
that such financial statements are not material to investors. The
guarantee of each Guarantor Subsidiary is full and unconditional and joint
and several and each Guarantor Subsidiary is a wholly owned subsidiary of
the Company. The non-guarantor subsidiaries (the "Non-Guarantor
Subsidiaries") own the following full-service hotels: the Albany Marriott;
Atlanta Marriott Marquis; Grand Hyatt, Atlanta; Marriott's Harbor Beach
Resort; Hartford Marriott; Hyatt Regency, Cambridge; Hyatt Regency,
Reston; Manhattan Beach Marriott; Minneapolis Southwest Marriott; New York
Marriott Marquis; Ontario Airport Marriott; Pittsburgh City Center
Marriott; The Ritz-Carlton, Amelia Island; San Diego Marriott Hotel and
Marina; San Diego Mission Valley; Swissotel, Atlanta; Swissotel, Boston;
Swissotel, Chicago; The Drake (Swissotel) New York; and the Oklahoma City
Waterford Marriott.
The following condensed combined consolidating information sets forth the
financial position as of March 24, 2000 and December 31, 1999 and results
of operations and cash flows for the twelve weeks ended March 24, 2000 and
March 26, 1999 of the parent, Guarantor Subsidiaries and the Non-Guarantor
Subsidiaries.
-11-
<PAGE>
HOST MARRIOTT, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Supplemental Condensed Combined Consolidating Balance Sheets
(in millions)
March 24, 2000
<TABLE>
<CAPTION>
Guarantor Non-Guarantor
Parent Subsidiaries Subsidiaries Eliminations Consolidated
-------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Property and equipment, net..................... $ 1,323 $ 3,573 $ 2,224 $ -- $ 7,120
Notes and other receivables..................... 678 51 23 (576) 176
Rent receivable................................. 14 38 32 -- 84
Investments in affiliate........................ 1,485 -- -- (1,436) 49
Other assets.................................... 143 212 195 (25) 525
Cash and cash equivalents....................... 48 56 22 -- 126
-------- -------- -------- -------- --------
Total assets................................. $ 3,691 $ 3,930 $ 2,496 $ (2,037) $ 8,080
======== ======== ======== ======== ========
Debt............................................ $ 1,188 $ 3,049 $ 1,166 $ (339) $ 5,064
Convertible debt obligation to Host Marriott.... 492 -- -- -- 492
Deferred income taxes........................... 17 32 -- -- 49
Deferred rent................................... 28 68 27 -- 123
Other liabilities............................... 290 331 182 (262) 541
-------- -------- -------- -------- --------
Total liabilities............................ 2,015 3,480 1,375 (601) 6,269
Minority interests.............................. 9 56 72 -- 137
Limited partner interest of third parties
at redemption value........................... 570 -- -- -- 570
Owner's capital................................. 1,097 394 1,049 (1,436) 1,104
-------- -------- -------- -------- --------
Total liabilities and owner's capital........ $ 3,691 $ 3,930 $ 2,496 $ (2,037) $ 8,080
======== ======== ======== ======== ========
</TABLE>
December 31, 1999
<TABLE>
<CAPTION>
Guarantor Non-Guarantor
Parent Subsidiaries Subsidiaries Eliminations Consolidated
-------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Property and equipment, net..................... $ 1,227 $ 3,642 $ 2,239 $ -- $ 7,108
Notes and other receivables..................... 685 51 24 (585) 175
Rent receivable................................. 11 23 38 -- 72
Investments in affiliate........................ 1,593 -- -- (1,544) 49
Other assets.................................... 175 214 175 (49) 515
Cash and cash equivalents ...................... 199 58 20 -- 277
-------- -------- -------- -------- --------
Total assets................................. $ 3,890 $ 3,988 $ 2,496 $ (2,178) $ 8,196
======== ======== ======== ======== ========
Debt............................................ $ 1,189 $ 3,062 $ 1,168 $ (350) $ 5,069
Convertible debt obligation to Host Marriott.... 514 -- -- -- 514
Deferred income taxes........................... 17 32 -- -- 49
Other liabilities............................... 314 346 198 (284) 574
-------- -------- -------- -------- --------
Total liabilities............................. 2,034 3,440 1,366 (634) 6,206
Minority interests.............................. 9 54 73 -- 136
