Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter ended June 19, 1998
OR
Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission File Number: 0-16728
COURTYARD BY MARRIOTT II LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Delaware
--------------------------------------------------------------
(State or other Jurisdiction of incorporation or organization)
52-1533559
-----------------------------------
(I.R.S. Employer Identification No.)
10400 Fernwood Road
Bethesda, Maryland
20817
---------------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: 301-380-2070
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 | |
<PAGE>
================================================================================
COURTYARD BY MARRIOTT II LIMITED PARTNERSHIP
================================================================================
TABLE OF CONTENTS
PAGE NO.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statement of Operations
Twelve and Twenty-Four Weeks Ended June 19, 1998 and June 20, 1997...5
Condensed Consolidated Balance Sheet
June 19, 1998 and December 31, 1997..................................6
Condensed Consolidated Statement of Cash Flows
Twenty-Four Weeks ended June 19, 1998 and June 20, 1997..............7
Notes to Condensed Consolidated Financial Statements...................8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.....................................................12
Item 6. Exhibits and Reports on Form 8-K......................................13
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COURTYARD BY MARRIOTT II LIMITED PARTNERSHIP
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
(in thousands, except per Unit amounts)
<TABLE>
<CAPTION>
Twelve Weeks Ended Twenty-Four Weeks Ended
June 19, June 20, June 19, June 20,
1998 1997 1998 1997
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES
Hotel revenues (Note 3)..............................$ 36,148 $ 35,295 $ 70,774 $ 67,972
------------- ------------ ------------ ------------
OPERATING COSTS AND EXPENSES
Depreciation ........................................ 6,255 6,297 12,521 12,594
Ground rent, taxes and other......................... 6,154 5,593 12,154 11,526
Base and Courtyard management fees................... 4,144 3,992 8,130 7,784
Incentive management fee............................. 3,388 3,382 6,600 6,385
------------- ------------ ------------ ------------
19,941 19,264 39,405 38,289
------------- ------------ ------------ ------------
OPERATING PROFIT........................................ 16,207 16,031 31,369 29,683
Interest expense..................................... (10,048) (10,349) (21,137) (21,748)
Interest income...................................... 631 680 1,303 1,156
------------- ------------ ------------ ------------
NET INCOME..............................................$ 6,790 $ 6,362 $ 11,535 $ 9,091
============= ============ ============ ============
ALLOCATION OF NET INCOME
General Partner......................................$ 340 $ 318 $ 577 $ 454
Limited Partners..................................... 6,450 6,044 10,958 8,637
------------- ------------ ------------ ------------
$ 6,790 $ 6,362 $ 11,535 $ 9,091
============= ============ ============ ============
NET INCOME PER LIMITED PARTNER UNIT
(1,470 Units)........................................$ 4,388 $ 4,112 $ 7,454 $ 5,876
============= ============ ============ ============
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
COURTYARD BY MARRIOTT II LIMITED PARTNERSHIP
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
<TABLE>
<CAPTION>
June 19, December 31,
1998 1997
------------ ------------
(Unaudited)
ASSETS
<S> <C> <C>
Property and equipment, net..................................................$ 459,053 $ 455,435
Due from Courtyard Management Corporation.................................... 10,289 11,318
Other assets................................................................. 33,260 43,060
Restricted cash.............................................................. 16,103 13,212
Cash and cash equivalents.................................................... 20,375 13,690
-------------- ---------------
$ 539,080 $ 536,715
============== ===============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
LIABILITIES
Debt.........................................................................$ 507,114 $ 512,955
Management fees due to Courtyard Management Corporation...................... 32,600 34,829
Due to Marriott International, Inc. and affiliates........................... 8,995 9,050
Accounts payable and accrued liabilities..................................... 12,326 10,578
-------------- ---------------
