S-4

   As filed with the Securities and Exchange Commission on December 15, 2000

                                                        Registration No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                               ----------------
                                    FORM S-4
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933

                               ----------------
                              HOST MARRIOTT, L.P.
             (Exact name of registrant as specified in its charter)

        Delaware                     7011                    52-2095412
     (State or other           (Primary Standard            (IRS Employer
     jurisdiction of              Industrial           Identification Number)
    incorporation or          Classification Code
      organization)                 Number)

      For Co-Registrants, see "Table of Co-Registrants" on following page.
                              10400 Fernwood Road
                            Bethesda, Maryland 20817
                                 (301) 380-9000
    (Address, including zip code, telephone number, including area code, of
                   registrant's principal executive offices)

                            Christopher G. Townsend
                              10400 Fernwood Road
                            Bethesda, Maryland 20817
                                 (301) 380-9000
 (Name, address, including zip code, and telephone number, including area code,
                             of agent for service)

                                   Copies to:
                                Scott C. Herlihy
                                Latham & Watkins
                          1001 Pennsylvania Ave., N.W.
                          Washington, D.C. 20004-2505
                                 (202) 637-2200

                               ----------------
   Approximate date of commencement of proposed sale to the public: as soon as
practicable after this Registration Statement becomes effective.

   If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]

   If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]

   If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

                        CALCULATION OF REGISTRATION FEE

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- ------------------------------------------------------------------------------

                                                      Proposed
                                       Amount         Maximum      Amount Of
      Title of Each Class of            To Be         Offering    Registration
   Securities To Be Registered       Registered    Price Per Unit   Fee (1)
- ------------------------------------------------------------------------------
                                                         
9 1/4% Series G senior notes due
 2007............................  $250,000,000.00     100.00%      $66,000
- ------------------------------------------------------------------------------
Guarantees of Series G senior
 notes (2).......................        (2)            (2)           (2)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------

(1) The Registration Fee has been calculated in accordance with Rule 457(f)
    under the Securities Act of 1933, as amended.
(2) No separate consideration will be received with respect to these guarantees
    and, therefore, no registration fee is attributable to them.

   The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant will
file a further amendment which specifically states that this registration
statement will thereafter become effective in accordance with section 8(a) of
the securities act or until this registration statement will become effective
on such date as the commission, acting pursuant to said section 8(a), may
determine.

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                            Table of Co-Registrants



                                                         Primary
                                          State of       Standard
                                            other       Industrial      IRS
                                        Jurisdiction  Classification  Employer
                 Name                   of Formation   Code Number     Number
                 ----                   ------------- -------------- ----------
                                                            
HMH Rivers, L.P.......................  Delaware           7011      52-2126158
HMH Marina LLC........................  Delaware           7011      52-2095412
HMC SBM Two LLC.......................  Delaware           7011      52-2095412
HMC PLP LLC...........................  Delaware           7011      52-2095412
HMC Retirement Properties, L.P........  Delaware           7011      52-2126159
HMH Pentagon LLC......................  Delaware           7011      52-2095412
Airport Hotels LLC....................  Delaware           7011      52-2095412
Chesapeake Financial Services LLC.....  Delaware           7011      52-2095412
HMC Capital Resources LLC.............  Delaware           7011      52-2095412
YBG Associates LLC....................  Delaware           7011      52-2059377
PRM LLC...............................  Delaware           7011      52-2095412
Host Park Ridge LLC...................  Delaware           7011      52-2095412
Host of Boston, Ltd...................  Massachusetts      7011      59-0164700
Host of Houston, Ltd..................  Texas              7011      52-1874034
Host of Houston 1979..................  Delaware           7011      95-3552476
Philadelphia Airport Hotel LLC........  Delaware           7011      52-2095412
HMC Hartford LLC......................  Delaware           7011      52-2095412
HMH Norfolk LLC.......................  Delaware           7011      52-2095412
HMH Norfolk, L.P......................  Delaware           7011      52-2039042
HMC Park Ridge LLC....................  Delaware           7011      52-2095412
HMC Partnership Holdings LLC..........  Delaware           7011      52-2095412
HMC Suites LLC........................  Delaware           7011      52-2095412
HMC Suites Limited Partnership........  Delaware           7011      52-1632307
Wellsford-Park Ridge Host Hotel
 Limited Partnership..................  Delaware           7011      52-6323494
City Center Interstate Partnership
 LLC..................................  Delaware           7011      52-2095412
Farrell's Ice Cream Parlor Restaurants
 LLC..................................  Delaware           7011      52-2095412
HMC Burlingame LLC....................  Delaware           7011      52-2095412
HMC California Leasing LLC............  Delaware           7011      52-2095412
HMC Capital LLC.......................  Delaware           7011      52-2095412
HMC Grand LLC.........................  Delaware           7011      52-2095412
HMC Hotel Development LLC.............  Delaware           7011      52-2095412
HMC Mexpark LLC.......................  Delaware           7011      52-2095412
HMC Polanco LLC.......................  Delaware           7011      52-2095412
HMC NGL LLC...........................  Delaware           7011      52-2095412
HMC OLS I L.P.........................  Delaware           7011      52-2095412
HMC RTZ Loan I LLC....................  Delaware           7011      52-2095412
HMC RTZ II LLC........................  Delaware           7011      52-2095412
HMC Seattle LLC.......................  Delaware           7011      52-2095412
HMC Swiss Holdings LLC................  Delaware           7011      52-2095412
HMC Waterford LLC.....................  Delaware           7011      52-2095412
HMH Restaurants LLC...................  Delaware           7011      52-2095412
HMH Rivers LLC........................  Delaware           7011      52-2095412
HMH WTC LLC...........................  Delaware           7011      52-2095412
HMP Capital Ventures LLC..............  Delaware           7011      52-2095412
HMP Financial Services LLC............  Delaware           7011      52-2095412
Host La Jolla LLC.....................  Delaware           7011      52-2095412
City Center Hotel Limited
 Partnership..........................  Minnesota          7011      41-1449758
MFR of Illinois LLC...................  Delaware           7011      52-2095412
MFR of Vermont LLC....................  Delaware           7011      52-2095412
MFR of Wisconsin LLC..................  Delaware           7011      52-2095412
PM Financial LLC......................  Delaware           7011      52-2095412
PM Financial LP.......................  Delaware           7011      52-2131022



                            Table of Co-Registrants



                                                        Primary
                                                        Standard
                                     State of other    Industrial      IRS
                                     Jurisdiction of Classification  Employer
                Name                    Formation     Code Number     Number
                ----                 --------------- -------------- ----------
                                                           
HMC Chicago LLC.....................    Delaware          7011      52-2095412
HMC HPP LLC.........................    Delaware          7011      52-2095412
HMC Desert LLC......................    Delaware          7011      52-2095412
HMC Hanover LLC.....................    Delaware          7011      52-2095412
HMC Diversified LLC.................    Delaware          7011      52-2095412
HMC Properties I LLC................    Delaware          7011      52-2095412
HMC Potomac LLC.....................    Delaware          7011      52-2095412
HMC East Side II LLC................    Delaware          7011      52-2095412
HMC Manhattan Beach LLC.............    Delaware          7011      52-2095412
Chesapeake Hotel Limited
 Partnership........................    Delaware          7011      52-1373476
HMH General Partner Holdings LLC....    Delaware          7011      52-2095412
HMC IHP Holdings LLC................    Delaware          7011      52-2095412
HMC OP BN LLC.......................    Delaware          7011      52-2095412
S.D. Hotels LLC.....................    Delaware          7011      52-2095412
HMC Gateway LLC.....................    Delaware          7011      52-2095412
HMC Pacific Gateway LLC.............    Delaware          7011      52-2095412
MDSM Finance LLC....................    Delaware          7011      52-2065959
HMC Market Street LLC...............    Delaware          7011      52-2095412
New Market Street LP................    Delaware          7011      52-2131023
Times Square LLC....................    Delaware          7011      52-2095412
Times Square GP LLC.................    Delaware          7011      52-2095412
HMC Atlanta LLC.....................    Delaware          7011      52-2095412
Ivy Street LLC......................    Delaware          7011      52-2095412
HMC Properties II LLC...............    Delaware          7011      52-2138453
Santa Clara HMC LLC.................    Delaware          7011      52-2095412
HMC BCR Holdings LLC................    Delaware          7011      52-2095412
HMC Palm Desert LLC.................    Delaware          7011      52-2095412
HMC Georgia LLC.....................    Delaware          7011      52-2095412
HMC SFO LLC.........................    Delaware          7011      52-2095412
Market Street Host LLC..............    Delaware          7011      52-2091669
HMC Property Leasing LLC............    Delaware          7011      52-2095412
HMC Host Restaurants LLC............    Delaware          7011      52-2095412
Durbin LLC..........................    Delaware          7011      52-2095412
HMC HT LLC..........................    Delaware          7011      52-2095412
HMC JWDC GP LLC.....................    Delaware          7011      52-2095412
HMC JWDC LLC........................    Delaware          7011      52-2095412
HMC OLS I LLC.......................    Delaware          7011      52-2095412
HMC OLS II L.P......................    Delaware          7011      52-2095412



++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+This prospectus is subject to completion and amendment. The information in    +
+this prospectus is not complete and may be changed. We may not sell or offer  +
+these securities until the registration statement filed with the Securities   +
+and Exchange Commission is effective. This prospectus is not an offer to sell +
+these securities and we are not soliciting an offer to buy these securities   +
+in any state where the offer or sale is not permitted.                        +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
                       Offer to Exchange all Outstanding

                     9 1/4% Series F Senior Notes due 2007

                                      for

                     9 1/4% Series G Senior Notes Due 2007

                                       of

                              HOST MARRIOTT, L.P.

  We are offering to exchange all of our outstanding 9 1/4% Series F senior
notes for our 9 1/4% Series G notes. The terms of the Series G senior notes are
substantially identical to the terms of the Series F senior notes except that
the Series G senior notes are registered under the Securities Act of 1933, as
amended, and are therefore freely transferrable. The Series F senior notes were
issued on October 6, 2000 and, as of the date of this prospectus, an aggregate
principal amount of $250 million is outstanding.


 Please consider the following:

 . Our offer to exchange the notes expires at 5:00 p.m., New York City time, on
   [   ], 2000. However, we may extend the offer.

 . You should carefully review the procedures for tendering the Series F senior
   notes beginning on page 3 of this prospectus. If you do not follow those
   procedures, we may not exchange your Series F senior notes for Series G
   senior notes.

 . We will not receive any proceeds from the exchange offer.

 . If you fail to tender your Series F senior notes, you will continue to hold
   unregistered securities and your ability to transfer them could be adversely
   affected.

 . There is currently no public market for the Series G senior notes. We do not
   intend to list the Series G senior notes on any securities exchange.
   Therefore, we do not anticipate that an active public market for these notes
   will develop.


Information about the Series G senior notes:

 . The notes will mature on October 1, 2007.

 . We will pay interest on the notes at the rate of 9 1/4% per year payable on
   April 1 and October 1, commencing April 1, 2001.

 . The notes are equal in right of payment to all of our unsubordinated
   indebtedness and senior to all of our subordinated obligations.

 . Subsidiaries of ours have guaranteed the notes. These subsidiaries comprise
   all of our subsidiaries that also guarantee our credit facility and any
   other indebtedness of ours.

 . As security for the notes, we have pledged the common equity interests of
   those of our subsidiaries whose interests are also pledged as security under
   our bank credit facility and certain of our other indebtedness.

 . We do not have the option to redeem the notes prior to maturity.

  Please see "Risk Factors" beginning on page 8 of this prospectus for a
discussion of certain factors that you should consider before participating in
this exchange offer.

  Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is
a criminal offense.

                  The date of this prospectus is       , 2000.


                      WHERE YOU CAN FIND MORE INFORMATION

   We file annual, quarterly and special reports, proxy statements and other
information with the Commission. You may read and copy materials that we have
filed with the Commission, including the registration statement, at the
following Commission public reference rooms:

450 Fifth Street, N.W.       7 World Trade Center     500 West Madison Street
Room 1024                    Suite 1300               Suite 1400
Washington, D.C. 20549       New York, New York 10048 Chicago, Illinois 60661

   Please call the Commission at 1-800-SEC-0330 for further information on the
public reference rooms.

   Our Commission filings can also be read at the following address:

    New York Stock Exchange
    20 Broad Street
    New York, New York 10005

   Our Commission filings are also available to the public on the Commission's
Web Site at http://www.sec.gov.

   The Commission allows us to "incorporate by reference" the information we
file with them, which means that we can disclose important information to you
by referring you to those documents. The information incorporated by reference
is an important part of this prospectus, and information that we file later
with the Commission will automatically update and supersede this information.
We incorporate by reference the documents listed below and any future filings
made with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until we have sold all of the offered
securities to which this prospectus relates or the offering is otherwise
terminated.

     1. Annual Report on Form 10-K of Host Marriott, L.P. for the fiscal year
  ended December 31, 1999 (filed on March 16, 2000).

     2. Quarterly Reports on Form 10-Q of Host Marriott, L.P. for the
  quarters ended:

    .  March 24, 2000 (filed on May 8, 2000),

    .  June 16, 2000 (filed on July 25, 2000) and

    .  September 8, 2000 (filed on October 23, 2000).

     3. Current Reports on Form 8-K filed by Host Marriott, L.P., dated:

    .  February 24, 2000 (filed on February 25, 2000), and

    .  November 28, 2000 (as amended by Form 8-K/A filed on December 14,
       2000).

   You may request a copy of these filings, at no cost, by writing us at the
following address or telephoning at (301) 380-2070 between the hours of 9:00
a.m. and 4:00 p.m., Eastern Time:

    Corporate Secretary
    Host Marriott Corporation
    10400 Fernwood Road
    Bethesda, Maryland 20817

                                       i


                                    SUMMARY

   The following summary contains basic information about this offering. It
likely does not contain all the information that is important to you. For a
more complete understanding of the offering, we encourage you to read this
entire document and the other documents to which we refer.

                              Host Marriott, L.P.

   We are a Delaware limited partnership whose sole general partner is Host
Marriott Corporation, a Maryland corporation that we refer to as "Host REIT".
We, Host LP, were formed in connection with a series of transactions pursuant
to which the former Host Marriott Corporation, a Delaware corporation that we
refer to as "Host Marriott", and its subsidiaries converted their business
operations to qualify as a real estate investment trust or "REIT." We refer to
this conversion in this offering memorandum as the "REIT conversion." As a
result of the REIT conversion, the hotel ownership business formerly conducted
by Host Marriott and its subsidiaries is conducted by and through us and our
subsidiaries, and Host Marriott was merged with and into Host REIT. Host REIT
has elected, beginning January 1, 1999, to be treated as a REIT for federal
income tax purposes.

   Our consolidated assets principally consist of 122 full service hotel
properties, virtually all of which are leased to Crestline Capital Corporation,
a publicly traded corporation and a former subsidiary of Host Marriott which
was distributed to the Host Marriott shareholders as part of the REIT
conversion. These properties are operated under some of the most respected and
widely recognized brand names in the lodging industry, including Marriott,
Ritz-Carlton, Four Seasons, Hyatt, Hilton, and Swissotel. Marriott
International, Inc. manages or franchises 109 of these properties as Marriott
or Ritz Carlton branded hotels. We also have economic, non-voting interests in
non-controlled subsidiaries, whose three full-service hotels are also managed
by Marriott International.

   On November 13, we and Crestline announced the execution of a definitive
agreement for the purchase and sale of the entities owning the leasehold
interests with respect to 117 full-service hotel properties owned by us. Under
the terms of the transaction, our wholly-owned subsidiary, which will elect to
be treated as a taxable REIT subsidiary, will purchase the Crestline
subsidiaries, whose primary assets are the leasehold interests, for
approximately $205 million, including recording a non-recurring loss of $120
million net of tax on the acquisition.

   Our principal executive offices are located at 10400 Fernwood Road,
Bethesda, Maryland 20817-1109. Our telephone number is (301) 380-9000.

                                       1



                               THE EXCHANGE OFFER

  Securities to be exchanged........    On October 6, 2000, we issued $250
                                        million in aggregate principal amount
                                        of Series F senior notes in a
                                        transaction exempt from the
                                        registration requirements of the
                                        Securities Act of 1933. The terms of
                                        the Series G senior notes and the
                                        Series F senior notes are substantially
                                        identical in all material respects,
                                        except that the Series G senior notes
                                        will be freely transferable by the
                                        holders thereof except as otherwise
                                        provided in this prospectus.

  The exchange offer................    $1,000 principal amount of Series G
                                        senior notes in exchange for each
                                        $1,000 principal amount of Series F
                                        senior notes. As of the date of this
                                        prospectus, Series F senior notes
                                        representing $250 million in aggregate
                                        principal amount are outstanding.

                                        We believe that, subject to the
                                        limitations noted in this prospectus,
                                        Series G senior notes issued pursuant
                                        to the exchange offer in exchange for
                                        Series F senior notes may be offered
                                        for resale, resold or otherwise
                                        transferred by holders thereof without
                                        compliance with the registration and
                                        prospectus delivery requirements of the
                                        Securities Act. Our belief is based on
                                        interpretations by the Staff of the
                                        SEC, as set forth in no-action letters
                                        issued to certain third parties
                                        unrelated to us. The exemption from the
                                        Securities Act requirements only
                                        applies if Series G senior notes are
                                        acquired in the ordinary course of the
                                        holders' business and the holders have
                                        no arrangement with any person to
                                        engage in a distribution of such
                                        registered notes. Any holder who is our
                                        "affiliate" within the meaning of
                                        Securities Act Rule 405, or a broker-
                                        dealer who purchased Series F senior
                                        notes directly from us to resell
                                        pursuant to Securities Act Rule 144A or
                                        any other available exemption
                                        promulgated under the Securities Act,
                                        is not eligible for this exemption.

                                        However, the SEC has not considered our
                                        exchange offer in the context of a no-
                                        action letter. We cannot be sure that
                                        the Staff of the SEC would make a
                                        similar determination with respect to
                                        our exchange offer as in those other
                                        circumstances. Furthermore, unless you
                                        are a broker-dealer, you must
                                        acknowledge that you are not engaged
                                        in, and do not intend to engage in, a
                                        distribution of Series G senior notes
                                        and you have no arrangement or
                                        understanding to participate in a
                                        distribution of Series G senior

                                       2


                                        notes. If you are a broker-dealer that
                                        receives Series G senior notes for your
                                        own account pursuant to the exchange
                                        offer, you must acknowledge that you
                                        will comply with the prospectus
                                        delivery requirements of the Securities
                                        Act in connection with any resale of
                                        Series G senior notes. Broker-dealers
                                        who acquired Series F senior notes
                                        directly from us and not as a result of
                                        market-making activities or other
                                        trading activities may not rely on the
                                        Staff's interpretations discussed above
                                        or participate in our exchange offer
                                        and must comply with the prospectus
                                        delivery requirements of the Securities
                                        Act in order to resell the Series F
                                        senior notes.

  Registration Rights Agreement.....    We sold the Series F senior notes on
                                        October 6, 2000 in a private placement
                                        in reliance on Section 4(2) of the
                                        Securities Act. The Series F senior
                                        notes were immediately resold by their
                                        initial purchasers in reliance on
                                        Securities Act Rule 144A. In connection
                                        with the sale, we entered into a
                                        registration rights agreement with the
                                        initial purchasers requiring us to make
                                        this exchange offer. Under the
                                        registration rights agreement, we are
                                        required to cause the registration
                                        statement of which the prospectus forms
                                        a part to become effective on or before
                                        the 160th day following the date on
                                        which we issued the Series F senior
                                        notes and we are obligated to
                                        consummate the exchange offer on or
                                        before the 190th day following the
                                        issuance of the Series F senior notes.

  Expiration date...................    Our exchange offer will expire at 5:00
                                        p.m., New York City time, [   ], 2000,
                                        or at a later date and time to which we
                                        may extend it.

  Withdrawal........................    You may withdraw a tender of Series F
                                        senior notes pursuant to our exchange
                                        offer at any time before 5:00 p.m., New
                                        York City time, on [   ], 2000, or such
                                        later date and time to which we extend
                                        the offer. We will return any Series F
                                        senior notes that we do not accept for
                                        exchange for any reason as soon as
                                        practicable after the expiration or
                                        termination of our exchange offer.

  Interest on the Series G senior
  notes and Series F senior notes...    Interest on the Series G senior notes
                                        will accrue from the date of the
                                        original issuance of the F senior notes
                                        or from the date of the last payment of
                                        interest on the Series F senior notes,
                                        whichever is later. We will not pay
                                        interest on Series F senior notes
                                        tendered and accepted for exchange.

                                       3



  Conditions to our exchange            Our exchange offer is subject to
  offer.............................    customary conditions which are
                                        discussed in the section of this
                                        prospectus entitled "The Exchange
                                        Offer." As described in that section,
                                        we have the right to waive some of the
                                        conditions.

  Procedures for tendering Series F     We will accept for exchange any and all
  senior notes......................    Series F senior notes which are
                                        properly tendered (and not withdrawn)
                                        in the exchange offer prior to 5:00
                                        p.m., New York City time, on [      ],
                                        2000. The Series G senior notes issued
                                        pursuant to our exchange offer will be
                                        delivered promptly following the
                                        expiration date.

                                        If you wish to accept our exchange
                                        offer, you must complete, sign and date
                                        the letter of transmittal, or a copy,
                                        in accordance with the instructions
                                        contained in this prospectus and
                                        therein, and mail or otherwise deliver
                                        the letter of transmittal, or the copy,
                                        together with the Series F senior notes
                                        and all other required documentation,
                                        to the exchange agent at the address
                                        set forth in this prospectus. If you
                                        are a person holding Series F senior
                                        notes through the Depository Trust
                                        Company, or "DTC", and wish to accept
                                        our exchange offer, you may do so
                                        pursuant to the DTC's Automated Tender
                                        Offer Program, or "ATOP", by which you
                                        will agree to be bound by the letter of
                                        transmittal. By executing or agreeing
                                        to be bound by the letter of
                                        transmittal, you will represent to us
                                        that, among other things:

                                        . the Series G senior notes that you
                                          acquire pursuant to the exchange
                                          offer are being obtained by you in
                                          the ordinary course of your business,
                                          whether or not you are the registered
                                          holder of the Series F senior notes;

                                        . you are not engaging in and do not
                                          intend to engage in a distribution of
                                          Series G senior notes;

                                        . you do not have an arrangement or
                                          understanding with any person to
                                          participate in a distribution of
                                          Series G senior notes; and

                                        . you are not our "affiliate," as
                                          defined under Securities Act Rule
                                          405.

                                        Under the registration rights agreement
                                        we may be required to file a "shelf"
                                        registration statement for a continuous
                                        offering pursuant to Rule 415 under the
                                        Securities act of 1933 in respect of
                                        the Series F senior notes, if:
                                        . we determine that we are not
                                          permitted to effect the exchange
                                          offer as contemplated by this

                                       4


                                         prospectus because of any change in
                                         law or Securities and Exchange
                                         Commission policy; or

                                        . we have commenced and not consummated
                                          the exchange offer with 190 days
                                          following the date on which we issued
                                          the Series F senior notes for any
                                          reason.

  Exchange agent....................
                                        HSBC Bank USA is serving as exchange
                                        agent in connection with the exchange
                                        offer.

  Federal income tax                    We believe the exchange of Series F
  considerations....................    senior notes for Series G senior notes
                                        pursuant to our exchange offer will not
                                        constitute a sale or an exchange for
                                        federal income tax purposes.

  Effect of not tendering...........
                                        If you do not tender your Series F
                                        senior notes or if you do tender them
                                        but they are not accepted by us, your
                                        Series F senior notes will continue to
                                        be subject to the existing restrictions
                                        upon transfer. Except for our
                                        obligation to file a shelf registration
                                        statement under the circumstances
                                        described above, we will have no
                                        further obligation to provide for the
                                        registration under the Securities Act
                                        of Series F senior notes.

                                        Ratio of Earnings to Fixed Charges

                                        In the Selected Financial Data table on
                                        page 29, we present the ratio of
                                        earnings to fixed charges on a
                                        historical basis for the last five
                                        years and the first three quarters of
                                        2000 and 1999. As Host Marriott is our
                                        predecessor, we consider the historical
                                        financial information of Host Marriott
                                        for periods prior to the REIT
                                        conversion to be our historical
                                        financial information.

                                       5


                           THE SERIES G SENIOR NOTES

   In the summary below, we describe the principal terms of the Series G senior
notes. The terms and conditions described below are subject to important
limitations and exceptions. The "Description of Notes" section of this
prospectus contains a more detailed description of the terms and conditions of
the Series G senior notes.


   Total amount of notes offered......  $250,000,000 aggregate principal amount
                                        of 9 1/4% Series G senior notes due
                                        2007.

   Maturity...........................  October 1, 2007.

   Issue Price........................  98.741% plus accrued interest from the
                                        date of issuance.

   Interest...........................  9 1/4% per annum, paid every six months
                                        on April 1 and October 1, commencing on
                                        April 1, 2001.

   Ranking............................  The Series G senior notes are equal in
                                        right of payment with all of our
                                        unsubordinated indebtedness and senior
                                        to all of our subordinated obligations,
                                        including any Series F senior notes
                                        that are not exchanged in the exchange
                                        offer.

   Optional redemption................  The Series G senior notes will be
                                        redeemable at our option at any time,
                                        in whole but not in part, for 100% of
                                        their principal amount, plus any make-
                                        whole premium and any accrued and
                                        unpaid interest. For more details, see
                                        the section "Description of Notes"
                                        under the heading "Optional
                                        Redemption."

   Mandatory offer to repurchase......  If we sell certain assets or undergo
                                        certain kinds of changes of control, we
                                        must offer to repurchase the Series G
                                        senior notes as described in the
                                        section "Description of Notes" under
                                        the heading "Covenants--Repurchase of
                                        Notes at the Option of the Holder upon
                                        a Change of Control Triggering Event."

   Basic covenants of the indenture...  The indenture governing the Series G
                                        senior notes, among other things,
                                        restricts our ability and the ability
                                        of most of our subsidiaries to:

                                        . incur additional indebtedness;

                                        . pay dividends on, redeem or
                                          repurchase our equity interests;

                                        . make investments;

                                        . permit payment or dividend
                                          restrictions on certain of our
                                          subsidiaries;

                                       6



                                        . sell assets;

                                        . in the case of our restricted
                                          subsidiaries, guarantee indebtedness;

                                        . create certain liens; and

                                        . sell certain assets or merge with or
                                          into other companies.

                                        For more details, you should read the
                                        description in the section "Description
                                        of Notes" under the heading
                                        "Covenants."

   Use of proceeds....................  We will not receive any cash proceeds
                                        from the issuance of the registered
                                        notes.

                                       7


                                  RISK FACTORS

   You should carefully consider the following risk factors, in addition to the
other information contained in this prospectus memorandum, before deciding to
tender Series F senior notes in the exchange offer.

Series F senior notes outstanding after the exchange offer will not have
registration rights.

   If you do not exchange your Series F senior notes for Series G senior notes
pursuant to the exchange offer, your Series F senior notes will continue to be
subject to the restrictions on transfer of the Series F notes. In general, you
may not offer to sell Series F senior notes unless they are registered under
the Securities Act, except pursuant to an exemption from, or in a transaction
not subject to the registration requirements of the Securities Act and
applicable state securities laws. If you are a broker-dealer that receives
Series G senior notes for your account in exchange for Series F senior notes,
where those Series F senior notes were acquired by you as a result of market-
making activities or other trading activities, you must acknowledge that you
will deliver a prospectus in connection with any resale of those Series G
senior notes.

We have substantial leverage.

   We have now, and after the exchange offer we will continue to have, a
significant amount of indebtedness. The following chart shows certain important
credit statistics and is presented assuming we completed the Series F offering
as of September 8, 2000:
  
     ---





                                                               Pro Forma
                                                                 As of
                                                              September 8,
                                                                  2000
                                                             --------------
                                                          
Total indebtedness (excluding convertible debt
 obligations)............................................... $5,365 million
Convertible debt obligations due to Host Marriott
 Corporation................................................ $  492 million
Partners' equity (including redeemable limited partner
 interests of third parties at redemption value)............ $1,751 million
Debt to equity ratio........................................           3.3x(1)

- --------
(1) Debt to equity ratio is calculated using the total indebtedness including
    the convertible debt divided by the partners' equity, including redeemable
    limited partner interests of third parties at redemption value.

   Our substantial indebtedness could have important consequences. For example,
it could adversely affect our ability to:

  . obtain financing in the future;

  . undertake refinancings on terms and conditions acceptable to us;

  . pursue our acquisition strategy; or

  . compete effectively or operate successfully under adverse economic
    conditions.

   If our cash flow and working capital were not sufficient to fund our
expenditures or service our indebtedness, we would have to raise additional
funds through:

  . the sale of equity;

  . the refinancing of all or part of our indebtedness;

  . the incurrence of additional permitted indebtedness; or

  . the sale of assets.

   We cannot assure you that any of these sources of funds would be available
in amounts sufficient for us to meet our obligations or fulfill our business
plans.


                                       8


The notes effectively will be junior in right of payment to some other
liabilities.

   Only those subsidiaries that have guaranteed payment of certain indebtedness
other than the notes, including our credit facility, the Series A senior notes,
the Series B senior notes, the Series C senior notes, the Series E senior
notes, the Series C senior notes, and future indebtedness that is so
guaranteed, have and are required to guarantee our obligations under the notes.
Although the indenture governing the terms of the notes places limits on the
overall level of indebtedness that non-guaranteeing subsidiaries may incur, the
notes effectively will be junior in right of payment to liabilities of our
subsidiaries which are not guarantors of the notes, to the extent of the assets
of such subsidiaries. Since only those subsidiaries that guarantee the credit
facility or our other indebtedness are required to guarantee the notes, there
can be no assurance as to the number of subsidiaries that will be guarantors of
the notes at any point in time or as to the value of their assets or
significance of their operations. In addition, together with our subsidiaries,
we have a significant amount of indebtedness secured by our assets and the
subsidiary guarantors (other than the equity interests of our direct and
indirect subsidiaries securing our credit facility and senior notes, including
the Series F senior notes). The notes effectively will be junior in right of
payment to this secured debt to the extent of the value of the assets securing
such debt. On a pro forma basis, giving effect to the transactions set forth in
the section, "Pro Forma Financial Information of Host Marriott, L.P.", as of
September 8, 2000, the amount of our and our subsidiaries' secured debt, other
than the existing notes and bank credit facility debt, was approximately $2.3
billion. The notes will not be secured by our assets or those of our
subsidiaries. The notes will be secured only by our directly and indirectly
held equity interests in those of our subsidiaries that have been pledged in
favor of our credit facility. In addition to the credit facility, this
collateral will be shared equally and ratably with holders of other
indebtedness, including but not limited to, the Series A senior notes, Series B
senior notes, Series C senior notes, Series E senior notes and certain of our
other indebtedness ranking pari passu with the notes. As of September 8, 2000,
the amount of indebtedness (including the notes) secured by the equity interest
of these subsidiaries would have been $3.1 billion.

The terms of our debt place restrictions on us and our subsidiaries, reducing
operational flexibility and creating default risks.

   The documents governing the terms of our debt, including the documents
governing the terms of these notes, contain covenants that place restrictions
on us and our subsidiaries. The activities upon which such restrictions exist
include, but are not limited to:


  . the incurrence of additional debt;

  . the creation of liens;

  . the sale of assets;

  . transactions with affiliates; and

  . certain mergers and consolidations.

   Certain sales of assets or changes of control could result in an obligation
for us to make an offer to purchase the notes. We cannot assure you that we
would have adequate resources to consummate such an offer to purchase. In
addition, certain covenants applying to debt other than the notes may require
us and our subsidiaries to meet financial performance tests. These covenants
reduce our flexibility in conducting our operations and create a risk of
default under the debt if we cannot satisfy the covenants.

The notes or a guarantee thereof may be deemed a fraudulent transfer.

   Under the federal bankruptcy law and comparable provisions of state
fraudulent transfer laws, a guarantee of the notes could be voided, or claims
on a guarantee of the notes could be subordinated to all other debts of that
guarantor if, among other things, the guarantor, at the time it incurred the
indebtedness evidenced by its guarantee:


     (1) received less than reasonably equivalent value or fair consideration
  for the incurrence of such guarantee; and

                                       9


     (2) either:

       (a) was insolvent or rendered insolvent by reason of such
    incurrence;

       (b) was engaged in a business or transaction for which the
    guarantor's remaining assets constituted unreasonably small capital; or

       (c) intended to incur, or believed that it would incur, debts beyond
    its ability to pay such debts as they mature.

   If such circumstances were found to exist, any payment by that guarantor
pursuant to its guarantee of the notes also could be voided and required to be
returned to the guarantor, or to a fund for the benefit of the creditors of the
guarantor.

   In addition, our obligations under the notes may be subject to review under
the same laws in the event of our bankruptcy or other financial difficulty. In
that event, if a court were to find that when we issued the notes the factors
in clauses (1) and (2) above applied to us, or that the notes were issued with
actual intent to hinder, delay or defraud creditors, the court could avoid our
obligations under the notes, or direct the return of any amounts paid
thereunder to us or to a fund for the benefit of our creditors.

   The measures of insolvency for purposes of these fraudulent transfer laws
will vary depending upon the law applied in any proceeding to determine whether
a fraudulent transfer has occurred. Generally, however, the partnership or a
guarantor would be considered insolvent if:

  . the sum of its debts, including contingent liabilities, were greater than
    the fair saleable value of all of its assets; or
  . if the present fair saleable value of its assets were less than the
    amount that would be required to pay its probable liability on its
    existing debts, including contingent liabilities, as they become absolute
    and mature; or
  . it could not pay its debts as they become due.

   On the basis of historical financial information, recent operating history
and other factors, we believe that we and each of our guarantors, after giving
effect to the guarantee of the notes, will be solvent, will have a reasonable
amount of capital for the business in which we or it is engaged and will not
have incurred debts beyond our or its ability to pay such debts as they mature.
We can offer no assurance, however, as to what standard a court would apply in
making such determinations or that a court would agree with our conclusions in
this regard.

An active trading market may not develop for the notes.

   The Series F senior notes are not listed on any securities exchange. Since
their issuance, there has been a limited trading market for the Series F senior
notes. To the extent that Series F senior notes are tendered and accepted in
the exchange offer, the trading market for untendered and tendered but
unaccepted Series F senior notes will be adversely affected. We cannot assure
you that this market will provide liquidity for you if you want to sell your
Series F senior notes.

   We will not list the Series G senior notes on any securities exchange. These
notes are new securities for which there is currently no market. The Series G
senior notes may trade at a discount from their initial offering price,
depending upon prevailing interest rates, the market for similar securities,
our performance and other factors. We have been advised by Donaldson, Lufkin &
Jenrette and BT Alex. Brown that they intend to make a market in the Series G
senior notes, as well as the Series F senior notes, as permitted by applicable
laws and regulations. However, they are not obligated to do so and their market
making activities may be discontinued at any time without notice. In addition,
their market making activities may be limited during our exchange offer.
Therefore, we cannot assure you that an active market for Series G senior notes
will develop.

                                       10


We do not control our day to day hotel operations, and we are dependent on the
managers and lessees of our hotels.

   Because federal income tax laws currently restrict REITs and "publicly
traded" partnerships from deriving revenues directly from operating a hotel, we
operate none of our hotels. Instead, we lease virtually all of our hotels to
subsidiaries of Crestline which, in turn, retain managers to manage our hotels
as agents pursuant to management agreements. Thus, we are dependent on the
lessees but, under the hotel leases, we have little influence over how the
lessees operate our hotels. Similarly, we have very limited recourse if we
believe that the hotel managers do not maximize the revenues from our hotels,
which in turn will maximize the rental payments we receive under the leases. We
may seek redress under most leases only if the lessee violates the terms of the
lease and then only to the extent of the remedies set forth in the lease.