Limited partner interest of third parties
at redemption value............................ 533 -- -- -- 533
Owner's capital................................. 1,314 494 1,057 (1,544) 1,321
-------- -------- -------- -------- --------
Total liabilities and owner's capital......... $ 3,890 $ 3,988 $ 2,496 $ (2,178) $ 8,196
======== ======== ======== ======== ========
</TABLE>
-12-
<PAGE>
HOST MARRIOTT, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Supplemental Condensed Combined Statements of Operations
(in millions)
Twelve Weeks Ended March 24, 2000
<TABLE>
<CAPTION>
Guarantor Non-Guarantor
Parent Subsidiaries Subsidiaries Eliminations Consolidated
------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
REVENUES..................................... $ (6) $ 84 $ 68 $ 39 $ 185
Depreciation................................. (18) (36) (20) -- (74)
Property-level expenses...................... (12) (20) (27) -- (59)
Minority interest............................ (1) (4) -- -- (5)
Interest expense............................. (30) (62) (23) 11 (104)
Corporate expenses........................... -- (6) (4) -- (10)
Other expenses............................... (5) (1) -- -- (6)
------ ------- ------- ------- -------
(Loss) income before income taxes............ (72) (45) (6) 50 (73)
(Provision for) benefit from income taxes.... (2) 1 -- -- (1)
------ ------- ------- ------- -------
(Loss) income before extraordinary item...... (74) (44) (6) 50 (74)
Extraordinary gain........................... 5 -- -- -- 5
------ ------- ------- ------- -------
NET INCOME (LOSS)............................ $ (69) $ (44) $ (6) $ 50 $ (69)
====== ======= ======= ======= =======
</TABLE>
Twelve Weeks Ended March 26, 1999
<TABLE>
<CAPTION>
Guarantor Non-Guarantor
Parent Subsidiaries Subsidiaries Eliminations Consolidated
------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
REVENUES..................................... $ 13 $ 101 $ 54 $ 24 $ 192
Depreciation................................. (15) (35) (18) -- (68)
Property-level expenses...................... (10) (22) (26) -- (58)
Minority interest............................ (1) (3) -- -- (4)
Interest expense............................. (41) (48) (21) 2 (108)
Corporate expenses........................... -- (4) (3) -- (7)
Other expenses............................... (2) -- -- -- (2)
------ ------- ------- ------- -------
(Loss) income before income taxes............ (56) (11) (14) 26 (55)
Provision for income taxes................... (1) -- -- -- (1)
------ ------- ------- ------- -------
NET INCOME (LOSS)............................ $ (57) $ (11) $ (14) $ 26 $ (56)
====== ======= ======= ======= =======
</TABLE>
-13-
<PAGE>
HOST MARRIOTT, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Supplemental Condensed Combined Statements of Cash Flows
(in millions)
Twelve Weeks Ended March 24, 2000
<TABLE>
<CAPTION>
Guarantor Non-Guarantor
Parent Subsidiaries Subsidiaries Consolidated
------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Cash from operations.................................... $ 11 $ 28 $ 43 $ 82
-------- --------- --------- ---------
INVESTING ACTIVITIES
Cash received from sales of assets...................... -- -- -- --
Acquisitions............................................ -- -- -- --
Capital expenditures and other investments.............. (25) (62) (12) (99)
Other................................................... -- -- -- --
-------- --------- --------- ---------
Cash used in investing activities ...................... (25) (62) (12) (99)
-------- --------- --------- ---------
FINANCING ACTIVITIES
Issuances of debt....................................... -- -- 83 83
Repayment of debt....................................... (1) (3) (85) (89)
Issuances of common units............................... 1 -- -- 1
Distributions........................................... (65) -- -- (65)
Redemption or repurchase of OP Units.................... (47) -- -- (47)
Repurchase of Convertible Preferred Securities.......... (15) -- -- (15)
Other................................................... (1) -- (1) (2)
Transfers to/from Parent................................ (9) 35 (26) --
-------- --------- --------- ---------
Cash (used in) provided by financing activities......... (137) 32 (29) (134)