Total Liabilities........................................................ 561,035 567,412
-------------- ---------------
PARTNERS' CAPITAL (DEFICIT)
General Partner.............................................................. 7,149 6,572
Limited Partners............................................................. (29,104) (37,269)
-------------- ---------------
Total Partners' Deficit.................................................. (21,955) (30,697)
-------------- ---------------
$ 539,080 $ 536,715
============== ===============
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
COURTYARD BY MARRIOTT II LIMITED PARTNERSHIP
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Twenty-Four Weeks Ended
June 19, June 20,
1998 1997
-------------- --------------
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net income.................................................................$ 11,535 $ 9,091
Noncash items.............................................................. 13,247 13,320
Changes in operating accounts.............................................. (143) 1,654
---------------- ---------------
Cash provided by operating activities.................................. 24,639 24,065
---------------- ---------------
INVESTING ACTIVITIES
Additions to property and equipment........................................ (16,140) (12,262)
Change in property improvement funds....................................... 9,089 5,242
---------------- ---------------
Cash used in investing activities...................................... (7,051) (7,020)
---------------- ---------------
FINANCING ACTIVITIES
Repayments of debt......................................................... (5,841) (5,420)
Capital distributions to the limited partners.............................. (2,793) (4,042)
Change in restricted cash.................................................. (2,269) (2,030)
---------------- ---------------
Cash used in financing activities...................................... (10,903) (11,492)
---------------- ---------------
INCREASE IN CASH AND CASH EQUIVALENTS........................................... 6,685 5,553
CASH AND CASH EQUIVALENTS at beginning of period................................ 13,690 14,197
---------------- ---------------
CASH AND CASH EQUIVALENTS at end of period......................................$ 20,375 $ 19,750
================ ===============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for mortgage and other interest..................................$ 19,238 $ 19,673
================ ===============
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
COURTYARD BY MARRIOTT II LIMITED PARTNERSHIP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The accompanying condensed consolidated financial statements have been
prepared by the Courtyard By Marriott II Limited Partnership (the
"Partnership") without audit. Certain information and footnote disclosures
normally included in financial statements presented in accordance with
generally accepted accounting principles have been condensed or omitted
from the accompanying statements. The Partnership believes the disclosures
made are adequate to make the information presented not misleading.
However, the condensed consolidated financial statements should be read in
conjunction with the Partnership's consolidated financial statements and
notes thereto included in the Partnership's Form 10-K for the year ended
December 31, 1997.
In the opinion of the Partnership, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments (which include
only normal recurring adjustments) necessary to present fairly the
financial position of the Partnership as of June 19, 1998 and December 31,
1997, the results of operations for the twelve and twenty-four weeks ended
June 19, 1998 and June 20, 1997 and the cash flows for the twenty-four
weeks ended June 19, 1998 and June 20, 1997. Interim results are not
necessarily indicative of fiscal year performance because of seasonal and
short-term variations.
For financial reporting purposes, the net income of the Partnership is
allocated 95% to the limited partners and 5% to CBM Two Corporation (the
"General Partner"). Significant differences exist between the net income
for financial reporting purposes and the net income reported for Federal
income tax purposes. These differences are due primarily to the use for
income tax purposes of accelerated depreciation methods, shorter
depreciable lives for the assets, differences in the timing of the
recognition of certain fees and straight-line rent adjustments.
2. Certain reclassifications were made to the prior year financial
statements to conform to the 1998 presentation.