   Each lessee's ability to pay rent accrued under its lease depends to a large
extent on the ability of the hotel manager to operate the hotel effectively and
to generate gross sales in excess of its operating expenses. Our rental income
from the hotels may therefore be adversely affected if the managers fail to
provide quality services and amenities and competitive room rates at our hotels
or fail to maintain the quality of the hotel brand names. Although the lessees
have primary liability under the management agreements while the leases are in
effect, we remain liable under the management agreements for all obligations
that the lessees do not perform. We may terminate a lease if the lessee
defaults under a management agreement, but terminating the lease could, unless
another suitable lessee is found, impair Host REIT's ability to continue to
qualify as a REIT for federal income tax purposes and our ability to qualify as
a partnership for federal income tax purposes if we are a "publicly traded
partnership" unless another suitable lessee is found. As described below, Host
REIT's inability to qualify as a REIT or our inability to qualify as a
partnership for federal income tax purposes would have a material adverse
effect on us.

   The REIT Modernization Act will permit a REIT to lease hotels to a taxable C
corporation in which it owns an equity interest, referred to as a "taxable REIT
subsidiary," or "TRS," effective beginning January 1, 2001. See "--The REIT
Modernization Act will affect the way in which our non-controlled subsidiaries
are taxed" below. On November 13, 2000, we and Crestline announced the
execution of a definitive agreement for the purchase and sale, effective
January 1, 2001, of the entities owning the leasehold interests with respect to
117 of our full-service hotels for approximately $205 million, including
recording a non-recurring loss of $120 million net of tax on the acquisition.
After the transaction is consummated, we will lease these hotels to a newly
created subsidiary of ours that qualifies as a TRS. In connection therewith, we
will recognize the revenues and expenses generated by the hotels subject to the
leases and we will no longer recognize rental income from these leases.
Consummation of the transaction with Crestline is subject to various
conditions, including the receipt of required third party consents. There can
be no assurance that we will be able to consummate this transaction.

We do not control the assets held by the non-controlled subsidiaries.

   We own economic interests in several taxable corporations, which we refer to
as "non-controlled subsidiaries," that hold various assets which, under our
credit facility may not exceed, in the aggregate, 15% of the value of our
assets. The assets held by the non-controlled subsidiaries consist primarily of
interests in partnerships that own hotels that are not leased to third parties,
hotels that are not leased to third parties, some furniture, fixtures,
furnishings and equipment used in our hotels and some international hotels. If
we owned these assets, it could jeopardize Host REIT's REIT status and/or our
status as a partnership for federal income tax purposes could be jeopardized
under current federal income tax laws. Although we own approximately 95% of the
total economic interests of the non-controlled subsidiaries, we own none of the
voting stock of the non-controlled subsidiaries. The Host Marriott Statutory
Employee/Charitable Trust, the beneficiaries of which are (1) a trust formed
for the benefit of a number of our employees and (2) the J. Willard and Alice
S. Marriott Foundation, owns all of the voting common stock, representing
approximately 5% of the total economic interests in the non-controlled
subsidiaries. The Host Marriott Statutory Employee/Charitable Trust elects the
directors who are responsible for overseeing the operations of the non-
controlled subsidiaries. The directors are currently our employees, although
this is not required. As a result, we have no control over the operation or

                                       11


management of the hotels or other assets owned by the non-controlled
subsidiaries, even though we depend upon the non-controlled subsidiaries for a
portion of our revenues. Also, the activities of the non-controlled
subsidiaries could cause us to be in default under our principal credit
facilities. Commencing January 1, 2001, the REIT Modernization Act will permit
us to own all of the voting stock of the non-controlled subsidiaries without
adversely affecting Host REIT's status so long as these subsidiaries elect to
be "taxable REIT subsidiaries" as defined under the Act. We are considering
pursuing a transaction with the Host Marriott Statutory Employee/Charitable
Trust that would allow us to acquire control of the non-controlled
subsidiaries, although we have not reached any such agreement and cannot assure
you that any such agreement will be reached or that a transaction will be
consummated.

We are dependent upon the ability of Crestline and the lessees to meet their
rent obligations.

   The lessees' rent payments are the primary source of our revenues. Crestline
guarantees the obligations of its subsidiaries under the hotel leases, but
Crestline's liability is limited to a relatively small portion of the aggregate
rent obligation of its subsidiaries. The ability of Crestline and each of its
subsidiaries to meet its obligations under the leases will determine the amount
of our revenue and our ability to meet our obligations including payments of
amounts due under the notes. We have no control over Crestline or any of its
subsidiaries and cannot assure you that Crestline or any of its subsidiaries
will have sufficient assets, income and access to financing to enable them to
satisfy their obligations under the leases or to make payments of fees under
the management agreements. Although the lessees have primary liability under
the management agreements while the leases are in effect, we and our
subsidiaries remain liable under the management agreements for all obligations
that the lessees do not perform. Because of our current dependence on
Crestline, our credit rating will be affected by its creditworthiness. If the
previously discussed purchase of the Crestline entities owning the leasehold
interests with respect to 117 of our full-service hotels is consummated
effective January 1, 2001, we will instead lease our hotels to a newly created
TRS and, thus, cease to be dependent upon Crestline.

Our relationships with Marriott International and Crestline may result in
conflicts of interest.

   Marriott International, a public hotel management company, manages a
significant number of our hotels. In addition, Marriott International and
Crestline manage hotels that compete with our hotels. Decisions made by our
managers, including Marriott International and Crestline, regarding competing
lodging facilities may not be in our best interest as owner. J.W. Marriott, Jr.
is a member of Host REIT's Board of Directors and his brother, Richard E.
Marriott, is Host REIT's Chairman of the Board. Both J.W. Marriott, Jr. and
Richard E. Marriott serve as directors, and J.W. Marriott, Jr. also serves as
Chairman of the Board and an officer, of Marriott International. J.W. Marriott,
Jr. and Richard E. Marriott also beneficially own, as determined for securities
law purposes, as of January 31, 2000, approximately 10.8% and 10.6%,
respectively, of the outstanding shares of common stock of Marriott
International. In addition, J.W. Marriott, Jr. and Richard E. Marriott own, as
of January 31, 2000, approximately 5.2% and 4.8%, respectively, of the
outstanding shares of common stock of Crestline. Neither J.W. Marriott, Jr. or
Richard E. Marriott serves as an officer or director of Crestline. As a result,
J.W. Marriott, Jr. and Richard E. Marriott have potential conflicts of interest
as Host REIT directors when making decisions regarding Marriott International,
including decisions relating to the management agreements involving the hotels,
Marriott International's management of competing lodging properties and
Crestline's leasing and other businesses.

   Both Host REIT's Board of Directors and the Board of Directors of Marriott
International follow appropriate policies and procedures to limit the
involvement of Messrs. J.W. Marriott, Jr. and Richard E. Marriott in conflict
situations, including requiring them to abstain from voting as directors of
either Host REIT or Marriott International or their respective subsidiaries on
matters which present a conflict between the companies. If appropriate, these
policies and procedures will apply to other directors and officers.

Our leases and management agreements could impair the sale or other disposition
of our hotels.

   Under each lease with a subsidiary of Crestline, we generally must purchase
a lease if we want to terminate the lease prior to the expiration of its term.
If we decide to sell a hotel, we may be required to

                                       12


terminate its lease, and the payment of the purchase price under such
circumstances could impair our ability to sell the hotel and would reduce the
net proceeds of any sale. If the previously discussed purchase and sale of the
Crestline entities owning the leasehold interests with respect to 117 of our
full-service hotels is consummated effective January 1, 2001, we will lease our
hotels to a newly created TRS and, therefore, the lease purchase provisions,
which would remain in effect, would no longer affect us adversely.

   Under the terms of the management agreements, we generally may not sell,
lease or otherwise transfer the hotels unless the transferee assumes the
related management agreements and meets specified other conditions. Our ability
to finance, refinance or sell any of the properties managed by our managers
may, depending upon the structure of such transactions, require the manager's
consent. If our managers did not consent, we would be prohibited from
financing, refinancing or selling the property without breaching the management
agreement.

Our rental revenues from hotels are subject to the prior rights of lenders.

   The mortgages on some of our hotels require that rent payments under the
leases on the hotels be used first to pay the debt service on the mortgage
loans. Consequently, only the cash flow remaining after debt service on those
mortgage loans will be available to satisfy other obligations, including
property taxes and insurance, furniture, fixtures, furnishings and equipment
reserves for the hotels and capital improvements, and to make distributions to
our unitholders, including Host REIT.

The acquisition contracts relating to some hotels limit our ability to sell or
refinance those hotels.

   For reasons relating to federal income tax considerations of the former
owners of some of our hotels, we have agreed to restrictions on selling some
hotels or repaying or refinancing the mortgage debt on those hotels for varying
periods depending on the hotel. We anticipate that, in specified circumstances,
we may agree to similar restrictions in connection with future hotel
acquisitions. As a result, even if it were in our best interests to sell or
refinance the mortgage debt on these hotels, it may be difficult or impossible
to do so during their respective lock-out periods.

Our ground lease payments may increase faster than the rent revenues we receive
on the hotels.

   As of September 8, 2000, we leased 53 of our hotels pursuant to ground
leases. These ground leases generally require increases in ground rent payments
every five years. Our ability to service debt could be adversely affected to
the extent that the rents payable by the lessees under the leases do not
increase at the same or a greater rate as the increases under the ground
leases. In addition, if we were to sell a hotel encumbered by a ground lease,
the buyer would have to assume the ground lease, which could result in a lower
sales price. Moreover, to the extent that such ground leases are not renewed at
their expiration, our revenues could be adversely affected.

New acquisitions may fail to perform as expected or we may be unable to make
acquisitions on favorable terms.

   We intend to acquire additional full-service hotels. Newly acquired
properties may fail to perform as expected, which could adversely affect our
financial condition. We may underestimate the costs necessary to bring an
acquired property up to standards established for its intended market position.
We expect to acquire hotels with cash from secured or unsecured financings and
proceeds from offerings of equity or debt, to the extent available. We may not
be in a position or have the opportunity in the future to make suitable
property acquisitions on favorable terms. Competition for attractive investment
opportunities may increase prices for hotel properties, thereby decreasing the
potential return on our investment. In addition, under current federal income
tax laws, in order to maintain Host REIT's status as a REIT, we must lease
virtually all of the properties we acquire. Under the REIT Modernization Act,
however, we are permitted to lease any newly acquired hotels to a taxable REIT
subsidiary after December 31, 2000.

                                       13


The seasonality of the hotel industry may affect the ability of the lessees to
make timely rent payments.

   The seasonality of the hotel industry may, from time to time, affect either
the amount of rent that accrues under the hotel leases or the ability of the
lessees to make timely rent payments under the leases. A lessee's inability to
make timely rent payments to us could adversely affect our financial condition
and our ability to service debt.

We may be unable to sell properties when appropriate because real estate
investments are illiquid.

   Real estate investments generally cannot be sold quickly. We may not be able
to vary our portfolio promptly in response to economic or other conditions. The
inability to respond promptly to changes in the performance of our investments
could adversely affect our financial condition, and ability to service debt
including the notes. In addition, there are limitations under the federal tax
laws applicable to REITs and agreements that we have entered into when we
acquired some of our properties that may limit our ability to recognize the
full economic benefit from a sale of our assets.

Our revenues and the value of our properties are subject to conditions
affecting the lodging industry.

   If our assets do not generate sufficient income to service our debt, we may
be unable to pay interest on our debt, including the notes offered hereby. Our
revenues and the value of our properties are subject to conditions affecting
the lodging industry. These include:

  . changes in the national, regional and local economic climate;

  . local conditions such as an oversupply of hotel properties or a reduction
    in demand for hotel rooms;

  . the attractiveness of our hotels to consumers and competition from
    comparable hotels;

  . the quality, philosophy and performance of the managers of our hotels,
    primarily Marriott International;

  . the ability of any hotel lessee to maximize rental payments;

  . changes in room rates and increases in operating costs due to inflation
    and other factors; and

  . the need to periodically refurbish our hotels.

   Adverse changes in these conditions could adversely affect our financial
performance.

Our expenses may remain constant even if our revenue drops.

   The expenses of owning property are not necessarily reduced when
circumstances like market factors and competition cause a reduction in income
from the property. If a property is mortgaged and we are unable to meet the
mortgage payments, the lender could foreclose and take the property. Our
financial condition could be adversely affected by:

  . interest rate levels;

  . the availability of financing;

  . the cost of compliance with government regulation, including zoning and
    tax laws; and

  . changes in governmental regulations, including those governing usage,
    zoning and taxes.

We depend on our key personnel.

   We depend on the efforts of our executive officers and other key personnel.
While we believe that we could find replacements for these key personnel, the
loss of their services could have a significant adverse effect on our
operations. We do not intend to obtain key-man life insurance with respect to
any of our key personnel.

                                       14


Partnership and other litigation judgments or settlements could have a material
adverse effect on our financial condition.

   We and Host REIT are parties to various lawsuits relating to previous
partnership transactions, including the roll-up of certain partnerships
associated with the REIT conversion. While we and the other defendants to such
lawsuits believe all of the lawsuits in which we are a defendant are without
merit and we are vigorously defending against such claims, we can give no
assurance as to the outcome of any of the lawsuits. In connection with the REIT
conversion, we have assumed all liability arising under legal proceedings filed
against Host REIT and will indemnify Host REIT as to all such matters. If any
of the lawsuits were to be determined adversely to us or settlement involving a
payment of a material sum of money were to occur, there could be a material
adverse effect on our financial condition.

Environmental problems are possible and can be costly.

   We believe that our properties are in compliance in all material respects
with applicable environmental laws. Unidentified environmental liabilities
could arise, however, and could have a material adverse effect on our financial
condition and performance. Federal, state and local laws and regulations
relating to the protection of the environment may require a current or previous
owner or operator of real estate to investigate and clean up hazardous or toxic
substances or petroleum product releases at the property. The owner or operator
may have to pay a governmental entity or third parties for property damage and
for investigation and clean-up costs incurred by the parties in connection with
the contamination. These laws typically impose clean-up responsibility and
liability without regard to whether the owner or operator knew of or caused the
presence of the contaminants. Even if more than one person may have been
responsible for the contamination, each person covered by the environmental
laws may be held responsible for all of the clean-up costs incurred. In
addition, third parties may sue the owner or operator of a site for damages and
costs resulting from environmental contamination emanating from that site.
Environmental laws also govern the presence, maintenance and removal of
asbestos. These laws require that owners or operators of buildings containing
asbestos properly manage and maintain the asbestos, notify and train those who
may come into contact with asbestos and undertake special precautions,
including removal or other abatement, if asbestos would be disturbed during
renovation or demolition of a building. These laws may impose fines and
penalties on building owners or operators who fail to comply with these
requirements and may allow third parties to seek recovery from owners or
operators for personal injury associated with exposure to asbestos fibers.

Compliance with other government regulations can also be costly.

   Our hotels are subject to various forms of regulation, including Title III
of the Americans with Disabilities Act, building codes and regulations
pertaining to fire safety. Compliance with those laws and regulations could
require substantial capital expenditures. These regulations may be changed from
time to time, or new regulations adopted, resulting in additional or unexpected
costs of compliance. Any increased costs could reduce the cash available for
servicing debt and making distributions to our unitholders.

Some potential losses are not covered by insurance.

   We carry comprehensive liability, fire, flood and extended coverage and
rental loss (for rental losses extending up to 12 months) insurance with
respect to all of our hotels. We believe the policy specifications and insured
limits of these policies are of the type customarily carried for similar
hotels. Some types of losses, such as from earthquakes and environmental
hazards, however, may be either uninsurable or too expensive to justify
insuring against. Should an uninsured loss or a loss in excess of insured
limits occur, we could lose all or a portion of the capital we have invested in
a hotel, as well as the anticipated future revenue from the hotel. In that
event, we might nevertheless remain obligated for any mortgage debt or other
financial obligations related to the property.

We cannot guarantee that Host REIT will qualify as a REIT.

   Host REIT has been organized and has operated in such a manner so as to
qualify as a REIT under the Internal Revenue Code, commencing with its taxable
year beginning January 1, 1999. A REIT generally is not

                                       15


taxed at the corporate level on income it currently distributes to its
shareholders as long as it distributes currently at least 95% of its taxable
income, excluding net capital gain. This distribution requirement will be
reduced to 90% in years beginning after December 31, 2000. No assurance can be
provided, however, that Host REIT will qualify as a REIT or that new
legislation, Treasury Regulations, administrative interpretations or court
decisions will not significantly change the tax laws with respect to its
qualification as a REIT or the federal income tax consequences of such
qualification.

Our ability to accumulate cash is limited.

   In order to continue to qualify as a REIT, Host REIT currently is required
each year to distribute to its shareholders at least 95% of its taxable income,
excluding net capital gain, and will be required to distribute at least 90% of
this amount for years beginning after December 31, 2000. A REIT must pay tax on
distributions of less than 100% of taxable income. Due to some transactions
entered into in years prior to the REIT conversion, Host REIT expects to
recognize substantial amounts of "phantom" income, which is taxable income that
is not matched by cash flow or EBITDA. In addition, Host REIT will be subject
to a 4% nondeductible excise tax on the amount, if any, by which certain
distributions made by Host REIT with respect to the calendar year are less than
the sum of 85% of Host REIT's ordinary income, 95% of Host REIT's capital gain
net income for that year, and any undistributed taxable income from prior
periods. Generally, Host REIT intends to distribute 100% of its taxable income,
excluding net capital gains to its shareholders, to comply with the 95%
distribution requirement and to avoid paying either tax on its income or the
nondeductible excise tax. Host REIT will rely on distributions from us for
purposes of making such distributions. However, differences in timing between
taxable income and cash available for distribution due to, among other things,
the seasonality of the lodging industry and the fact that some taxable income
will be "phantom" income could require us to borrow funds or to issue
additional equity to enable Host REIT to meet the 95% distribution requirements
and, therefore, to maintain Host REIT's REIT status, and to avoid the
nondeductible excise tax. We are required to pay, or reimburse Host REIT, as
our general partner, for, some taxes and other liabilities and expenses that it
incurs, including all taxes and liabilities attributable to periods and events
prior to the REIT conversion. In addition, because the REIT distribution
requirements prevent Host REIT from retaining earnings, we will generally be
required to refinance debt that matures with additional debt or equity. We
cannot assure you that any of these sources of funds, if available at all,
would be sufficient to meet our distribution and tax obligations.

Host REIT was required to distribute all of its earnings and profits before the
end of fiscal year 1999, and we cannot assure you that it met this requirement.

   In order to qualify as a REIT, Host REIT cannot have at the end of any
taxable year any undistributed earnings and profits that is attributable to one
of its non-REIT taxable years. Host REIT was required to have distributed this
E&P prior to the end of 1999, the first taxable year for which its REIT
election was effective. If Host REIT failed to do this, it will be disqualified
as a REIT at least for taxable year 1999. We believe that distributions of non-
REIT E&P that Host REIT made were sufficient to distribute all of the non-REIT
E&P as of December 31, 1999, but there could be uncertainties relating to the
estimate of Host REIT's non-REIT E&P and the value of the Crestline stock that
Host REIT distributed to its shareholders. Therefore, we cannot guarantee that
Host REIT met this requirement.

Host REIT may not be able to meet the income tests to qualify as a REIT.

   To qualify as a REIT, Host REIT must satisfy two gross income tests, under
which specified percentages of its gross income must be passive income, like
rent. For the rent paid pursuant to the leases, which constitutes substantially
all of our gross income, to qualify for purposes of the gross income tests, the
leases must be respected as true leases for federal income tax purposes and not
be treated as service contracts, joint ventures or some other type of
arrangement. In addition, the lessees must not be regarded as "related party
tenants," as defined in the Internal Revenue Code. We believe, taking into
account both the terms of the leases and the

                                       16


expectations that we and the lessees have with respect to the leases, that the
leases will be respected as true leases for federal income tax purposes. There
can be no assurance, however, that the IRS will agree with this view. If the
leases were not respected as true leases for federal income tax purposes or if
the lessees were regarded as "related party tenants," Host REIT would not be
able to satisfy either of the two gross income tests applicable to REITs and
Host REIT would lose its REIT status. If Host REIT fails to continue to qualify
as a REIT, it will be subject to federal income tax, including any applicable
alternative minimum tax, on its taxable income at regular corporate rates. Host
REIT's failure to qualify as a REIT would result in a default under the senior
notes and the credit facility. As a result of the REIT Modernization Act,
beginning January 1, 2001, a "taxable REIT subsidiary" of Host REIT that meets
certain requirements would not be regarded as a "related party tenant" with
respect to hotels leased by Host REIT.

Host REIT is subject to taxes, even if it continues to qualify as a REIT.

   Notwithstanding Host REIT's status as a REIT, we are subject to certain
federal, state and local taxes on our income and property. In addition, Host
REIT will be required to pay tax at the regular corporate rate, currently 35%,
upon its share of any "built-in gain" recognized as a result of any sale before
January 1, 2009, by us of assets, including the hotels, in which interests were
acquired by us from Host REIT's predecessor and its subsidiaries as part of the
REIT conversion. Built-in gain is the amount by which an asset's fair market
value exceeded Host REIT's adjusted basis in the asset on January 1, 1999, the
first day of Host REIT's first taxable year as a REIT. At the time of the REIT
conversion there were substantial built-in gain and deferred tax liabilities
that Host REIT would recognize in the next ten years without any corresponding
receipt of cash by Host REIT from us. Host REIT, however, recognized a
substantial amount of these built-in gains and deferred tax liabilities in
1999. Accordingly, our potential tax exposure on these gains and deferred
liabilities for the future is significantly less than it was at the time of our
REIT conversion. We are obligated under our partnership agreement to pay all
such taxes incurred by Host REIT, as well as any liabilities that the IRS may
assert against Host REIT for corporate income taxes for taxable years prior to
the time it qualified as a REIT. The non-controlled subsidiaries are fully
taxable corporations and will pay federal and state income tax on their net
income at the applicable corporate rates. Any taxable REIT subsidiaries that we
form pursuant to the provisions of the REIT Modernization Act that become
effective January 1, 2001, also will be fully taxable at the regular corporate
income tax rates.

If we fail to qualify as a partnership, Host REIT would fail to qualify as a
REIT, adversely affecting our operations.

   We believe that we qualify to be treated as a partnership for federal income
tax purposes. No assurance can be provided, however, that the IRS will not
challenge our status as a partnership for federal income tax purposes, or that
a court would not sustain such a challenge. If the IRS were successful in
treating us as a corporation for tax purposes, Host REIT would fail to meet two
of the asset tests applicable to REITs and, accordingly, cease to qualify as a
REIT. If Host REIT fails to continue to qualify as a REIT, it will be subject
to federal income tax, including any applicable alternative minimum tax, on its
taxable income at regular corporate rates. Host REIT's failure to qualify as a
REIT would result in a default under the senior notes and the credit facility.
Also, the imposition of a corporate tax on us would reduce significantly the
amount of cash available for distribution to our unitholders, including Host
REIT. Finally, the classification of us as a corporation would cause Host REIT
to recognize gain at least equal to its "negative capital accounts," and
possibly more, depending upon the circumstances.

The REIT Modernization Act will affect the way in which our non-controlled
subsidiaries are taxed.

   Currently, a REIT may not own securities in any one issuer if the value of
those securities exceeds 5% of the value of the REIT's total assets or the
securities owned by the REIT represent more than 10% of the issuer's
outstanding voting securities. As a result of the REIT Modernization Act, after
December 31, 2000, the 5% value test and the 10% voting security test will be
modified in two respects. First, the 10% voting securities

                                       17


test will be expanded so that REITs also will be prohibited from owning more
than 10% of the value of the outstanding securities of any one issuer. Second,
an exception to these tests will allow a REIT to own securities of a subsidiary
that exceed the 5% value test and the new 10% vote or value test if the
subsidiary elects to be a "taxable REIT subsidiary," which would be a fully
taxable corporation. Under a new asset test, for taxable years beginning after
December 31, 2000, we will not be able to own securities of taxable REIT
subsidiaries that represent in the aggregate more than 20% of the value of our
total assets. We expect that both of our current non-controlled subsidiaries
will elect to be treated as taxable REIT subsidiaries.

   Several provisions of the new law will ensure that a taxable REIT subsidiary
will be subject to an appropriate level of federal income taxation. For
example, a taxable REIT subsidiary will be limited in its ability to deduct
interest payments made to an affiliated REIT. In addition, the REIT will have
to pay a 100% penalty tax on some payments that it receives if the economic
arrangements between the REIT, the REIT's tenants, and the taxable REIT
subsidiary are not comparable to similar arrangements between unrelated
parties.

The reliability of market data included in this prospectus is uncertain.

   The market data included in this prospectus, including information relating
to our relative position in the industry, is based on independent industry
publications, other publicly available information, studies performed for us by
independent consultants or our management's good faith beliefs. Although we
believe that such independent sources are reliable, the accuracy and
completeness of such information is not guaranteed and has not been
independently verified.

                                       18


                           FORWARD-LOOKING STATEMENTS

   This prospectus includes forward-looking statements. We have based these
forward-looking statements on our current expectations and projections about
future events. We identify forward-looking statements in this prospectus by
using words or phrases such as "anticipate," "believe," "estimate," "expect,"
"intend," "may be," "objective," "plan," "predict," "project," and "will be"
and similar words or phrases, or the negative thereof.

   These forward-looking statements are subject to numerous assumptions, risks
and uncertainties. Factors which may cause our actual results, performance or
achievements to be materially different from any future results, performance or
achievements expressed or implied by us in those statements include, among
others, the following:

  . national and local economic and business conditions that will affect,
    among other things, demand for products and services at our hotels and
    other properties, the level of room rates and occupancy that can be
    achieved by such properties and the availability and terms of financing;

  . our ability to maintain the properties in a first-class manner, including
    meeting capital expenditure requirements;

  . our ability to compete effectively in areas such as access, location,
    quality of accommodations and room rate structures;

  . our ability to acquire or develop additional properties and the risk that
    potential acquisitions or developments may not perform in accordance with
    expectations;

  . our degree of leverage which may affect our ability to obtain financing
    in the future or compliance with current debt covenants;

  . changes in travel patterns, taxes and government regulations which
    influence or determine wages, prices, construction procedures and costs;

  . government approvals, actions and initiatives including the need for
    compliance with environmental and safety requirements, and change in laws
    and regulations or the interpretation thereof;

  . the effects of tax legislative action, including specified provisions of
    the Work Incentives Improvement Act of 1999 as enacted on December 17,
    1999 (we refer to this as the "REIT Modernization Act");

  . Host REIT's ability to continue to satisfy complex rules in order to
    qualify as a REIT for federal income tax purposes and in order for us to
    qualify as a partnership for federal income tax purposes, and our ability
    to operate effectively within the limitations imposed by these rules; and

  . other factors discussed above under the heading "Risk Factors" and in
    filings with the Securities and Exchange Commission.

   Although we believe the expectations reflected in our forward-looking
statements are based upon reasonable assumptions, we can give no assurance that
we will attain these expectations or that any deviations will not be material.
Except as otherwise required by the federal securities laws, we disclaim any
obligations or undertaking to publicly release any updates or revisions to any
forward-looking statement contained in this prospectus 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.

                                       19


                                USE OF PROCEEDS

   We will not receive any cash proceeds from the exchange of the Series G
senior notes for the Series F senior notes pursuant to the exchange offer. In
consideration for issuing the Series G senior notes as contemplated in this
prospectus, we will receive in exchange Series F senior notes in like principal
amounts, which will be cancelled. Accordingly, there will not be any increase
in our outstanding indebtedness.

                                 CAPITALIZATION

   In the following table we set forth our capitalization as of September 8,
2000 on an historical basis and on a pro forma basis after giving effect to the
transactions described below under "Pro Forma Financial Information of Host
Marriott, L.P." that occurred or are expected to occur subsequent to September
8, 2000, including the issuance of the Series F senior notes, as if such
transactions had occurred as of September 8, 2000. The following table should
be read in conjunction with our unaudited condensed consolidated financial
statements and the notes thereto as of September 8, 2000 and the unaudited pro
forma financial information included herein.



                              As of September 8, 2000
                             -------------------------------
                             Historical        Pro Forma(1)
                             ------------      -------------
                             (unaudited, in millions)
                                         
Cash and cash equivalents..    $        188       $        153
                               ============       ============
Debt:
 Senior notes
 7 7/8% Series A senior
  notes due 2005(2)........    $        500       $        500
 7 7/8% Series B senior
  notes due 2008(2)........           1,194              1,194
 8.45%Series C senior
  notes due 2008(2)........             499                499
 8 3/8% Series E senior
  notes due 2006...........             300                300
 9 1/4% Series G senior
  notes due 2007...........              --                250
 Other senior notes........              47                 47
 Mortgage debt.............           2,289              2,289
 Bank credit facility......             176(3)             190(4)
 Other debt................              96                 96
                               ------------       ------------
 Total debt (excluding the
  convertible debt
  obligation to Host
  REIT)....................           5,101              5,365
Convertible debt obligation
 to Host REIT..............             492                492
Minority interest..........             133                133
Cumulative redeemable
 preferred limited
 partnership interests of
 third parties at
 redemption value..........               7                  7
Limited partnership
 interests of third parties
 at redemption value.......             687                687
Partners' capital..........             828              1,057
                               ------------       ------------
   Total capitalization....    $      7,248       $      7,741
                               ============       ============

- ---------------------
(1) Pro forma reflects the acquisition of the Crestline lessee entities, cash
    payments to settle litigation, and the estimated net proceeds to us from
    the offering of Series F senior notes and the application of the proceeds
    therefrom. See "Pro Forma Financial Information of Host Marriott, L.P."
    beginning on pg. 21.
(2) Amount is net of a discount at issuance.
(3) Represents draws under the bank credit facility through September 8, 2000.
    $599 million is available under the revolving portion of the bank credit
    facility subject to the terms and conditions thereof.
(4) Reflects the application of a portion of the proceeds from the Series F
    senior notes offering to repay $26 million on the bank credit facility, and
    additional borrowings of $40 million under the bank credit facility to
    partially fund the acquisition of the Crestline lessee entities. $585
    million would be available under the revolving portion of the bank credit
    facility subject to the terms and conditions thereof.

                                       20


             PRO FORMA FINANCIAL INFORMATION OF HOST MARRIOTT, L.P.

   The pro forma financial information of Host LP set forth below is based on
the unaudited consolidated financial statements as of and for the thirty-six
weeks ended September 8, 2000 ("First Three Quarters 2000") and audited
consolidated financial statements for the fiscal year ended December 31, 1999.

   The pro forma financial statements reflect the following transactions:

2000 Transactions:

  . Acquisition by the TRS of the entities owning the leasehold interests to
    117 hotels owned by Host LP from Crestline for approximately $205
    million, of which $40 million will be funded through additional
    borrowings under the bank credit facility;

  . November cash payments of $6 million by Host LP and $82 million by a non-
    controlled subsidiary ("NCS") of Host LP (of which $52 million in cash
    was advanced to the NCS by Host LP) in settlement of certain litigation.
    The settlement of the litigation includes the acquisition of a 50% non-
    controlling interest in a joint venture owning the limited partner
    interests in two affiliated partnerships;

  . October issuance of $250 million of Series F senior notes and their
    subsequent exchange for Series G senior notes, and application of a
    portion of the proceeds therefrom to repay $26 million debt outstanding
    under the bank credit facility;

  . September cash payment of $12 million by Host LP and $19 million by the
    NCS in settlement of litigation with plaintiffs in four partnerships;

  . Repurchases of 4.9 million shares of Host REIT common stock, 0.4 million
    shares of convertible preferred securities of Host REIT, and 0.3 million
    OP units for an aggregate consideration of approximately $62 million;
    preferred securities of Host REIT, and 0.3 million OP units for an
    aggregate consideration of approximately $62 million.

  . June modifications to our bank credit facility to extend the term for two
    additional years and to permanently reduce the total line from $1.25
    billion at origination to $775 million as of June 16, 2000, consisting of
    a $150 million term loan and a $625 million revolver.

1999 Transactions:

  . November issuance of Class B preferred stock;

  . Fourth quarter repurchases of 5.8 million shares of Host REIT common
    stock, 1.1 million shares of convertible preferred securities of Host
    REIT, and 0.3 million OP units for an aggregate consideration of
    approximately $89 million;

  . Repayments of $225 million on a term loan entered into as part of our
    bank credit facility;

  . Third quarter prepayment on mortgages of two hotels;

  . August issuance of Class A preferred stock;

  . July refinancing of the mortgages on eight hotels;

  . April refinancing of the mortgage on the New York Marriott Marquis Hotel;

  . February issuance of Series D senior notes and their subsequent exchange
    for Series E senior notes, and the application of proceeds therefrom to
    repay, refinance, or acquire certain debt;

  . Disposition of five hotels.

   All of the above transactions except for the acquisition of the Crestline
entities, the litigation settlements, and the issuance of Series F senior notes
and the application of the proceeds therefrom are already reflected in our
consolidated balance sheet as of September 8, 2000 and, therefore, no pro forma
adjustments for these transactions were necessary in the unaudited pro forma
balance sheet.

                                       21


   Our unaudited pro forma statements of operations reflect the transactions
described above for the fiscal year ended December 31, 1999 and the First Three
Quarters 2000 as if those transactions had been completed at the beginning of
the periods presented. Our unaudited pro forma statements of operations which
we present below include only income before extraordinary items.

   Our unaudited pro forma financial statements do not purport to represent
what our results of operations or financial condition would actually have been
if these transactions had in fact occurred at the beginning of the periods
presented, or to project our results of operations or financial condition for
any future period.

   Our unaudited pro forma financial statements are based upon available
information and upon assumptions and estimates, some of which are set forth in
the notes to the unaudited pro forma financial statements, that we believe are
reasonable under the circumstances. The unaudited pro forma financial
statements and accompanying notes should be read in conjunction with our
financial statements and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" contained in this registration statement.

                                       22


                       UNAUDITED PRO FORMA BALANCE SHEET
                               September 8, 2000
                                 (in millions)



                                                                  (C)
                             Host                     (B, D)    Series F
                         Marriott L.P.     (A)      Litigation    Debt
                          Historical   Acquisitions Settlements Issuance Pro Forma
                         ------------- ------------ ----------- -------- ---------
                                                          
         Assets
Property and equipment,
 net....................    $7,101        $ --         $--        $--     $7,101
Notes and other
 receivables, net.......       172          (88)         36        --        120
Due from hotel
 managers...............       --            88         --         --         88
Rent receivable.........        72          --          --         --         72
Investments in
 affiliates.............        99          --          --         --         99
                                                        --
Other assets............       550           85         --           5       640
Cash and cash
 equivalents............       188         (205)        (31)       245       153
                                             40         (58)       (26)
                            ------        -----        ----       ----    ------
                            $8,182        $ (80)       $(53)      $224    $8,273
                            ======        =====        ====       ====    ======
 Liabilities and Equity
Debt....................    $5,101        $  40        $--        $250    $5,365
                                                                   (26)
Convertible debt
 obligation to Host
 Marriott Corporation...       492          --          --         --        492
Accounts payable and
 accrued expenses.......       147          --          --         --        147
Deferred income taxes...        48          --          --         --         48
Deferred rent...........       366         (349)        --         --         17
Other liabilities.......       373          --          (22)       --        320
                                                        (31)
                            ------        -----        ----       ----    ------
  Total liabilities.....     6,527         (309)        (53)       224     6,389
Minority interest.......       133          --          --         --        133
Cumulative redeemable
 preferred limited
 partnership interests
 of third parties at
 redemption value
 ("Preferred OP Units")
 (representing 0.6
 million units).........         7          --          --         --          7
Limited Partnership
 interests of third
 parties at redemption
 value (representing
 63.2 million units)....       687          --          --         --        687
Partners' Capital
  General partner.......         1          --          --         --          1
  Cumulative redeemable
   preferred limited
   partner..............       196          --          --         --        196
  Limited partner.......       628         (120)        --         --        857
                                            349
  Accumulated other
   comprehensive
   income...............         3          --          --         --          3
                            ------        -----        ----       ----    ------
Total partners'
 capital................       828          229         --         --      1,057
                            ------        -----        ----       ----    ------
                            $8,182        $ (80)       $(53)      $224    $8,273
                            ======        =====        ====       ====    ======


             See Notes to Unaudited Pro Forma Financial Statements.

