Securities and Exchange Commission
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 12, 1998
POTOMAC HOTEL LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Delaware 2-75711 52-1240223
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
of incorporation or organization) Identification No.)
10400 Fernwood Road, Bethesda, MD 20817-1109
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: 301-380-2070
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ITEM 5. OTHER EVENTS
On June 12, 1998, September 24, 1998 and November 25, 1998, the General Partner
sent to the Limited Partners of the Partnership a letter that accompanied the
Partnership's Quarterly Reports on Form 10-Q. Such letters are being filed as
exhibits to this Current Report on Form 8-K.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
99.2 Letter from the General Partner to the Limited Partners of the
Partnership that accompanied the Partnership's Quarterly Report on
Form 10-Q for the Quarter Ended March 27, 1998.
99.3 Letter from the General Partner to the Limited Partners of the
Partnership that accompanied the Partnership's Quarterly Report on
Form 10-Q for the Quarter Ended June 19, 1998.
99.4 Letter from the General Partner to the Limited Partners of the
Partnership that accompanied the Partnership's Quarterly Report on
Form 10-Q for the Quarter Ended September 11, 1998.
<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, hereunto duly authorized.
POTOMAC HOTEL
LIMITED PARTNERSHIP
By: HOST MARRIOTT CORPORATION
General Partner
December 4, 1998 By: /s/ Donald D. Olinger
Donald D. Olinger
Title: Senior Vice President
and Corporate Controller
(Principal Accounting Officer)
<PAGE>
EXHIBIT INDEX
Exhibit No.: Description:
99.2 Letter from the General Partner to the Limited Partners
of the Partnership that accompanied the Partnership's
Quarterly Report on Form 10-Q for the Quarter Ended
March 27, 1998.
99.3 Letter from the General Partner to the Limited Partners
of the Partnership that accompanied the Partnership's
Quarterly Report on Form 10-Q for the Quarter Ended
June 19, 1998.
99.4 Letter from the General Partner to the Limited Partners of
the Partnership that accompanied the Partnership's Quarterly
Report on Form 10-Q for the Quarter Ended
September 11, 1998.
EXHIBIT 99.2
1998 First Quarter Report
Limited Partner Quarterly Update
Presented for your review is the 1998 First Quarter Report for the Potomac
Hotel Limited Partnership. The 1998 First Quarter Form 10-Q immediately follows
this letter and replaces the First Quarter Report format previously used by the
Partnership. The information presented is essentially the same as the
information given in prior years with certain additional items required by
the rules of the Securities and Exchange Commission. Discussion of the
Partnership's performance and hotel operations is included in Item 2,
Management's Discussion and Analysis of Financial Condition and Results of
Operations. Finally, the Partnership's Supplementary Unaudited Information which
contains amounts paid to the General Partner and Marriott International, Inc.
and their respective affiliates is reported on the final page of this report.
You are encouraged to review this report in its entirety. If you have any
further questions regarding your investment, please contact Host Marriott
Partnership Investor Relations at (301) 380-2070.
Host Marriott Real Estate Investment Trust
On April 17, 1998, Host Marriott Corporation ("Host Marriott"), the General
Partner of the Partnership, announced that its Board of Directors has authorized
the company to reorganize its business operations to qualify as a real estate
investment trust ("REIT") to become effective as of January 1, 1999. As part of
the REIT conversion, Host Marriott expects to form a new operating partnership
(the "Operating Partnership") and limited partners in certain Host Marriott
full-service hotel partnerships and joint ventures, including the Partnership,
are expected to be given an opportunity to receive, on a tax-deferred basis,
Operating Partnership units in the new Operating Partnership in exchange for
their current partnership interest. We will keep you informed on the status of
this matter.
<PAGE>
SUPPLEMENTARY INFORMATION
Potomac Hotel Limited Partnership
Amounts Paid to the General Partner and Marriott International, Inc. and
Affiliates For the Twelve Weeks Ended March 27, 1998 (in thousands)
General Partner and Affiliates
Interest and principal paid on Bank Guaranty loan..................$ 2,212
Interest and principal paid on FF&E loans.......................... 1,607
Interest and principal paid on Tampa acquisition loan.............. 848
Interest and principal paid on Raleigh acquisition loan............ 683
Administrative expenses reimbursed................................. 103
$ 5,453
Marriott International, Inc. and Affiliates:
Chain Services and Marriott Rewards Program costs reimbursed.......$ 1,871
Deferred base management fees paid................................. 1,545
Base management fees paid.......................................... 908
Incentive management fees paid..................................... 410
Interest and principal paid on FF&E loan........................... 21
$ 4,755
EXHIBIT 99.3
1998 Second Quarter Report
Limited Partner Quarterly Update
Presented for your review is the 1998 Second Quarter Report for the Potomac
Hotel Limited Partnership. A discussion of the Partnership's performance and
hotel operations is included in the attached Form 10-Q, Item 2, Management's
Discussion and Analysis of Financial Condition and Results of Operations. The
Partnership's Supplementary Unaudited Information which contains amounts paid to
the General Partner and Marriott International, Inc. and their respective
affiliates is reported on the final page of this report. You are encouraged to
review this report in its entirety. If you have any further questions
regarding your investment, please contact Host Marriott Partnership Investor
Relations at (301) 380-2070.