-------- --------- --------- ---------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS.......................................... $ (151) $ (2) $ 2 $ (151)
======== ========= ========= =========
</TABLE>
-14-
<PAGE>
HOST MARRIOTT, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Twelve Weeks Ended March 26, 1999
(unaudited)
<TABLE>
<CAPTION>
Guarantor Non-Guarantor
Parent Subsidiaries Subsidiaries Consolidated
------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Cash (used in) from operations.......................... (10) 21 (7) 4
-------- ------- ------- -------
INVESTING ACTIVITIES
Cash received from sales of assets...................... 2 34 -- 36
Acquisitions............................................ -- -- (4) (4)
Capital expenditures and other investments.............. (21) (46) (9) (76)
Other................................................... 2 -- -- 2
-------- ------- ------- -------
Cash used in investing activities ...................... (17) (12) (13) (42)
-------- ------- ------- -------
FINANCING ACTIVITIES
Issuances of debt....................................... 40 259 -- 299
Repayment of debt....................................... (1) (267) (67) (335)
Distributions........................................... (69) -- -- (69)
Repurchase of common stock.............................. (4) -- -- (4)
Other................................................... (5) -- -- (5)
Transfers to/from Parent................................ (162) 62 100 --
-------- ------- ------- -------
Cash (used in) provided by financing activities......... (201) 54 33 (114)
-------- ------- ------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........ $ (228) $ 63 $ 13 $ (152)
======== ======= ======= =======
</TABLE>
12. Subsequent Event
In April 2000, the Company borrowed $40 million under the revolver portion
of the bank credit facility. As a result, the available capacity under the
line of credit was reduced to $860 million, and the total line remains
$1.025 billion.
13. Contingencies
On March 16, 1998, limited partners in several limited partnerships filed
a lawsuit, the Texas Multi-Partnership Lawsuit, naming the Company,
Marriott International Inc. ("Marriott International"), and others as
defendants and claiming that they conspired to sell hotels to the
partnerships for inflated prices, that they charged the partnerships
excessive management fees to operate the partnerships' hotels and
otherwise breached their fiduciary duties. The lawsuit involved the
following partnerships: Courtyard by Marriott Limited Partnership,
Courtyard by Marriott II Limited Partnership, Marriott Residence Inn
Limited Partnership, Marriott Residence Inn II Limited Partnership,
Fairfield Inn by Marriott Limited Partnership, Desert Springs Marriott
Limited Partnership and Atlanta Marriott Marquis Limited Partnership.
Three other lawsuits, collectively, the Partnership Lawsuits, involving
limited partners of some of the aforementioned partnerships had also been
filed, at various dates beginning in June 1996, and include similar
actions naming the Company, Marriott International and others as
defendants.
The Company and Marriott International announced that we have executed a
definitive settlement agreement to resolve the Texas Multi-Partnership
Lawsuit and the Partnership Lawsuits. The understanding, which is still
subject to numerous conditions, including court approval and various
consents, has two principal features. First, the Company and Marriott
International expect, through a joint venture to be formed between their
affiliates, to acquire the equity interest of the limited partners in the
-15-
<PAGE>
HOST MARRIOTT, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
two Courtyard partnerships for approximately $372 million. The Company's
share of the acquisition costs of the Courtyard partnerships is expected
to be approximately $82 million. Second, the Company and Marriott
International will each pay approximately $31 million to the limited
partners of the remaining partnerships in exchange for settlement of the
litigation and a full release of claims. As a result of the proposed
settlement, the Company recorded a non-recurring, pre-tax charge of $40
million during the fourth quarter of 1999.