                                       23


                  UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
                           First Three Quarters 2000
                     (in millions, except per unit amounts)



                                                                         (G)
                                                                         Debt
                                                            (F,H)     Issuances
                         Host Marriott L.P.     (E)      Litigation      and
                             Historical     Acquisitions Settlements Refinancings Pro Forma
                         ------------------ ------------ ----------- ------------ ---------
                                                                   
REVENUE
Rental income...........       $ 580          $  (508)      $--          $--       $   72
Hotel property-level
 revenues
  Rooms.................         --             1,723        --           --        1,723
  Food and beverage.....         --               824        --           --          824
  Other.................         --               206        --           --          206
                               -----          -------       ----         ----      ------
Total hotel property-
 level revenues.........         580            2,245        --           --        2,825
Net gains on property
 transactions...........           4              --         --           --            4
Equity in earnings of
 affiliates and other...          13              (18)         3          --           (2)
                               -----          -------       ----         ----      ------
    Total revenues......         597            2,227          3          --        2,827
                               -----          -------       ----         ----      ------
OPERATING COSTS AND
 EXPENSES
Hotel property-level
 costs and expenses
  Rooms.................         --              (406)       --           --         (406)
  Food and beverages....         --              (611)       --           --         (611)
  Other.................         --              (101)       --           --         (101)
  Management fees.......         --              (163)       --           --         (163)
  Other property-level
   costs and expenses...        (415)            (570)       --           --         (985)
                               -----          -------       ----         ----      ------
    Total hotel
     property-level
     costs and
     expenses...........        (415)          (1,851)       --           --       (2,266)
                               -----          -------       ----         ----      ------
OPERATING PROFIT BEFORE
 MINORITY INTEREST,
 CORPORATE EXPENSES,
 INTEREST AND OTHER
 EXPENSES...............         182              376          3          --          561
Minority interest.......         (11)             --         --           --          (11)
Corporate expenses......         (27)             --         --           --          (27)
Interest expense........        (315)             --         --           (20)       (335)
Interest income.........          26               (3)        (1)         --           22
Other...................          (9)             --         --           --           (9)
                               -----          -------       ----         ----      ------
Income (loss) before
 income taxes...........        (154)             373          2          (20)        201
Provision for income
 taxes..................          (7)            (151)       --           --         (158)
                               -----          -------       ----         ----      ------
Income (loss) before
 extraordinary items....       $(161)         $   222       $  2         $(20)     $   43
                               =====          =======       ====         ====      ======
Less:
Distributions on
 preferred units........         (16)                                                 (16)
                               =====                                               ======
Income (loss) before
 extraordinary items
 available to common
 unitholders............       $(177)                                              $   27
                               =====                                               ======
Basic earnings (loss)
 per unit before
 extraordinary items
 available to common
 unitholders (L)........       $(.62)                                              $  .10
                               =====                                               ======


             See Notes to Unaudited Pro Forma Financial Statements.

                                       24


                  UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
                      For the year ended December 31, 1999
                    (in millions, except per units amounts)



                                                                        (G)
                            Host Marriott                (F, H)        Debt                       (J)
                                L.P.          (E)      Litigation  Issuances and     (I)        OP Unit    Pro
                             Historical   Acquisitions Settlements Refinancings  Dispositions Repurchases Forma
                            ------------- ------------ ----------- ------------- ------------ ----------- ------
                                                                                     
REVENUE
Rental income.............     $1,295       $(1,155)      $--          $--           $(20)       $--      $  120
Hotel property-level
 revenues
 Rooms....................        --          2,336        --           --            --          --       2,336
 Food and beverage........        --          1,163        --           --            --          --       1,163
 Other....................        --            278        --           --            --          --         278
                               ------       -------       ----         ----          ----        ----     ------
Total hotel property-level
 revenues.................      1,295         2,622        --           --            (20)        --       3,897
Net gains on property
 transactions.............         28           --         --           --            (24)        --           4
Equity in earnings of
 affiliates and other.....         14           (23)         5          --            --          --          (4)
                               ------       -------       ----         ----          ----        ----     ------
Total revenues............      1,337         2,599          5          --            (44)        --       3,897
                               ------       -------       ----         ----          ----        ----     ------
OPERATING COSTS AND
 EXPENSES
Hotel property-level costs
 and expenses
 Rooms....................        --           (555)       --           --            --          --        (555)
 Food and beverage........        --           (855)       --           --            --          --        (855)
 Other....................        --           (134)       --           --            --          --        (134)
 Management fees..........        --           (213)       --           --            --          --        (213)
 Other property-level
  costs and expenses......       (553)         (787)       --           --              8         --      (1,332)
                               ------       -------       ----         ----          ----        ----     ------
Total hotel property-level
 costs and expenses.......       (553)       (2,544)       --           --              8         --      (3,089)
                               ------       -------       ----         ----          ----        ----     ------
OPERATING PROFIT BEFORE
 MINORITY INTEREST,
 CORPORATE EXPENSES,
 INTEREST AND OTHER
 EXPENSES.................        784            55          5          --            (36)        --         808
Minority interest.........        (21)          --         --           --            --          --         (21)
Corporate expenses........        (37)          --         --           --            --          --         (37)
Interest expense..........       (469)          --         --           (19)          --          --        (488)
Interest income...........         39            (5)        (2)         --            --           (9)        23
Loss on litigation
 settlement...............        (40)          --         --           --            --          --         (40)
Other.....................        (16)          --         --           --            --          --         (16)
                               ------       -------       ----         ----          ----        ----     ------
Income (loss) before
 income taxes.............        240            50          3          (19)          (36)         (9)       229
Benefit (provision) for
 income taxes.............         16           (20)       --           --              5         --           1
                               ------       -------       ----         ----          ----        ----     ------
Income (loss) before
 extraordinary items......     $  256       $    30       $  3         $(19)         $(31)       $ (9)    $  230
                               ======       =======       ====         ====          ====        ====     ======
Less:
Distributions on preferred
 units (K)................         (6)                                                                       (20)
                               ------                                                                     ------
Income before
 extraordinary items
 available to common
 unitholders..............     $  250                                                                     $  210
                               ======                                                                     ======
Basic earnings per unit
 before extraordinary
 items available to common
 unitholders (L)..........     $  .86                                                                     $  .75
                               ======                                                                     ======


             See Notes to Unaudited Pro Forma Financial Statements.

                                       25


               NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS

   A. Represents the adjustment to record the acquisition by a wholly-owned
taxable REIT subsidiary ("TRS") of Host LP of the entities owning the lease
rights to 117 hotels owned by Host LP from Crestline for approximately $205
million:

  . Record the transfer of working capital of approximately $88 million from
    Crestline to Host LP by increasing due from hotel managers and decreasing
    notes receivable.
  . Record a deferred tax asset of approximately $85 million.
  . Record the decrease in cash and cash equivalents of $205 million.
  . Record the $40 million increase in cash and cash equivalents and
    corresponding $40 million increase in debt, representing the additional
    borrowings under the bank credit facility.
  . Record the $120 million reduction of partners' capital as a result of the
    non-recurring loss on the acquisition.

   B. Represents the adjustment to record the November 2000 settlement of
certain litigation.

  . Record an affiliate note receivable of $36 million for cash advanced to
    the NCS by Host LP.
  . Record the decrease in cash of $58 million.
  . Reduce accrued liabilities by $22 million.

   C. Represents the adjustment to record the offering of Series F senior notes
and subsequent exchange for Series G senior notes, and partial application of
the proceeds therefrom to paydown the bank credit facility:

  . Record the issuance of $250 million of notes.
  . Record the deferred financing fees of $5 million.
  . Record net cash proceeds of $245 million.
  . Record the $26 million use of cash to repay the revolver portion of the
    bank credit facility.

   D. Represents the adjustment to record the September 2000 settlement of
litigation with plaintiffs from four partnerships:

  . Record the decrease in cash and cash equivalents of $31 million.
  .  Record the decrease in other liabilities of $31 million.

   E. Represents the adjustment for the acquisition by the TRS of the entities
owning the leasehold interests to 117 hotels owned by Host LP from Crestline.
We anticipate recording a non-recurring loss of approximately $120 million that
is not presented in the pro forma results of operations.

  . Reduce rental income by $1,155 million and $508 million for fiscal year
    1999 and the First Three Quarters 2000, respectively.
  . Reduce equity in earnings of affiliates by $23 million and $18 million
    for fiscal year 1999 and the First Three Quarters 2000, respectively, to
    reverse FF&E Rental Income paid by Crestline to a non- controlled
    subsidiary of Host LP.
  . Record hotel property revenues of $3,777 million and $2,753 million and
    hotel operating costs and expenses of $2,544 million and $1,851 million
    for fiscal year 1999 and the First Three Quarters 2000, respectively.
    Historical rental income for the First Three Quarters 2000 does not
    include approximately $349 million of contingent rent related to the 117
    leased hotels, which has been deferred in accordance with Staff
    Accounting Bulletin 101. The pro forma statements for the First Three
    Quarters 2000 have been adjusted to include the impact of the reversal of
    the contingent rent.

                                       26


  . Reduce interest income by $5 million and $3 million for fiscal year 1999
    and the First Three Quarters 2000, respectively, for the interest income
    earned on the $88 million in working capital notes receivable due from
    Crestline.
  . Record a provision for federal and state income taxes applicable to the
    TRS of $20 million and $151 million, respectively, for fiscal year 1999
    and the First Three Quarters, 2000, using an effective tax rate of 40.5%.

   F. Represents the adjustment to record equity in earnings of affiliates of
$5 million and $3 million for fiscal year 1999 and the First Three Quarters
2000, respectively, associated with Host LP's share of the earnings of the
joint venture formed by a NCS of Host LP to acquire the limited partner
interests in two partnerships.

   G. Represents the adjustment to record interest expense and related
amortization of deferred financing fees as a result of the $40 million net
borrowings under the bank credit facility to partially fund the acquisition of
the Crestline entities, the issuance of the Series F senior notes, the
retirement of $75 million of the convertible debt obligation to Host REIT in
connection with the repurchase of Host REIT's convertible preferred securities,
the refinancing of the New York Marriott Marquis, the prepayment or refinancing
of the various mortgages, and the paydowns and modifications to the bank credit
facility. The adjustments exclude net extraordinary gains of $3 million for the
First Three Quarters 2000 and $29 million for the fiscal year ended December
31, 1999 resulting from the early extinguishments of debt.

   The following table represents the adjustment to decrease (increase)
interest expense, including amortization of deferred financing fees for the
respective periods (in millions):



                                                       First Three
                                                        Quarters   Fiscal Year
                                                          2000        1999
                                                       ----------- -----------
                                                             
Issuance of Series F senior notes.....................    $(17)       $(24)
Series D senior notes and subsequent exchange for
 Series E senior notes................................     --           (4)
Debt repaid, refinanced, or acquired with proceeds of
 Series D senior notes................................     --            4
Bank credit facility, as amended......................      (3)          7
Retirement of $75 million of convertible debt
 obligation to Host REIT..............................     --            4
New York Marriott Marquis refinancing.................     --           (4)
$665 million mortgage refinancing for eight hotel
 properties...........................................     --           (6)
Prepayments on mortgages for two hotel properties.....     --            4
                                                          ----        ----
                                                          $(20)       $(19)
                                                          ====        ====


   H. Represents the adjustment to reduce interest income for the cash payment
of approximately $31 million made from corporate cash balances during September
2000, to settle litigation with plaintiffs from four partnerships.

   I. Represents the adjustment to reduce the historical revenues and property
level expenses for the 1999 sales of the Minneapolis/Bloomington Airport
Marriott, the Saddle Brook Marriott, Marriott's Grand Hotel and Golf Resort,
The Ritz-Carlton, Boston, and the El Paso Marriott, including the elimination
of the non-recurring gains and taxes on the sales totaling $24 million and $5
million, respectively, in fiscal year 1999.

   J. Represents the adjustment to reduce interest income for approximately
$150 million in cash payments made during 1999 and 2000 to repurchase Host REIT
common stock, OP units and Host REIT's convertible preferred securities in
connection with our stock buyback plan.

   K. Represents the adjustment to record full-year distributions on 8.16
million units of cumulative redeemable preferred limited partner units, which
were issued during the second half of 1999. Holders of the units are entitled
to receive a cash distribution of $2.50 per unit annually.

                                       27


   L. The historical weighted average common OP units outstanding was 291.6
million and 284.2 million for fiscal year 1999 and the First Three Quarters
2000, respectively. On a pro forma basis, weighted average common OP units
outstanding for fiscal year 1999 and the First Three Quarters 2000 would be
280.6 million and 283.2 million, respectively, to reflect units repurchased in
conjunction with the stock repurchase plan.

                                       28


                            SELECTED FINANCIAL DATA

   The following table presents certain selected historical financial data of
us and Host Marriott, the predecessor to Host REIT, which has been derived from
Host Marriott's audited consolidated financial statements for the four years
prior to 1999, our audited consolidated financial statements for the fiscal
year ended December 31, 1999 and our unaudited condensed consolidated financial
statement for the First Three Quarters 2000 and 1999.

   The information contained in the following table for years prior to 1999 is
not comparable to our 2000 and 1999 operations because the historical
information relates to an operating entity which owns and operates its hotels,
while we own the hotels but lease them to the lessees and receive rental
payments in connection therewith. If we and Crestline complete the previously
discussed transaction for the purchase and sale of the Crestline entities
owning the leasehold interests with respect to 117 of our full-service hotels
during January 2001, our consolidated operations going forward will represent
property-level revenues and expenses rather than rental income from lessees.



                         First Three Quarters                 Fiscal Year(1)(2)
                         --------------------- -------------------------------------------------
                         2000(3)(4) 1999(3)(4) 1999(4)  1998(4)(5) 1997(4)(5)  1996   1995(4)(5)
                         ---------- ---------- -------  ---------- ---------- ------  ----------
                              (Unaudited)
                                    (in millions, except per unit data and ratios)
                                                                 
Income Statement Data:
  Revenues(6)...........   $  623     $  598   $1,376     $3,564     $2,875   $2,005    $1,389
  Income (loss) from
   continuing
   operations...........     (161)      (155)     256        194         47      (13)      (62)
  Income (loss) before
   extraordinary items..     (161)      (155)     256        195         47      (13)     (123)
  Net income (loss).....     (158)      (138)     285         47         50      (13)     (143)
  Net income (loss)
   available to common
   unitholders..........     (174)      (139)     279         47         50      (13)     (143)
  Basic earnings (loss)
   per common unit:(7)
    Income (loss) from
     continuing
     operations.........    (0.62)     (0.54)     .86        .90        .22     (.06)     (.36)
    Income (loss) before
     extraordinary
     items..............    (0.62)     (0.54)     .86        .91        .22     (.06)     (.72)
    Net income (loss)...    (0.61)     (0.48)     .96        .22        .23     (.06)     (.84)
  Diluted earnings
   (loss) per common
   unit:(7)
    Income (loss) from
     continuing
     operations.........    (0.62)     (0.54)     .83        .84        .22     (.06)     (.36)
    Income (loss) before
     extraordinary
     items..............    (0.62)     (0.54)     .83        .85        .22     (.06)     (.72)
    Net income (loss)...    (0.61)     (0.48)     .93        .27        .23     (.06)     (.84)
  Cash distributions per
   common unit(8) ......      .65        .63      .84       1.00        --       --        --

Balance Sheet Data:
  Total assets(9).......   $8,182     $8,324   $8,196     $8,262     $6,141   $5,152    $3,557
  Debt(10)..............    5,593      5,717    5,583      5,698      3,466    2,647     2,178
  Convertible Preferred
   Securities...........      --         --       --         --         550      550       --

Other Data:
Ratio of earnings to
 fixed charges and
 preferred unit
 distributions..........      --         --      1.49x      1.54x      1.32x    1.01x      --
Deficiency of earnings
 to fixed charges and
 preferred unit
 distributions (11).....   $  145     $  137      --         --         --       --     $   70


                                       29


- --------
 (1) The Internal Revenue Code requires REITs to file their income tax return
     on a calendar year basis. Accordingly, in 1998 we changed our fiscal year
     end to December 31 for both financial and tax reporting requirements.
     Previously, our fiscal year ended on the Friday nearest to December 31.
     As a result of this change, the results of operations for 15 hotels not
     managed by Marriott International were adjusted in 1998 to include 13
     months of operations (December 1997 through December 1998) and therefore
     are not comparable to fiscal years 1997 and 1996, each of which included
     12 months of operations. The additional month of operations in 1998
     increased our revenues by $44 million.
 (2) Fiscal year 1996 includes 53 weeks. Fiscal years 1995, 1997, 1998 and
     1999 include 52 weeks.
 (3) Our leases have initial terms ranging from 7 to 10 years, subject to
     earlier termination upon the occurrence of certain contingencies, as
     defined. 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.We recognize 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 $366 million and
     $339 million, respectively, for the First Three Quarters 2000 and 1999,
     have been deferred.
 (4) During the First Three Quarters 2000, we recorded an extraordinary loss
     of $2 million in connection with the renegotiation of the bank credit
     facility and an extraordinary gain of $5 million related to the
     extinguishment of a portion of the convertible debt obligation to Host
     REIT. During the First Three Quarters 1999, we recorded an extraordinary
     gain of $13 million related to the renegotiation of the management
     agreement for the New York Marriott Marquis and a $3 million
     extraordinary loss for the write-off of deferred financing fees along
     with a $7 million extraordinary gain on the termination of the interest
     rate swap agreements, both related to the refinancing of mortgage debt
     for eight properties. In 1999, we recognized a $14 million extraordinary
     gain on the renegotiation of the management agreement for the New York
     Marriott Marquis, a net extraordinary gain of $5 million related to the
     refinancing of the mortgage debt for eight properties, a $2 million
     extraordinary loss related to prepayments on the bank credit facility,
     and a net extraordinary gain of $12 million related to the extinguishment
     of a portion of the convertible debt obligation to Host REIT. In 1998, we
     recognized a $148 million extraordinary loss, net of taxes, on the early
     extinguishment of debt. In 1997, we recognized a $3 million extraordinary
     gain, net of taxes, on the early extinguishment of debt. Also in 1998, we
     recognized REIT conversion expenses of $64 million and recorded a tax
     benefit of $106 million related to tax liabilities that we will not
     recognize as a result of our conversion to a REIT. The loss from
     continuing operations for 1995 includes a $10 million pre-tax charge to
     write down the carrying value of five limited service properties to their
     net realizable value and a $60 million pre-tax charge to write down an
     undeveloped land parcel to its estimated sales value. In 1995, we
     recognized a $20 million extraordinary loss, net of taxes, on the
     extinguishment of debt.
 (5) The historical financial data for fiscal years 1998 and 1997 reflect as
     discontinued operations our senior living business that we formerly
     conducted but disposed of in the spin-off of Crestline as part of the
     REIT conversion. We recorded income from the discontinued operations, net
     of taxes, of $6 million in fiscal year 1998. We recorded a loss from
     discontinued operations, net of taxes, of $61 million in 1995, as a
     result of the spin-off of Host Marriott Services Corporation. The 1995
     loss from discontinued operations includes a pre-tax charge of $47
     million for the adoption of SFAS No. 121, "Accounting For the Impairment
     of Long-Lived Assets and Long-Lived Assets to be Disposed Of," a pretax
     $15 million restructuring charge and an extraordinary loss of $10
     million, net of taxes, on the extinguishment of debt.
 (6) Historical revenue for 2000 and 1999 primarily represents lease income
     generated by our leases with Crestline. Periods prior to 1999 represent
     gross hotel sales as our leases were not in effect until January 1, 1999.
     Revenues for fiscal years 1998, 1997, 1996 and 1995 have also been
     adjusted to reclassify interest income as revenue (previously classified
     as other income from operations) in order to be consistent with our 2000
     and 1999 statements of operations presentation.
 (7) Basic earnings (loss) per common unit is computed by dividing net income
     (loss) by the weighted average number of units of common OP Units
     outstanding. Diluted earnings (loss) per common unit is computed by
     dividing net income (loss) by the weighted average number of units of
     common OP Units outstanding plus other dilutive securities. Diluted
     earnings (loss) per unit has not been adjusted for the impact of the
     Convertible Preferred Securities for 1999, 1997 and 1996 and for the
     comprehensive stock plan for 1995 through 1996, as they are anti-
     dilutive. There were no dilutive securities for the First Three Quarters
     2000 and 1999.
 (8) 2000 cash dividends per common unit for the first and second quarters
     reflect a quarterly cash distribution of $0.21 per common unit paid on
     April 14 and July 14, 2000, and a quarterly cash distribution of $0.23
     per common unit paid on October 16, 2000. 1999 cash dividends per common
     unit reflect a quarterly cash distribution of $0.21 per common unit paid
     on April 14, July 14 and October 15, 1999 and January 17, 2000. 1998 cash
     distributions per common unit reflect the cash portion of a special
     dividend paid on February 10, 1999. This special dividend entitled
     shareholders of record on December 28, 1998 to elect to receive either
     $1.00 in cash or .087 of a share of common stock for each outstanding
     share of our common stock owned by such shareholder on the record date.
     Cash totaling approximately $73 million and approximately 11.5 million
     shares were subsequently issued during 1999.
 (9) Total assets for fiscal year 1997 include $236 million related to net
     investment in discontinued operations.
(10) Long-term obligations consist of long term debt (which includes senior
     notes, secured senior notes, mortgage debt, a revolving bank credit
     facility, convertible debt obligation to Host Marriott Corporation, and
     other notes) and capital lease obligations.
(11) The deficiency of $70 million in 1995 is primarily as a result of
     depreciation expense. The deficiency of $145 million and $137 million for
     the First Three Quarters 2000 and 1999, respectively, is due to the
     deferral of contingent rent of $366 million and $339 million for the same
     periods, respectively.

                                      30


          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS

Overview
   Host Marriott, L.P., a Delaware limited partnership, operates through an
umbrella partnership structure and is the owner of hotel properties. Host REIT
operates as a self-managed and self-administered REIT with its operations
conducted solely through us and our subsidiaries. Since REITs are not currently
permitted to derive revenues directly from the operations of hotels, we lease
substantially all of the hotels to subsidiaries of Crestline Capital
Corporation.

   As of September 8, 2000, we owned, or had controlling interests in, 122
upscale and luxury, full-service hotel lodging properties generally located
throughout the United States and operated primarily under the Marriott, Ritz-
Carlton, Four Seasons, Swissotel, Hilton and Hyatt brand names. Most of these
properties are managed by Marriott International.

   During 1999, our basic earnings per unit before extraordinary items
decreased 4% to $0.86, and for the First Three Quarters of 2000 and 1999 our
basic loss per unit before extraordinary items decreased to $0.09 from $0.16,
respectively. Our full year 1999 results benefited from increased hotel sales,
offset by the loss on litigation settlement, and the refinancing of almost $1.2
billion of debt with long term fixed rate notes. As of September 8, 2000, the
refinancing of our debt that began in 1999 and continued in 2000 has resulted
in an average interest rate of approximately 8.1% with 95% of the debt at a
fixed rate and an average maturity of approximately seven years with only $41
million of our principal due through 2001.

   During the third and fourth quarter of 1999 we received net proceeds of $196
million as a result of the issuance of 8.16 million in perpetual preferred
stock by Host REIT and our issuance of a substantially similar preferred OP
Unit security, of which Host REIT is the sole holder. Also in the third quarter
of 1999, Host REIT implemented a stock repurchase program which resulted in the
retirement of a like number of OP Units held by Host REIT being repurchased.

   We are focused on carefully using our capital to improve returns to
unitholders. In 1999 and the first quarter of 2000, our primary use of free
cash flow and asset sales proceeds was the funding of Host REIT's stock buyback
plan. We believe that the stock repurchase program reflected the best return on
investment for our unitholders. However, we have and will continue to look at
strategic acquisitions, such as our purchase in May 2000 of a non-controlling
interest in the J.W. Marriott Hotel in Washington, D.C., as well as evaluate
the stock repurchase program based on changes in market conditions and the
stock price. Through September 8, 2000, the stock repurchase program has
resulted in the retirement of 10.7 million shares of Host REIT common stock,
1.5 million shares of Host REIT's Convertible Preferred Securities and 0.6
million operating partnership units, for a total reduction of 16.2 million
equivalent units on a fully diluted basis for $150 million.

   On November 13, 2000, we executed a definitive agreement with Crestline for
the purchase and sale of the entities owning the leasehold interests with
respect to 117 of our full-service hotels. Under the terms of the transaction,
our newly created wholly-owned subsidiary, which will elect to be treated as a
TRS, will purchase certain Crestline subsidiaries, whose primary assets are the
leasehold interests, for approximately $205 million, including recording a non-
recurring loss of $120 million net of tax on the acquisition. The consummation
of the transaction, which is permitted as a result of the passage of the REIT
Modernization Act, will simplify our corporate structure, enable us to better
control our portfolio of hotels, and is expected to be accretive to our future
earnings.

   Effective November 15, 1999, we amended substantially all of our leases with
Crestline 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 to be
determined either by agreement between us and Crestline or through arbitration
at the time the renewal option is exercised. Crestline is under no obligation
to exercise these renewal options, and we have the right to terminate the
renewal options during time periods specified in the amendments. In addition,
the amendments provide that the fair rental value payable by us to Crestline in
connection with the purchase of a lease, as

                                       31


described below, does not include any amounts relating to any renewal period.
Therefore, the fair rental value of a lease after expiration of the initial
term for such lease would be zero.

   In December 1999, the REIT Modernization Act was passed, effective for
taxable years beginning after December 31, 2000, which significantly amends the
REIT laws applicable to us. Under the REIT Modernization Act, beginning January
1, 2001, (i) we will be able to lease our hotels to a subsidiary that is a
taxable corporation and that elects to be treated as a "taxable REIT
subsidiary" rather than to a third party such as Crestline and (ii) we will be
permitted to own all of the voting stock of such taxable REIT subsidiary. In
addition, as a result of passage of the REIT Modernization Act, and under the
terms of our leases with Crestline subsidiaries, we have the right to purchase
the leases from Crestline on or after January 1, 2001, for a price equal to the
fair rental value of the lessee's interest in the leases over their remaining
terms based on an agreed upon formula, excluding any option periods. On
November 13, we announced the execution of a definitive agreement with
Crestline for the purchase and sale of the entities owning the leasehold
interests with respect to 117 full-service hotel properties owned by us. Under
the terms of the transaction, a wholly-owned subsidiary, which will elect to be
treated as a taxable REIT subsidiary ("TRS"), will purchase the Crestline
subsidiaries, whose primary assets are the leasehold interests, for
approximately $205 million, including recording a non-recurring loss of $120
million net of tax on the acquisition. In connection therewith, we will
recognize the revenues and expenses generated by the hotels subject to the
leases and we will no longer recognize rental income from these leases.
Consummation of the transaction is subject to various conditions, including the
receipt of any required third party consents. There can be no assurance that
the purchase will be consummated. We are also considering pursuing a
transaction with Host Marriot Statutory Employee/Charitable Trust that would
allow us to acquire control of the non-controlled subsidiaries which we expect
will elect to be treated as taxable REIT subsidiaries, although we have not
reached any such agreement and cannot assure you that any such agreement will
be reached.

   We and Marriott International have settled with plaintiffs to resolve
specific litigation involving seven limited partnerships in which we act as
general partner. The settlement involved an acquisition of the limited partner
interests in two partnerships by a joint venture between one of our affiliates
and a subsidiary of Marriott International, the contribution by our non-
controlled subsidiaries of their general partnership interests in the
partnerships and cash payments to partners in the other five partnerships, in
exchange for resolution of claims against all defendants in all seven
partnerships. Our share of the cash required to resolve the litigation,
including the acquisition by a joint venture formed by us and Marriott
International of two of the partnerships, was approximately $124 million. Of
this amount, $31 million in cash was paid during September 2000 in settlement
of litigation with the plaintiffs from four of the partnerships, and $88
million in cash was paid by us and a non-controlled subsidiary in settlement of
litigation with plaintiffs in two partnerships. The settlement included the
acquisition of a 50% non-controlling interest in a joint venture owning the
limited partner interests in two affiliated partnerships. As a result of the
settlement, we recorded a one-time non-recurring, pre-tax charge of $40 million
in the fourth quarter of 1999.

Results of Operations

   Our historical revenues prior to 1999 primarily represented gross property-
level sales from hotels, net gains on property transactions, interest income
and equity in earnings of affiliates. Our historical operating costs and
expenses prior to 1999 principally consisted of property-level operating costs,
depreciation, management fees, real and personal property taxes, ground,
building and equipment rent, property insurance and other costs. As of
January 1, 1999, we lease substantially all of our hotels to subsidiaries of
Crestline due to the REIT conversion. As a result of these leases, we no longer
record property-level revenues and operating expenses, rather we recognize
rental income on the leases and specified owner expenses, including real estate
and property taxes, property insurance, and ground and equipment rent related
to the properties. The comparison of the 2000 and 1999 results with 1998 and
1997 is also affected by a change in the reporting period for our hotels not
managed by Marriott International. Thus, 2000 and 1999 revenues and expenses
are not comparable with prior years.


                                       32


   If we and Crestline complete the previously discussed transaction for the
purchase and sale of the Crestline entities owning the leasehold interests with
respect to 117 of our full-service hotels during January 2001, our future
consolidated revenues and operating expenses will primarily consist of gross
property-level revenues and expenses, rather than rental income related to the
leases with our wholly-owned taxable REIT subsidiary.

First Three Quarters 2000 Compared to First Three Quarters 1999

   Revenues. Our revenues primarily represent rental income from our leased
hotels, net gains on property transactions, interest income and equity in
earnings of affiliates. Percentage rental revenues of $75 million and $86
million for the twelve weeks ended September 8, 2000 and September 10, 1999,
respectively, and $366 million and $339 for the thirty-six weeks ended
September 8, 2000 ("First Three Quarters 2000") and September 10, 1999 ("First
Three Quarters 1999"), respectively, were deferred 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.
The table is presented in order to facilitate an investor's reconciliation of
hotel sales to rental income.



                                 Twelve Weeks
                                    Ended               First Three Quarters
                          -------------------------- --------------------------
                          September 8, September 10, September 8, September 10,
                              2000         1999          2000         1999
                          ------------ ------------- ------------ -------------
                                (in millions)              (in millions)
                                                      
Hotel Sales
  Rooms..................     $656         $609         $1,979       $1,881
  Food and beverage......      258          250            862          828
  Other..................       71           66            224          201
                              ----         ----         ------       ------
    Total hotel sales....     $985         $925         $3,065       $2,910
                              ====         ====         ======       ======


   Rental income increased $36 million, or 19%, to $224 for the third quarter
of 2000 and increased $34 million, or 6% to $580 million for the First Three
Quarters 2000, primarily driven by the growth in room revenues generated per
available room or REVPAR for comparable properties, and the completion of the
new Tampa Waterside Marriott in February 2000 and the 500-room expansion at the
Orlando World Center Marriott in June 2000, partially offset by the sale of
five properties in 1999. REVPAR increased 9.4% to $119.74 for the third quarter
of 2000 and 6.6% to $124.31 for the First Three Quarters 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 7.9%
and 6.3%, while average occupancy increased one percentage point and less than
one percentage point for the third quarter of 2000 and First Three Quarters
2000, respectively.

   Depreciation and Amortization. Depreciation and amortization increased $7
million or 10% for the third quarter of 2000 and increased $21 million or 10%
for the First Three Quarters 2000, reflecting an increase in depreciable
assets, which is primarily the result of capital projects placed in service in
2000, including the Tampa Waterside Marriott and expansion at the Orlando World
Center Marriott, 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 $4 million, or 6%, to $66 million for the third quarter of
2000 and increased $7 million, or 4%, to $191 million for the First Three
Quarters 2000, primarily due to an increase in ground lease expense, which is
commensurate with the increase in hotel sales, and an increase in equipment
rent expense due to technology initiatives at the hotels during 2000.


                                       33


   Minority Interest Expense. Minority interest expense decreased 50% to $1
million in the third quarter of 2000 and 15% to $11 million for the First Three
Quarters 2000. The decrease in minority interest expense reflect the minority
owners' share in the net losses for the periods, which is primarily the result
of the deferral of contingent rental revenue.

   Interest Expense. Interest expense decreased 1% to $107 million in the third
quarter of 2000, primarily due to a decrease in the outstanding balance of the
convertible debt obligation to Host REIT, as approximately $75 million of the
debt obligation was extinguished in connection with the repurchase of
approximately 1.5 million shares of Host REIT's Convertible Preferred
Securities during the fourth quarter of 1999 and first quarter of 2000, and
partially offset by a decrease in capitalized interest as the development
projects at the Tampa Waterside Marriott and Orlando World Center Marriott were
completed in February and June 2000, respectively. Interest expense decreased
3% to $315 million for the First Three Quarters 2000, primarily due to the
aforementioned decrease in the convertible debt obligation to Host REIT and
repayments totaling $225 million on the term loan portion of the bank credit
facility during the fourth quarter of 1999.

   Corporate Expenses. Corporate expenses were $7 million and $5 million for
the third quarters of 2000 and 1999, respectively, and increased $7 million to
$27 million for the First Three Quarters 2000, resulting primarily from an
increase in compensation expense related to employee stock plans.

   Extraordinary Gain (Loss). There were no extraordinary items recognized
during the third quarter of 2000. 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
approximately $5 million on this transaction, based on the discount at which we
purchased the Convertible Preferred Securities. During the twelve weeks ended
June 16, 2000, we recorded an extraordinary loss of approximately $2 million
representing the write off of deferred financing costs and certain fees paid to
our lender in connection with the renegotiation of the bank credit facility.

   In connection with the refinancing of the mortgage and the renegotiation of
the management agreement on the New York Marriott Marquis, we recognized an
extraordinary gain of $13 million on the forgiveness of debt in the form of
accrued incentive management fees in the second quarter of 1999. An
extraordinary loss of $3 million representing the write-off of deferred
financing fees was recognized in July 1999 when the mortgage debt for eight
properties was refinanced, including the New York Marriott Marquis. In
connection with this refinancing, the interest rate swap agreements associated
with some of the original debt were terminated and a $7 million extraordinary
gain was recognized.

   Net Loss. Our net loss decreased $19 million to $21 million for the third
quarter of 2000 and increased $20 million to $158 million for the First Three
Quarters 2000 as a result of the items discussed above.

   Net Loss Available to Common Unitholders. The net loss available to common
unitholders decreased $14 million to $27 million for the third quarter of 2000
and increased $35 million to $174 million for the First Three Quarters 2000.
The net loss available to common unitholders reflects year-to-date
distributions in 2000 and 1999 of $16 million and $1 million, respectively, on
preferred limited partner units, which were issued during the second half of
1999.

1999 Compared to 1998

   Revenues. Revenues decreased $2.2 billion, or 61%, to $1.4 billion for 1999.
As discussed above, our revenues and operating profit are not comparable to
prior years, primarily due to the leasing of our hotels as a result of the REIT
conversion. However, gross hotel sales, which is used in the determination of
rental income for 1999, increased $836 million or 24% over 1998 amounts as is
shown in the following table.

                                       34


   The table below represents gross hotel sales generated by the properties for
1999 and 1998. Rental income for 1999 is computed based on gross hotel sales.



                                                              Year Ended
                                                       -------------------------
                                                       December 31, December 31,
                                                           1999         1998
                                                       ------------ ------------
                                                             (in millions)
                                                              
   Hotel Sales(1)
     Rooms............................................    $2,725       $2,220
     Food and beverage................................     1,258          984
     Other............................................       295          238
                                                          ------       ------
       Total sales....................................    $4,278       $3,442
                                                          ======       ======

- --------
(1) 1999 gross hotel sales do not represent our reported revenues for 1999.
    Rather, rental income, which is computed based on gross hotel sales,
    represents our reported revenues for 1999.

   Lodging results for 1999 were primarily driven by the addition of 36
properties in 1998. The increase in hotel sales also reflects the growth in
room revenues generated per available room or REVPAR. For comparable
properties, REVPAR increased 4.1%, to $115.13 for 1999. On a comparable basis,
average room rates increased approximately 3.8% for the year, while average
occupancy increased less than one percentage point for the year.

   Interest income decreased $12 million or 24% as a result of a lower level of
cash and marketable securities held during 1999 compared to 1998.