3. Revenues represent house profit which is hotel sales less hotel-level
expenses, excluding certain operating costs and expenses such as
depreciation, base, Courtyard and incentive management fees, real and
personal property taxes, ground and equipment rent, insurance and certain
other costs. Revenues consist of the following for the twelve and
twenty-four weeks ended (in thousands):
<TABLE>
<CAPTION>
Twelve Weeks Ended Twenty-Four Weeks Ended
June 19, June 20, June 19, June 20,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
-------------- ------------- ------------- ---------
HOTEL SALES
Rooms...........................................$ 62,679 $ 59,969 $ 122,959 $ 116,725
Food and beverage............................... 4,172 4,248 8,201 8,359
Other........................................... 2,218 2,305 4,341 4,642
-------------- ------------- ------------- -------------
69,069 66,522 135,501 129,726
-------------- ------------- ------------- -------------
HOTEL EXPENSES
Departmental direct costs
Rooms......................................... 13,153 12,369 25,811 24,009
Food and beverage............................. 3,457 3,591 6,916 7,025
Other........................................... 16,311 15,267 32,000 30,720
-------------- ------------- ------------- -------------
32,921 31,227 64,727 61,754
-------------- ------------- ------------- -------------
REVENUES..........................................$ 36,148 $ 35,295 $ 70,774 $ 67,972
============== ============= ============= =============
</TABLE>
<PAGE>
On November 20, 1997, the Emerging Issues Task Force ("EITF") of the
Financial Accounting Standards Board reached a consensus on EITF 97-2
"Application of FASB Statement No. 94 and APB Opinion No. 16 to Physician
Practice Management Entities and Certain Other Entities with Contractual
Management Arrangements." EITF 97-2 addresses the circumstances in which a
management entity may include the revenues and expenses of a managed entity
in its financial statements.
The Partnership is assessing the impact of EITF 97-2 on its policy of
excluding property-level revenues and operating expenses of the Hotels from
its statements of operations. If the Partnership concludes that EITF 97-2
should be applied to the Hotels, it would include operating results of this
managed operation in its financial statements. Application of EITF 97-2 to
financial statements for the twelve and twenty-four weeks ended June 19,
1998, would have increased both revenues and operating expenses by
approximately $32.9 million and $64.7 million, respectively, and would have
had no impact on net income.
4. Host Marriott Corporation, on behalf of the General Partner, CBM Two
Corporation, filed a preliminary Prospectus/Consent Solicitation Statement
with the Securities and Exchange Commission in December 1997, which
proposed the consolidation (the "Consolidation") of this Partnership and
five other limited partnerships into a publicly traded real estate
investment trust ("REIT").
In addition, there are existing REIT's which are active in the moderate
price and extended stay hotel segment that have expressed an interest in
acquiring the hotels owned by the six limited partnerships. Although the
General Partner has had preliminary discussions with some of these
companies, no agreements have yet been reached.
The General Partner has retained Merrill Lynch to advise the Partnership
with respect to the Partnership's strategic alternatives. The General
Partner intends to continue to explore these alternatives and determine
which path to pursue, subject to appropriate partner approval.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
Certain matters discussed herein are forward-looking statements and as such may
involve known and unknown risks, uncertainties, and other factors which may
cause the actual results, performance or achievements of the Partnership to be
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. Although the Partnership believes
that the expectations reflected in such forward-looking statements are based
upon reasonable assumptions, it can give no assurance that its expectations will
be attained. These risks are detailed from time to time in the Partnership's
filings with the Securities and Exchange Commission. The Partnership undertakes
no obligation to publicly release the result of any revisions to these
forward-looking statements that may be made to reflect any future events or
circumstances.
RESULTS OF OPERATIONS
Revenues. Revenues increased by $0.9 million and $2.8 million to $36.1 million
and $70.8 million for the twelve and twenty-four weeks ended June 19, 1998,
respectively. These represent a 2.4% and a 4.1% increase, respectively, for the
quarter and year-to-date when compared to the same periods in 1997. The increase
in revenues was achieved primarily through an increase in hotel sales offset by
an increase in direct hotel operating costs and expenses.
For the twelve and twenty-four weeks ended June 19, 1998, hotel sales increased
by $2.5 million and $5.8 million, or 3.8% and 4.5%, to $69.1 million and $135.5
million, respectively, over the same periods in 1997. The increase in sales was
achieved primarily through an increase in the combined average room rate. The
combined average room rate increased $5.94 to $88.78 for the second quarter and
$6.27 to $88.65 year-to-date as compared to the same periods in 1997. The
increase in average room rate is primarily due to aggressive weekday pricing
combined with a strong advertising campaign which focused on leisure travelers.