The Company has also been named a defendant in other lawsuits involving
various hotel partnerships. The lawsuits are ongoing, and although the
ultimate resolution of lawsuits is not determinable, the Company does not
believe the outcome will be material to the financial position, statement
of operations or cash flows of the Company.
-16-
<PAGE>
HOST MARRIOTT, L.P.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Forward-looking Statements
Certain matters discussed herein are forward-looking statements. We have
based these forward-looking statements on our current expectations and
projections about future events. Certain, but not necessarily all, of such
forward-looking statements can be identified by the use of forward-looking
terminology, such as "believes," "expects," "may," "will," "should,"
"estimates," or "anticipates," or the negative thereof or other variations
thereof or comparable terminology. All forward-looking statements involve
known and unknown risks, uncertainties and other factors which may cause
our actual transactions, results, performance or achievements to be
materially different from any future transactions, results, performance or
achievements expressed or implied by such forward-looking statements.
Although we believe the expectations reflected in such forward-looking
statements are based upon reasonable assumptions, we can give no assurance
that our expectations will be attained or that any deviations will not be
material. We disclaim any obligations or undertaking to publicly release
any updates or revisions to any forward-looking statement contained in
this quarterly report on Form 10-Q to reflect any change in our
expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based.
Results of Operations
Revenues. Our revenues primarily represent rental income from our leased
hotels, net gains on property transactions, interest income and equity in
earnings of affiliates. As discussed in Note 2 to the financial
statements, percentage rental revenues of $123 million and $115 million
for the twelve weeks ended March 24, 2000 and March 26, 1999,
respectively, were deferred on the balance sheet in accordance with the
Securities and Exchange Commission's Staff Accounting Bulletin No. 101
("SAB 101"). Percentage rent will be recognized as income during the year
once specified hotel sales thresholds are achieved.
The table below represents hotel sales from which rental income is
computed in order to facilitate an investor's understanding of the
operation of our properties.
<TABLE>
<CAPTION>
Twelve Weeks Ended
------------------------------
March 24, 2000 March 26, 1999
-------------- --------------
(in millions)
<S> <C> <C>
Hotel Sales
Rooms...................................................... $ 613 $ 600
Food and beverage.......................................... 274 268
Other...................................................... 71 63
------- -------
Total sales........................................... $ 958 $ 931
======= =======
</TABLE>
Rental income increased $2 million, or 1%, to $173 million for the first
quarter of 2000 versus the first quarter of 1999, primarily driven by the
growth in room revenues generated per available room or REVPAR for
comparable properties, and partially offset by the sale of five properties
in 1999. REVPAR increased 3.3% to $122.38 for the first quarter of 2000
for comparable properties, which consist of the 114 properties owned,
directly or indirectly, by us for the same period of time in each period
covered, excluding two properties where significant expansion at the
hotels affected operations and five properties where reported results were
affected by a change in reporting period. On a comparable basis, average
room rates increased approximately 5%, while average occupancy decreased 1
percentage point.
Depreciation and Amortization. Depreciation and amortization increased $6
million or 9% for the first quarter of 2000 versus the first quarter of
1999, reflecting an increase in depreciable assets, which is
-17-
<PAGE>
HOST MARRIOTT, L.P.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
primarily the result of $361 million in capital expenditures during 1999,
partially offset by net asset disposals of approximately $174 million in
connection with the sale of five hotels during 1999.
Property-level Owner Expenses. Property-level owner expenses primarily
consist of property taxes, insurance, and ground and equipment rent. These
expenses increased less than 2% to $59 million for the first quarter of
2000 versus first quarter of 1999, reflecting, in part, the effect of the
sale of five hotel properties in 1999.