   The net gain on property transactions for 1999 primarily represents the $24
million recognized on the sale of five properties, including the sale of the
Ritz-Carlton Boston and the El Paso Marriott during the fourth quarter of 1999.

   Expenses. As discussed above, hotel revenues and hotel operating costs are
not comparable with the prior year. The lessee pays specified direct property-
level costs including management fees and we receive a rent payment, which is
generally calculated as a percentage of revenue, subject to a minimum level,
net of certain property-level owner costs. All of these costs were our expenses
in 1998. Property-level owner costs which are comparable, including
depreciation, property taxes, property insurance, ground and equipment rent,
increased 8% to $553 million for 1999 versus 1998, primarily reflecting the
depreciation from 36 properties acquired during 1998.

   Minority Interest. Minority interest expense decreased $31 million to $21
million in 1999, primarily reflecting the impact of the consolidation of
partnerships which occurred as part of the REIT conversion.

   Interest Expense. Interest expense increased 40% to $469 million in 1999,
primarily due to the issuance of senior notes, establishment of a new credit
facility and additional mortgage debt on properties acquired in 1998. In
addition, in 1999, we recognized $38 million in interest expense related to the
convertible debt obligation to Host REIT, which supports the dividends paid by
Host REIT to holders of the Convertible Preferred Securities. In 1998, these
dividends, totaling $37 million, were a separate component of expense.

   Corporate Expenses. Corporate expenses decreased $13 million to $37 million
in 1999, resulting primarily from lower staffing levels after the Crestline
spin-off, lower costs associated with reduced acquisition activity and lower
costs related to various stock compensation plans.

   Loss on Litigation. In connection with a proposed settlement for litigation
related to seven limited service partnerships discussed above we have recorded
a one-time, non-recurring charge of $40 million.

   Income from Discontinued Operations. Income from discontinued operations
represents the senior living communities business' results of operations for
1998.

                                       35


   Extraordinary Gain (Loss). In connection with the refinancing of the
mortgage and renegotiation of the management agreement on the New York Marriott
Marquis Hotel, we recognized an extraordinary gain of $14 million on the
forgiveness of debt in the form of accrued incentive management fees.

   An extraordinary loss of $3 million representing the write-off of deferred
financing fees occurred in July 1999 when the mortgage debt for eight
properties was refinanced, including the New York Marriott Marquis Hotel. In
connection with this refinancing, the interest rate swap agreements associated
with some of the original debt were terminated and an extraordinary gain of $8
million was recognized.

   An extraordinary loss of $2 million representing the write-off of deferred
financing fees occurred during the fourth quarter of 1999 when prepayments
totaling $225 million were made to permanently reduce the outstanding balance
of the term loan portion of the Bank Credit Facility to $125 million.

   During the fourth quarter of 1999, we extinguished approximately $53 million
of the convertible debt obligation to Host REIT through the purchase of 1.1
million shares of Host REIT's Convertible Preferred Securities on the open
market. We recorded an extraordinary gain of $14 million on this transaction,
based on the discount at which we purchased the Convertible Preferred
Securities. We also recorded an extraordinary loss of $2 million representing
the write-off of deferred financing fees in connection with the early
extinguishment.

   In connection with the purchase of the old senior notes, we recognized an
extraordinary loss of $148 million in the third quarter of 1998, which
represents the bond premium and consent payments totaling approximately $175
million and the write-off of deferred financing fees of approximately $52
million related to the old senior notes, net of taxes.

   Net Income. Our net income in 1999 was $285 million, compared to $47 million
in 1998. Basic and diluted earnings per common unit were $.96 and $.93 for
1999, compared to $.22 and $.27 in 1998.

   Net Income Available to Common Unitholders. Our net income available to
common unitholders in 1999 was $279 million, compared to $47 million in 1998,
reflecting dividends of $6 million in 1999 on the Class A and Class B Preferred
Units which were issued during 1999.

1998 Compared to 1997

   Revenues. Revenues increased $0.7 billion, or 24%, to $3.6 billion for 1998
from $2.9 billion for 1997. Our revenue and operating profit were impacted by
improved results for comparable full-service hotel properties, the addition of
18 full-service hotel properties during 1997 and 36 full-service hotel
properties during 1998 and the gain on the sale of two hotel properties in
1998.

   Hotel sales, which are gross hotel sales, including room sales, food and
beverage sales, and other ancillary sales such as telephone sales, increased
$0.6 billion, or 23%, to over $3.4 billion in 1998, reflecting the REVPAR
increases for comparable units and the addition of full-service hotels in 1997
and 1998. Improved results for our full-service hotels were driven by strong
increases in REVPAR for our 78 comparable units of 7.3% to $112.39 for 1998.
Results were further enhanced by approximately one percentage point increase in
the house profit margin for comparable full-service properties. Average room
rates increased nearly 6.9% for our comparable full-service hotels.

   As discussed in notes to the financial statements on page F-13, we spun off
our senior living communities. We have accounted for these revenues and
expenses as discontinued operations and have shown the amount, net of taxes,
below income from continuing operations. Revenues generated from our 31 senior
living communities totaled $241 million for 1998 compared to $111 million for
1997, as the assets were purchased in the third quarter of 1997.


                                       36


   Revenues were also impacted by the gains on the sales of two hotels. The New
York East Side Marriott was sold for $191 million resulting in a pre-tax gain
of approximately $40 million. The Napa Valley Marriott was sold for $21 million
resulting in a pre-tax gain of approximately $10 million.

   Operating Costs and Expenses. Operating costs and expenses principally
consisted of property-level operating costs, depreciation, management fees,
real and personal property taxes, ground, building and equipment rent,
insurance and certain other costs. Operating costs and expenses increased $0.5
billion to $2.9 billion, primarily representing increased hotel operating
costs. Hotel operating costs increased $0.5 billion to $2.8 billion for 1998,
primarily due to the addition of 54 full-service hotel properties during 1997
and 1998 and increased management fees and rentals tied to improved property
results. As a percentage of hotel revenues, hotel operating costs and expenses
decreased slightly to 82% for 1998 from 84% of revenues for 1997, due to the
significant increases in REVPAR discussed above, offset by increases in
management fees and property-level operating costs, including higher labor
costs in certain markets.

   Minority Interest. Minority interest expense increased $21 million to $52
million for 1998, primarily reflecting the impact of the consolidation of
affiliated partnerships and the acquisition of controlling interests in newly-
formed partnerships during 1997 and 1998.

   Corporate Expenses. Corporate expenses increased $5 million to $50 million
for 1998. As a percentage of revenues, corporate expenses decreased to 1.4% of
revenues for 1998 from 1.6% in 1997, reflecting our efforts to control
corporate expenses in spite of the substantial growth in revenues.

   REIT Conversion Expenses. REIT conversion expenses reflect the professional
fees, consent fees, and other expenses associated with our conversion to a REIT
and totaled $64 million for 1998. There were no REIT conversion expenses prior
to 1998.

   Interest Expense. Interest expense increased 16% to $335 million in 1998,
primarily due to additional debt assumed in connection with the 1997 and 1998
full-service hotel additions as well as the issuance of the senior notes and
establishment of a new credit facility in 1998.

   Dividends on Convertible Preferred Securities. The dividends on the
Convertible Preferred Securities reflect the dividends on the $550 million in
6.75% Convertible Preferred Securities issued by a subsidiary trust of Host
Marriott in December 1996.

   Interest Income. Interest income decreased $1 million to $51 million for
1998, primarily reflecting the lower level of cash and marketable securities
held in 1998 compared to 1997.

   Discontinued Operations. Income from discontinued operations of $6 million
for 1998 represents the senior living communities' business results of
operations for the entire year. The provision for loss on disposal of $5
million for 1998 includes organizational and formation costs related to
Crestline.

   Income before Extraordinary Item. Income before extraordinary item for 1998
was $195 million, compared to $47 million for 1997.

   Extraordinary Gain (Loss). In connection with the purchase in August 1998 of
our old senior notes, we recognized an extraordinary loss of $148 million,
which represents the bond premium and consent payments totaling approximately
$175 million and the write-off of deferred financing fees of approximately $52
million related to the old senior notes, net of taxes. In March 1997, we
purchased 100% of the outstanding bonds secured by a first mortgage on the San
Francisco Marriott Hotel. We purchased the bonds for $219 million, which was an
$11 million discount to the face value of $230 million. In connection with the
redemption and defeasance of the bonds, we recognized an extraordinary gain of
$5 million, which represents the $11 million discount and the write-off of
deferred financing fees, net of taxes. In December 1997, we refinanced the
mortgage debt secured by Marriott's Orlando World Center. In connection with
the refinancing, we recognized an extraordinary loss of $2 million, which
represents payment of a prepayment penalty and the write-off of unamortized
deferred financing fees, net of taxes.

                                       37


   Net Income. Net income for 1998 was $47 million compared to net income of
$50 million for 1997. Basic earnings per common share was $.22 and $.23 for
1998 and 1997, respectively. Diluted earnings (loss) per common share was $.27
and $.23 for 1998 and 1997, respectively.

Liquidity and Capital Resources

   Cash and cash equivalents were $277 million and $436 million at December 31,
1999 and December 31, 1998, respectively. Cash and cash equivalents for the
First Three Quarters 2000 and 1999, were $188 million and $290 million,
respectively. The decrease in cash is primarily a result of cash flows used for
investing and financing activities, offset by cash provided by operating
activities.

   Cash provided by continuing operations increased $48 million to $360 million
during 1999. During 1998, cash from discontinued operations was $29 million;
however, there was no cash activity related to discontinued operations in 1999.
Cash from operations for the First Three Quarters 2000 and 1999, was $439
million and $256 million, respectively.

   Cash used in investing activities from continuing operations was $176
million and $655 million in 1999 and 1998, respectively. Cash used in investing
activities includes capital expenditures of $361 million and $252 million and
acquisitions of $29 million and $988 million in 1999 and 1998, respectively.
Significant investing activities during 1999 include:

  . Costs associated with the newly constructed 717-room Tampa Waterside
    Marriott which opened in February 2000 with over 45,000 square feet of
    meeting space. The total cost of the project was over $104 million, of
    which $57 million was expended during 1999.

  . During 1999 we acquired the remaining minority interests in the two
    hotels whose operations we previously consolidated. The acquisition costs
    included the issuance of approximately 600,000 preferred OP Units valued
    at $8 million and payments of partnership indebtedness of approximately
    $6 million.

  . In May 1999, we completed a 210-room expansion of the Philadelphia
    Marriott for a total cost of approximately $37 million. The project
    consisted of a renovation and conversion of the historic railway terminal
    directly adjacent to the property.

  . Property and equipment balances include $243 million and $78 million for
    construction in progress as of December 31, 1999 and December 31, 1998,
    respectively. The balance as of December 31, 1999 primarily relates to
    the Tampa Waterside Marriott, which was placed in service in February
    2000, as well as properties in Orlando, Memphis, Naples, and various
    other expansion and development projects.

   The cash used for investing activities was partially offset by cash provided
from the net sale of assets of $195 million in 1999, compared to $227 million
in 1998. 1999 property dispositions consisted of the five hotels previously
discussed.

   Cash used in investing activities from discontinued operations was $50
million in 1998; however, there was no cash investing activity related to
discontinued operations in 1999.

   Cash used in investing activities was $307 million and $276 million for the
First Three Quarters of 2000 and 1999, respectively. Cash used in investing
activities through the third quarter includes capital expenditures of $271
million and $261 million for 2000 and 1999, respectively, mostly related to
renewals and replacements on existing properties and new development projects.
Significant investing activities during the First Three Quarters 2000 include:

  . In May 2000, we acquired a non-controlling partnership interest in the
    JWDC Limited Partnership, which owns the JW Marriott Hotel, a 772-room
    hotel located on Pennsylvania Avenue in Washington, DC. We previously
    held a small interest in the venture, and invested an additional $40
    million in the form of a preferred equity contribution.

                                       38


  . In late June 2000, an expansion that included the additions of a 500-room
    tower and 15,000 square feet of meeting space at the Orlando World Center
    Marriott was placed in service at an approximate development cost of $88
    million, of which $35 million was expended during the First Three
    Quarters 2000.

  . Property and equipment balances include $101 million and $243 million for
    construction in progress as of September 8, 2000 and December 31, 1999,
    respectively. The reduction in construction in progress is due to the
    completion of the Tampa Waterside Marriott, which was placed in service
    in February 2000 and the expansion at the Orlando World Center Marriott
    which was placed in service in late June 2000. The balance as of
    September 8, 2000 primarily relates to properties in Naples, Chicago,
    Harbor Beach, and various other expansion and development projects.

   In December 2000, a newly created joint venture formed by us (through non-
controlled subsidiaries) and Marriott International acquired the partnership
interests in Courtyard by Marriott Limited Partnership and Courtyard by
Marriott II Limited Partnership for an aggregate payment of approximately $372
million plus interest and legal fees, of which we paid approximately $91
million. The joint venture acquired the partnerships by acquiring partnership
units pursuant to a tender offer for such units followed by a merger of each of
CBM I and CBM II with and into subsidiaries of the joint venture. The joint
venture financed the acquisition with mezzanine indebtedness borrowed from
Marriott International and with cash and other assets contributed by us
(through our non-controlled subsidiaries) and Marriott International. We own a
50% interest in the joint venture.

   On November 13, 2000, we and Crestline announced the execution of a
definitive agreement for the purchase and sale of the entities owning the
leasehold interests with respect to 117 of our full-service hotels. Under the
terms of the transaction, our subsidiary, which will elect to be treated as a
TRS, will purchase certain Crestline subsidiaries, whose primary assets are the
leasehold interests, for approximately $205 million, including recording a non-
recurring loss of $120 million net of tax on the acquisition.

   Cash (used in) provided by financing activities from continuing operations
was ($343) million and $265 million in 1999 and 1998, respectively. Cash used
in financing activities for the First Three Quarters 2000 and 1999 was $221
million and $126 million, respectively.

   We believe cash payments will be required for the proposed acquisition of
the Crestline lessee entities, the recognition of certain deferred tax items
and the settlement of certain audits of prior years' tax returns with the
Internal Revenue Service and also to fund specific development projects, all of
which are discussed in this prospectus. We may also make cash payments for
certain tax and litigation contingencies, and other matters that we hope to
come to final resolution upon, by the end of 2000, as well as certain
development projects. The source of future cash outflows are dependent on cash
from operations and the amount of additional debt, if any, necessary for
payment upon the final resolution of these matters.

   As of September 8, 2000, our total consolidated debt was approximately $5.6
billion. Our debt is comprised of $2.5 billion in unsecured senior notes, $2.3
billion in non-recourse mortgage debt and $150 million outstanding under the
term loan and $26 million under the revolver portion of the $775 million bank
credit facility and $492 million of convertible debt obligation to Host REIT.
Based on our total capitalization of approximately $7.2 billion as of September
8, 2000 consisting of long term debt, convertible debt obligation to Host REIT,
minority interests and Partner's equity, consolidated debt represents 77% of
Host REIT's total capitalization, compared to 74% as of December 31, 1999.

   Since August 1998, we have issued or refinanced more than $3.9 billion of
debt, as described below, in order to reduce the risk and volatility in our
capital structure. The net effect of these transactions has been to virtually
eliminate all of our near term maturities, with only $49 million of our
principal due through 2001, reduce our average interest rate by approximately
70 basis points, and extend our average maturity by over one year. As a result,
our average rate is now approximately 8.1%, and our average maturity is
approximately seven years, with 95% of our debt having fixed interest rates.

                                       39


   Significant debt transactions include:

  .  In October 2000, we issued $250 million of 9 1/4% Series F senior notes
    and used a portion of the proceeds to repay $26 million of debt
    outstanding under the revolver portion of the bank credit facility. We
    will exchange the Series F senior notes for the Series G senior notes
    pursuant to this exchange offer.

  . As of December 1, 2000, $150 million is outstanding under the term loan
    portion of the bank credit facility, while the available capacity under
    the revolving credit portion of the bank credit facility is $625 million.
    The bank credit facility was renegotiated in June 2000 for $775 million.
    The credit facility's term was extended for two additional years, through
    August 2003. Borrowings under the credit facility generally bear interest
    at the Eurodollar rate plus 2.25% (9.15% at September 8, 2000), and the
    interest rate and commitment fee on the unused portion of the facility
    fluctuate based on specified financial ratios. In connection with the
    previously discussed definitive agreement between Crestline and us for
    the purchase and sale of the entities owning the leasehold interests with
    respect to 117 of our full-service hotels for approximately $205 million,
    we anticipate funding a portion of the transaction through increased
    borrowings under the revolver portion of the bank credit facility of $40
    million.

  . In February 2000, we 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.

  . We issued $300 million of 8 3/8% Series D senior notes due 2006 in
    February 1999 and used the proceeds to refinance, or purchase, debt which
    had been assumed through the merger of some partnerships or the purchase
    of hotel properties in connection with the REIT conversion in December
    1998. We repaid a $40 million variable rate mortgage with a portion of
    the proceeds, and terminated the associated swap agreement, incurring a
    termination fee of approximately $1 million. In August 1999, the Series D
    senior notes were exchanged on a one-for-one basis for Series E senior
    notes, which are freely transferable by the holders.

  . In April 1999, a subsidiary of ours completed the refinancing of the $245
    million mortgage on the New York Marriott Marquis Hotel, maturing in June
    2000. In connection with the refinancing, we renegotiated the hotel's
    management agreement and recognized an extraordinary gain of $14 million
    on the forgiveness of accrued incentive management fees by the manager.
    This mortgage was subsequently refinanced as part of the $665 million
    financing agreement discussed below.

  . In June 1999, we refinanced the debt on the San Diego Marriott Hotel and
    Marina. The mortgage is for $195 million and a term of 10 years at a rate
    of 8.45%. In addition, we entered into a mortgage for the Philadelphia
    Marriott expansion in July 1999 for $23 million at an interest rate of
    approximately 8.6%, maturing in 2009.

  . In July 1999, we entered into a financing agreement pursuant to which we
    borrowed $665 million due 2009 at a fixed rate of 7.47%. Eight of our
    hotels serve as collateral for the agreement. In connection with this
    refinancing, an extraordinary loss of $3 million was recognized,
    representing the write-off of deferred financing fees. The proceeds from
    this financing were used to refinance existing mortgage indebtedness
    maturing at various times through 2000, including approximately $590
    million of outstanding variable rate mortgage debt, and to terminate the
    related interest rate swap agreements, recognizing an extraordinary gain
    of approximately $8 million. As a result of the refinancing we no longer
    have any interest rate swap agreements outstanding.

  . In August 1999, we made a prepayment of $19 million to pay down in full
    the mezzanine mortgage on the Marriott Desert Springs Resort and Spa. In
    September 1999, we made a prepayment of $45 million to pay down in full
    the mortgage note on the Philadelphia Four Seasons Hotel.

  . In August 1998, we purchased substantially all of our then outstanding
    senior debt including: (i) $600 million of 9 1/2% senior notes due 2005,
    (ii) $350 million of 9% senior notes due 2007 and (iii) $600 million of 8
    7/8% senior notes due 2007. We simultaneously issued an aggregate of $1.7
    billion in new senior notes in two series: $500 million of 7 7/8% Series
    A senior notes due in 2005 and $1.2 billion of

                                       40


   7 7/8% Series B senior notes due in 2008. In December 1998, we issued $500
   million of 8.45% Series C senior notes due in 2008 under the same
   indenture and with the same covenants as the Series A and Series B senior
   notes.

  . In addition to the capital resources provided by our debt financings, in
    December 1996, a wholly-owned subsidiary of Host Marriott issued 11
    million shares of 6 3/4% Convertible Quarterly Income Preferred
    Securities, with a liquidation preference of $50 per share for a total
    liquidation amount of $550 million. The Convertible Preferred Securities
    represent an undivided beneficial interest in the assets of the trust
    and, pursuant to various agreements entered into in connection with the
    transaction, are fully, irrevocably and unconditionally guaranteed by us.
    Proceeds from the issuance of the convertible preferred securities were
    invested in $567 million 6 3/4% Convertible Subordinated Debentures due
    December 2, 2026 issued by us, which are the trust's sole assets. Each of
    the convertible preferred securities is convertible at the option of the
    holder into shares of Host REIT common stock at the rate of 3.2537 shares
    per convertible preferred security equivalent to a conversion price of
    $15.367 per share of Host REIT common stock. This conversion ratio
    includes adjustments to reflect distributions made to Host REIT's common
    stockholders in connection with the REIT conversion. During 1999, 1998
    and 1997, no shares were converted into common stock. Holders of the
    convertible preferred securities are entitled to receive preferential
    cumulative cash distributions at an annual rate of 6 3/4% accruing from
    the original issue date, commencing March 1, 1997, and payable quarterly
    in arrears thereafter. The distribution rate and the distribution and
    other payment dates for the Convertible Preferred Securities correspond
    to the interest rate and interest and other payment dates on the
    Convertible Subordinated Debentures. We may defer interest payments on
    the Convertible Subordinated Debentures for a period not to exceed 20
    consecutive quarters. If interest payments on the Convertible
    Subordinated Debentures are deferred, so too are payments on the
    Convertible Preferred Securities. Under this circumstance, Host REIT
    would not be permitted to declare or pay any cash distributions with
    respect to Host REIT capital stock or debt securities that rank equal in
    right of payment with or junior to the Convertible Subordinated
    Debentures. Subject to certain restrictions, the Convertible Preferred
    Securities are redeemable at Host REIT's option upon any redemption of
    the Convertible Subordinated Debentures after December 2, 1999. Upon
    repayment at maturity or as a result of the acceleration of the
    Convertible Subordinated Debentures upon the occurrence of a default, the
    Convertible Preferred Securities are subject to mandatory redemption.
    During 1999 and 2000, Host REIT repurchased 1.5 million shares of the
    Convertible Preferred Securities as part of the stock repurchase plan
    discussed below which resulted in the retirement of $75 million of the
    Convertible Subordinated Debentures.

   Significant equity transactions include:

  . Distributions in 2000 reflect quarterly cash distributions of $0.21 per
    unit paid on January 17, April 14 and July 14. In addition, a third
    quarter cash distribution of $0.23 per unit was paid on October 16.

  . In September 1999, Host REIT announced its intention to repurchase, from
    time to time, up to 22 million shares of its common stock, our operating
    partnership units or an amount of the Convertible Preferred Securities
    which are convertible into a like number of shares of its common stock
    based upon the specified conversion ratio. As of December 31, 1999, we or
    Host REIT had purchased approximately 5.8 million shares of common stock,
    1.1 million shares of the Convertible Preferred Securities and 0.3
    million OP Units for an aggregate consideration of approximately $89
    million. Any repurchases of common stock, OP Units, or Convertible
    Preferred Securities may be effected through open market or privately
    negotiated purchases, through a tender offer, or through one or more
    combinations of such methods. The repurchase program is on-going, and
    through September 8, 2000, approximately 16.2 million equivalent common
    units on a fully diluted basis were repurchased for $150 million.

  . Distributions in 1999 reflect the $73 million in payments for a special
    dividend declared in December 1998 as well as the $0.63 distribution per
    OP Unit paid as of December 31, 1999. In addition, on December 20, 1999,
    Host REIT's Board of Directors declared a regular cash distribution of
    $0.21 per OP Unit paid on January 17, 2000.

                                      41


  . In August 1999, Host REIT sold 4.16 million shares of 10% Class A
    preferred stock, and we issued an equivalent security, the Class A
    Preferred Limited Partner Units. Holders of the Class A preferred units
    are entitled to receive cumulative cash dividends at a rate of 10% per
    year of the $25.00 per unit liquidation preference. Dividends and
    corresponding distributions are payable quarterly in arrears beginning
    October 15, 1999. After August 3, 2004 Host REIT has the option to redeem
    the Class A preferred stock for $25.00 per share, plus accrued and unpaid
    dividends to the date of redemption. The Class A preferred units rank
    senior to our common OP Units, and on a parity with our Class B preferred
    units. The Class A preferred unitholders generally have no voting rights.

  . In November 1999, Host REIT sold 4.0 million shares of 10% Class B
    preferred stock, and we issued an equivalent security, the Class B
    Preferred Limited Partner Units. Holders of the Class B preferred units
    are entitled to receive cumulative cash dividends at a rate of 10% per
    year of the $25.00 per unit liquidation preference. Dividends and
    corresponding distributions are payable quarterly in arrears beginning
    January 15, 2000. After April 29, 2005 Host REIT has the option to redeem
    the Class B preferred stock for $25.00 per share, plus accrued and unpaid
    dividends to the date of redemption. The Class B preferred units rank
    senior to our OP Units, and on a parity with our Class A preferred units.
    The Class B preferred unitholders generally have no voting rights.

  . In December 1998, we completed the acquisition of, or controlling
    interests in, twelve world-class luxury hotels and certain other assets,
    including a mortgage note on a thirteenth hotel property from affiliates
    of the Blackstone Group. We paid approximately $920 million in cash and
    assumed debt and issued approximately 47.7 million OP Units, along with
    other consideration for a total value of approximately $1.55 billion.

  . In December 1998, subsidiaries of ours merged with eight public
    partnerships and acquired limited partnership interests in four private
    partnerships, which collectively own or control 28 properties, 15 of
    which were controlled by us and consolidated on our financial statements
    prior to December 1998. We issued approximately 25.8 million OP Units,
    8.5 million of which were subsequently converted to Host REIT common
    stock, for interests in these partnerships valued at approximately $333
    million. As a result of these transactions, we increased our ownership of
    most of the 28 properties to 100% while consolidating 13 additional
    hotels containing 4,445 rooms.

  . In connection with our conversion to a REIT, we formed two non-controlled
    subsidiaries, which own approximately $329 million in assets as of
    December 31, 1999. The ownership of most of these assets by us and Host
    REIT would have jeopardized its status as a REIT and our status as a
    partnership for federal income tax purposes. These assets primarily
    consist of partnership or other interests in hotels which are not leased,
    some furniture, fixtures and equipment used in the hotels. In exchange
    for our contribution of these assets to the non-controlled subsidiaries,
    we received nonvoting common stock representing 95% of the total economic
    interests of the non-controlled subsidiaries. The Host Marriott Statutory
    Employee/Charitable Trust, the beneficiaries of which are 1) a trust
    formed for the benefit of some of our employees and 2) the J. Willard
    Marriott Foundation, acquired all of the voting common stock representing
    the remaining 5% of the total economic interests, and reflecting 100% of
    the control of each non-controlled subsidiary. As a result, as of
    December 31, 1998, we did not control the non-controlled subsidiaries.
    Commencing January 1, 2001, the REIT Modernization Act would permit us to
    own all of the voting stock of the non-controlled subsidiaries without
    adversely affecting Host REIT so long as these subsidiaries were to elect
    to be taxable REIT subsidiaries. We have not yet determined whether to
    pursue a transaction with the Host Marriott Statutory Employee/Charitable
    Trust that would allow us to acquire control of the non-controlled
    subsidiaries.

 FFO and EBITDA

   We consider Funds from Operations ("FFO"), which represents FFO as defined
by the National Association of Real Estate Investment Trusts, and our EBITDA to
be indicative measures of our operating performance due to the significance of
our long-lived assets. FFO and EBITDA are also useful in measuring our ability
to service debt, fund capital expenditures and expand our business.
Furthermore, management

                                       42


believes that FFO and EBITDA are meaningful disclosures that will help
unitholders and the investment community to better understand our financial
performance, including comparing our performance to other REITs. However, FFO
and EBITDA as presented may not be comparable to 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 FFO presentation.

   FFO increased $149 million, or 37%, to $551 million in 1999 over 1998, and
Comparative Funds From Operations ("Comparative FFO"), which represents FFO, as
defined by the National Association of Real Estate Investment Trusts, plus
contingent rent, available to common unitholders increased $39 million or 10%
to $419 million for the First Three Quarters 2000 over the same period in 1999.
The following is a reconciliation of income (loss) from continuing operations
to FFO (in millions):



                                                       First Three Quarters
                                                       ----------------------
                                                          2000        1999
                                                       ----------  ----------
                                                             
   Funds from Operations
   Loss from operations before extraordinary items.... $     (161) $     (155)
   Depreciation and amortization......................        220         203
   Other real estate activities.......................         (2)        (16)
   Partnership adjustments............................         18          19
                                                       ----------  ----------
   Funds from operations of Host L.P. ................         75          51
   Effects on funds from operations of SAB 101........        359         330
                                                       ----------  ----------
   Comparative funds from operations of Host L.P.
    before preferred unit distributions...............        434         381
   Distributions on preferred units...................        (15)         (1)
                                                       ----------  ----------
   Comparative funds from operations of Host L.P.
    available to common unitholders................... $      419  $      380
                                                       ==========  ==========




                                                        Year Ended
                                           ------------------------------------
                                           December 31, December 31, January 2,
                                               1999         1998        1998
                                           ------------ ------------ ----------
                                                            
   Funds from Operations
   Income from continuing operations.....      $256         $194        $ 47
   Depreciation and amortization.........       291          243         230
   Other real estate activities..........       (28)         (57)          5
   Partnership adjustments...............        19          (11)        (12)
   REIT conversion expenses..............       --            64         --
   Loss on litigation settlement.........        40          --          --
   Tax adjustments.......................       (21)         (59)         15
                                               ----         ----        ----
   Funds from continuing operations of
    Host L.P.............................       557          374         285
   Discontinued operations...............       --            28          10
                                               ----         ----        ----
   Funds from operations of Host L.P. be-
    fore preferred unit
    distributions........................       557          402         295
   Distributions on preferred units......        (6)         --          --
                                               ----         ----        ----
   Funds from operations of Host LP
    available to common unitholders......      $551         $402        $295
                                               ====         ====        ====



                                       43


   EBITDA increased $179 million, or 22%, to $1,007 million in 1999 from $828
million in 1998, and increased $55 million, or 8%, to $749 million for the
First Three Quarters 2000 over the same period in 1999. Hotel EBITDA increased
$162 million, or 19%, to $1,032 million in 1999 from $870 million in 1998,
reflecting comparable hotel EBITDA growth, as well as incremental EBITDA from
1998 acquisitions offset by amounts representing hotel sales which are retained
by Crestline. Hotel EBITDA for the First Three Quarters 2000 and 1999 was $390
million and $362 million, respectively, which does not include deferred rental
income of $366 million and $339 million for the same periods, respectively.

   The following schedule presents our EBITDA as well as a reconciliation of
EBITDA to income (loss) from continuing operations (in millions):



                                                         First Three Quarters
                                                         ----------------------
                                                            2000        1999
                                                         ----------  ----------
                                                               
EBITDA
  Hotels................................................ $      390  $      362
  Office buildings......................................          5           3
  Interest income.......................................         26          26
  Corporate and other expenses..........................        (38)        (36)
  Effect on revenue of SAB 101..........................        366         339
                                                         ----------  ----------
EBITDA.................................................. $      749  $      694
                                                         ==========  ==========
EBITDA.................................................. $      749  $      694
  Effect on revenue of SAB 101..........................       (366)       (339)
  Interest expense......................................       (315)       (325)
  Depreciation and amortization.........................       (224)       (203)
  Minority interest expense.............................        (11)        (13)
  Income taxes..........................................         (7)         (3)
  Other non-cash changes, net...........................         13          34
                                                         ----------  ----------
    Loss from operations before extraordinary item...... $     (161) $     (155)
                                                         ==========  ==========




                                                        Year Ended
                                           ------------------------------------
                                           December 31, December 31, January 2,
                                               1999         1998        1998
                                           ------------ ------------ ----------
                                                            
EBITDA
  Hotels..................................    $1,032       $ 870       $ 690
  Office buildings........................         3           1         --
  Interest income.........................        39          53          55
  Corporate and other expenses............       (67)        (96)        (63)
                                              ------       -----       -----
EBITDA....................................    $1,007       $ 828       $ 682
                                              ======       =====       =====
EBITDA....................................    $1,007       $ 828       $ 682
  Interest expense........................      (469)       (335)       (288)
  Dividends on Convertible Preferred Secu-
   rities.................................       --          (37)        (37)
  Depreciation and amortization...........      (293)       (243)       (231)
  Minority interest expense...............       (21)        (52)        (31)
  Income taxes............................        16          20         (36)
  REIT Conversion expense.................       --          (64)        --
  Loss on litigation settlement...........       (40)        --          --
  Other non-cash changes, net.............        56          77         (12)
                                              ------       -----       -----
    Income from continuing operations.....    $  256       $ 194       $  47
                                              ======       =====       =====



                                       44


   Our interest coverage, defined as EBITDA divided by cash interest expense,
was 2.4 times, 2.7 times, and 2.5 times for 1999, 1998, and 1997, respectively
and 2.4 times and 2.2 times for the First Three Quarters 2000 and 1999,
respectively. The ratio of earnings to fixed charges was 1.5 to 1.0, 1.5 to
1.0, and 1.3 to 1.0 in 1999, 1998, and 1997, respectively and the deficiency of
earnings to fixed charges was $145 million and $137 million for the First Three
Quarters 2000 and 1999, respectively, which is primarily due to the deferral of
contingent rent of $366 million and $339 million for the same periods,
respectively.

   Partnership Activities. Prior to the REIT conversion, we had general and
limited partner interests in numerous limited partnerships which owned 240
hotels including 20 full-service hotels, managed by Marriott International. As
a result of the REIT conversion, the majority of our interests in the 220
limited-service hotels were transferred to the non-controlled subsidiaries.
Additionally, as part of the REIT conversion, we acquired 13 of the 20 full-
service hotels, two were sold, four were transferred to one of the non-
controlled subsidiaries and one was retained by Host REIT.

   Leases. In addition to our full-service hotels, we also lease some property
and equipment under noncancelable operating leases, including the long-term
ground leases for some of our hotels, generally with multiple renewal options.
The leases related to the 53 Courtyard properties and 18 Residence Inn
properties sold during 1995 and 1996, are nonrecourse to us and contain
provisions for the payment of contingent rentals based on a percentage of sales
in excess of stipulated amounts. During the REIT conversion these properties
were subleased to Crestline. We remain contingently liable on certain leases
related to divested non-lodging properties. Such contingent liabilities
aggregated $80 million at December 31, 1999. However, management considers the
likelihood of any substantial funding related to these divested properties'
leases to be remote.

   Inflation. Our hotel lodging properties have been impacted by inflation
through its effect on increasing costs and on the managers' ability to increase
room rates. Unlike other real estate, hotels have the ability to change room
rates on a daily basis, so the impact of higher inflation generally can be
passed on to customers. Our exposure to inflation is less now that
substantially all of our hotels are leased to others.

   Almost all of our debt bears interest at fixed rates. This debt structure
largely mitigates the impact of changes in the rate of inflation on future
interest costs. We have some financial instruments that are sensitive to
changes in interest rates. The interest recognized on the debt obligations is
based on various LIBOR terms, which ranged from 5.6% to 5.9% and 5.1% to 5.8%
at December 31, 1999 and December 31, 1998, respectively, and 5.8% to 6.9% for
the First Three Quarters 2000.

   We repaid a $40 million variable rate mortgage with proceeds from the $300
million Series D senior notes offering during the first quarter of 1999. We
terminated the associated swap agreement incurring a termination fee of
approximately $1 million.

   In July 1999, we completed the refinancing of approximately $784 million of
outstanding variable rate mortgage debt and terminated the related interest
rate swap agreements. As a result of the refinancing we no longer have any
interest rate swap agreements outstanding. As of September 8, 2000, our
remaining variable debt consists of the credit facility and the mortgage debt
on the Ritz-Carlton Amelia Island property which totaled $265 million, and has
subsequently been reduced to $239 million with the $26 million paydown of the
bank credit facility in October, 2000.

   Accounting Standards. In December 1999, we changed our method of accounting
for contingent rental revenues to conform to the Commission's Staff Accounting
Bulletin (SAB) No. 101. As a result, contingent rental revenue will be deferred
on the balance sheet until certain revenue thresholds are realized. We have
adopted SAB No. 101 with retroactive effect beginning January 1, 1999 to
conform to the new presentation. SAB No. 101 has no impact on full-year 1999
revenues, net income, or earnings per unit because all rental revenues
considered contingent under SAB No. 101 were earned as of December 31, 1999.
For the First Three Quarters 2000 and 1999, $366 million and $339 million were
deferred on the balance sheet. The change in accounting principle has no effect
on prior years because percentage rent relates to rental income on our leases,
which began in 1999.