Host Marriott Corporation's Conversion to a Real Estate Investment Trust
As previously reported, Host Marriott Corporation ("Host Marriott"), the
General Partner of the Partnership, announced on April 17, 1998, that its Board
of Directors authorized Host Marriott to reorganize its business operations to
qualify as a real estate investment trust ("REIT") to become effective as of
January 1, 1999. As part of the REIT conversion, Host Marriott formed a new
operating Partnership (the "Operating Partnership") and limited partners in
certain Host Marriott full-service hotel partnerships and joint ventures,
including the Potomac Hotel Limited Partnership, are expected to be given an
opportunity to receive, on a tax-deferred basis, Operating Partnership
units in the Operating Partnership in exchange for their current limited
partnership interests. The Operating Partnership units would be redeemable by
the limited partner for freely traded Host Marriott shares (or the cash
equivalent thereof) at any time after one year from the closing of the merger.
In connection with the REIT conversion, the Operating Partnership filed a
Registration Statement on Form S-4 (the "Form S-4") with the Securities and
Exchange Commission (the "SEC") on June 2, 1998. Limited partners will be able
to vote on this Partnership's participation in the merger later this year
through a consent solicitation.
In order to assist you with your financial planning, we are providing you
with the preliminary valuation information on your Partnership units as
disclosed in the Form S-4. The estimated exchange value is $5,040 per
Partnership unit (the "Estimated Exchange Value"). The Estimated Exchange Value
is subject to adjustment to reflect various closing and other adjustments and
the final valuation information will be set forth in the final Form S-4 you will
receive later this year through a consent solicitation.
The Estimated Exchange Value is being provided to you at this time for
information purposes only. We have not attempted to provide you with all of the
detail relating to the methodologies, variables, assumptions and estimates used
in determining the Estimated Exchange Value. The final valuation likely will
differ from the Estimated Exchange Value set forth above and such difference may
be material. The consent solicitation that will be mailed to you to solicit your
approval of a merger of the Partnership will contain the final valuation for a
Partnership unit as well as a discussion of the methodologies, variables,
assumptions and estimates used.
The solicitation period is expected to commence in late September 1998, and
the merger, if approved, would close by the end of the year (although there is
no assurance that this will be the case). Please notify the General Partner in
writing of any address changes in order to facilitate the prompt delivery of the
consent solicitation documents to you.
Secondary Market Activity
There has been an increase in the number of third party solicitations for
this Partnership's limited partner units. Although we are not in a position to
advise you as to whether you should accept such offers, limited partners should
be aware that the General Partner will restrict the assignment of partnership
interests in order to ensure that the Partnership will be able to qualify for at
least one of the "safe harbors" which govern the circumstances under which a
limited partnership will cease to be treated as a partnership and will instead
be treated as a corporation for tax purposes. If Partnership sales activity for
1998 brings the Partnership to the safe harbor limit for 1998, the General
Partner will be unable to allow additional unit sales in 1998. You should check
with the General Partner before signing any sale document to determine if your
transfer can be accepted.
In addition to reviewing the information provided in this report, we
encourage you to consult with your financial and tax advisors when deciding if
you should sell your Partnership units. Due to the substantial amount of tax
losses allocated to the limited partners in the earlier years of the
Partnership, there may be significant negative tax effects resulting from the
sale of these units that may impact your decision to sell. Once you have begun
the sale process we will do whatever is in our power to facilitate the transfer
of your units. Please note, the General Partner does not charge a fee in
connection with the transfer of Partnership units. If you wish to effect a
transfer, please contact our transfer agent, Trust Company of America/Gemisys at
1-800-797-6812 for necessary documents.