Minority Interest Expense. For the twelve weeks ended March 24, 2000 and
March 26, 1999, respectively, we recognized minority interest expense of
$5 million and $4 million.
Interest Expense. Interest expense decreased 4% to $104 million in the
first quarter of 2000, primarily due to repayments on the term loan
portion of the Bank Credit Facility totaling $225 million during the
second half of 1999.
Corporate Expenses. Corporate expenses increased $3 million to $10 million
for the first quarter of 2000, resulting primarily from an increase in
compensation expense related to employee stock plans.
Extraordinary Gain. During the first quarter of 2000, we extinguished
approximately $22 million of the convertible debt obligation to Host REIT
through the purchase of 435,000 shares of Host REIT's Convertible
Preferred Securities on the open market. We recorded an extraordinary gain
of $5 million on this transaction, net of income tax expense of $1
million, based on the discount at which we purchased the Convertible
Preferred Securities.
Net Loss. Our net loss increased to $69 million for the first quarter of
2000 from $56 million for the first quarter of 1999.
Net Loss Available to Common Unitholders. The net loss available to common
unitholders was $74 million for the first quarter of 2000, an increase of
$18 million over the first quarter of 1999. The net loss available to
common unitholders reflects distributions of $5 million on preferred
limited partner units to Host Marriott, which were issued during the
second half of 1999.
COMPARATIVE FFO and EBITDA
We consider Comparative Funds From Operations ("Comparative FFO"), which
consists of Funds From Operations, as defined by the National Association
of Real Estate Investment Trusts, plus contingent rent, as well as our
consolidated earnings before interest expense, income taxes, depreciation,
amortization and other non-cash items (including contingent rent)
("EBITDA") to be indicative measures of our operating performance due to
the significance of our long-lived assets. Comparative FFO and EBITDA are
also useful in measuring our ability to service debt, fund capital
expenditures and expand our business. Furthermore, management believes
that Comparative FFO and EBITDA are meaningful disclosures that will help
shareholders and the investment community to better understand our
financial performance, including comparing our performance to other Real
Estate Investment Trusts. However, Comparative FFO and EBITDA as presented
may not be comparable to FFO and EBITDA amounts calculated by other
companies. This information should not be considered as an alternative to
net income, operating profit, cash from operations, or any other operating
or liquidity performance measure prescribed by generally accepted
accounting principles. Cash expenditures for various long-term assets,
interest expense (for EBITDA purposes only) and income taxes have been,
and will be incurred which are not reflected in the EBITDA and Comparative
FFO presentations.
-18-
<PAGE>
HOST MARRIOTT, L.P.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Comparative FFO available to common unitholders increased $2 million, or
2%, to $119 million in the first quarter of 2000 over the first quarter of
1999. The following is a reconciliation of the loss from operations before
extraordinary item to Comparative FFO (in millions):
<TABLE>
<CAPTION>
Twelve Weeks Ended
------------------------------
March 24, 2000 March 26, 1999
-------------- --------------
<S> <C> <C>
Funds from Operations
Loss from operations before extraordinary item................................ $ (74) $ (56)
Depreciation and amortization................................................. 72 68
Other real estate activities.................................................. -- (11)
Partnership adjustments....................................................... 7 3
------- -------
Funds from operations of Host LP................................................ 5 4
Effect on funds from operations of SAB 101.................................... 119 113
------- -------
Comparative funds from operations of Host LP.................................... 124 117
Distributions on preferred units.............................................. (5) --
------- -------
Comparative funds from operations of Host LP available to common
unitholders................................................................... $ 119 $ 117
======= =======
</TABLE>
EBITDA increased $5 million, or 2%, to $231 million in the first quarter
of 2000, reflecting primarily EBITDA growth from owned properties,
partially offset by EBITDA related to assets sold during 1999. Hotel
EBITDA was $114 million in the both the first quarter of 2000 and 1999,
which does not include deferred rental income of $123 million and $115
million, respectively.