                                       45


   In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." The Statement
establishes accounting and reporting standards requiring that every derivative
instrument (including specified derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or liability
measured at its fair value. The Statement requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on the hedged
item in the income statement and requires that a company must formally
document, designate and assess the effectiveness of transactions that receive
hedge accounting. SFAS No. 133 is effective for fiscal years beginning after
June 15, 2000. We have not determined the full impact of SFAS No. 133.

           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

   The table below provides information as of December 1, 2000 about our
financial instruments that are sensitive to changes in interest rates. For debt
obligations, the table presents principal cash flows and related weighted
average interest rates by expected maturity dates.



                                                 Expected Maturity Date
                                             -----------------------------------
                                                                           Fair
                                             2000  2001  2002  2003  Total Value
                                             ----  ----  ----  ----  ----- -----
                                                         
Liabilities
Long-term variable rate debt:
 The Ritz-Carlton, Amelia Island............ --    --    --    $89    $89   $89
 Credit facility............................ --    --    --    150    150   150
Average Interest Rate(1).................... 8.8%  8.8%  8.8%  8.8%   8.8%

- --------
(1) Interest rates are based on various LIBOR terms plus certain basis points
    which range from 200 to 225 basis points. The one-month LIBOR rate at
    September 8, 2000 was 6.6%. We have assumed for purposes of this
    presentation that the LIBOR rate remains unchanged. A 100 basis point
    increase in LIBOR would increase our interest rate expense by approximately
    $2 million per year.

                                       46


                            BUSINESS AND PROPERTIES

   Host Marriott, L.P., or the "operating partnership," is a limited
partnership owning full service hotel properties as part of an umbrella
partnership real estate investment trust with Host Marriott Corporation, which
we refer to as "Host REIT," as our sole general partner. We were formed as a
Delaware limited partnership in 1998 as a wholly owned subsidiary of Host
Marriott Corporation, a Delaware corporation, in connection with its efforts to
reorganize its business operations to qualify as a REIT for federal income tax
purposes. As part of this reorganization, which we refer to as the REIT
conversion, and which is described below in more detail, on December 29, 1998,
Host Marriott Corporation and various of its subsidiaries contributed to us
substantially all of their assets and we assumed substantially all of their
liabilities. As a result, we have succeeded to the hotel ownership business
formerly conducted by Host Marriott Corporation. Throughout this prospectus,
activities prior to December 29, 1998 represent the activities of our
predecessor, Host Marriott Corporation and its subsidiaries.

   We and Host REIT were formed primarily to continue, in an UPREIT structure,
the full service hotel ownership business formerly conducted by Host Marriott
and its subsidiaries. Our primary business objective is to provide superior
total returns to our unitholders through a combination of distributions and
appreciation in unit price. In addition, we endeavor to:

  . achieve long-term sustainable growth in FFO (i.e., net income computed in
    accordance with generally accepted accounting principles, excluding gains
    or losses from sales of properties, plus real estate-related depreciation
    and amortization, and after adjustments for unconsolidated partnerships
    and joint ventures), and cash flow;

  . increase asset values by selectively improving and expanding our hotels;

  . acquire additional existing and newly developed upscale and luxury full
    service hotels in targeted markets, primarily focusing on downtown hotels
    in core business districts in major metropolitan markets and select
    airport and resort/convention locations;

  . develop and construct upscale and luxury full service hotels; and

  . opportunistically pursue other real estate investments.

   As of September 8, 2000, we own 122 hotels, containing approximately 58,000
rooms, located throughout the United States and Canada. The hotels are
generally operated under the Marriott, Ritz-Carlton, Four Seasons, Swissotel,
Hilton and Hyatt brand names. These brand names are among the most respected
and widely recognized brand names in the lodging industry. The hotels are
currently leased by us and our subsidiaries to lessees, including Crestline and
its subsidiaries, and are managed on behalf of the lessees by subsidiaries of
Marriott International and other companies. As previously discussed, we have
executed a definitive agreement with Crestline for the purchase and sale of the
entities owning the leasehold interests with respect to 117 of our full-service
hotels for approximately $205 million in cash. If this transaction is
consummated, our wholly-owned taxable REIT subsidiary will be the lessee.

   Host REIT is our sole general partner and manages all aspects of our
business. This includes decisions with respect to:

  . sales and purchases of hotels;

  . the financing of the hotels;

  . the leasing of the hotels; and

  . capital expenditures for the hotels subject to the terms of the leases
    and the management agreements.

   Host REIT, our sole general partner, is managed by a Board of Directors and
has no employees who are not also our employees.

   Under current federal income tax law, REITs are restricted in their ability
to derive revenues directly from the operations of hotels. Therefore we lease
virtually all of our hotels to the lessees. See "--The Leases"

                                       47


below. The lessees pay rent to us and our subsidiaries generally equal to the
greater of a specified minimum rent or rent based on specified percentages of
different categories of aggregate sales at the relevant hotels, to the extent
such "percentage rent" would exceed the minimum rent. As we discuss further
below, under the REIT Modernization Act, effective for taxable years beginning
after December 31, 2000, (i) we will be able to lease our hotels to a
subsidiary that is a taxable corporation that elects to be treated as a
"taxable REIT subsidiary" rather than to a third party such as Crestline and
(ii) we will be permitted to own all of the voting stock of such taxable REIT
subsidiary. See "--The REIT Conversion" below. The lessees operate the hotels
pursuant to management agreements with the managers. Each of the management
agreements provides for certain base and incentive management fees, plus
reimbursement of specific costs, as further described below. See "--The
Management Agreements." Such fees and cost reimbursements are the obligation of
the lessees and not ours or our subsidiaries' (although the obligation to pay
such fees could adversely affect the ability of the lessees to pay the required
rent to us or our subsidiaries).

   The leases, through the sales percentage rent provisions, are designed to
allow us to participate in any growth above specified levels in room sales at
the hotels, which management expects can be achieved through increases in room
rates and occupancy levels. Although the economic trends affecting the hotel
industry will be the major factor in generating growth in lease revenues, the
abilities of the lessees and the managers will also have a material impact on
future sales growth.

   In addition to external growth generated by new acquisitions, we intend to
carefully and periodically review our portfolio to identify opportunities to
selectively enhance existing assets to improve operating performance through
major capital improvements. Our leases and those of our subsidiaries do provide
us with the right to approve and finance major capital improvements.

   Our primary focus is on the acquisition of upscale and luxury full service
hotel lodging properties. Since the beginning of 1994 through the date hereof,
we have acquired, directly and through our respective subsidiaries, 106 full
service hotels containing more than 48,000 rooms for an aggregate purchase
price of approximately $6.2 billion. Based upon data provided by Smith Travel
Research, we believe that our full service hotels outperform the industry's
average occupancy rate by a significant margin and averaged 77.7% occupancy for
both fiscal years 1999 and 1998 compared to a 69.1% and 69.4% average occupancy
for our competitive set for 1999 and 1998, respectively and 79.0% and 79.2%
occupancy compared to 72.1% and   % occupancy for our competitive set for the
First Three Quarters 2000 and 1999, respectively. "Our competitive set" refers
to hotels in the upscale and luxury full service segment of the lodging
industry, the segment which is most representative of our full service hotels,
and consists of Crowne Plaza; Doubletree; Hyatt; Hilton; Radisson; Renaissance;
Sheraton; Swissotel; Westin and Wyndham.

   The relatively high occupancy rates of our hotels, along with increased
demand for full-service hotel rooms, have allowed the managers of our hotels to
increase average daily room rates by selectively raising room rates and by
minimizing, in specified cases, discounted group business, replacing it with
higher-rate group and transient business. As a result, on a comparable basis
REVPAR for our full-service properties increased approximately 4.1% for full-
year 1999, and 6.6% for the First Three Quarters 2000.

 Business Strategy

   Our primary business objective is to provide superior total returns to our
unitholders through a combination of distributions and appreciation in unit
price. In order to achieve this objective and, therefore, enhance our equity
value, we employ the following strategies:

  . Acquire existing upscale and luxury full-service hotels as market
    conditions permit, including Marriott and Ritz-Carlton hotels and other
    hotels operated by leading management companies such as Four Seasons and
    Hyatt which satisfy our investment criteria, which acquisitions may be
    completed through various means including by entering into joint ventures
    when we believe our return on investment will be maximized by doing so;


                                       48


  . Develop selected new upscale and luxury full-service hotels, including
    Marriott and Ritz-Carlton hotels and other hotels operated by leading
    management companies such as Four Seasons and Hyatt which satisfy our
    investment criteria and employ transaction structures which mitigate our
    risk;

  . Participate in the sales growth for each of our hotels through leases
    which provide for the payment of rent based upon the lessees' gross hotel
    sales in excess of specified thresholds; and

  . Enhance existing hotel operations by completing selective capital
    improvements that are designed to increase gross hotel sales or improve
    operations.

   Although competition for acquisitions has remained steady and the
availability of suitable acquisition candidates has been limited recently due
to market conditions, we believe that the upscale and luxury full-service
segments of the market will continue to offer opportunities over time to
acquire assets at attractive multiples of cash flow and at discounts to
replacement value, including underperforming hotels which can be improved by
conversion to the Marriott, Ritz-Carlton, or other high quality brands. Since
the beginning of fiscal year 1994, we have acquired 14 hotels which we have
converted to the Marriott brand. The vast majority of our hotel properties are
operated under the Marriott and Ritz-Carlton brands. In general, based upon
REVPAR data provided by Smith Travel Research, we believe that our portfolio
has consistently outperformed the industry. Our comparable properties,
consisting of 84 hotels, owned directly or indirectly by us for the entire 1999
and 1998 fiscal years, respectively, excluding two properties where significant
expansion at the hotels substantially affected operations during the two fiscal
years, generated a 31% and 29% REVPAR premium over our competitive set for
fiscal years 1999 and 1998, respectively. Our comparable properties for 2000
consisting of 114 hotels, owned directly or indirectly by us for the entire
First Three Quarters 2000 and 1999, respectively, 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, generated a 30% and 32% REVPAR premium over our competitive set for the
First Three Quarters 2000 and 1999, respectively.

   On November 13, 2000, we executed a definitive agreement with Crestline for
the purchase and sale of the entities owning the leasehold interests with
respect to 117 of our full-service hotels. Under the terms of the transaction,
our newly created wholly-owned subsidiary, which will elect to be treated as a
TRS, will purchase certain Crestline subsidiaries, whose primary assets are the
leasehold interests, for approximately $205 million in cash, including
recording a non-recurring loss of $120 million net of tax on the acquisition.
The consummation of the transaction, which is permitted as a result of the
passage of the REIT Modernization Act, will simplify our corporate structure,
enable us to better control our portfolio of hotels, and is expected to be
accretive to future earnings.

   In December 2000, a newly created joint venture formed by us (through non-
controlled subsidiaries) and Marriott International acquired the partnership
interests in Courtyard by Marriott Limited Partnership and Courtyard by
Marriott II Limited Partnership for an aggregate payment of approximately $372
million plus interest and legal fees, of which we paid approximately $91
million. The joint venture financed the acquisition with mezzanine indebtedness
borrowed from Marriott International and with cash and other assets contributed
by us (through our non-controlled subsidiaries) and Marriott International. We
own a 50% non-controlling interest in the joint venture.

   We have increased our pool of potential acquisition candidates by
considering acquisitions of select non-Marriott and non-Ritz-Carlton hotels
that offer long-term growth potential and are consistent with the overall
quality of our current portfolio. We will focus on upscale and luxury full
service properties in difficult to duplicate locations with high costs to
prospective competitors, such as hotels located in downtown, airport and
resort/convention locations, which are operated by quality managers. For
example, in December 1998, we consummated the Blackstone acquisition for
approximately $1.55 billion in a combination of cash, OP Units, assumed debt
and other consideration. The Blackstone acquisition consisted of two Ritz-
Carlton, two Four Seasons, one Grand Hyatt, three Hyatt Regency and four
Swissotel properties. Currently, we also consider opportunities to improve
property operations by converting certain existing or acquired hotels to these
and other quality national brands. For example, we converted the resort
property in Singer Island, Florida to the Hilton brand in April 2000.

                                       49


   We believe we are well qualified to pursue our acquisition and development
strategy. Management has extensive experience in acquiring and financing
lodging properties and believes its industry knowledge, relationships and
access to market information provide a competitive advantage with respect to
identifying, evaluating and acquiring hotel assets.

   In September 1999, the board of directors of Host REIT 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 Marriott
Corporation common stock, OP Units or Convertible Preferred Securities
convertible into a like number of shares of common stock. The Board of
Directors of Host REIT will continue to look at strategic acquisitions as well
as evaluate Host REIT's stock repurchase program based on changes in market
conditions and Host REIT's stock price. The stock repurchases may be financed
through cash from operations, assets sales, and other financing activities,
such as the issuances of the Class A and Class B Preferred Stock made during
1999. Such repurchases will be made at management's discretion, subject to
market conditions and may be suspended at any time at our discretion. Through
September 8, 2000, we spent, in the aggregate, approximately $150 million to
repurchase 10.7 million shares of common stock, and 1.5 million shares of the
Convertible Preferred Securities and 0.6 million operating partnership units
for a total reduction of 16.2 million equivalent common shares on a fully
diluted basis.

The REIT Conversion

   During 1998, Host Marriott and its subsidiaries and affiliates consummated a
series of transactions intended to enable Host REIT to qualify as a REIT for
federal income tax purposes. As a result of these transactions, the hotels
formerly owned by Host Marriott and its subsidiaries and other affiliates are
now owned by us and our subsidiaries; we and our subsidiaries lease
substantially all of these hotels to Crestline, and Marriott International and
other hotel operators conduct the day-to-day management of the hotels pursuant
to management agreements with Crestline. Host REIT has elected to be treated as
a REIT for federal income tax purposes effective January 1, 1999. The important
transactions comprising the REIT conversion are summarized below.

   During 1998, Host Marriott reorganized its hotels and certain other assets
so that they were owned by us and our subsidiaries. Host Marriott and its
subsidiaries received a number of OP Units equal to the number of then
outstanding shares of Host Marriott common stock, and we and our subsidiaries
assumed substantially all of the liabilities of Host Marriott and its
subsidiaries. As a result of this reorganization and the related transactions
described below, Host REIT is our sole general partner and, as of September 8,
2000, held approximately 78% of our outstanding common OP Units. We and our
subsidiaries conduct our hotel ownership business. OP Units owned by holders
other than Host REIT are redeemable at the option of the holder, generally
commencing one year after the issuance of their OP Units. Upon redemption of an
OP Unit, the holder would receive from us cash in an amount equal to the market
value of one share of Host REIT common stock. However, in lieu of a cash
redemption by us, Host REIT has the right to acquire any OP Unit offered for
redemption directly from the holder thereof in exchange for either one share of
Host REIT common stock or cash in an amount equal to the market value of one
share of Host REIT common stock.

   In connection with the REIT conversion, two taxable corporations were formed
in which we own approximately 95% of the economic interest but none of the
voting interest. We refer to these two subsidiaries as the non-controlled
subsidiaries. The non-controlled subsidiaries hold various assets and related
liabilities which were originally contributed by Host Marriott and its
subsidiaries to us, but whose direct ownership by Host REIT, us or our other
subsidiaries generally would jeopardize Host REIT's status as a REIT and our
status as a partnership for federal income tax purposes. These assets primarily
consist of interests in partnerships or other interests in three hotels which
are not leased, and specified furniture, fixtures and equipment--also known as
FF&E--used in the hotels. We have no control over the operation or management
of the hotels or other assets owned by the non-controlled subsidiaries. The
Host Marriott Statutory Employee/Charitable Trust acquired all of the voting
common stock of each non-controlled subsidiary,

                                       50


representing, in each case, the remaining approximately 5% of the total
economic interests in each non-controlled subsidiary. The beneficiaries of the
Employee/Charitable Trust are a trust formed for the benefit of specified
employees of ours and the J. Willard and Alice S. Marriott Foundation.
Commencing January 1, 2001, the REIT Modernization Act would permit us to own
all of the voting stock of the non-controlled subsidiaries without adversely
affecting Host REIT so long as these subsidiaries were to elect to be taxable
REIT subsidiaries.

   Under current federal income tax law, REITs are restricted in their ability
to derive revenues from the operation of hotels. However, they can derive
rental income by leasing hotels. Therefore, we and our subsidiaries lease
virtually all of our hotel properties to subsidiaries of Crestline. We have
executed a definitive agreement with Crestline for the purchase and sale of the
entities owning the leasehold interests with respect to 117 of our full-service
hotels for approximately $205 million. If this transaction is consummated, our
wholly-owned taxable REIT subsidiary will be the lessee. Currently, the lessees
pay rent to us and our subsidiaries generally equal to the greater of (1) a
specified minimum rent or (2) rent based on specified percentages of different
categories of aggregate sales at the relevant hotels. Generally, there is a
separate lessee for each hotel property or there is a separate lessee for each
group of hotel properties that has separate mortgage financing or has owners in
addition to us and our wholly owned subsidiaries. The lessees for all but four
of our hotels are wholly owned subsidiaries of Crestline, formed as limited
liability companies, each of whose purpose is limited to acting as lessee under
an applicable lease. The limited liability company agreement for each Crestline
lessee provides that Crestline will have full control over the management of
the business of the lessee, except with respect to certain decisions for which
the consent of other members or the hotel manager will be required. In
addition, although the Crestline lessees are wholly owned subsidiaries of
Crestline, Marriott International or its appropriate subsidiary has a non-
economic voting interest on specific matters pertaining to hotels which are
managed by Marriott International or its subsidiaries.

   The leases, through the sales percentage rent provisions, are designed to
allow us and our subsidiaries to participate in any growth above specified
levels in room sales at the hotels, which management expects can be achieved
through increases in room rates and occupancy levels. Although the economic
trends affecting the hotel industry will be the major factor in generating
growth in lease revenues, the abilities of the lessees and the managers will
also have a material impact on future sales growth. Our leases have remaining
terms ranging from two to ten years, subject to earlier termination upon the
occurrence of contingencies that are specified in the leases. We have entered
into a definitive agreement with Crestline to purchase the entities which own
the leasehold interests of 117 of our full-service hotels on or about January
1, 2000 as a result of certain changes in tax law included in the REIT
Modernization Act (discussed below), for $205 million.

   In December 1999, the REIT Modernization Act was passed, with most
provisions effective for taxable years beginning after December 31, 2000. The
REIT Modernization Act significantly amends the REIT laws applicable to us.
Among the changes, the REIT Modernization Act allows a REIT to own up to 100%
of the voting stock of one or more taxable REIT subsidiaries subject to
limitations on the value of those subsidiaries. The rents received from such
subsidiaries would not be disqualified from being "rents from real property" by
reason of our ownership interest in the subsidiary so long as the property is
operated on behalf of the taxable REIT subsidiary by an "eligible independent
contractor." This will enable us to lease our hotels to wholly owned taxable
subsidiaries if the hotels are operated and managed on behalf of such
subsidiaries by an independent third party. Under the REIT Modernization Act,
taxable REIT subsidiaries will be subject to federal income tax. The REIT
Modernization Act also changes the asset limitations applicable to REITs. Under
the law that is currently in effect, a REIT must satisfy three tests relating
to the nature of its assets:

  . First, at least 75% of its total assets must be represented by real
    estate assets.

  . Second, no more than 25% of its total assets may be represented by
    securities other than those in the 75% asset class.

  . Third, within the 25% assets class, the value of any one issuer's
    securities may not exceed 5% of its total assets and a REIT may not own
    more than 10% of any one issuer's outstanding voting securities.

                                       51


   The third test will be modified in two respects by the REIT Modernization
Act:

  . The 10% voting securities test will be expanded so that we will be
    prohibited from owning more than 10% of the value of the outstanding
    securities of any one issuer.

  . We will be permitted to own securities of a subsidiary that exceed the 5%
    value test and the new 10% vote or value test if the subsidiary elects to
    be a taxable REIT subsidiary.

   Under the REIT Modernization Act, beginning January 1, 2001, (i) we will be
able to lease our hotels to a subsidiary that is a taxable corporation and that
elects to be treated as a "taxable REIT subsidiary" rather than to a third
party such as Crestline and (ii) we will be permitted to own all of the voting
stock of such taxable REIT subsidiary. In addition, as a result of passage of
the REIT Modernization Act and under the terms of our leases with Crestline
subsidiaries, we have the right to purchase the leases from Crestline on or
after January 1, 2001, for a price equal to the fair rental value of the
lessee's interest in the leases over their remaining terms based on an agreed
upon formula, excluding any option periods. On November 13, Host LP and
Crestline announced the execution of a definitive agreement for the purchase
and sale of the entities owning the leasehold interests with respect to 117
full-service hotel properties owned by Host LP. Under the terms of the
transaction, a wholly-owned subsidiary of Host LP, which will elect to be
treated as a taxable REIT subsidiary ("TRS"), will purchase the Crestline
subsidiaries, whose primary assets are the leasehold interests, for
approximately $205 million, including recording a non-recurring loss of $120
million net of tax on the acquisition. If the transaction is consummated, we
will lease these hotels to a newly created subsidiary of ours that qualifies as
a taxable REIT subsidiary. In connection therewith, we will recognize the
revenues and expenses generated by the hotels subject to the leases and we will
no longer recognize rental income from these leases. Consummation of the
transaction with Crestline is subject to various conditions, including the
receipt of any required third party consents. There can be no assurance that
the purchase will be consummated. We are also considering pursuing a
transaction with Host Marriott Statutory Employee/Charitable Trust that would
allow us to acquire control of the non-controlled subsidiaries (which we expect
will elect to be treated as a taxable REIT subsidiary) although we have not
reached any such agreement and cannot assure you that any such agreement will
be reached.

  Finally, under the REIT Modernization Act, beginning January 1, 2001, the
aggregate fair market values of real and personal property will be used for
purposes of determining rents from real property. Currently, the aggregate tax
bases of both real and personal property are used for this purpose.

Recent Acquisitions, Developments and Dispositions

   The pace of acquisitions changed significantly in 2000 and 1999 from the
previous years. After three years of acquisitions numbering 36, 17, and 24 full
service hotels for 1998, 1997 and 1996, respectively, our 1999 acquisitions
were limited to completing the acquisition of minority interests in two hotels
where we had previously acquired the controlling interests for a total
consideration of approximately $14 million.

   During 2000, we focused our energies on increasing the value of our current
portfolio with selective investments and expansions and new developments. We
plan to selectively develop new upscale and luxury full-service hotels in major
urban markets and convention/resort locations with strong growth prospects,
unique or difficult to duplicate sites, high costs for prospective competitors
for other new hotels and limited new supply. We intend to target only
development projects that show promise of providing financial returns that
represent a premium to acquisitions. The largest of these projects was the
construction of a 717-room full service hotel adjacent to the convention center
in downtown Tampa, Florida. The hotel, which was completed and opened for
business on February 19, 2000, includes 45,000 square feet of meeting space,
three restaurants and a 30-slip marina as well as many other amenities. The
total development cost of the property was approximately $104 million,
excluding a $16 million tax subsidy provided by the City of Tampa.


                                       52


   In December 2000, a newly created joint venture formed by us (through non-
controlled subsidiaries) and Marriott International acquired the partnership
interests in Courtyard by Marriott Limited Partnership and Courtyard by
Marriott II Limited Partnership for an aggregate payment of approximately $372
million plus interest and legal fees, of which we paid approximately $91
million. The joint venture financed the acquisition with mezzanine indebtedness
borrowed from Marriott International and with cash and other assets contributed
by us (through our non-controlled subsidiaries) and Marriott International. We
own a 50% interest in the joint venture.

   In May 1999 we completed a 210-room expansion of the Philadelphia Marriott,
through a renovation of the historic railroad headhouse building adjacent to
the property. The project was completed for approximately $37 million including
a $7 million tax financing provided by the City of Philadelphia. At the Orlando
Marriott, the addition of a 500-room tower and 15,000 square feet of meeting
space was completed in June 2000 at an approximate development cost of $88
million, making it the single largest hotel in the Marriott system at 2000
rooms. We also have renovated the golf course, added a multi-level parking
deck, and upgraded and expanded several restaurants.

   Also under development is a 50,000 square-foot world-class spa at the Ritz-
Carlton, Naples. This project is anticipated to be completed late in 2000. The
development cost for this expansion is estimated to be approximately $23
million.

   Two longer-term development projects are currently active with anticipated
completion in 2001. These are the construction of a 295-room Ritz-Carlton,
Naples, Golf Lodge and the 200-room expansion of the Memphis Marriott. The
construction of the Naples Golf Lodge near the 463-room Ritz-Carlton, Naples,
as well as the construction of the new spa facility, will offer travelers an
unmatched resort experience. The Memphis Marriott, which is located adjacent to
a newly-renovated convention center, was converted to the Marriott brand upon
acquisition in 1998 to capitalize on Marriott's brand name recognition. The
combined development costs for these projects is estimated to be approximately
$90 million.

   In addition to investments in partnerships in which we already held minority
interests, we have been successful in adding properties to our portfolio
through partnership arrangements with either the seller of the property or the
incoming managers (typically Marriott International or a Marriott franchisee).
For example, we acquired a non-controlling partnership interest in the 772-room
Washington, D.C., J.W. Marriott Hotel in May 2000 and have the option to
purchase an additional 44% limited partnership interest between December 15,
2001 and September 30, 2002 and between January 15, 2003 and June 30, 2003. We
have the financial flexibility and, due to our existing private partnership
investment portfolio, the administrative infrastructure in place to accommodate
such arrangements. We view this ability as a competitive advantage and expect
to enter into similar arrangements to acquire additional properties in the
future.

   Through subsidiaries we currently own four Canadian properties, containing
1,636 rooms. We intend to continue to evaluate other attractive acquisition
opportunities in Canada. In addition, the overbuilding and economic stress
experienced in some European and Pacific Rim countries may eventually lead to
additional international acquisition opportunities. We will acquire
international properties only when we believe such acquisitions achieve
satisfactory returns after adjustments for currency and country risks.

   We will also consider from time to time selling hotels that do not fit our
long-term strategy, or otherwise meet our ongoing investment criteria,
including for example, hotels in some suburban locations, hotels that require
significant capital improvement and other underperforming assets. The net
proceeds from these sales will be reinvested in upscale and luxury hotels more
consistent with our strategy or otherwise applied in a

                                       53


manner consistent with our investment strategy (which may include the purchase
of securities) at the time of sale. The following table summarizes our 1999
dispositions (in millions, except number of rooms):



                                                                      Pre-tax
                                                          Total     Gain (Loss)
Property                           Location     Rooms Consideration on Disposal
- --------                           --------     ----- ------------- -----------
                                                        
Minneapolis/Bloomington
 Marriott....................  Bloomington, MN   479      $ 35          $10
Saddle Brook Marriott........  Saddle Brook, NJ  221        15            3
Marriott's Grand Hotel Resort
 and Golf Club...............  Point Clear, AL   306        28           (2)
The Ritz-Carlton, Boston.....  Boston, MA        275       119           15
El Paso Marriott.............  El Paso, TX       296         1           (2)


Hotel Lodging Industry

   The lodging industry posted moderate gains in 1999 as higher average daily
rates drove strong increases in REVPAR, which measures daily room revenues
generated on a per room basis. This does not include food and beverage or other
ancillary revenues generated by the property. REVPAR represents the product of
the average daily room rate charged and the average daily occupancy achieved.
Previously, the lodging industry benefited from a favorable supply/demand
imbalance, driven in part by low construction levels combined with high gross
domestic product, or GDP, growth. However, during 1999 and 1998 supply
moderately outpaced demand, causing slight declines in occupancy rates in the
upscale and luxury full-service segments in which we operate. According to
Smith Travel Research, supply in our brands' competitive set increased 1.6% for
the year ended December 31, 1999 and increased 2.0% for the First Three
Quarters 2000 while demand in our competitive set increased 1.1% for the year
ended December 31, 1999 and increased 4.6% for the First Three Quarters 2000.
At the same time, occupancy declined 0.4 percentage points in our competitive
set for the year ended December 31, 1999 and increased 3.2 percentage points
for The First Three Quarters 2000.

   These declines in occupancy, however, were more than offset by increases in
average daily rates which generated higher REVPAR. According to Smith Travel
Research, for the year ended December 31, 1999, average daily rate and REVPAR
for our competitive set increased 3.0% and 2.5%, respectively, versus the same
period one year ago. For the First Three Quarters 2000, average daily rate and
REVPAR increased 5.2% and 7.8%, respectively, versus the same period one year
ago. The current amount of excess supply in the upper-upscale and luxury
portions of the full-service segment of the lodging industry is relatively
moderate and much less severe than that experienced in the lodging industry in
other occupancy downturns, in part because of the greater financial discipline
and lending practices imposed by financial institutions and public markets
today relative to those during the late 1980's.

   Our hotels have outperformed both the industry as a whole and the upper-
upscale and luxury full service segment. The attractive locations of our
hotels, the limited availability of new building sites for new construction of
competing full service hotels, and the lack of availability of financing for
new full service hotels has allowed us to maintain REVPAR and average daily
rate premiums over our competitors in these service segments. For our
comparable hotels, as previously defined, average daily rates increased 3.8% in
1999 and 6.3% for the First Three Quarters 2000. The increase in average daily
rate helped generate a strong increase in comparable hotel REVPAR of 4.1% and
6.6% for the same periods, respectively. Furthermore, because our lodging
operations have a high fixed-cost component, increases in REVPAR generally
yield greater percentage increases in our consolidated earnings before interest
expense, income taxes, depreciation, amortization and other non-cash items or
EBITDA. While we currently do not benefit directly from increases in EBITDA
levels at our properties due to the structure of our leases, we should benefit
from such increases due to expected higher market valuations of our properties
based on such elevated EBITDA levels. If we were to acquire the Crestline
leases with respect to our hotels, any increases in EBITDA levels at our
properties (which formerly were leased to Crestline) would have a direct,
positive effect on our consolidated EBITDA.

   We currently believe that demand is exceeding supply in the sub-markets in
which we operate, however, we expect that this trend will reverse in 2001. The
relative balance between supply and demand growth may be influenced by a number
of factors including growth of the economy, interest rates, unique local
considerations

                                       54


and the relatively long lead time to develop urban, convention and resort
hotels. We believe that growth in room supply in upscale and luxury full-
service sub-markets in which we operate continue to exceed room demand growth
through the year 2001. There can be no assurance that growth in supply will
moderate or that REVPAR and EBITDA will continue to improve.

Hotel Lodging Properties

   Our lodging portfolio, as of September 8, 2000, consists of 122 upscale and
luxury full-service hotels containing approximately 58,000 rooms. Our hotel
lodging properties represent quality upscale and luxury assets in the full
service segment. All but thirteen of our hotel properties are currently
operated under the Marriott or Ritz-Carlton brand names.

   Our hotels average approximately 478 rooms. Thirteen of our hotels have more
than 750 rooms. Hotel facilities typically include meeting and banquet
facilities, a variety of restaurants and lounges, swimming pools, gift shops
and parking facilities. Our hotels primarily serve business and pleasure
travelers and group meetings at locations in downtown, airport, resort
convention and suburban locations throughout the United States. The properties
are generally well situated in locations where there are significant barriers
to entry by competitors including downtown areas of major metropolitan cities,
at airports and resort/convention locations where there are limited or no
development sites. The average age of the properties is 16 years, although many
of the properties have had more recent substantial renovations or major
additions.

   To maintain the overall quality of our lodging properties, each property
undergoes refurbishments and capital improvements on a regularly scheduled
basis. Typically, refurbishing has been provided at intervals of five years,
based on an annual review of the condition of each property. For fiscal years
1999, 1998 and 1997 we spent $197 million, $165 million and $129 million,
respectively, on capital improvements to existing properties. As a result of
these expenditures, we expect to maintain high quality rooms at our properties.

   In addition to acquiring and maintaining superior assets, a key part of our
strategy is to have the hotels managed by leading management companies. As of
September 8, 2000, 100 of our 122 hotel properties were managed by subsidiaries
of Marriott International as Marriott or Ritz-Carlton brand hotels and an
additional nine hotels are part of Marriott International's full-service hotel
system through franchise agreements. The remaining hotels are managed by
leading management companies including Four Seasons, Hilton, Hyatt, and
Swissotel. Our properties have reported annual increases in REVPAR since 1993.
Based upon data provided by Smith Travel Research, our comparable properties,
as previously defined, have more than a nine and ten percentage point occupancy
premium and an approximate 31% and 30% REVPAR premium over the competitive set
for fiscal year 1999 and First Three Quarters 2000, respectively.

   Comparable properties refer to properties that we owned for the same period
of time in each of the periods covered as adjusted to exclude properties where
significant disruptions to operations occurred due to expansions to the
properties.

   The chart below sets forth performance information for our comparable
properties:



                                               First Three
                                                Quarters         Year Ended
                                             ----------------  ----------------
                                              2000     1999     1999     1998
                                             -------  -------  -------  -------
                                                            
Comparable Full-Service Hotels(1)
Number of properties........................     114      114       84       84
Number of rooms.............................  52,426   52,426   40,868   40,868
Average daily rate.......................... $156.40  $147.13  $146.74  $141.41
Occupancy percentage........................    79.5%    79.3%    78.5%    78.2%
REVPAR...................................... $124.31  $116.64  $115.13  $110.57
REVPAR % change.............................     6.6%     --       4.1%     --

- --------
(1) Consists of 114 and 84 properties owned, directly or indirectly, by us for
    the entire First Three Quarters 2000 and 1999, and the 1999 and 1998 fiscal
    years, respectively, 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 for the First Three
    Quarters 2000 and 1999, and excluding two properties where significant
    expansion at the hotels affected operations for the 1999 and 1998 fiscal
    years. These properties, for the respective periods, represent the
    "comparable properties."

                                       55


   The chart below presents some performance information for our hotels:



                                      First Three
                                       Quarters             Year Ended
                                    ----------------  -------------------------
                                    2000(3)  1999(4)  1999(1)  1998(2)   1997
                                    -------  -------  -------  -------  -------
                                                         
Number of properties...............     122      124      121      126       95
Number of rooms....................  58,369   57,966   57,086   58,445   45,718
Average daily rate................. $155.22  $146.79  $149.51  $140.36  $133.74
Occupancy percentage...............    79.0%    79.2%    77.7%    77.7%    78.4%
REVPAR............................. $122.64  $116.19  $116.13  $109.06  $104.84

- --------
(1) The property statistics and operating results include operations for the
    Minneapolis/Bloomington Marriott, the Saddle Brook Marriott, Marriott's
    Grand Hotel Resort and Golf Club, the Ritz-Carlton, Boston, and the El Paso
    Marriott, which were sold at various times throughout 1999, through the
    date of sale.
(2) Number of properties and rooms is as of December 31, 1998 and includes 25
    properties (9,965 rooms) acquired in that month.
(3) Number of properties and rooms is as of September 8, 2000 and includes the
    Tampa Waterside Marriott (717 rooms), which opened in February 2000.
(4) The property statistics and operating results include operations for the
    five hotels which were sold at various times in 1999, through the date of
    sale.

   The following tables present full service hotel information by geographic
region:



                         As of September 8, 2000     First Three Quarters 2000
                         ------------------------ --------------------------------------
                          Number   Average Number  Average       Average
Geographic Region        of Hotels of Guest Rooms Occupancy    Daily Rate     REVPAR
- -----------------        --------- -------------- -----------  ------------  -----------
                                                              
Atlanta.................     11         487             74.0%   $    158.29  $    117.12
Florida.................     13         584             77.8         154.03       119.81
Mid-Atlantic............     17         364             77.1         142.41       109.84
Midwest.................     14         358             76.5         137.17       104.95
New York................     10         719             83.7         209.08       174.98
Northeast...............     11         390             77.3         135.20       104.56
South Central...........     19         497             78.7         125.74        98.93
Western.................     27         492             81.8         163.20       133.42
                            ---
Average--All regions....    122         478             79.0         155.22       122.64
                            ===

                         As of December 31, 1999  Year Ended December 31, 1999(2)
                         ------------------------ --------------------------------------
                          Number   Average Number  Average       Average
Geographic Region        of Hotels of Guest Rooms Occupancy    Daily Rate     REVPAR
- -----------------        --------- -------------- -----------  ------------  -----------
                                                              
Atlanta.................     11         486             74.7%   $    148.78  $    111.12
Florida.................     12         531             77.1         149.75       115.51
Mid-Atlantic............     17         364             75.8         132.80       100.69
Midwest.................     14         358             76.6         132.19       101.24
New York................     10         716             84.0         203.16       170.70
Northeast...............     11         390             77.4         140.99       109.07
South Central...........     19         497             76.2         123.25        93.89
Western.................     27         491             78.2         154.26       120.60
                            ---
Average--All regions....    121         472             77.7         149.51       116.13
                            ===

- --------
(1) The property statistics and operating results include operations for the
    Tampa Waterside Marriott, which opened in February 2000.
(2) The property statistics and operating results include operations for the
    five hotels which were sold at various times throughout 1999, through the
    date of sale.