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SUPPLEMENTARY INFORMATION
Potomac Hotel Limited Partnership
Amounts Paid to the General Partner and Marriott International, Inc. and
Affiliates For the Twenty-Four Weeks Ended June 19, 1998 (in thousands)
General Partner and Affiliates
Interest and principal paid on Bank Guaranty loan..................$ 2,212
Interest and principal paid on FF&E loans.......................... 1,696
Interest and principal paid on Raleigh acquisition loan............ 1,465
Interest and principal paid on Tampa acquisition loan.............. 1,425
Administrative expenses reimbursed................................. 132
$ 6,930
Marriott International, Inc. and Affiliates:
Chain Services and Marriott Rewards Program costs reimbursed.......$ 3,716
Base management fees paid.......................................... 1,733
Deferred base management fees paid................................. 1,545
Incentive management fees paid..................................... 715
Interest and principal paid on FF&E loan........................... 41
$ 7,750
EXHIBIT 99.4
1998 Third Quarter Report
Limited Partner Quarterly Update
Presented for your review is the 1998 Third Quarter Report for the Potomac
Hotel Limited Partnership (the "Partnership"). A discussion of the Partnership's
performance and hotel operations is included in the attached Form 10-Q, Item 2,
Management's Discussion and Analysis of Financial Condition and Results of
Operations. You are encouraged to review this report in its entirety. If you
have any further questions regarding your investment, please contact Host
Marriott Partnership Investor Relations at (301) 380-2070.
HOST MARRIOTT CORPORATION'S CONVERSION TO A REAL ESTATE INVESTMENT TRUST
As publicly announced in April 1998, Host Marriott Corporation ("Host
Marriott"), the General Partner of the Partnership, has adopted a plan to
restructure its business operations so that it will qualify as a real estate
investment trust ("REIT") for federal income tax purposes. As part of the REIT
conversion, Host Marriott proposes to merge into HMC Merger Corporation (to be
renamed "Host Marriott Corporation"), a Maryland corporation ("Host REIT"), and
thereafter continue and expand its full-service hotel ownership business. Host
REIT will operate through Host Marriott, L.P., a Delaware limited partnership
(the "Operating Partnership"), of which Host REIT will be the sole general
partner. This is commonly called an "UPREIT" structure and it is used to
facilitate tax-deferred acquisitions of properties.
In previous correspondence, you were notified that you would be asked to
vote on a proposed transaction involving the Merger of this Partnership with the
Operating Partnership. The Prospectus/Consent Solicitation Statement and the
Partnership's Supplement which contain detailed information relating to this
proposal were mailed to all Limited Partners of record as of September 18, 1998.
This is the date set by the General Partner as the record date for determining
Limited Partners entitled to vote on the Merger and the related amendments to
the partnership agreement. The Prospectus/Consent Solicitation Statement and the
Partnership's Supplement should be reviewed as you make your decision to vote.
You also received, among other things, a list of Questions and Answers and
telephone numbers for assistance. We strongly encourage Limited Partners to
consult with their own financial and tax advisors when making their decision on
how to vote and which option to choose.
It is important that your Partnership Units be voted, regardless of the
number of Partnership Units you hold. The solicitation period ends at 5:00 p.m.,
Eastern time, on December 12, 1998, unless extended. If you have not yet
received the Prospectus/Consent Solicitation Statement or if you or your
advisors have any questions regarding the Merger, please contact the Information
Agent at 1-800-733-8481 extension 445.
<PAGE>
ESTIMATED 1998 TAX INFORMATION
If the Partnership votes to approve the Merger and the Merger is
consummated, the taxable income is estimated to be $6,400 per limited partner
unit for the year ending December 31, 1998. If the Partnership does not approve
the Merger, the taxable income is estimated to be $5,300 per limited partner
unit for 1998.
The 1998 tax information, used for preparing your Federal and state income
tax returns, will be mailed no later than March 15, 1999. To ensure
confidentiality, we regret that we are unable to furnish your tax information
over the telephone. Unless otherwise instructed, we will mail your tax
information to your address as it appears on this report. Therefore, to avoid
delays in delivery of this important information, please notify the Partnership
in writing of any address changes by January 31, 1999.
AMOUNTS PAID TO THE GENERAL PARTNER AND MARRIOTT INTERNATIONAL, INC. AND
AFFILIATES
The chart below summarizes amounts paid (in thousands) to the General
Partner and Marriott International, Inc. and affiliates for the thirty-six weeks
ended September 11, 1998 (unaudited):
General Partner and Affiliates
Interest and principal paid on Bank Guaranty loan..................$ 2,212
Interest and principal paid on Raleigh acquisition loan............ 2,179
Interest and principal paid on FF&E loans.......................... 1,749
Interest and principal paid on Tampa acquisition loan.............. 1,713
Administrative expenses reimbursed................................. 177
$ 8,030
Marriott International, Inc. and Affiliates:
Chain Services and Marriott Rewards Program costs reimbursed.......$ 5,423
Base management fees paid.......................................... 2,418
Deferred base management fees paid................................. 1,545
Incentive management fees paid..................................... 679
Interest and principal paid on FF&E loan........................... 58
$ 10,123