The following schedule presents our EBITDA as well as a reconciliation of
EBITDA to the loss from operations before extraordinary items (in
millions):
<TABLE>
<CAPTION>
Twelve Weeks Ended
------------------------------
March 24, 2000 March 26, 1999
-------------- --------------
<S> <C> <C>
EBITDA
Hotels......................................................................... $ 114 $ 114
Office buildings............................................................... -- --
Interest income................................................................ 9 8
Corporate and other expenses................................................... (15) (11)
Effect on revenue of SAB 101................................................... 123 115
------- -------
EBITDA of Host LP............................................................... 231 226
======= =======
<CAPTION>
Twelve Weeks Ended
------------------------------
March 24, 2000 March 26, 1999
-------------- --------------
<S> <C> <C>
EBITDA of Host LP............................................................... $ 231 $ 226
Effect on revenue of SAB 101.................................................... (123) (115)
Interest expense................................................................ (104) (108)
Income taxes.................................................................... (1) (1)
Depreciation and amortization................................................... (74) (68)
Minority interest expense....................................................... (5) (4)
Other non-cash charges, net..................................................... 2 14
------- -------
Loss from operations before extraordinary item................................ $ (74) $ (56)
======= =======
</TABLE>
Our interest coverage, defined as EBITDA divided by cash interest expense,
was 2.4 times for first quarters of 2000 and 1999, and full year 1999. The
deficiency of earnings to fixed charges was $68 million for the first
quarter of 2000 and $50 million for the first quarter of 1999, which is
primarily due to the deferral of contingent rent of $123 million and $115
million for the same periods, respectively.
-19-
<PAGE>
HOST MARRIOTT, L.P.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Cash Flows and Financial Condition
We reported a decrease in cash and cash equivalents of $151 million during
the twelve weeks ended March 24, 2000. Cash from operations was $82
million for the first quarter of 2000 and $4 million for the first quarter
of 1999. The $78 million increase in cash from operations primarily
relates to changes in operating accounts, specifically rent receivable.
First quarter 1999 cash from operations were affected by the addition of
36 properties as of December 30, 1998 and the timing of the receipt of
cash payments as a result of our hotel leases, which were effective
beginning January 1, 1999 in connection with the REIT Conversion.
Cash used in investing activities was $99 million and $42 million for the
first quarter of 2000 and 1999, respectively. Cash used in investing
activities for the first quarter includes capital expenditures of $99
million and $76 million for 2000 and 1999, respectively, mostly related to
renewals and replacements on existing properties and new development
projects. Property and equipment balances include $163 million and $243
million for construction in progress as of March 24, 2000 and December 31,
1999, respectively. The reduction in construction in progress is due to
the Tampa Waterside Marriott, which was placed in service in February
2000. The current balance primarily relates to properties in Orlando,
Memphis, Naples and various other expansion and development projects.
Cash used in financing activities was $134 million for the first quarter
of 2000 and $114 million for the first quarter of 1999. Cash used in
financing activities includes $80 million in prepayment of debt, offset by
a similar amount of debt issuances, as well as repurchases under our stock
buyback program, and the payment of distributions.
In February 2000, the Company refinanced the $80 million mortgage on
Marriott's Harbor Beach Resort property in Fort Lauderdale, Florida. The
new mortgage is for $84 million, at a rate of 8.58%, and matures in March
2007.
On March 23, 2000, the Board of Directors of Host Marriott Corporation
declared a cash distribution of $0.21 per OP Unit, which was paid on April
14, 2000 to unitholders of record on March 31, 2000. In addition, they
declared a dividend of $0.625 per unit of cumulative redeemable preferred
limited partner interest, which was paid on April 14, 2000 to unitholders
of record on March 31, 2000.