Combined average occupancy for the twelve and twenty-four weeks ended June 19,
1998 decreased by 2.1 and 1.7 percentage points to 81.3% and 79.9%,
respectively, when compared to the same periods in 1997. The decrease in
occupancy is mainly due to increased competition and aggressive rate increases
in some markets. For the twenty-four weeks ended June 19, 1998, 40 of the
Partnership's 70 Hotels posted occupancy rates exceeding 80%. REVPAR, or revenue
per available room, represents the combination of the average daily room rate
charged and the average daily occupancy achieved and is a commonly used
indicator of hotel performance (although it is not a GAAP or generally accepted
accounting principles measurement of revenue). REVPAR for the twelve weeks and
twenty-four weeks ended June 19, 1998 was $72.18 and $70.83, representing a 4.5%
and 5.4% increase, respectively, when compared to the same periods in 1997.
Direct hotel operating costs and expenses increased from $31.2 million and $61.8
million for the twelve and twenty-four weeks ended June 19, 1997 to $32.9
million and $64.7 million, respectively, for the same periods in 1998. Room
profit increased by 4.0% and 4.8% for the twelve and twenty-four weeks ended
June 19, 1998, respectively, as compared to the same periods in 1997.
Operating Costs and Expenses. The Partnership's operating costs and expenses
increased by 3.5% to $19.9 million and by 2.9% to $39.4 million for the twelve
and twenty-four weeks ended June 19, 1998, respectively, when compared to the
same periods in 1997. As a percentage of total hotel sales, these costs and
expenses decreased slightly from 29.5% in the twenty-four weeks ended June 20,
1997 to 29.1% in the same period of 1998. As a percentage of total sales for the
second quarter of 1997 and 1998, these costs and expenses remained stable at
29%. Some of the component of this category are discussed below:
Base and Courtyard Management Fees. The increase in base and Courtyard
management fees from $7.8 million for the twenty-four weeks ended June 20, 1997
to $8.1 million for the comparable period in 1998 is due to the improved
combined hotel sales for the 70 Hotels.
Incentive Management Fees. During the twenty-four weeks ended June 19, 1998,
incentive management fees earned increased by 3.4% to $6.6 million from $6.4
million in the comparable period in 1997. The increase in incentive management
fees earned was the result of improved combined hotel operating results.
Operating Profit. Operating profit increased by $1.7 million to $31.4 million in
the twenty-four weeks ended June 19, 1998 from $29.7 million in the same period
in 1997, primarily due to higher revenues.
Interest expense decreased by 2.8% to $21.1 million for the twenty-four weeks
ended June 19, 1998 from $21.7 million for the comparable period in 1997. For
the second quarter 1998, interest expense decreased $0.3 million as compared to
the second quarter 1997. The decrease was primarily due to principal
amortization on the Certificates/Mortgage Loan. The weighted average interest
rate for the twenty-four weeks ended June 19, 1998 was 8.6% as compared to 8.4%
for the comparable period in 1997.
For the twenty-four weeks ended June 19, 1998, the Partnership had net income of
$11.5 million, an increase of $2.4 million, from net income of $9.1 million for
the comparable period in 1997. This increase was primarily due to higher
revenues as discussed above, offset by increases in management fees, ground
rent, taxes and other expenses.
CAPITAL RESOURCES AND LIQUIDITY
The Partnership's financing needs have historically been funded through loan
agreements with various lenders and Host Marriott Corporation ("Host Marriott").
The General Partner believes that the Partnership will have sufficient capital
resources and liquidity to continue to conduct its business in the ordinary
course.
Principal Sources and Uses of Cash
The Partnership's principal source of cash is from operations. Its principal
uses of cash are to make debt service payments, fund the property improvement
fund and to make distributions to limited partners.