                                       56


   Prior to 1997, we divested virtually all of our limited-service hotel
properties through the sale and leaseback of 53 Courtyard properties and 18
Residence Inn properties. The Courtyard and Residence Inn properties are
subleased to subsidiaries of Crestline under sublease agreements and are
managed by Marriott International under long-term management agreements. During
1999, limited-service properties represented less than 1% of our EBITDA from
hotel properties. Lease revenues for the 71 properties that we sub-lease are
reflected in our revenues in 1999, while gross property-level sales were
reflected previous to that.

   The following table sets forth as of September 8, 2000, the location and
number of rooms relating to each of our 122 hotels. All of the properties are
leased to a subsidiary of Crestline and operated under Marriott brands by
Marriott International, unless otherwise indicated.



Location                                                                   Rooms
- --------                                                                   -----
                                                                        
Arizona
 Mountain Shadows Resort..................................................   337
 Scottsdale Suites........................................................   251
 The Ritz-Carlton, Phoenix................................................   281
California
 Coronado Island Resort(1)(2).............................................   300
 Costa Mesa Suites........................................................   253
 Desert Springs Resort and Spa............................................   884
 Fullerton(2).............................................................   224
 Hyatt Regency, Burlingame(3).............................................   793
 Manhattan Beach(1)(2)(4)(6)..............................................   380
 Marina Beach(1)(2).......................................................   368
 Newport Beach............................................................   586
 Newport Beach Suites.....................................................   250
 Ontario Airport(4)(6)....................................................   299
 Sacramento Airport(2)(3)(7)..............................................    85
 San Diego Marriott Hotel and Marina(2)(6)................................ 1,355
 San Diego Mission Valley(6)(7)...........................................   350
 San Francisco Airport....................................................   684
 San Francisco Fisherman's Wharf(4).......................................   285
 San Francisco Moscone Center(2).......................................... 1,498
 San Ramon(2).............................................................   368
 Santa Clara(2)...........................................................   754
 The Ritz-Carlton, Marina del Rey(2)......................................   306
 The Ritz-Carlton, San Francisco..........................................   336
 Torrance.................................................................   487
Colorado
 Denver Southeast(2)......................................................   595
 Denver Tech Center(1)....................................................   625
 Denver West(2)...........................................................   307
 Marriott's Mountain Resort at Vail(1)....................................   349
Connecticut
 Hartford/Farmington......................................................   380
 Hartford/Rocky Hill(2)...................................................   251
Florida
 Fort Lauderdale Marina(2)................................................   580
 Harbor Beach Resort(2)(5)(6).............................................   637
 Jacksonville(2)(4).......................................................   256
 Miami Airport(2).........................................................   782
 Miami Biscayne Bay(2)....................................................   605
 Orlando World Center..................................................... 2,003
 Palm Beach Gardens(4)....................................................   279
 Singer Island Hilton(3)..................................................   222
 Tampa Airport(2).........................................................   295
 Tampa Waterside..........................................................   717
 Tampa Westshore(2).......................................................   309



Location                                                                   Rooms
- --------                                                                   -----
                                                                        
 The Ritz-Carlton, Amelia Island..........................................   449
 The Ritz-Carlton, Naples.................................................   463
Georgia
 Atlanta Marriott Marquis(6).............................................. 1,671
 Atlanta Midtown Suites(2)................................................   254
 Atlanta Norcross.........................................................   222
 Atlanta Northwest........................................................   401
 Atlanta Perimeter(2).....................................................   400
 Four Seasons, Atlanta(3).................................................   246
 Grand Hyatt, Atlanta(3)..................................................   439
 JW Marriott Hotel at Lenox(2)............................................   371
 Swissotel, Atlanta(3)....................................................   348
 The Ritz-Carlton, Atlanta(2).............................................   447
 The Ritz-Carlton, Buckhead...............................................   553
Illinois
 Chicago/Deerfield Suites.................................................   248
 Chicago/Downers Grove Suites.............................................   254
 Chicago/Downtown Courtyard...............................................   334
 Chicago O'Hare(2)........................................................   681
 Chicago O'Hare Suites(2).................................................   256
 Swissotel, Chicago(3)....................................................   630
Indiana
 South Bend(2)............................................................   300
Louisiana
 New Orleans.............................................................. 1,290
Maryland
 Bethesda(2)..............................................................   407
 Gaithersburg/Washingtonian Center........................................   284
Massachusetts
 Boston/Newton............................................................   430
 Hyatt Regency, Cambridge(3)..............................................   469
 Swissotel, Boston(3).....................................................   498
Michigan
 The Ritz-Carlton, Dearborn...............................................   308
 Detroit Livonia..........................................................   224
 Detroit Romulus..........................................................   245
 Detroit Southfield.......................................................   226
Minnesota
 Minneapolis City Center(2)...............................................   583
 Minneapolis Southwest(6)(7)..............................................   320
Missouri
 Kansas City Airport(2)...................................................   382
New Hampshire
 Nashua...................................................................   251
New Jersey
 Hanover..................................................................   353


                                       57




Location                                                                   Rooms
- --------                                                                   -----
New Jersey (continued)
                                                                        
 Newark Airport(2)........................................................   590
 Park Ridge(2)............................................................   289
New Mexico
 Albuquerque(2)...........................................................   411
New York
 Albany(6)(7).............................................................   359
 New York Marriott Financial Center.......................................   504
 New York Marriott Marquis(2)............................................. 1,944
 Marriott World Trade Center (1)(2).......................................   820
 Swissotel, The Drake(3)..................................................   494
North Carolina
 Charlotte Executive Park(4)..............................................   298
 Greensboro/Highpoint(2)..................................................   299
 Raleigh Crabtree Valley..................................................   375
 Research Triangle Park...................................................   224
Ohio
 Dayton...................................................................   399
Oklahoma
 Oklahoma City............................................................   354
 Oklahoma City Waterford(1)(4)(6).........................................   197
Oregon
 Portland.................................................................   503
Pennsylvania
 Four Seasons, Philadelphia(3)............................................   365
 Philadelphia Convention Center(2)(6)..................................... 1,410
 Philadelphia Airport(2)..................................................   419
 Pittsburgh City Center(1)(2)(4)(6).......................................   400
Tennessee
 Memphis(1)(2)............................................................   403
Texas
 Dallas/Fort Worth Airport................................................   492



Location                                                                  Rooms
- --------                                                                  ------
                                                                       
 Dallas Quorum(2)........................................................    547
 Houston Airport(2)......................................................    566
 Houston Medical Center(2)...............................................    386
 JW Marriott Houston.....................................................    514
 Plaza San Antonio(1)(2)(4)..............................................    252
 San Antonio Rivercenter(2)..............................................    999
 San Antonio Riverwalk(2)................................................    500
Utah
 Salt Lake City(2).......................................................    510
Virginia
 Dulles Airport(2).......................................................    370
 Fairview Park(2)........................................................    395
 Hyatt Regency, Reston(3)................................................    514
 Key Bridge(2)...........................................................    588
 Norfolk Waterside(2)(4).................................................    404
 Pentagon City Residence Inn.............................................    300
 The Ritz-Carlton, Tysons Corner(2)......................................    397
 Washington Dulles Suites................................................    254
 Westfields(1)...........................................................    335
 Williamsburg(1).........................................................    295
Washington
 Seattle SeaTac Airport..................................................    459
Washington, DC
 Washington Metro Center(1)..............................................    456
Canada
 Calgary(1)..............................................................    380
 Toronto Airport(6)......................................................    423
 Toronto Eaton Center(2).................................................    459
 Toronto Delta Meadowvale(3).............................................    374
                                                                          ------
TOTAL.................................................................... 58,369
                                                                          ======


(1) This property was converted to the Marriott brand after acquisition.
(2) The land on which this hotel is built is leased under one or more long-term
    lease agreements.
(3) This property is not operated under the Marriott brand and is not managed
    by Marriott International.
(4) This property is operated as a Marriott franchised property.
(5) This property is leased to Marriott International.
(6) This property is not wholly owned by us.
(7) This property is not leased to Crestline.

Investments in Affiliated Partnerships

   We and certain of our subsidiaries also manage our partnership investments
and conduct the partnership services business. As previously discussed, in
connection with the REIT conversion, the non-controlled subsidiaries were
formed to hold various assets. The direct ownership of those assets by us or
Host REIT could jeopardize Host REIT's status as a REIT or our treatment as a
partnership for federal income tax purposes. Substantially all our general and
limited partner interests in partnerships owning 209 limited-service hotels
were held by the non-controlled subsidiaries at year end. There were also 20
full-service hotels in which we had general and limited partner interests, 13
of which have been acquired by us, two were sold, four were transferred to our
non-controlled subsidiary and one was retained.

   The managing general partner of the partnership is responsible for the day-
to-day management of the partnership operations, which generally includes
payment of partnership obligations from partnership funds, preparation of
financial reports and tax returns and communications with lenders, limited
partners and regulatory bodies. The general partner is reimbursed for the cost
of providing these services subject to limitations in certain cases.

                                       58


   The partnership hotels are currently operated under management agreements
with Marriott International or its subsidiaries. The general partner oversees
and monitors Marriott International and its subsidiaries' performance pursuant
to these agreements.

   Cash distributions provided from these partnerships including distributions
related to partnerships sold, transferred or acquired in 1998 are tied to the
overall performance of the underlying properties and the overall level of
debt. All debt of these partnerships is nonrecourse to us and our
subsidiaries, except that we are contingently liable under various guarantees
of debt obligations of certain of the limited-service partnerships.

Marketing

   As of September 8, 2000, 100 of our 122 hotel properties were managed by
subsidiaries of Marriott International as Marriott or Ritz-Carlton brand
hotels and an additional nine hotels are part of Marriott International's
full-service hotel system through franchise agreements. The remaining hotels
are managed primarily by Hyatt, Four Seasons and Swissotel. In addition, we
converted the resort property in Singer Island, Florida to the Hilton brand in
April 2000.

   We believe that our properties will continue to enjoy competitive
advantages arising from their participation in the Marriott, Ritz-Carlton,
Hyatt, Four Seasons, Swissotel, and Hilton hotel systems. The national
marketing programs and reservation systems of each of these managers, as well
as the advantages of strong customer preference for these upper-upscale and
luxury brands should also help these properties to maintain or increase their
premium over competitors in both occupancy and room rates. Repeat guest
business is enhanced by guest rewards programs offered by Marriott, Hyatt,
Swissotel, and Hilton. For example, the Marriott Rewards program membership
includes more than 7.5 million members.

   Each of the managers maintains national reservation systems that provide
reservation agents with complete descriptions of the rooms available and up-
to-date rate information from the properties. Marriott's reservation system
also features connectivity to airline reservation systems, providing travel
agents with access to available rooms inventory for all Marriott and Ritz-
Carlton lodging properties. In addition, software at Marriott's centralized
reservations centers enables agents to immediately identify the nearest
Marriott or Ritz-Carlton brand property with available rooms when a caller's
first choice is fully occupied. Our website (www.hostmarriott.com) currently
permits users to connect to the Marriott, Ritz-Carlton, Hyatt, Hilton, Four
Seasons, and Swissotel reservation systems to reserve rooms in our hotels.

Competition

   Our hotels compete with several other major lodging brands in each segment
in which they operate. Competition in the industry is based primarily on the
level of service, quality of accommodations, convenienceof locations and room
rates. Although the competitive position of each of our hotel properties
differs from market to market, we believe that our properties compare
favorably to their competitive set in the markets in which they operate on the
basis of these factors. The following table presents key participants in
segments of the lodging industry in which we compete:



 Segment              Representative Participants
 -------              ---------------------------
                   
 Luxury Full-Service  Ritz-Carlton; Four Seasons
 Upscale Full-Service Crown Plaza; Doubletree; Hyatt; Hilton; Marriott Hotels,
                      Resort and Suites; Radisson; Renaissance; Sheraton;
                      Swissotel; Westin; Wyndham


Seasonality

   Our hotel revenues have traditionally experienced significant seasonality.
Additionally, hotel revenues in the fourth quarter reflect sixteen weeks of
results compared to twelve weeks for the first three quarters of the fiscal
year. Average hotel sales by quarter over the three years 1997 through 1999
for our lodging properties are as follows:



       First Quarter      Second Quarter       Third Quarter       Fourth Quarter
       -------------      --------------       -------------       --------------
                                                          
            22%                23%                  22%                 33%



                                      59


Other Real Estate Investments

   We have lease and sublease activity relating primarily to Host Marriott's
former restaurant operations. Additionally, we have lease activity related to
certain office space that we own in Atlanta, Chicago, and San Francisco which
is included in other revenues in our statements of operations. Prior to the
REIT conversion, we owned 12 undeveloped parcels of vacant land, totaling
approximately 83 acres, originally purchased primarily for the development of
hotels or senior living communities. These parcels are now owned by one of the
non-controlled subsidiaries.

Employees

   As of September 8, 2000, we had 179 management employees, and 13 other
employees who are covered by a collective bargaining agreement that is subject
to review and renewal on a regular basis. We believe that we and our managers
have good relations with labor unions and have not experienced any material
business interruptions as a result of labor disputes.

Environmental and Regulatory Matters

   Under various federal, state and local environmental laws, ordinances and
regulations, a current or previous owner or operator of real property may be
liable for the costs of removal or remediation of hazardous or toxic substances
on, under or in such property. Such laws may impose liability whether or not
the owner or operator knew of, or was responsible for, the presence of such
hazardous or toxic substances. In addition, certain environmental laws and
common law principles could be used to impose liability for release of
asbestos-containing materials, and third parties may seek recovery from owners
or operators of real properties for personal injury associated with exposure to
released asbestos-containing materials. Environmental laws also may impose
restrictions on the manner in which property may be used or business may be
operated, and these restrictions may require expenditures. In connection with
our current or prior ownership or operation of hotels, we may be potentially
liable for any such costs or liabilities. Although we are currently not aware
of any material environmental claims pending or threatened against us, we can
offer no assurance that a material environmental claim will not be asserted
against us.

The Leases

   Currently, in order for Host REIT to qualify as a REIT and for us to be
treated as a partnership for income tax purposes, neither we nor Host REIT may
operate the hotels or related properties. Accordingly, we lease the hotels to
lessees, which are primarily wholly owned indirect subsidiaries of Crestline.
Beginning January 1, 2001, the REIT Modernization Act, however, will permit a
REIT to lease hotels to a subsidiary that qualifies as a taxable REIT
subsidiary. For a description of our definitive agreement with Crestline to
acquire the entities that own the leasehold interests for 117 of our hotels
through a taxable REIT subsidiary, see "--The REIT Conversion" above.

   The following is a brief summary of the general terms of the leases, a form
of which has been filed with the Securities and Exchange Commission.

  . Lessees. There generally is a separate lessee for each hotel or group of
    hotels that is owned by us or our subsidiaries. Each lessee is a Delaware
    limited liability company, whose purpose is limited to acting as lessee
    under the applicable lease(s). For those hotels where it is the manager,
    Marriott International or a subsidiary has a noneconomic membership
    interest in the lessee entitling it to certain voting rights but no
    economic rights. The operating agreements for such lessees provide that
    the Crestline member of the lessee has full control over the management
    of the business of the lessee, except with respect to specific decisions
    for which the consent of both members is required. Upon any termination
    of the applicable management agreement, these special voting rights of
    Marriott International or its subsidiary will cease.

                                       60


  . Lease Terms. Each lease has a fixed term ranging generally from seven to
    ten years (depending upon the lease), subject to earlier termination upon
    the occurrence of specified contingencies described in the lease.
    Effective November 15, 1999, we amended substantially all of our leases
    with Crestline 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, to be determined either by agreement between us and Crestline or
    through arbitration at the time the renewal option is exercised.
    Crestline is under no obligation to exercise these renewal options, and
    we have the right to terminate the renewal options during time periods
    specified in the amendments. In addition, the amendments provide that the
    fair rental value payable by us to Crestline in connection with the
    purchase of a lease as described above does not include any amounts
    relating to any renewal period. Therefore, the fair rental value of a
    lease after expiration of the initial term for such lease would be zero.

  . Termination of the Leases upon Changes in Tax Laws. In the event that
    changes in the federal income tax laws such as those included in the REIT
    Modernization Act allow the lessors, or subsidiaries or affiliates of the
    lessors, to directly operate the hotels without jeopardizing Host REIT's
    status as a REIT, the lessors have the right to terminate all, but not
    less than all, of the leases (excluding leases of hotels that must still
    be leased following the tax law change) in return for paying the lessees
    the fair market value of the remaining terms of the leases. We are
    currently engaged in discussions with Crestline regarding a transaction
    in which a taxable REIT subsidiary owned by us would acquire all or
    substantially all of the leases that Crestline owns for our hotels. We
    have not reached an agreement with Crestline with respect to this
    acquisition and there can be no assurance that we will be able to reach
    an agreement or that an acquisition would be completed.

  . Minimum Rent; Percentage Rent. Each lease requires the lessee to pay
    minimum rent in a fixed dollar amount per annum specified in each lease
    plus, to the extent it exceeds minimum rent, percentage rent based upon
    specified percentages of aggregate sales from the applicable hotel,
    including room sales, food and beverage sales and other income in excess
    of specified thresholds. The amount of minimum rent and the percentage
    rent thresholds are to be adjusted each year. The annual adjustment with
    respect to minimum rent equals a percentage of any increase in the
    Consumer Price Index during the previous twelve months. Neither minimum
    rent nor percentage rent thresholds will be decreased because of the
    annual adjustment.

  . Lessee Expenses. Each lessee is responsible for paying all of the
    expenses of operating the applicable hotel(s), including all personnel
    costs, utility costs and general repair and maintenance of the hotel(s).
    The lessee also is responsible for all fees payable to the applicable
    manager, including base and incentive management fees, chain services
    payments and franchise or system fees, with respect to periods covered by
    the term of the lease. The lessee is not obligated to bear the cost of
    any capital improvements or capital repairs to the hotels or the other
    expenses borne by the lessor, as described below.

  . Lessor Expenses. The lessor is responsible for the following expenses:
    real estate taxes, personal property taxes, casualty insurance on the
    structures, ground lease rent payments, required expenditures for FF&E
    and capital expenditures. The consent of the lessor is required for any
    capital expenditures or a change in the amount of the FF&E reserve
    payment.

  . Crestline Guarantee. Crestline and some of its subsidiaries have entered
    into a limited guarantee of the lease and management agreement
    obligations of each lessee. For each of four identified "pools" of
    hotels, the cumulative limit of the guarantee at any time is 10% of the
    aggregate rents under all leases in such pool paid with respect to the
    preceding thirteen full accounting periods (with an annualized amount
    based upon the minimum rent for those leases that have not been in effect
    for thirteen full accounting periods). In the event of a payment default
    under any lease or failure of Crestline to maintain specified minimum net
    worth or debt service coverage ratios, the obligations under the
    guarantees of leases in each pool are secured by excess cash flow of each
    lessee in such pool. Such excess cash flow will be collected, held in a
    cash collateral account, and disbursed in accordance with agreed cash
    management procedures.

                                       61


  . Working Capital. Each lessor sold the existing working capital (including
    Inventory and Fixed Asset Supplies (as defined in the Uniform System of
    Accounts for Hotels) and receivables due from the manager, net of
    accounts payable and accrued expenses) to the applicable lessee upon the
    commencement of the lease at a price equal to the fair market value of
    such assets. The purchase price was represented by a note evidencing a
    loan that bears interest at a rate per year equal to the "long-term
    applicable federal rate" in effect on the commencement of the lease.
    Interest owed on the working capital loan is due simultaneously with each
    periodic rent payment and the amount of each payment of interest will be
    credited against such rent payment. The principal amount of the working
    capital loan will be payable upon termination of the lease.

  . Termination of Leases upon Disposition of Full-Service Hotels. In the
    event the applicable lessor enters into an agreement to sell or otherwise
    transfer any full-service hotel free and clear of the applicable lease,
    the lessor must pay the lessee a termination fee equal to the fair market
    value of the lessee's leasehold interest in the remaining term of the
    lease. Alternatively, the lessor would be entitled to substitute a
    comparable hotel or hotels for any hotel that is sold or sell the hotel
    subject to the lease subject to the lessee's reasonable approval. In
    addition, the lessors collectively and the lessees collectively each have
    the right to terminate up to twelve leases without being required to pay
    any fee or other compensation as a result of such termination, but the
    lessors are permitted to exercise such right only in connection with
    sales of hotels to an unrelated third party or the transfer of a hotel to
    a joint venture in which we do not have a two-thirds or greater interest.

  . Assignment of Lease. A lessee is permitted to sublet all or part of the
    hotel or assign its interest under its lease, without the consent of the
    lessor, to any wholly owned and controlled single purpose subsidiary of
    Crestline, provided that Crestline continues to meet the minimum net
    worth test and all other requirements of the lease. Transfers to other
    parties are permitted if approved by the lessor.

  . Subordination to Qualifying Mortgage Debt. The rights of each lessee are
    expressly subordinate to qualifying mortgage debt and any refinancing
    thereof.

  . Personal Property Limitation. If a lessor reasonably anticipates that the
    average tax basis of the items of the lessor's FF&E and other personal
    property that are leased to the applicable lessee will exceed 15% of the
    aggregate average tax basis of the real and personal property subject to
    the applicable lease the lessor would acquire any replacement FF&E that
    would cause the applicable limits to be exceeded, and immediately
    thereafter the lessee would be obligated either to acquire such excess
    FF&E from the lessor or to cause a third party to purchase such FF&E. The
    annual rent under the applicable lease would then be reduced in
    accordance with a formula based on market leasing rates for the excess
    FF&E. Beginning January 1, 2001, the average aggregate fair market values
    of both real and personal property will be used for purposes of
    determining rents from real property as opposed to the aggregate tax
    bases.

  . Change in Manager. A lessee is permitted to change the manager or the
    brand affiliation of a hotel only with the approval of the applicable
    lessor, which approval may not be unreasonably withheld.

The Management Agreements

   All of our hotels are subject to management agreements for the operation of
the properties. The original terms of the management agreements are generally
15 to 20 years in length with multiple optional renewal terms. The following is
a brief summary of the general terms of the management agreements, a form of
which has been filed with the Securities and Exchange Commission. The lessees
lease the hotels from us or our subsidiaries. Upon leasing the hotels, the
lessees assume substantially all of the obligations of such subsidiaries under
the management agreements between those entities and the subsidiaries of the
companies that currently manage the hotels. As a result of their assumptions of
obligations under the management agreements, the lessees have substantially all
of the rights and obligations of the "owners" of the hotels under the
management agreements for the period during which the leases are in effect
(including the obligation to pay the management

                                       62


and other fees thereunder) and hold us harmless with respect thereto. Our
subsidiaries remain liable for all obligations under the management agreements.
If the purchase of the Crestline entities that own the leasehold interests with
respect to 117 of our full-service hotels is consummated, Crestline will no
longer be obligated under the management agreements.

  . General. Under each management agreement related to a Marriott
    International-managed hotel, the manager provides complete management
    services to the applicable lessees in connection with its management of
    such lessee's hotels.

  . Operational services. The managers have been delegated sole
    responsibility and exclusive authority for all activities necessary for
    the day-to-day operation of the hotels, as agents, including
    establishment of all room rates, the processing of reservations,
    procurement of inventories, supplies and services, periodic inspection
    and consultation visits to the hotels by the managers' technical and
    operational experts and promotion and publicity of the hotels. The
    manager receives compensation from the lessee in the form of a base
    management fee and an incentive management fee, which are normally
    calculated as percentages of gross revenues and operating profits,
    respectively.

  . Executive supervision and management services. The managers provide all
    managerial and other employees for the hotels; review the operation and
    maintenance of the hotels; prepare reports, budgets and projections;
    provide other administrative and accounting support services, such as
    planning and policy services, financial planning, divisional financial
    services, risk planning services, product planning and development,
    employee planning, corporate executive management, legislative and
    governmental representation and certain in-house legal services; and
    protect tradenames and service marks. The managers also provide national
    reservations systems.

  . Chain services. Generally, the management agreements require the manager
    to furnish chain services that are furnished generally on a central or
    regional basis. Such services include: (1) the development and operation
    of computer systems and reservation services, (2) regional management and
    administrative services, regional marketing and sales services, regional
    training services, manpower development and relocation costs of regional
    personnel and (3) such additional central or regional services as may
    from time to time be more efficiently performed on a regional or group
    level. Costs and expenses incurred in providing such services are
    allocated among all hotels managed by the manager or its affiliates and
    each applicable lessee is required to reimburse the manager for its
    allocable share of such costs and expenses.

  . Working capital and fixed asset supplies. The lessee is required to
    maintain working capital for each hotel and fund the cost of fixed asset
    supplies, which principally consist of linen and similar items. The
    applicable lessee also is responsible for providing funds to meet the
    cash needs for the operations of the hotels if at any time the funds
    available from operations are insufficient to meet the financial
    requirements of the hotels.

  . Use of affiliates. The manager employs the services of its affiliates to
    provide certain services under the management agreements. Certain of the
    management agreements provide that the terms of any such employment must
    be no less favorable to the applicable lessee, in the reasonable judgment
    of the manager, than those that would be available from the manager.

   Furniture, fixtures, furnishings and equipment replacements. The management
agreements generally provide that once each year the manager will prepare a
list of FF&E to be acquired and certain routine repairs that are normally
capitalized to be performed in the next year and an estimate of the funds
necessary therefor. Under the terms of the leases, the lessor is required to
provide to the applicable lessee all necessary FF&E for the operation of the
hotels (including funding any required FF&E replacements). For purposes of
funding the FF&E replacements, a specified percentage (generally 5%) of the
gross revenues of the hotel is deposited by the manager into a book entry
account. These amounts are treated under the leases as paid by the lessees to
the lessor and will be credited against their rental obligations.

                                       63


   Under each lease, the lessor is responsible for the costs of FF&E
replacements and for decisions with respect thereto (subject to its obligations
to the lessee under the lease).

  . Building alterations, improvements and renewals. The management
    agreements require the manager to prepare an annual estimate of the
    expenditures necessary for major repairs, alterations, improvements,
    renewals and replacements to the structural, mechanical, electrical,
    heating, ventilating, air conditioning, plumbing and vertical
    transportation elements of each hotel. Such estimate must be submitted to
    the lessor and the lessee for their approval. In addition to the
    foregoing, the management agreements generally provide that the manager
    may propose such changes, alterations and improvements to the hotel as
    are required, in the manager's reasonable judgment, to keep the hotel in
    a competitive, efficient and economical operating condition or in
    accordance with Marriott standards. The cost of the foregoing is paid
    from the FF&E reserve account; to the extent that there are insufficient
    funds in such account, we are required to pay any shortfall.

  . Service marks. During the term of the management agreements, the service
    mark, such as "Marriott" and other symbols, logos and service marks
    currently used by the manager and its affiliates, may be used in the
    operation of the hotels. Marriott International (or its applicable
    affiliates), Hyatt, Swissotel, and Four Seasons intend to retain their
    legal ownership of these marks. Any right to use the service marks, logo
    and symbols and related trademarks at a hotel will terminate with respect
    to that hotel upon termination of the management agreement with respect
    to such hotel.

  . Termination fee. Certain of the management agreements provide that if the
    management agreement is terminated prior to its full term due to
    casualty, condemnation or the sale of the hotel, the manager would
    receive a termination fee as specified in the specific management
    agreement. Under the leases, the responsibility for the payment of any
    such termination fee as between the lessee and the lessor depends upon
    the cause for such termination.

  . Termination for failure to perform. Most of the management agreements may
    be terminated based upon a failure to meet certain financial performance
    criteria, subject to the manager's right to prevent such termination by
    making specified payments to the lessee based upon the shortfall in such
    criteria.

   Assignment of management agreements. The management agreements applicable to
each hotel have been assigned to the applicable lessee for the term of the
lease of such hotel. The lessee is obligated to perform all of the obligations
of the lessor under the management agreement during the term of its lease,
other than specified retained obligations including, without limitation,
payment of real property taxes, property casualty insurance and ground rent,
and maintaining a reserve fund for FF&E replacements and capital expenditures,
for which the lessor retains responsibility. Although the lessee has assumed
obligations of the lessor under the management agreement, the lessor is not
released from its obligations and, if the lessee fails to perform any
obligations, the manager will be entitled to seek performance by or damages
from the lessor. If the lease is terminated for any reason, any new or
successor lessee must meet certain requirements for an approved lessee or
otherwise be acceptable to Marriott International.

Non-competition agreements

   Pursuant to a non-competition agreement entered into in connection with the
leases, Crestline has agreed, among other things, that until the earlier of
December 31, 2008 and the date on which it is no longer a lessee for more than
25% of the number of the hotels owned by us on December 29, 1998, it will not
(1) own, operate or otherwise control (as owner or franchisor) any full-service
hotel brand or franchise, or purchase, finance or otherwise invest in full-
service hotels, or act as an agent or consultant with respect to any of the
foregoing activities, or lease or manage full-service hotels (other than hotels
owned by us) if its economic return therefrom would be more similar to returns
derived from ownership interests in such hotels except for acquisitions of
property used in hotels as to which a subsidiary of Crestline is the lessee,
investments in full-service hotels which represent an immaterial portion of a
merger or similar transaction or a minimal portfolio investment in another
entity, limited investments (whether debt or equity) in full-service hotels as
to which a subsidiary of Crestline is the lessee or activities undertaken with
respect to its business of providing asset

                                       64


management services to hotel owners, or (2) without our consent, manage any of
the hotels owned by us, other than to provide asset management services.

   We have agreed with Crestline, among other things, that, (1) until December
31, 2003, we will not purchase, finance or otherwise invest in senior living
communities, or act as an agent or consultant with respect to any of the
foregoing activities (except for acquisitions of communities which represent an
immaterial portion of a merger or similar transaction or for minimal portfolio
investments in other entities) and (2) until the earlier of December 31, 2008
and the date on which subsidiaries of Crestline are no longer lessees for more
than 25% of the number of the hotels owned by Host Marriott on December 29,
1998, we will not lease, as tenant or subtenant, limited- or full-service hotel
properties from any "real estate investment trust" within the meaning of
Sections 856 through 859 of the Internal Revenue Code where it will not be the
operator or manager of the hotel (other than through a contractual arrangement
with a non-affiliated party) and where its rental payments qualify as "rents
from real property" within the meaning of Section 856(d) of the Internal
Revenue Code, or purchase, finance or otherwise invest in persons or entities
which engage in any of the foregoing activities, or act as an agent or
consultant with respect to any of the foregoing activities (except for
acquisitions of entities which engage in any of the foregoing activities where
the prohibited activities represent an immaterial portion of a merger or
similar transaction, or minimal portfolio investments in other entities which
engage in any of the foregoing activities, or certain leasing arrangements
existing on December 29, 1998 or entered into in the future between us and
certain other related parties, or by our management of any hotels in which it
has an equity interest). In addition, both Crestline and we have agreed not to
hire or attempt to hire any of the other company's senior employees at any time
prior to December 31, 2000. In the event we were to consummate a transaction
with Crestline for the purchase of all or substantially all of the leases for
our hotels held by Crestline subsidiaries, as more fully described above under
"--The REIT Conversion," the non-competition agreement would likely be affected
as part of the negotiation.

   We entered into a noncompetition agreement with Marriott International that
defines our rights and obligations with respect to certain businesses operated
by each of us. Crestline became an additional party to this agreement at the
time its shares were distributed to our stockholders. At that time, we also
entered into an agreement with Crestline under which we agreed with Crestline
about the allocation between us of the rights to engage in certain activities
permitted under the agreement with Marriott International. In general, under
this agreement, we and our subsidiaries are prohibited from entering into or
acquiring any business that competes with the hotel management business (i.e.,
managing, operating or franchising full-service or limited-service hotels) as
conducted by Marriott International. This non-competition agreement with
Marriott International terminates on October 8, 2000, and thereafter will no
longer restrict business in which we may engage.

Legal Proceedings

   Marriott Hotel Properties II Limited Partnership (MHP). Limited partners of
MHP II have filed putative class action lawsuits in Palm Beach County Circuit
Court on May 10, 1996, Leonard Rosenblum, as Trustee of the Sylvia Bernice
Rosenblum Trust, et. al. v. Marriott MHP Two Corporation, et. al., Case No. CL-
96-4087-AD, and, in the Delaware Court of Chancery on April 24, 1996, Cary W.
Salter, Jr., et. al. v. MHP II Acquisition Corp., et. al., respectively,
against Host REIT and certain of its affiliates alleging that the defendants
violated their fiduciary duties and engaged in fraud and coercion in connection
with the tender offer for MHP II units and with our acquisition of MHP II in
connection with the REIT conversion. The plaintiffs in these actions are
seeking unspecified damages.

   In the Florida case, the defendants removed the case to the United States
District Court for the Southern District of Florida and, after hearings on
various procedural motions, the District Court remanded the case to state court
on July 25, 1998. In light of the court's decision in the Delaware case,
detailed below, the defendants in the Florida action filed a supplemental
memorandum in support of their motions to dismiss, and attached a copy of the
Delaware opinion to the memorandum. The Florida court has not yet ruled on the
motions.

   In the Delaware case, the Delaware Court of Chancery initially granted the
plaintiffs' motion to voluntarily dismiss the case with the proviso that the
plaintiffs could refile in the aforementioned action in

                                       65


federal court in Florida. After the District Court's remand of the Florida
action back to Florida state court, two of the three original Delaware
plaintiffs asked the Court of Chancery to reconsider its order granting their
voluntary dismissal. The Court of Chancery refused to allow the plaintiffs to
join the Florida action and, instead, reinstated the Delaware case, now styled
In Re Marriott Hotel Properties II Limited Partnership Unitholders Litigation,
Consolidated Civil Action No. 14961. On January 29, 1999, Cary W. Salter, one
of the original plaintiffs, alone filed an Amended Consolidated Class Action
Complaint in the Delaware action, adding the allegations that related to our
acquisition of MHP II in connection with the REIT conversion. On January 24,
2000, the Delaware Court of Chancery issued a memorandum opinion in which the
court dismissed all but one of the plaintiff's claims, which remaining claim
concerns the adequacy of disclosure during the initial tender offer. This claim
remains pending.

   A subsequent lawsuit, Accelerated High Yield Growth Fund, Ltd., et al. v.
HMC Hotels Properties II Limited Partnership, et. al., C.A. No. 18254NC, was
filed on August 23, 2000 in the Delaware Court of Chancery by the MacKenzie
Patterson group of funds, one of the three original Delaware plaintiffs,
against Host REIT and certain of its affiliates alleging breach of contract,
fraud and coercion in connection with the acquisition of MHP II during the REIT
conversion. The plaintiffs allege that our acquisition of MHP II by merger in
connection with the REIT conversion violated the partnership agreement and that
our subsidiary acting as the general partner of MHP II breached its fiduciary
duties by allowing it to occur. The plaintiffs in this action are seeking
unspecified damages.