In September 1999, the Board of Directors of Host Marriott Corporation
approved the repurchase, from time to time on the open market and/or in
privately negotiated transactions, of up to 22 million of the outstanding
shares of Host REIT common stock, OP Units, or a corresponding amount
(based on the appropriate conversion ratio) of Host REIT's Convertible
Preferred Securities. Additionally, under the terms of the partnership
agreement, an equivalent number of OP Units will also be repurchased on a
one-for-one basis from Host Marriott Corporation. The repurchases have
been financed in part through cash from operations and the net proceeds
from sales of assets, prior to their reinvestment in real estate assets.
Based on current market conditions, we believe that, at our current stock
price, the stock repurchase program reflects a favorable return on
investment for our shareholders. However, we will continue to look at
strategic acquisitions as well as evaluate our stock repurchase program
based on changes in market conditions and our stock price. During the
first quarter of 2000, we repurchased approximately 4.9 million common
shares, 325,000 OP Units, and 435,000 shares of Convertible Preferred
Securities, for a total investment of $62 million. Since the inception of
the repurchase program through May 1, 2000, repurchases under the program
total 16.2 million common shares or equivalent for a total investment of
$150 million.
-20-
<PAGE>
HOST MARRIOTT, L.P.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
In April 2000, the resort property in Singer Island, Florida was converted
to the Hilton brand, representing our first property under this brand.
In April 2000, the Company borrowed $40 million under the revolver portion
of the bank credit facility. As a result, the available capacity under the
line of credit was reduced to $860 million, and the total line remains
$1.025 billion.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Our borrowings under the term loan portion of the bank credit facility as
well as the mortgage on The Ritz-Carlton, Amelia Island are sensitive to
changes in interest rates. The interest rates on these debt obligations,
which were $214.8 million and $215.0 million, respectively, at March 24,
2000 and December 31, 1999, are based on various LIBOR terms plus certain
basis points which range from 165 to 200 basis points. The weighted
average interest rate for these financial instruments are 7.77% at March
24, 2000 and 7.58% at December 31, 1999.
-21-
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Incorporated by reference to the description of legal proceedings in footnote 13
to the condensed consolidated financial statements set forth in Part I,
"Financial Information."
Item 4. Submission of Matters to a Vote of Security Holders
On April 17, 2000, Host Marriott Corporation announced the Annual Meeting of
Shareholders to be held on May 18, 2000 to elect members to the Board of
Directors, among other matters.
Item 6. Reports on Form 8-K
b. Reports on Form 8-K
. February 24, 2000--Report that Host Marriott Corporation and Marriott
International, Inc. announced that they have reached a non-binding
understanding to resolve pending litigation involving certain limited
partnerships formed in the mid-to late 1980's.
-22-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HOST MARRIOTT, L.P.
BY: HOST MARRIOTT CORPORATION
Its General Partner
May 4, 2000 /s/ Donald D. Olinger
- ----------- ---------------------
Date Donald D. Olinger
Senior Vice President and
Corporate Controller
(Chief Accounting Officer)
-23-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE HOST
MARRIOTT, L.P. CONDENSED CONSOLIDATED INTERIM STATEMENT OF OPERATIONS AS OF AND
FOR THE PERIOD ENDED MARCH 24, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-24-2000
<CASH> 126
<SECURITIES> 0
<RECEIVABLES> 260
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 8,411
<DEPRECIATION> 1,291
<TOTAL-ASSETS> 8,080
<CURRENT-LIABILITIES> 0
<BONDS> 2,539
0
0
<COMMON> 0
<OTHER-SE> 1,104
<TOTAL-LIABILITY-AND-EQUITY> 8,080
<SALES> 173
<TOTAL-REVENUES> 185
<CGS> 0
<TOTAL-COSTS> 258
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 104
<INCOME-PRETAX> (73)
<INCOME-TAX> (1)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 5
<CHANGES> 0
<NET-INCOME> (69)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