Cash provided by operations for the twenty-four weeks ended June 19, 1998, and
June 20, 1997, was $24.6 million and $24.1 million, respectively. The increase
in cash provided by operations is due to improved operations, offset by the
change in the receivable balance due from the Manager at June 19, 1998 when
compared to the change at June 20, 1997.
Cash used in investing activities was $7.1 million for the first two quarters of
1998 and $7.0 million for the first two quarters of 1997. Cash used in investing
activities for 1998 includes capital expenditures of $16.1 million, primarily
related to renovations and replacements at the Partnership's hotels.
Cash used in financing activities was $10.9 million and $11.5 million for the
first two quarters of 1998 and 1997, respectively. During the first twenty-four
weeks of 1998 and 1997, the Partnership repaid $5.8 million and $5.4 million,
respectively, of principal on the Certificates/Mortgage Loan. The Partnership
also transferred a net amount of $2.3 million and $2.0 million into reserve
accounts during the twenty-four weeks ended June 19, 1998 and June 20, 1997,
respectively. Cash used in financing activities included $2.8 million and $4.0
million of cash distributions to limited partners during the twenty-four weeks
ended June 19, 1998 and June 20, 1997, respectively. In April of 1998, the
Partnership utilized 1997 cash flow after debt service to make a final cash
distribution totaling $2.8 million or $1,900 per limited partner unit, bringing
the total distribution from 1997 operations to $13.2 million or $9,000 per
limited partner unit. Additionally, on July 27, 1998, the Partnership utilized
1998 cash flow through June 19, 1998 to make a distribution of $5.9 million or
$4,000 per limited partner unit.
The General Partner believes that cash from hotel operations combined with the
ability to defer certain management fees to the Manager and ground rent payments
to Marriott International, Inc. and affiliates will provide adequate funds in
the short term and long term to meet the operational and capital needs of the
Partnership.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Certain Limited Partners of the Partnership have filed a lawsuit, styled Whitey
Ford, et al. v. Host Marriott Corporation, et al., Case No. 96-CI-08327, in the
285th Judicial District Court of Bexar County, Texas against the General
Partner, the Manager, various of their subsidiaries, J.W. Marriott, Jr., Stephen
Rushmore and Hospitality Valuation Services, Inc. (collectively, the
"Defendants"). On January 29, 1998, two other Limited Partners filed a petition
to expand this lawsuit to include a class action. On June 23, 1998, the Court
entered an order certifying a class of Limited Partners under Texas law,
appointing A.R. Milkes and D.R. Burklew as representative plaintiffs on behalf
of the class, and later, appointing the law firm of Berg & Androphy as lead
class counsel. The plaintiffs allege, among other things, that the Defendants
committed fraud, breached fiduciary duties, and violated the provisions of
various contracts. The General Partner believes that all of the plaintiffs'
allegations are without foundation and the Defendants intend to vigorously
defend against them.
On February 11, 1998, four individual limited partners in partnerships sponsored
by Host Marriott Corporation ("Host Marriott"), filed a class action lawsuit,
styled Ruben, et al. v. Host Marriott Corporation, et al., Civil Action No.
16186, in Delaware State Chancery Court against Host Marriott and the general
partners of Courtyard by Marriott Limited Partnership, Courtyard by Marriott II
Limited Partnership, Marriott Residence Inn Limited Partnership, Marriott
Residence Inn II Limited Partnership, and Fairfield Inn by Marriott Limited
Partnership (collectively, the "Five Partnerships"). The plaintiffs allege that
the merger of the Five Partnerships (the "Merger") into an umbrella partnership
real estate investment trust proposed by CRF Lodging Company, L.P. in a
preliminary registration statement filed with the Securities and Exchange
Commission, dated December 22, 1997, constitutes a breach of the fiduciary
duties owed to the limited partners of the Five Partnerships by Host Marriott
and the general partners of the Five Partnerships. In addition, the plaintiffs
allege that the Merger breaches various agreements relating to the Five
Partnerships. The plaintiffs are seeking, among other things, the following:
certification of a class; injunctive relief to block consummation of the Merger
or, in the alternative, recision of the Merger; and damages. Host Marriott and
the general partners of the Five Partnerships believe that these allegations are
totally devoid of merit and they intend to vigorously defend against them. The
defendants also maintain that this lawsuit is premature because the Merger has
not been and may not be consummated as proposed in the SEC filings. Accordingly,
they have filed a motion to dismiss the lawsuit.