   Marriott Suites Limited Partnership (MSLP). On December 10, 1999, KSK Hawaii
Co., Ltd. ("KSK"), a limited partner in MSLP, filed a lawsuit, KSK Hawaii Co.,
Ltd. v. Marriott SBM One Corporation, et al., Civil Action No. 17657-NC, in the
Delaware Court of Chancery. This lawsuit relates to a 1996 recapitalization of
MSLP by our subsidiary, the general partner of MSLP, and the merger of MSLP
into Host REIT in 1998. KSK claims that it was coerced into selling 19 of its
20 partnership units in the 1996 recapitalization and alleges that the 1998
merger was a "freeze-out' merger that was designed solely to eliminate KSK's
interest in MSLP. KSK maintains that it lost slightly more than $15 million as
a result of its investment in MSLP. The defendants have filed their answer, and
this case is in the early stages of discovery.

   Mutual Benefit Chicago Marriott Suite Hotel Partners, L.P. ("O'Hare
Suites"). On October 5, 2000, Joseph S. Roth and Robert M. Niedelman, limited
partners in O'Hare Suites, filed a putative class action lawsuit, Joseph S.
Roth, et al., v. MOHS Corporation, et al., Case No. 00CH14500, in the Circuit
Court of Cook County, Illinois, Chancery Division, against Host REIT, Host LP,
Marriott International, and MOHS Corporation, a subsidiary of Host LP and a
former general partner of O'Hare Suites. The plaintiffs allege that an improper
calculation of the hotel manager's incentive management fees resulted in
inappropriate payments in 1997 and 1998, and, consequently, in an inadequate
appraised value for their limited partner units in connection with the
acquisition of O'Hare Suites during the REIT conversion. The plaintiffs are
seeking damages of approximately $13 million.

Certain Policies

   The following is a discussion of our and Host REIT's policies with respect
to distributions, investments, financing, lending, conflicts of interest and
certain other activities. Our policies with respect to these activities are
determined by the Board of Directors of Host REIT and may be amended or revised
from time to time at the discretion of the Board of Directors, except that
changes in certain policies with respect to conflicts of interest must be
consistent with legal and contractual requirements.

  Investment Policies

   Investments in Real Estate or Interests in Real Estate. Host REIT is
required to conduct all of its investment activities through us. Our investment
objectives are to

  .  achieve long-term sustainable growth in "Funds from Operations" (i.e.,
     net income computed in accordance with generally accepted accounting
     principles, excluding gains or losses from debt

                                       66


     restructuring and sales of properties, plus real estate related
     depreciation and amortization, and after adjustments for unconsolidated
     partnerships and joint ventures) per OP Unit and cash flow;

  .  increase asset values by selectively improving and expanding our hotels;

  .  acquire additional existing and newly developed upscale and luxury full
     service hotels in targeted markets (primarily focusing on downtown
     hotels in core business districts in major metropolitan markets and
     select airport and resort/convention locations);

   .  develop and construct upscale and luxury full service hotels; and

  .  opportunistically pursue other real estate investments.

   Our business primarily focuses on upscale and luxury full service hotels.
Where appropriate, and subject to REIT qualification rules and limitations
contained in our partnership agreement, we may sell certain of our hotels.

   We also may participate with other entities in property ownership through
joint ventures or other types of co-ownership. Equity investments may be
subject to existing mortgage financing and other indebtedness or such
financing or indebtedness may be incurred in connection with acquiring
investments. Any such financing or indebtedness will have priority over our
equity interest in such property.

   Investments in Real Estate Mortgages. While we will emphasize equity real
estate investments, we may, in our discretion, invest in mortgages and other
similar interests. We do not intend to invest to a significant extent in
mortgages or deeds of trust, but may acquire mortgages as a strategy for
acquiring ownership of a property or the economic equivalent thereof, subject
to the investment restrictions applicable to REITs. In addition, we may invest
in mortgage-related securities and/or may seek to issue securities
representing interests in such mortgage-related securities as a method of
raising additional funds.

   Securities of or Interests in Persons Primarily Engaged in Real Estate
Activities and Other Issuers.  Subject to the percentage ownership limitations
and gross and asset income tests necessary for REIT qualification, we also may
invest in securities of other entities engaged in real estate activities or
invest in securities of other issuers, including for the purpose of exercising
control over such entities. We may acquire all or substantially all of the
securities or assets of other REITs or similar entities where such investments
would be consistent with our investment policies. No such investments will be
made, however, unless the Board of Directors determines that the proposed
investment would not cause either Host REIT or us to be an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.

  Financing Policies

   Neither our nor Host REIT's organizational documents contain restrictions
on incurring debt. The indenture described in this prospectus under
"Description of Notes" and our existing credit facility impose limitations on
the incurrence of indebtedness. The indenture limits the amount of debt that
we may incur if, immediately after giving effect to the incurrence of such
additional debt, the aggregate principal amount of all of our and our
subsidiaries on a consolidated basis is greater than 65% of our undepreciated
total assets on the date of such incurrence. We may, from time to time, reduce
our outstanding indebtedness by repurchasing a portion of such outstanding
indebtedness, subject to certain restrictions contained in our partnership
agreement and the terms of our outstanding indebtedness. We will from time to
time reevaluate our borrowing policies in light of then current economic
conditions, relative costs of debt and equity capital, market conditions,
market values of properties, growth and acquisition opportunities and other
factors. Consequently, our financing policy is subject to modification and
change. We may waive or modify our borrowing policy without notice to, or vote
of, the holders of any of our securities or any securities of Host REIT.

   To the extent that the Host REIT Board of Directors determines to seek
additional capital, we or Host REIT may raise such capital through equity
offerings, debt financing or retention of cash flow or a combination of these
methods. As long as we are in existence, the net proceeds of all equity
capital raised by Host REIT will be contributed to us in exchange for OP
Units, which will dilute the ownership interest of our limited partners.

                                      67


   In the future, we may seek to extend, expand, reduce or renew our existing
credit facility, or obtain new credit facilities or lines of credit, subject to
our general policy relating to the ratio of debt-to-total market
capitalization, for the purpose of making acquisitions or capital improvements
or providing working capital or meeting the taxable income distribution
requirements for REITs under the Internal Revenue Code. In the future, we and
Host REIT also may determine to issue securities senior to the common shares or
OP Units, including preferred shares and debt securities (either of which may
be convertible into common shares or OP Units or may be accompanied by warrants
to purchase common shares or OP Units).

   We have not established any limit on the number or amount of mortgages that
may be placed on any single hotel or on its portfolio as a whole, although our
objective is to reduce its reliance on secured indebtedness.

  Lending Policies

   We may consider offering purchase money financing in connection with the
sale of a hotel where the provision of such financing will increase the value
we receive for the hotel sold.

  Policies With Respect to Other Activities

   We may, but do not presently intend to, make investments other than as
previously described. Host REIT will make investments only through us. We and
Host REIT have authority to offer our securities and to repurchase or otherwise
reacquire our securities and may engage in such activities in the future. We
and Host REIT also may make loans to joint ventures in which we may participate
in the future to meet working capital needs. We do not, and Host REIT does not,
intend to engage in trading, underwriting, agency distribution or sale of
securities of other issuers. Host REIT's policies with respect to such
activities may be reviewed and modified from time to time by Host REIT's Board
of Directors without notice to, or the vote of, the holders of any securities
of Host REIT or us.

                                       68


                                   MANAGEMENT

Executive Officers and Directors of Host REIT

   The following table sets forth certain information with respect to persons
who are the directors and executive officers of Host REIT, our sole general
partner.



    Name                  Age               Position With Host REIT
                        
Richard E. Marriott(1)..   61 Chairman of the Board of Directors
J.W. Marriott, Jr.(1)...   68 Director
R. Theodore Ammon.......   51 Director
Robert M. Baylis........   62 Director
Terence C. Golden.......   56 Director
Ann Dore McLaughlin.....   58 Director
John G. Schreiber.......   53 Director
Harry L. Vincent, Jr. ..   80 Director
Christopher J.
 Nassetta...............   38 Director, President and Chief Executive Officer
Robert E. Parsons,
 Jr. ...................   45 Executive Vice President and Chief Financial Officer
James F. Risoleo........   45 Executive Vice President
W. Edward Walter........   45 Executive Vice President and Treasurer
Christopher G.
 Townsend...............   53 Senior Vice President, General Counsel and Secretary
Donald D. Olinger.......   41 Senior Vice President and Controller

- ---------------------
(1) Richard E. Marriott and J.W. Marriott, Jr. are brothers.

   The following is a biographical summary of the experience of the persons who
are the directors and executive officers of Host REIT.

   Richard E. Marriott. Mr. Richard E. Marriott has been a Director of Host
Marriott Corporation, now Host REIT, since 1979 and is a Director of Marriott
International, Inc. and the Polynesian Cultural Center, and he is Chairman of
the Board of First Media Corporation. Mr. Marriott also serves on the Federal
City Counsel, the Board of Associates for Gallaudet University and the National
Advisory Council of Brigham Young University. He is a past President of the
National Restaurant Association. In addition, Mr. Marriott is the President and
a Trustee of the Marriott Foundation for People with Disabilities. Mr.
Marriott's term as a Director of Host REIT will expire at the 2001 annual
meeting of shareholders. Mr. Marriott joined Host Marriott Corporation in 1965
and has served in various executive capacities. In 1984, he was elected
Executive Vice President, and in 1986, he was elected Vice Chairman of the
Board of Directors. In 1993, Mr. Marriott was elected Chairman of the Board.

   J.W. Marriott, Jr. Mr. J.W. Marriott, Jr. has been a Director of Host
Marriott Corporation, now Host REIT, since 1964 and is Chairman of the Board
and Chief Executive Officer of Marriott International, Inc., and a Director of
General Motors Corporation and the Naval Academy Endowment Trust. He also
serves on the Boards of Trustees of Georgetown University and on the Board of
Trustees of the National Geographic Society. He serves on the Executive
Committee of the World Travel & Tourism Council and is a member of the Business
Council. Mr. Marriott's term as a Director of Host REIT will expire at the 2002
annual meeting of shareholders.

   R. Theodore Ammon. Mr. Ammon has been a Director of Host Marriott
Corporation, now Host REIT, since 1992 and is a private investor and Founder
and Chairman of Vertis, Inc. He was formerly a General Partner of Kohlberg
Kravis Roberts & Company (a New York and San Francisco-based investment firm)
from 1990 to 1992, and was an executive of such firm prior to 1990. Mr. Ammon
is also the Chairman of the Board of 24/7 Media, Inc. and a Director of CAIS
Internet, Inc., and he serves on numerous boards of privately held companies.
In addition, he is involved in a number of not-for-profit organizations,
including as a member of the Board of Directors of The Municipal Art Society of
New York, The New York YMCA, Jazz @ Lincoln Center and on the Board of Trustees
of Bucknell University. Mr. Ammon's term as a Director of Host REIT will expire
at the 2001 annual meeting of shareholders.

                                       69


   Robert M. Baylis. Mr. Baylis has been a Director of Host Marriott
Corporation, now Host REIT, since 1996 and is a Director of The International
Forum, an executive education program of the Wharton School of the University
of Pennsylvania. He was formerly Vice Chairman of CS First Boston. Mr. Baylis
also serves as a Director of New York Life Insurance Company, Covance, Inc. and
Gildan Activewear, Inc. In addition, he is an overseer of the University of
Pennsylvania Museum of Archeology and Anthropology. Mr. Baylis's term as a
Director of Host REIT will expire at the 2003 annual meeting of shareholders.

   Terence C. Golden. Mr. Golden has been a Director of Host Marriott
Corporation, now Host REIT, since 1995 and served as President and Chief
Executive Officer of Host REIT from 1995 until his retirement in May 2000. He
also serves as Chairman of Bailey Realty Corporation and Bailey Capital
Corporation and various affiliated companies. In addition, Mr. Golden is a
Director of American Classic Voyages Co., Cousins Properties, Inc., Potomac
Electric Power Company, The Morris and Gwendolyn Cafritz Foundation and the
District of Columbia Early Childhood Collaborative. He is also a member of the
Executive Committee of the Federal City Council. Prior to coming to Host REIT,
Mr. Golden had served as chief financial officer of The Oliver Carr Company and
was a Founder and National Managing Partner of Trammel Crow Residential
Companies. He has also served as Administrator of the U.S. General Services
Administration and as Assistant Secretary of the U.S. Department of the
Treasury. Mr. Golden's term as a Director of Host REIT will expire at the 2003
annual meeting of shareholders.

   Ann Dore McLaughlin. Ms. McLaughlin has been a Director of Host Marriott
Corporation, now Host REIT, since 1993 and currently is Senior Advisor to
Benedetto, Gartland & Company, Inc., an investment banking firm in New York.
She formerly served as President of the Federal City Council from 1990 until
1995 and as Chairman of The Aspen Institute from 1996 until August 2000. Ms.
McLaughlin has served with distinction in several U.S. Administrations in such
positions as Secretary of Labor and Under Secretary of the Department of the
Interior. She also serves as a Director of AMR Corporation, Fannie Mae, Kellogg
Company, Microsoft Corporation, Nordstrom, Inc., Donna Karan International,
Inc., Vulcan Materials Company and Harman International Industries, Inc. Ms.
McLaughlin's term as a Director of Host REIT will expire at the 2003 annual
meeting of shareholders.

   John G. Schreiber. Mr. Schreiber has been a Director of Host Marriott
Corporation, now Host REIT, since 1998 and is President of Centaur Capital
Partners, Inc. and a senior advisor and partner of Blackstone Real Estate
Advisors, L.P., an affiliate of The Blackstone Group L.P. Mr. Schreiber serves
as a Trustee of AMLI Residential Properties Trust and as a Director of Urban
Shopping Centers, Inc., JMB Realty Corporation, The Brickman Group, Ltd. and a
number of mutual funds advised by T. Rowe Price Associates, Inc. Prior to his
retirement as an officer of JMB Realty Corporation in 1990, Mr. Schreiber was
Chairman and CEO of JMB/Urban Development Company and an Executive Vice
President of JMB Realty Corporation. Mr. Schreiber's term as a Director of Host
REIT will expire at the 2002 annual meeting of shareholders.

   Harry L. Vincent, Jr. Mr. Vincent has been a Director of Host Marriott
Corporation, now Host REIT, since 1969 and is a retired Vice Chairman of Booz-
Allen & Hamilton, Inc. He also served as a Director of Signet Banking
Corporation from 1973 until 1989. Mr. Vincent's term as a Director of Host REIT
will expire at the 2002 annual meeting of shareholders.

   Christopher J. Nassetta. Mr. Nassetta has been a Director of Host Marriott
Corporation, now Host REIT, since 1999 and became the President and Chief
Executive Officer of Host REIT in May 2000. He also serves on the Board of
Trustees of Prime Group Realty Trust and as a member of the McIntire School of
Commerce Advisory Board for the University of Virginia. Mr. Nassetta's term as
a Director of Host REIT will expire at the 2001 annual meeting of shareholders.
From 1995 until May 2000, he served as Executive Vice President and was elected
Chief Operating Officer of Host Marriott Corporation in 1997. Prior to joining
Host, Mr. Nassetta served as President of Bailey Realty Corporation from 1991
until 1995. He had previously served as Chief Development Officer and in
various other positions with The Oliver Carr Company from 1984 through 1991.

                                       70


   Robert E. Parsons, Jr. Mr. Parsons joined the Corporate Financial Planning
staff of Host Marriott Corporation, now Host REIT, in 1981 and was made
Assistant Treasurer in 1988. In 1993, Mr. Parsons was elected Senior Vice
President and Treasurer of Host Marriott Corporation, and in 1995, he was
elected Executive Vice President and Chief Financial Officer of Host Marriott
Corporation. Mr. Parsons is now Executive Vice President and Chief Financial
Officer of Host REIT.

   James F. Risoleo. Mr. Risoleo joined Host Marriott Corporation, now Host
REIT, in 1996 as Senior Vice President for Acquisitions, and he was elected
Executive Vice President in May 2000. He is responsible for Host Marriott's
development, acquisition and disposition activities. Prior to joining Host
Marriott, Mr. Risoleo served as Vice President of Development for Interstate
Hotels Corporation, then the nation's largest independent hotel management
company. Before joining Interstate, he was Senior Vice President at
Westinghouse Financial Services.

   W. Edward Walter. Mr. Walter joined Host Marriott Corporation, now Host
REIT, in 1996 as Senior Vice President for Acquisitions, and he was elected
Treasurer in 1998 and Executive Vice President in May 2000. He is responsible
for all of Host's debt and equity financing activities as well as its asset
management efforts. Prior to joining Host Marriott, Mr. Walter was a partner
with Trammell Crow Residential Company and the President of Bailey Capital
Corporation, a real estate firm that focused on tax-exempt real estate
investments. Mr. Walter is a member of the District of Columbia Bar
Association.

   Christopher G. Townsend. Mr. Townsend joined the Law Department of Host
Marriott Corporation, now Host REIT, in 1982 as a Senior Attorney. In 1984, Mr.
Townsend was made Assistant Secretary of Host Marriott Corporation, and in
1986, he was made Assistant General Counsel. In 1993, Mr. Townsend was elected
Senior Vice President, Corporate Secretary and Deputy General Counsel. In
January 1997, he was elected General Counsel. Mr. Townsend is now Senior Vice
President, General Counsel and Secretary of Host REIT.

   Donald D. Olinger. Mr. Olinger joined Host Marriott Corporation, now Host
REIT, in 1993 as Director--Corporate Accounting. Later in 1993, Mr. Olinger was
promoted to Senior Director and Assistant Controller. He was promoted to Vice
President--Corporate Accounting in 1995. In 1996, he was elected Senior Vice
President and Corporate Controller. Mr. Olinger is now Senior Vice President
and Corporate Controller of Host REIT. Prior to joining Host Marriott
Corporation, Mr. Olinger was with the firm of Deloitte & Touche.

Committees of the Board of Directors

   The Board of Directors of Host REIT, our general partner, has established
the following committees:

   Audit Committee. The Audit Committee is composed of five Directors who are
not our employees or employees of Host REIT, namely, R. Theodore Ammon (Chair),
Harry L. Vincent, Jr., Ann Dore McLaughlin, John G. Schreiber and Robert M.
Baylis. The Audit Committee meets at least four times a year with the
independent auditors, management representatives and internal auditors;
recommends to the Board of Directors appointment of independent auditors;
approves the scope of audits and other services to be performed by the
independent and internal auditors; considers whether the performance of any
professional service by the auditors other than services provided in connection
with the audit function could impair the independence of the outside auditors;
reviews the results of internal and external audits, the accounting principles
applied in financial reporting, and financial and operational controls; and
reviews interim financial statements each quarter before the company files its
Form 10-Q with the Securities and Exchange Commission.

   Compensation Policy Committee. The Compensation Policy Committee is composed
of six Directors who are not our employees or employees of Host REIT, namely,
John G. Schreiber (Chair), R. Theodore Ammon, Robert M. Baylis, J.W. Marriott,
Jr., Ann Dore McLaughlin and Harry L. Vincent, Jr. The Compensation Policy
Committee's functions include recommendations on policies and procedures
relating to senior officers' compensation and various employee stock plans, and
approval of individual salary adjustments and stock awards in those areas.


                                       71


   Nominating and Corporate Governance Committee. The Nominating and Corporate
Governance Committee is composed of six Directors who are not our employees or
employees of Host REIT, namely, Ann Dore McLaughlin (Chair), Harry L. Vincent,
Jr., John G. Schreiber, R. Theodore Ammon, J.W. Marriott, Jr. and Robert M.
Baylis. It considers candidates for election as Directors and is responsible
for keeping abreast of and making recommendations with regard to corporate
governance in general. In addition, the Nominating and Corporate Governance
Committee fulfills an advisory function with respect to a range of matters
affecting the Board of Directors and its Committees, including the making of
recommendations with respect to qualifications of Director candidates,
compensation of Directors, the selection of committee chairs, committee
assignments and related matters affecting the functioning of the Board.

   Host REIT may from time to time form other committees as circumstances
warrant. Such committees will have authority and responsibility as delegated by
the Board of Directors.

Compensation of Directors

   Directors who are also our officers or officers of Host REIT will receive no
additional compensation for their services as Directors. Directors who are not
officers will receive an annual retainer fee of $30,000 as well as an
attendance fee of $1,250 for each shareholders' meeting, meeting of the Board
of Directors or meeting of a committee of the Board of Directors, regardless of
the number of meetings held on a given day. The chair of each committee of the
Board of Directors will receive an additional annual retainer fee of $1,000,
except for the chair of the Compensation Policy Committee, Mr. Schreiber, who
will receive an annual retainer fee of $6,000. (The higher annual retainer fee
paid to the chair of the Compensation Policy Committee relates to his
additional duties which include, among other things, the annual performance
appraisal of the chief executive officer on behalf of the Board, although the
final appraisal is determined by the Board.) Any individual Director receiving
these fees may elect to defer payment of all such fees or any portion thereof
pursuant to Host REIT's Executive Deferred Compensation Plan and/or Host REIT's
Non-Employee Directors' Deferred Stock Compensation Plan. Directors will also
be reimbursed for travel expenses and other out-of-pocket costs incurred in
attending meetings or in visiting hotels or other properties controlled by us
or by Marriott International.

   Directors who are not also our officers or officers of Host REIT receive an
annual award of deferred shares of Host REIT common stock equal in value to the
amount of the annual retainer fee paid to non-employee Directors. This annual
award of deferred shares is distributed immediately following the annual
meeting of Host REIT shareholders. In 2000, each such award was for 2,972
shares. Host REIT's Non-Employee Directors' Deferred Stock Compensation Plan
permits participants to be credited with dividend equivalents which are equal
in value to the dividends paid on Host REIT common stock. In addition, in 1997,
the following Directors of Host REIT received special one-time awards of Host
REIT common stock in the amounts indicated: Mr. Ammon, 4,000 shares; Mr.
Baylis, 7,000 shares; Ms. McLaughlin, 7,000 shares and Mr. Vincent, 7,000
shares. The special one-time awards of Host REIT common stock vest at the rate
of 10% per year of a Director's service on the Board, with credit given for
each year of service already completed, and will also become fully vested upon
the death or disability of the Directors.

                                       72


Executive Compensation

   The table below sets forth a summary of the compensation paid by Host
Marriott, now Host REIT, for the last three fiscal years to the Chief Executive
Officer and the four additional most highly compensated persons serving as
executive officers of Host Marriott at the end of Host Marriott's fiscal year
1999 (the "Named Executive Officers").



                                                                      Long-Term
                                      Annual Compensation           Compensation
                                ------------------------------- ---------------------
                                                                Restricted
                                                   Other Annual   Stock                All Other
                                                   Compensation   Awards      LTIP    Compensation
Name and Principal       Fiscal Salary(1) Bonus(2)    (3)(4)      (5)(6)   Payouts(7)     (8)
Position                  Year     ($)      ($)        ($)         ($)        ($)         ($)
- ------------------       ------ --------- -------- ------------ ---------- ---------- ------------
                                                                 
Richard E. Marriott       1999   307,008  150,434    262,548             0        0      26,111
 Chairman of the Board    1998   290,450  116,180    275,607     2,138,750        0      23,923
                          1997   271,449  108,580    212,324             0        0      22,668
Terence C. Golden         1999   749,996  849,895          0             0        0      81,952
 Former President and     1998   669,782  602,804     67,489    11,800,000        0      73,051
 Chief Executive          1997   619,045  557,141     58,783       354,693        0      66,105
 Officer(9)
Christopher J. Nassetta   1999   500,006  536,106          0             0  947,318      48,363
 President and Chief      1998   382,563  286,922          0     7,375,000        0      36,970
 Executive Officer(9)     1997   338,889  254,167          0             0        0      36,231
Robert E. Parsons, Jr.    1999   424,996  455,681          0             0  947,318      42,672
 Executive Vice
 President                1998   369,583  277,187          0     6,195,000        0      36,970
 and Chief Financial      1997   338,889  254,167          0             0        0      36,231
 Officer
Christopher G. Townsend   1999   225,000  194,295          0             0        0      24,566
 Senior Vice President    1998   215,904  118,747          0     1,696,250        0      19,683
 and General Counsel      1997   202,962  111,629          0     1,015,800        0      18,405

- --------
(1) Salary amounts include base salary earned and paid in cash during the
    fiscal year as well as the amount of base salary deferred at the election
    of the named executive officer under Host REIT's Executive Deferred
    Compensation Plan. An increase in base salary for the period November 2,
    1997 through the end of that fiscal year was paid in 1998 and reported as
    1997 earnings. The 1998 salary includes a competitive pay adjustment, paid
    in 1999 but effective as of November 2, 1998 and reported as 1998 earnings.
    The 1998 salary adjustment resulted from a compensation study conducted by
    an independent consulting firm retained by the Compensation Policy
    Committee of the Board of Directors.
(2) The bonus consists of the cash bonus earned pursuant to Host REIT's 1997
    Comprehensive Stock and Cash Incentive Plan. It was either paid subsequent
    to the end of each fiscal year or deferred under the Executive Deferred
    Compensation Plan.
(3) The amounts set forth in this column for Mr. Marriott include $110,700,
    $97,000 and $92,000 in 1999, 1998 and 1997, respectively, for the
    allocation of company personnel costs for non-company business, and
    $120,174, $133,626 and $101,535 in 1999, 1998 and 1997, respectively, for
    additional cash compensation to cover taxes payable for all other
    compensation in this column.
(4) The amounts set forth in this column for Mr. Golden represent reimbursement
    of travel expenses of Mr. Golden's spouse when she accompanied him on Host
    Marriott Corporation business trips. It also includes additional cash
    compensation to cover taxes payable for such reimbursement.
(5) Restricted Stock. Restricted stock awards are subject to various general
    restrictions, such as continued employment, as well as several performance
    restrictions. Holders of restricted stock receive dividends and exercise
    voting rights on their restricted shares. The named executive officers have
    agreed that any cash dividends on the shares of restricted stock shall,
    after withholding for or payment of any taxes due on the dividends, be
    reinvested in shares of Host REIT common stock either through a dividend
    reinvestment program or otherwise. Deferred Bonus Stock. The amount of a
    deferred bonus stock award generally equals 20 percent of each individual's
    annual cash bonus award, based on the stock price on the last trading day
    for the fiscal year. Holders of deferred bonus stock awards do not receive
    dividends or exercise voting rights on their deferred bonus stock until
    such stock has been distributed to them. The recipient can designate an
    award as current, which is distributed in 10 annual installments beginning
    one year after the award is granted, or deferred, which is distributed in a
    lump sum or in up to 10 annual installments following termination of
    employment. Deferred bonus stock awards contingently vest in 10 equal
    annual installments beginning one year after the awards are granted.

                                       73


(6) Seventy percent of the restricted shares awarded in 1998 have performance
    restrictions and thirty percent have general restrictions conditioned upon
    continued employment. The performance criteria established by the
    Compensation Policy Committee are based upon (i) the measurement of our
    annual stock performance (Stockholder Return Performance) and (ii) either
    (a) for 1999, the relative performance of Host REIT stock measured against
    a published peer index (Relative Performance), or (b) for all other years,
    Host Marriott's achieving specific earnings targets set by the Compensation
    Policy Committee. Restricted shares granted in previous years which had not
    had restrictions released, including those reflected in the table as having
    been granted in 1997, were forfeited and replaced by the restricted shares
    awarded in 1998. The total number of restricted and deferred shares held by
    each named executive officer as of the end of the 1999 fiscal year and the
    aggregate value of those shares at such time were as follows: Mr. Marriott,
    150,176 shares valued at $1,262,417; Mr. Golden, 895,151 shares valued at
    $7,524,863; Mr. Nassetta, 578,414 shares valued at $4,862,293; Mr. Parsons,
    483,213 shares valued at $4,099,586; and Mr. Townsend, 138,075 shares
    valued at $1,160,693.
(7) In 1999, the Compensation Policy Committee determined that the time and
    performance criteria set forth in the long-term incentive plan established
    in 1996 for Mr. Nassetta and Mr. Parsons had been met. Accordingly, the
    restricted shares awarded under such long-term incentive plan vested and
    the restrictions were released.
(8) This column represents Host REIT's matching contributions made under its
    Retirement and Savings Plan and its Executive Deferred Compensation Plan.
    Under the Retirement and Savings Plan, Host REIT contributed $9,600 for
    each of the named executive officers in 1999. The amounts contributed under
    the Executive Deferred Compensation Plan for 1999 for each named executive
    officer were as follows: Mr. Marriott, $15,953; Mr. Golden, $72,352; Mr.
    Nassetta, $38,763; Mr. Parsons, $33,072; and Mr. Townsend, $14,966. For Mr.
    Marriott, this column also includes the amount of the taxable economic
    benefit to Mr. Marriott as a result of Host Marriott's purchase of certain
    life insurance policies for the benefit of a trust established by Mr.
    Marriott. For 1999, such taxable economic benefit to Mr. Marriott was $558.
(9) Mr. Golden retired from his positions as President and Chief Executive
    Officer in May 2000, at which time Mr. Nassetta became President and Chief
    Executive Officer. During the fiscal years reported in this table, Mr.
    Nassetta served as Executive Vice President and Chief Operating Officer.

                                       74


Aggregated Stock Option/SAR Exercises and Year-End Value

   The table below sets forth, on an aggregated basis, (1) information
regarding the exercise during fiscal year 1999 of options to purchase Host
Marriott common stock (and shares of the common stock of other companies which
Host Marriott has previously spun off) by each of the Named Executive Officers
listed on the Executive Compensation table above, (2) information regarding the
exercise of stock appreciation rights ("SARs") in Host REIT common stock by
each of the Named Executive Officers, and (3) the value on December 31, 1999 of
all unexercised options and SARs held by such individuals. Terence C. Golden
and Christopher J. Nassetta do not have any options to purchase stock in any of
the companies listed in the following table. Richard E. Marriott is the only
executive officer who holds SARs in Host REIT common stock. In 1998, he entered
into an agreement with Host Marriott pursuant to which all of his then
outstanding options to purchase Host Marriott common stock were canceled and
then replaced with SARs on equivalent economic terms.

 Aggregated Stock Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
                                 Option Values



                                                              Number of
                                                          Shares Underlying       Value of Unexercised
                                     Shares           Unexercised Options/SARs  In-the-Money Options/SARs
                                    Acquired            at Fiscal Year End(2)     at Fiscal Year End(3)
                                       on     Value              (#)                       ($)
                                    Exercise Realized ------------------------- -------------------------
  Name                   Company(1)   (#)      ($)    Exercisable Unexercisable Exercisable Unexercisable
  ----                   ---------- -------- -------- ----------- ------------- ----------- -------------
                                                                       
R.E. Marriott...........      HM          0        0     66,685          0         434,877         0
                             HMS     11,140  160,446          0          0               0         0
                              MI          0        0    122,634          0       3,227,392         0
                                     ------  -------    -------        ---       ---------       ---
                           TOTAL     11,140  160,446    189,319          0       3,662,269         0

R.E. Parsons, Jr........      HM      3,592   19,846     14,637          0          89,561         0
                             HMS      3,045   37,486          0          0               0         0
                              MI          0        0          0          0               0         0
                                     ------  -------    -------        ---       ---------       ---
                           TOTAL      6,637   57,332     14,637          0          89,561         0

C.G. Townsend...........      HM      1,677    9,161      6,676          0          41,473         0
                             HMS          0        0          0          0               0         0
                              MI          0        0          0          0               0         0
                                     ------  -------    -------        ---       ---------       ---
                           TOTAL      1,677    9,161      6,676          0          41,473         0



- --------
(1) "HM" represents options to purchase or SARs in Host REIT common stock.
    "HMS" represents options to purchase Host Marriott Services Corporation
    common stock. "MI" represents options to purchase Marriott International,
    Inc. common stock.
(2) The number and terms of these options reflect several adjustments made as a
    result of our spin-off of Marriott International in October 1993; Host
    Marriott's spin-off of Host Marriott Services Corporation in December 1995;
    the spin-off of Marriott International from Sodexho Marriott Services
    Corporation in March 1998; and Host Marriott's conversion into a real
    estate investment trust (and the related spin-off of Crestline Capital
    Corporation) in December 1998, each in accordance with the applicable
    employee benefit plans covering those options. These adjustments preserved,
    but did not increase or decrease, the economic value of the options.
(3) These figures are based on a per share price for Host REIT common stock of
    $8.406 and a per share price for Marriott International, Inc. common stock
    of $31.375. These prices reflect the average of the high and low trading
    prices on the New York Stock Exchange on December 31, 1999.

                                       75


Employment Arrangements

   Certain of the terms and conditions of employment of Messrs. Golden,
Nassetta, Parsons, Risoleo, Walter, Townsend and Olinger, are governed by a
written "Key Executives/Termination of Employment" policy. The policy provides
a basic framework to govern the termination of employment under specific
circumstances. This policy is not a binding contract and can be changed by Host
REIT unilaterally at any time. The terms of the plan are subject to the
approval of the Board of Directors or the Chief Executive Officer/President as
applicable.

   Certain of the terms and conditions of employment of Terence C. Golden are
also governed by a written employment agreement. Under the terms of that
agreement, Mr. Golden's annual salary has been set at $750,000 for 2000. Under
the agreement, in the event of a "termination event" (defined as a significant
reduction in Mr. Golden's responsibility, a requirement to relocate, a change
in control, a change in his responsibility to the Company's Chairman or his
failure to receive a bonus equal to at least half of the maximum bonus
available to be earned for a particular year), Mr. Golden will receive a
payment equal to one year's salary and an amount equal to the maximum bonus
that could have been earned for the year in which such termination event
occurs, and the restrictions will be lifted on all remaining restricted stock
held by Mr. Golden. If he is terminated without cause, Mr. Golden will receive
one year's salary and bonus and the restrictions will be lifted on the
restricted stock that is not subject to performance goals. In the event Mr.
Golden is terminated for cause or resigns, he will receive no termination
payment and the restricted stock will be canceled. Mr. Golden retired from his
position as President and Chief Executive Officer in May 2000, but he remains
an employee of Host Marriott through the remainder of fiscal year 2000.
Accordingly, he will receive any benefits accruing in 2000 that are incidental
to such employment. His bonus award for fiscal year 2000, however, will be pro
rated through May 2000.

1998 Employee Benefits Allocation Agreement

   As part of the REIT conversion, we entered into an Employee Benefits and
Other Employment Matters Allocation Agreement along with Host REIT and
Crestline ("1998 Employee Benefits Allocation Agreement"). The 1998 Employee
Benefits Allocation Agreement governs the allocation of responsibilities with
respect to various compensation, benefits and labor matters. Under the 1998
Employee Benefits Allocation Agreement, Crestline assumes certain liabilities
relating to covered benefits and labor matters with respect to individuals who
were employed by Host Marriott or its affiliates before they became employed by
Crestline or its affiliates ("Transferred Employees") and we assume certain
other liabilities relating to employee benefits and labor matters. The 1998
Employee Benefits Allocation Agreement also governs the treatment of awards
under the Host Marriott Corporation 1997 Comprehensive Stock Incentive Plan,
formerly called the Host Marriott Corporation 1993 Comprehensive Stock
Incentive Plan (the "Comprehensive Stock Incentive Plan"), as part of the REIT
conversion. The 1998 Employee Benefits Allocation Agreement requires Crestline
to establish the Crestline Capital Corporation 1998 Comprehensive Stock
Incentive Plan to grant awards of Crestline common stock. Additionally, the
1998 Employee Benefits Allocation Agreement provides that we will adopt the
Comprehensive Stock Incentive Plan.

Comprehensive Stock Incentive Plan

   Host REIT sponsors the Comprehensive Stock Incentive Plan for purposes of
attracting and retaining highly qualified employees. Host REIT reserved
44,442,911 shares of Host REIT common stock for issuance pursuant to the
Comprehensive Stock Incentive Plan. As part of the REIT conversion, we adopted
the Comprehensive Stock Incentive Plan. Shares of Host Marriott common stock
issued or reserved under the Comprehensive Stock Incentive Plan before the REIT
conversion have been exchanged for Host REIT Common Shares and Crestline common
stock, according to the terms of the 1998 Employee Benefits Allocation
Agreement.

   Under the terms of the Comprehensive Stock Incentive Plan, we may award
eligible full-time employees (1) options to purchase Host REIT common stock,
(2) deferred shares of Host REIT common stock, (3) restricted shares of Host
REIT common stock, (4) stock appreciation rights, (5) special recognition
awards or (6) other equity-based awards, including but not limited to, phantom
shares of Host REIT common stock,

                                       76


performance shares of Host REIT common stock, bonus shares of Host REIT common
stock, dividend equivalent units or similar securities or rights.