On March 16, 1998, limited partners in several partnerships sponsored by Host
Marriott, filed a lawsuit, styled Robert M. Haas, Sr. and Irwin Randolph Joint
Tenants, et al. v. Marriott International, Inc., et al., Case No. 98-CI-04092,
in the 57th Judicial District Court of Bexar County, Texas against Marriott
International, Inc. ("Marriott International"), Host Marriott, various of their
subsidiaries, J.W. Marriott, Jr., Stephen Rushmore, and Hospitality Valuation
Services, Inc. (collectively, the "Defendants"). The lawsuit relates to the
following limited 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 (collectively, the "Seven
Partnerships"). The plaintiffs allege that the Defendants conspired to sell
hotels to the Seven Partnerships for inflated prices and that they charged the
Seven Partnerships excessive management fees to operate the Seven Partnerships'
hotels. The plaintiffs further allege, among other things, that the Defendants
committed fraud, breached fiduciary duties, and violated the provisions of
various contracts. The plaintiffs are seeking unspecified damages. The
Defendants, which do not include the Seven Partnerships, believe that there is
no truth to the plaintiffs' allegations and that the lawsuit is totally devoid
of merit. The Defendants intend to vigorously defend against the claims asserted
in the lawsuit. They have filed an answer to the plaintiffs' petition and
asserted a number of defenses. Although the Seven Partnerships have not been
named as Defendants in the lawsuit, the partnership agreements relating to the
Seven Partnerships include an indemnity provision which requires the Seven
Partnerships, under certain circumstances, to indemnify the general partners
against losses, judgments, expenses and fees.
The Partnership and the Hotels are involved in routine litigation and
administrative proceedings arising in the ordinary course of business, some of
which are expected to be covered by liability insurance and which collectively
are not expected to have a material adverse effect on the business, financial
condition or results of operations of the Partnership.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
None.
b. Reports on Form 8-K:
May 6, 1998 -- Letter from the General Partner to
limited partners regarding status of proposed
consolidation.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Form 10-Q to be signed on its behalf by the
undersigned, thereunto duly authorized.
COURTYARD BY MARRIOTT II
LIMITED PARTNERSHIP
By: CBM TWO CORPORATION
General Partner
July 31, 1998 By: /s/ Earla L. Stowe
------------------
Earla L. Stowe
Vice President and Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
SECOND QUARTER 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000832179
<NAME> COURTYARD BY MARRIOT II LIMITED PARTNERSHIP
<MULTIPLIER> 1000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> JUN-19-1998
<EXCHANGE-RATE> 1000
<CASH> 36,478
<SECURITIES> 33,260 <F1>
<RECEIVABLES> 10,289
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 80,027
<PP&E> 726,554
<DEPRECIATION> (267,501)
<TOTAL-ASSETS> 539,080
<CURRENT-LIABILITIES> 12,326
<BONDS> 548,709
0
0
<COMMON> 0
<OTHER-SE> (21,955) <F2>
<TOTAL-LIABILITY-AND-EQUITY> 539,080
<SALES> 0
<TOTAL-REVENUES> 70,774
<CGS> 0
<TOTAL-COSTS> 38,102
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,137
<INCOME-PRETAX> 11,535
<INCOME-TAX> 0
<INCOME-CONTINUING> 11,535
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,535
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1> THIS REPRESENTS OTHER ASSETS.
<F2> THIS REPRESENTS PARTNERS DEFICIT.
</FN>
</TABLE>