   The awarding of options to purchase Host REIT common stock under the
Comprehensive Stock Incentive Plan is expected to continue. Options granted to
our officers and key employees or officers and key employees of Host REIT will
have an exercise price of not less than the fair market value on the date of
grant. Incentive stock options granted under the Comprehensive Stock Incentive
Plan expire no later than 10 years after the date of grant and non-qualified
stock options expire up to 15 years after the date of grant.

   Under the terms of the Comprehensive Stock Incentive Plan, Host REIT may
award deferred shares of Host REIT common stock to eligible full-time
employees. Deferred shares may be granted as part of a bonus award or deferred
stock agreement. Host REIT intends to award deferred shares of Host REIT Common
Shares under the Comprehensive Stock Incentive Plan. Deferred shares generally
vest over ten years in annual installments commencing one year after the date
of grant.

   The Comprehensive Stock Incentive Plan also provides for the issuance of
restricted shares of Host REIT common stock to officers and key executives to
be distributed over the next three or five years in annual installments based
on continued employment and the attainment of certain performance criteria.

   Under the terms of the Comprehensive Stock Incentive Plan, Host REIT may
grant bonus awards to eligible full-time employees. Bonus awards may be part of
a management incentive program which pays part of the annual performance bonus
awarded to managers and other key employees in shares of Host REIT common
stock. A bonus award entitles the holder to receive a distribution of Host REIT
common stock in accordance with the underlying agreement. Holders of bonus
awards vest in the shares covered by their award over ten years in annual
installments commencing one year after grant. Unless the holder of a bonus
award elects otherwise, vested shares are distributed in 10 consecutive,
approximately equal, annual installments.

   The Comprehensive Stock Incentive Plan authorizes Host REIT to grant SARs to
eligible full-time employees. SARs awarded under the Comprehensive Stock
Incentive Plan give the holder the right to an amount equal to the appreciation
in the value of the Host REIT common stock over a specified price. SARs may be
paid in the Host REIT common stock, cash or other form or combination form of
payout.

   Under the Comprehensive Stock Incentive Plan, Host REIT may award an
eligible full-time employee or officer a Special Recognition Award. Special
Recognition Awards may be paid in the form of Host REIT common stock or an
option to purchase Host REIT common stock at an amount not less than fair
market value on the date of grant.

Stock Purchase Plan

   Host REIT sponsors the Host Marriott, L.P. Employee Stock Purchase Plan (the
"Stock Purchase Plan"). Under the terms of the Stock Purchase Plan, an
individual who is: (1) an active eligible employee on the last day of the prior
plan year, (2) working more than 20 hours per week and (3) customarily employed
more than five months in a calendar year may, at the end of the plan year,
purchase Host common stock through contributions or payroll deductions at the
lower of 90% of the fair market value on the first or last day of such plan
year. A participant may elect to contribute up to 10% of his compensation per
year.

401(k) Plan

   Host REIT sponsors the Host Marriott, L.P. Retirement and Saving Plan (the
"401(k) Plan"). The 401(k) Plan has received a favorable ruling from the IRS as
to its tax-qualified status. We assumed the 401(k) Plan as part of the REIT
conversion. The 401(k) Plan is available to all eligible employees immediately
upon their date

                                       77


of hire. A participant may elect to contribute from 1% to 15% of his
compensation to the 401(k) Plan. Each year, we will make a fixed matching
contribution equal to 50% of the first 6% of the compensation contributed to
the 401(k) Plan by employees. In addition, we may make a discretionary
contribution, in an amount, if any, determined annually by the Board of our
general partner (Host REIT) to the 401(k) Plan for the benefit of eligible
employees.

   Under the terms of the 401(k) Plan, participants may elect to invest part or
all of their plan benefits in Host REIT common stock. As part of the REIT
conversion, all shares of Host Marriott common stock held under the 401(k) Plan
have been converted to Host REIT Common Shares and Crestline common stock.

Directors' Deferred Compensation Plan

   Host REIT sponsors the Host Marriott Corporation Non-Employee Directors'
Deferred Stock Compensation Plan (the "Deferred Compensation Plan") for
purposes for attracting and retaining qualified non-employee Directors. Under
the terms of the Deferred Compensation Plan, a non-employee Director may elect
to defer payment of part or all of his or her Directors' fees from Host REIT
until such individual is no longer a member of the Board. Currently, fees that
are deferred under the Deferred Compensation Plan are converted into shares of
Host REIT common stock using the fair market value of such shares on the date
of deferral. In addition, the Deferred Compensation Plan provides for annual
grants of deferred shares of Host REIT common stock equal to the amount of the
annual cash retainer fee paid to non-employee Directors. This award is
distributed immediately following each annual meeting. The Deferred
Compensation Plan also permits participants to be credited with dividend
equivalents which are equal in value to the dividends paid on Host REIT common
stock.

Limitation of Liability and Indemnification

   The MGCL permits a Maryland corporation to include in its charter a
provision limiting the liability of its directors and officers to the
corporation and its shareholders for money damages except for liability
resulting from (a) actual receipt of an improper benefit or profit in money,
property or services or (b) acts committed in bad faith or active and
deliberate dishonesty established by a final judgment as being material to the
cause of action. The charter of Host REIT contains such a provision which
eliminates such liability to the maximum extent permitted by Maryland law.

   The charter of Host REIT authorizes it, to the maximum extent permitted by
Maryland law, to obligate itself to indemnify and to pay or reimburse
reasonable expenses in advance of final disposition of a proceeding to (1) any
present or former director or officer or (2) any individual who, while a
director of Host REIT and at the request of Host REIT, serves or has served
another corporation, real estate investment trust, partnership, joint venture,
trust, employee benefit plan or any other enterprise from and against any claim
or liability to which such person may become subject or which such person may
incur by reason of his or her status as a present or former Director or officer
of Host REIT. The bylaws of Host REIT obligate it, to the maximum extent
permitted by Maryland law, to indemnify and to pay or reimburse reasonable
expenses in advance of final disposition of a proceeding to (a) any present or
former director or officer who is made party to the proceeding by reason of his
service in that capacity or (b) any individual who, while a director or officer
of Host REIT and at the request of Host REIT, serves or has served another
corporation, real estate investment trust, partnership, joint venture, trust,
employee benefit plan or any other enterprise as a trustee, director, officer
or partner of such corporation, real estate investment trust, partnership,
joint venture, trust, employee benefit plan or other enterprise and who is made
a party to the proceeding by reason of his service in that capacity, against
any claim or liability to which he may become subject by reason of such status.
The charter and bylaws also permit Host REIT to indemnify and advance expenses
to any person who served as a predecessor of Host REIT in any of the capacities
described above and to any employee or agent of Host REIT or a predecessor of
Host REIT. The bylaws require Host REIT to indemnify a director or officer who
has been successful, on the merits or otherwise, in the defense of any
proceeding to which he is made a party by reason of his service in that
capacity.

                                       78


   The MGCL permits a Maryland corporation to indemnify and advance expenses to
its directors, officers, employees and agents. The MGCL permits a corporation
to indemnify its present and former directors and officers, among others,
against judgments, penalties, fines, settlements and reasonable expenses
actually incurred by them in connection with any proceeding to which they may
be made a party by reason of their service in those or other capacities unless
it is established that (a) the act or omission of the director or officer was
material to the matter giving rise to the proceeding and (i) was committed in
bad faith or (ii) was the result of active and deliberate dishonesty, (b) the
director or officer actually received an improper personal benefit in money,
property or services or (c) in the case of any criminal proceeding, the
director or officer had reasonable cause to believe that the act or omission
was unlawful. However, under the MGCL, a Maryland corporation may not indemnify
for an adverse judgment in a suit by or in the right of the corporation. In
accordance with the MGCL, the bylaws of Host REIT require it, as a condition to
advancing expenses, to obtain (1) a written affirmation by the director or
officer of his good faith belief that he has met the standard of conduct
necessary for indemnification by Host REIT as authorized by the bylaws and (2)
a written statement by or on his behalf to repay the amount paid or reimbursed
by Host REIT if it is ultimately determined that the standard of conduct was
not met.

   The Host Marriott, L.P. Partnership Agreement also provides for
indemnification of Host REIT and its officers and trustees to the same extent
that indemnification is provided to officers and directors of Host REIT in its
charter, and limits the liability of Host REIT and its officers and directors
to Host Marriott, L.P. and its respective partners to the same extent that the
liability of the officers and directors of Host REIT to Host REIT and its
shareholders is limited under Host REIT's charter. Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to directors,
officers or persons controlling the registrant pursuant to the foregoing
provisions, Host REIT has been informed that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.

Indemnification Agreements

   Each of Host REIT and Host Marriott, L.P. have entered into or will enter
into indemnification agreements with each of its directors and officers, as
applicable. The indemnification agreements require, among other things, that
Host REIT and/or Host Marriott, L.P. indemnify their directors and officers to
the fullest extent permitted by law and advance to their directors and officers
all related expenses, subject to reimbursement if it is subsequently determined
that indemnification is not permitted.

                                       79


                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Relationships Between Host REIT, Host Marriott, L.P. and Marriott International

   Host Marriott (Host REIT's predecessor) and Marriott International, prior to
October 8, 1993, were operated as a single consolidated company. On October 8,
1993 in connection with the issuance of a special dividend, the consolidated
company's businesses were split between Host Marriott Corporation and Marriott
International. Thereafter, Host Marriott retained the lodging real estate
business and the airport/tollroad concessions business, while Marriott
International took over the management of the lodging and service management
businesses. On December 29, 1995, Host Marriott distributed its airport/toll
road concession business to its stockholders.

 Distribution Agreement and Related Agreement

   In connection with the Marriott International distribution, Host Marriott
and Marriott International entered into a distribution agreement, which
provided for, among other things, (1) the division between Host Marriott and
Marriott International of certain liabilities and (2) certain other agreements
governing the relationship between Host Marriott and Marriott International
following the Marriott International distribution. Under the Marriott
International distribution agreement, which has been amended from time to time,
Marriott International obtained a purchase right which provided Marriott
International with the right, until June 2017, to purchase up to 20% of each
class of Host Marriott's voting stock (determined after assuming full exercise
of the right) at its then fair market value (based on an average of trading
prices during a specified period), upon the occurrence of certain specified
events generally involving a change in control of Host Marriott. The Marriott
International purchase right could be exercised for a 30-day period following
the date a person or group of affiliated persons has (1) become the beneficial
owner of 20% or more of the total voting power of the then outstanding shares
of Host Marriott's voting stock or (2) announced a tender offer for 30% more of
the total voting power of the then outstanding shares of Host Marriott common
stock. The Marriott International purchase right continues in effect with
respect to Host REIT as to Host REIT's common stock, subject to the following
limitations intended to protect the REIT status of Host REIT. The Marriott
International purchase right will be exercisable only to the extent that
neither (1) Marriott International, or any entity in which it has a direct or
indirect interest (and which would be deemed, under the applicable attribution
rules, to own the shares of Host REIT owned by Marriott International) would,
as a result of such exercise, own, taking into account the applicable
attribution rules, more than 9.8% of both Host REIT and Crestline, any
subsidiary of Crestline or any other tenant of Host REIT nor (2) any owners of
direct or indirect interests in Marriott International would, as a result of
such exercise, own, taking into account the applicable attribution rules, more
than 9.8% of both Host REIT and Crestline, any subsidiary of Crestline or any
other tenant of Host REIT. In addition to the foregoing limitation, in the
event Host Marriott, L.P. is or would be considered a "publicly traded
partnership" within the meaning of the code, the Marriott International
purchase right will be exercisable only if such acquisition and ownership of
Host REIT common stock would not cause Host Marriott, L.P. to be considered to
own, directly or by attribution, 10% or more of Crestline, any subsidiary of
Crestline or any other tenant of Host REIT (taking into account the applicable
attribution rules and any stock of Crestline that the operating partnership is
deemed to own under the attribution rules by reason of the ownership of an
interest in Host Marriott, L.P. by the Blackstone Entities).

   In addition, Host Marriott and Marriott International entered into a number
of other agreements in connection with the Marriott International distribution,
including (1) a tax sharing agreement that defines the parties' rights and
obligations with respect to deficiencies and refunds of federal, state and
other income or franchise taxes relating to Host Marriott's businesses for tax
years prior to the Marriott International distribution and with respect to
certain tax attributes of Host Marriott after the Marriott International
distribution; (2) a noncompetition agreement that defines the parties' rights
and obligations with respect to certain businesses operated by Marriott
International, which expires on October 8, 2000; and (3) agreements under which
Marriott International would guarantee Host Marriott's performance in
connection with certain

                                       80


partnership, real estate and project loans and other obligations. Host
Marriott, L.P. assumed the liabilities of Host Marriott under each of these
agreements with Marriott International.

 Acquisition Financing

   Marriott International has also provided, and Host REIT expects that
Marriott International in the future may provide, financing for a portion of
the cost of acquiring properties to be operated or franchised by Marriott
International. In 1999 Marriott International did not provide any new
acquisition financing, although a non-controlled subsidiary of Host Marriott
remained indebted to Marriott International for acquisition financing from
prior years. The amount of such indebtedness at December 31, 1999 was $38
million.

 Lodging Management and Franchise Agreements

   Marriott International and certain of its subsidiaries have entered into
management agreements with us and certain of our subsidiaries to manage for
fees the Marriott Hotels, Resorts and Suites, Ritz-Carlton hotels, Courtyard
hotels and Residence Inns owned or leased by us and our subsidiaries. Marriott
International has also entered into franchise agreements with us and certain of
our subsidiaries. The franchise agreements allow us to use the Marriott brand,
associated trademarks, reservation systems and other related items in
connection with 9 Marriott hotels for which we have entered into operating
agreements with hotel management companies other than Marriott International.

   These agreements reflect market terms and conditions and are substantially
the same as agreements of similar types with other third-party owners. As a
result of the REIT conversion, however, we have assigned the management
agreements and franchise agreements to Crestline. Consequently, it is
Crestline's primary obligation to pay Marriott International the management
fees and franchise fees owed under these agreements as long as Crestline
remains the lessee for hotels governed by these agreements.

   In addition, certain of our non-controlled subsidiaries are partners in
several unconsolidated partnerships that owned 226 lodging properties, although
11 of those properties were sold during 1999. These properties are operated by
Marriott International or certain of its subsidiaries under long-term
agreements. Our non-controlled subsidiaries typically serve as the general
partners in such partnerships. In 1999, those unconsolidated partnerships paid
fees of $119 million to Marriott International under those agreements. The
partnerships also paid $22 million in rent to Marriott International in 1999
for leases of land upon which certain of the partnerships' hotels are located.

   J.W. Marriott, Jr. and Richard E. Marriott beneficially own approximately
10.8% and 10.6%, respectively, of the outstanding shares of common stock of
Marriott International. By reason of their ownership of such shares of common
stock of Marriott International and their positions as Chairman and a Director,
respectively, of Marriott International, J.W. Marriott, Jr. and Richard E.
Marriott, who is also a Director and Chairman, respectively, of Host REIT,
could be deemed in control of Marriott International within the meaning of the
federal securities laws. Other members of the Marriott family might also be
deemed control persons of Marriott International by reason of their ownership
of shares of Marriott International and/or their relationship to other family
members.

Relationships Between Host REIT, Host Marriott, L.P. and Crestline

   For the purposes of governing certain of the ongoing relationships between
Crestline and Host REIT, Crestline, Host REIT and Host Marriott, L.P. have
entered into various agreements in addition to the leases, as described below.
On November 13, 2000, we announced the execution of a definitive agreement with
Crestline for the purchase and sale, effective January 1, 2001, of the entities
owning the leasehold interests with respect to 117 of our full-service hotels
for approximately $205 million. The agreement includes arrangements for the
amendment, supplement or termination of the various agreements described below.
There can be no assurance that the transaction we will be completed.

                                       81


 Distribution Agreement

   As part of the REIT conversion, Crestline and Host REIT entered into a
distribution agreement which provided for, among other things:

  . the distribution of shares of Crestline to the stockholders of Host REIT
    in connection with the Crestline distribution;

  . the division of certain assets and liabilities between Crestline and Host
    REIT;

  . the contribution to Crestline of Host REIT's interest in 31 senior living
    communities;

  . the transfer to Crestline of the 25% interest in Swissotel Management
    (USA) L.L.C. which Host REIT acquired from the Blackstone Entities;

  . a guarantee by Host REIT on certain Crestline debt obligations;

  . the contingent right for a period of ten years to purchase Crestline's
    interest in Swissotel Management (USA) L.L.C. at fair market value if the
    tax laws are changed so that Host REIT could own such interest without
    jeopardizing its status as a REIT; and

  . certain other agreements governing the relationship between Crestline and
    Host REIT following the Crestline distribution.

   Subject to certain exceptions, the distribution agreement provides for,
among other things, assumptions of liabilities and cross-indemnities designed
to allocate to Crestline financial responsibilities for liabilities arising out
of or in connection with the business of the senior living communities.

   The changes in the tax laws resulting from the passage of the REIT
Modernization Act would not permit us to acquire Crestline's 25% interest in
Swissotel Management (USA) L.L.C.

 Hotel Leases

   We and our subsidiaries have entered into hotel leases with subsidiaries of
Crestline for 122 full-service hotels. In 1999, we sold five of the leased
full-service hotels, and we agreed with Crestline to terminate the leases
reducing the number of hotels leased from us to 117 full-service hotels. Each
hotel lease has a fixed term generally ranging from seven to ten years.
Crestline is required to pay:

  . a minimum rent specified in each hotel lease;

  . plus, to the extent it exceeds the minimum rent, a percentage rent based
    upon a specified percentage of aggregate sales from the hotels in excess
    of specified thresholds.

   The amount of minimum rent and percentage rent thresholds will be increased
each year based upon any increases in the Consumer Price Index and the
Employment Cost Index during the previous twelve months. The hotel leases will
generally provide for a rent adjustment in the event of damage, destruction,
partial taking or certain capital expenditures. In 1999, Crestline paid us an
aggregate amount of $1.253 billion in rent for the hotels leased by us to
Crestline.

   Under the hotel leases, Crestline is responsible for paying all hotel
operating expenses, including all personnel costs, utility costs, and general
repair and maintenance of the hotels. In addition, Crestline is responsible for
all fees payable to the hotel manager, including base and incentive management
fees, chain services payments and franchise or system fees. However, we remain
responsible for real estate and personal property taxes, property casualty
insurance, ground lease rent and capital expenditures and for maintaining a
reserve fund for furnishings, fixtures and equipment replacements.

                                       82


   If we dispose of a hotel free and clear of the hotel lease, we have to pay a
termination fee equal to the fair market value of Crestline's leasehold
interest in the remaining term of the hotel lease using a discount rate of 12%.
Alternatively, we are entitled either to:

  . substitute a comparable hotel for any hotel that is sold, with the terms
    agreed to by Crestline; or

  . sell the hotel subject to the hotel lease and to Crestline's approval
    under certain circumstances, but without having to pay a termination fee.

   In addition, we have the right to terminate up to 12 hotel leases, in
connection with sales of hotels, without having to pay any termination fees.
During 1999, we exercised our right to terminate five hotel leases without
paying termination fees for five leased hotels that were sold during 1999,
although only three of such terminations counted against our right to terminate
12 hotel leases as described above. At the same time, Crestline may terminate
up to 12 full-service leases without penalty upon 180 days' notice to us.
During 1999 and 2000, Crestline exercised its right to terminate seven hotel
leases, but we subsequently agreed with Crestline to continue all of these
leases on modified terms.

   See "Business and Properties--The Leases" for a more complete description of
our hotel leases with Crestline. As a result of the passage of the REIT
Modernization Act, and under the terms of the leases for our hotels with
Crestline subsidiaries, we have the right to purchase the leases from Crestline
on or after January 1, 2001. On November 13, 2000, we announced the execution
of a definitive agreement with Crestline for the purchase and sale of the
entities owning the leasehold interests with respect to 117 of our full-service
hotels. Under the terms of the transaction, our newly created wholly-owned
subsidiary, which will elect to be treated as a taxable REIT subsidiary, will
purchase certain Crestline subsidiaries, whose primary assets are the leasehold
interests, for approximately $205 million. There can be no assurances that the
purchase will be consummated. For a discussion of the REIT Modernization Act
and our agreement with Crestline, see "Business and Properties--The REIT
Conversion."

 Furnishings, Fixtures and Equipment Leases

   In connection with the Crestline distribution, if the total average tax
basis of an individual hotel's FF&E and other personal property exceeded 15% of
the aggregate average tax basis of the hotel's real and personal property,
there was excess FF&E. In these cases, subsidiaries of Crestline and non-
controlled subsidiaries of ours entered into lease agreements for the excess
FF&E. The terms of the FF&E leases generally range from two to three years and
rent under the FF&E leases is a fixed amount. Crestline will have the option at
the expiration of the lease term either to:

  . renew the FF&E leases for consecutive one year renewal terms at a fair
    market rental rate; or

  . purchase the excess FF&E for a price equal to its fair market value.

   If Crestline does not exercise its purchase or renewal option, it must pay a
termination fee equal to approximately one month's rent. In 1999, Crestline
paid our non-controlled subsidiaries an aggregate amount of $23 million in rent
under the FF&E leases.

 Tax Sharing Agreement

   Crestline and Host REIT are parties to a tax sharing agreement which defines
each party's rights and obligations with respect to deficiencies and refunds of
federal, state and other income or franchise taxes relating to Crestline's
business for taxable years prior to the distribution of Crestline share of Host
REIT's stockholders and with respect to certain tax attributes of Crestline
after such distribution. Generally, Host REIT will be responsible for filing
consolidated returns and paying taxes for periods through the date of the
distribution, and Crestline will be responsible for filing returns and paying
taxes for subsequent periods.

                                       83


 Asset Management Agreement

   Host Marriott, L.P. and a Non-Controlled Subsidiary entered into asset
management agreements with Crestline pursuant to which Crestline agrees to
provide review and advice on the management and operation of our hotels.
Generally, Crestline will provide the following consulting services:

  . review of operating and financial results (including site visits) and
    meet with Host Marriott, L.P. and the non-controlled subsidiaries, as
    applicable, at least quarterly, to review such results of the hotels;

  . review of financial statements and budgets, including periodic accounting
    statements, annual operating budgets, FF&E budgets and management
    analysis reports;

  . review of revenue and capital spending projections;

  . administration of approvals relating to the operation of the hotel
    required under any related loan documents;

  . advice relating to any changes to the hotel management agreements;

  . review of market conditions and competition for each of the hotels;

  . monitoring and negotiating with governmental agencies in connection with
    any condemnation proceedings against the hotels; and

  .  monitoring and negotiating with insurance companies and contractors
     following a casualty at a hotel.

   Crestline was paid a fee of $4.5 million in 1999 for its consulting services
under the asset management agreements, which was allocated between Host
Marriott, L.P. and the non-controlled subsidiary. The asset management
agreements have a term of two years with an automatic one year renewal, unless
earlier terminated by either party in accordance with the terms thereof.

 Non-Competition Agreement

   Crestline, Host REIT and Host Marriott, L.P. entered into a non-competition
agreement that limits the respective parties' future business opportunities.
See "Business and Properties--Noncompetition Agreements."

 Guarantee and Pooling Agreements

   Crestline and certain of its subsidiaries entered into guarantees of the
lease obligations of each lessee. See "Business and Properties--The Leases."

 1998 Employee Benefits Allocation Agreement

   As part of the REIT conversion, Host REIT, Host Marriott, L.P. and Crestline
entered into the 1998 Employee Benefits and Other Employment Matters Allocation
Agreement relating to various compensation, benefits and labor matters. See
"Management--1998 Employee Benefit Allocation Agreement."

Relationship between Host REIT, Host Marriott, L.P. and Blackstone Entities

   In conjunction with the REIT conversion, in December 1998 we acquired 12
upscale and luxury full-service hotels, a mortgage loan secured by a thirteenth
hotel, and certain other assets from The Blackstone Group L.P. and a series of
partnerships, persons and other entities affiliated with Blackstone Real Estate
Associates. We refer to this group of entities as the Blackstone Entities. As
part of the Blackstone acquisition, Host Marriott, L.P. and Host REIT entered
into a contribution agreement with the Blackstone Entities. This agreement
provides that an affiliate of the Blackstone Entities will have the right to
designate one person to be included in the slate of Directors nominated for
election to Host REIT's Board of Directors as long as the Blackstone Entities
own at least 5% of all of the outstanding operating partnership units
(including those operating partnership units held by Host REIT and its
subsidiaries). The Blackstone Entities designated John G. Schreiber, who is a
senior advisor and partner of Blackstone Real Estate Advisors L.P., an
affiliate of the Blackstone Entities. Mr. Schreiber has served on the Host REIT
Board of Directors since 1998.

                                       84


   In addition, the Blackstone contribution agreement provides that OP Units
beneficially owned by the Blackstone Entities (and their permitted transferees)
are redeemable for cash or, at Host REIT's election, for Host REIT common
stock. Host REIT has granted to the Blackstone Entities (and their permitted
transferees) certain registration rights with respect to shares of Host REIT
common stock obtained upon conversion of the Blackstone OP Units.

   The Blackstone contribution agreement also grants the Blackstone Entities an
exemption from the ownership limitations contained in our partnership
agreement. It also contains standstill provisions which prohibit the Blackstone
Entities from engaging in certain activities with respect to Host REIT and that
Host Marriott, L.P. For example, the Blackstone Entities may not take any
actions in opposition to Host REIT's Board of Directors. In addition, the
Blackstone Entities' ability to acquire and dispose of our voting securities is
restricted.

   In addition to the contribution agreement, Host Marriott, L.P. and Host REIT
entered into another agreement with the Blackstone Entities which restricts our
ability, without the consent of the Blackstone Entities, to transfer our
interests in the hotels and other assets acquired form the Blackstone Entities
if such a transfer would create adverse tax consequences to the Blackstone
Entities. These restrictions terminate on December 30, 2003 with respect to 50%
of the assets acquired from the Blackstone Entities, and they terminate in
their entirety on the earlier of (i) December 30, 2008 or (ii) the date on
which the Blackstone Entities have redeemed all of their OP Units pursuant to
the contribution agreement.

Investment in STSN, Inc.

   STSN, Inc. is a privately held company that is a leading provider of in-
room, high-speed Internet access to the lodging industry. Marriott
International has selected STSN as the exclusive provider of high-speed
Internet access at hotels managed by Marriott International, including those
owned by Host Marriott, L.P. and its subsidiaries. In September 2000, one of
our non-controlled subsidiaries acquired an approximate 4% interest in the
equity of STSN from an affiliate of First Media Corporation for a purchase
price of $4.5 million. First Media is a corporation of which Richard E.
Marriott is an officer, director and controlling shareholder. The purchase
price was at the same cost as First Media's original investment in STSN in
December 1999, plus investment costs and accrued interest through September
2000.

                                       85


                               THE EXCHANGE OFFER

Purpose and effect

   We sold the Series F senior notes on October 6, 2000. In connection with
that issuance, we entered into the registration rights agreement, which
requires us to file a registration statement under the Securities Act of 1933
with respect to the Series G senior notes. Upon the effectiveness of that
registration statement, we are required to offer to the holders of the Series F
senior notes the opportunity to exchange their Series F senior notes for a like
principal amount of Series G senior notes, which will be issued without a
restrictive legend and which generally may be reoffered and resold by the
holder without registration under the Securities Act.

   The registration rights agreement further provides that we must use our
reasonable best efforts to consummate the exchange offer on or before the 190th
day following the date on which we issued the Series F senior notes.

   Except as provided below, upon the completion of the exchange offer, our
obligations with respect to the registration of the Series F senior notes and
the Series G senior notes will terminate. A copy of the registration rights
agreement has been filed as an exhibit to the registration statement of which
this prospectus is a part, and the summary in this prospectus of its material
provisions is not complete and is qualified in its entirety by reference to the
actual agreement. Except as set forth below, following the completion of the
exchange offer holders of Series F senior notes not tendered will not have any
further registration rights and those Series F senior notes will continue to be
subject to restrictions on transfer. Accordingly, the liquidity of the market
for the Series F senior notes could be adversely affected upon consummation of
the exchange offer.

   In order to participate in the exchange offer, you must represent to us,
among other things, that:

  . the Series G senior notes you acquire pursuant to the exchange offer are
    being obtained in the ordinary course of your business;

  . you are not engaging in and do not intend to engage in a distribution of
    the Series G senior notes;

  . you do not have an arrangement or understanding with any person to
    participate in a distribution of the Series G senior notes; and

  . you are not our "affiliate," as defined under Securities Act Rule 405.

   Pursuant to the registration rights agreement we will be required to file a
"shelf" registration statement for a continuous offering pursuant to Securities
Act Rule 415 in respect of the Series F senior notes if:

  . we determine that we are not permitted to effect the exchange offer as
    contemplated hereby because of any change in applicable law or Securities
    and Exchange Commission policy; or

  . we have commenced and not consummated the exchange offer within 190 days
    following the date on which we issued the Series F senior notes for any
    reason.

   Other than as set forth above, no holder will have the right to participate
in the shelf registration statement or to otherwise require that we register
their Series F senior notes under the Securities Act.

   Based on an interpretation by the SEC Staff set forth in no-action letters
issued to third parties unrelated to us, we believe that, with the exceptions
set forth below, Series G senior notes issued to you pursuant to the exchange
offer in exchange for Series F senior notes may be offered for resale, resold
and otherwise transferred by you, unless you are our "affiliate" within the
meaning of Securities Act Rule 405 or a broker-dealer who purchased
unregistered notes directly from us to resell pursuant to Rule 144A or any
other available exemption promulgated under the Securities Act, without
compliance with the registration and prospectus delivery provisions of the
Securities Act; provided that the Series G senior notes are acquired in the
ordinary course of business of the holder and the holder does not have an
arrangement or understanding with any person to participate in the distribution
of Series G senior notes.


                                       86


   If you tender in the exchange offer for the purpose of participating in a
distribution of the Series G senior notes, you cannot rely on this
interpretation by the SEC Staff and you must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction. If you are a broker-dealer that receives Series G
senior notes for your own account in exchange for Series G senior notes, where
those notes were acquired by you as a result of market-making activities or
other trading activities, you must acknowledge that you will deliver a
prospectus in connection with any resale of such Series G senior notes. If you
are a broker-dealer who acquired Series F senior notes directly from us and not
as a result of market-making activities or other trading activities, you may
not rely on the Staff's interpretations discussed above or participate in the
exchange offer and must comply with the prospectus delivery requirements of the
Securities Act in order to sell the Series G senior notes.

Consequences of failure to exchange

   Following the completion of the exchange offer, you will not have any
further registration rights for Series F senior notes that you did not tender.
All Series F senior notes not tendered in the exchange offer will continue to
be subject to restrictions on transfer. Accordingly, the liquidity of the
market for Series F senior notes could be adversely affected upon completion of
the exchange offer.

Terms of the exchange offer

   Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, we will accept any and all Series F senior
notes validly tendered and not withdrawn prior to 5:00 p.m., New York City
time, on [     ], 2000, or such date and time to which we extend the offer. We
will issue $1,000 principal amount of Series G senior notes in exchange for
each $1,000 principal amount of outstanding Series F senior notes accepted in
the exchange offer. Holders may tender some or all of their Series F senior
notes pursuant to the exchange offer. However, Series F senior notes may be
tendered only in integral multiples of $1,000 in principal amount.

   The form and terms of the Series G senior notes are substantially the same
as the form and terms of the Series F senior notes except that the Series G
senior notes have been registered under the Securities Act and will not bear
legends restricting their transfer. The Series G senior notes will evidence the
same debt as the Series F senior notes and will be issued pursuant to, and
entitled to the benefits of, the same indenture pursuant to which the Series F
senior notes were issued.

   As of the date of this prospectus, Series F senior notes representing $250
million in aggregate principal amount were outstanding and there was one
registered holder, a nominee of the DTC. This prospectus, together with the
letter of transmittal, is being sent to that registered holder and to you and
others based on our belief that you have beneficial interests in the Series F
senior notes. We intend to conduct the exchange offer in accordance with the
applicable requirements of the Securities Exchange Act of 1934 and the rules
and regulations of the SEC.

   We will be deemed to have accepted validly tendered Series F senior notes
when, as, and if we have given oral or written notice thereof to the exchange
agent. The exchange agent will act as your agent for the purpose of receiving
the Series G senior notes from us. If any of your tendered Series F senior
notes are not accepted for exchange because of an invalid tender, the
occurrence of the other events set forth in this prospectus or otherwise,
certificates for any such unaccepted Series F senior notes will be returned,
without expense, to you as promptly as practicable after [   ], 2000, unless we
extend the exchange offer.

   If you tender Series F senior notes in the exchange offer, you will not be
required to pay brokerage commissions or fees or, subject to the instructions
in the letter of transmittal, transfer taxes with respect to the exchange of
Series F senior notes pursuant to the exchange offer. We will pay all charges
and expenses, other than certain applicable taxes, in connection with the
exchange offer.


                                       87


Expiration date; extensions; amendments

   The expiration date will be 5:00 p.m., New York City time, on [      ],
2000, unless, in our sole discretion, we extend the exchange offer, in which
case the expiration date will mean the latest date and time to which the
exchange offer is extended. In order to extend the exchange offer, we will
notify the exchange agent of any extension by oral or written notice prior to
9:00 a.m., New York City time, on the next business day after the previously
scheduled expiration date.

   We reserve the right, in our sole discretion:

  . to delay accepting any Series F senior notes, to extend the exchange
    offer or, if any of the conditions to the exchange offer set forth below
    under "--Conditions to Exchange Offer" have not been satisfied, to
    terminate the exchange offer, by giving oral or written notice of such
    delay, extension or termination to the exchange agent; or

  . to amend the terms of the exchange offer in any manner.

   In the event that we make a material or fundamental change to the terms of
the exchange offer, we will file a post-effective amendment to the registration
statement.

Procedures for tendering

   Only a holder of Series F senior notes may tender the Series F senior notes
in the exchange offer. To tender in the exchange offer you must either (1)
complete, sign, and date the letter of transmittal, or a copy thereof, have the
signatures thereon guaranteed if required by the letter of transmittal, and
mail or otherwise deliver the letter of transmittal or copy to the exchange
agent prior to the expiration date or (2) comply with the book-entry
requirements which are discussed below under "--Book Entry Transfer". In
addition:

  . certificates for Series F senior notes must be received by the exchange
    agent along with the letter of transmittal prior to the expiration date;

  . a timely confirmation of a book-entry transfer of those Series F senior
    notes, if that procedure is available, into the exchange agent's account
    at DTC pursuant to the procedure for book-entry transfer described below,
    must be received by the exchange agent on or prior to the expiration
    date; or

  . you must comply with the guaranteed delivery procedures described below.

   To be tendered effectively, the letter of transmittal and other required
documents must be received by the exchange agent on or prior to the expiration
date. Its address is given below under "--Exchange Agent".

   A tender of your Series F senior notes that is not withdrawn before the
expiration date will constitute an agreement between you and us in accordance
with the terms and subject to the conditions set forth in this prospectus and
in the letter of transmittal.

   The method of delivery of Series F senior notes and the letter of
transmittal and all other required documents to the exchange agent is at your
election and risk. Instead of delivery by mail, we recommend that you use an
overnight or hand delivery service. In all cases, you should allow sufficient
time to assure delivery to the exchange agent before the expiration date. You
should not send any letter of transmittal or Series F senior notes to us. You
may request your respective brokers, dealers, commercial banks, trust companies
or nominees to effect these transactions for you.

   If you are a beneficial owner whose Series F senior notes are registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
and you wish to tender, you should contact the registered holder promptly and
instruct the registered holder to tender on your behalf. If you wish to tender
on your own behalf, you must, prior to completing and executing the letter of
transmittal and delivering your Series F senior notes, either make appropriate
arrangements to register ownership of the unregistered notes in your name or
obtain a properly completed bond power from the registered holder. The transfer
of registered ownership may take considerable time.

                                       88


   Signatures on a letter of transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by an eligible institution unless the Series F
senior notes tendered pursuant thereto are tendered:

  . by a registered holder who has not completed the box entitled "Special
    Registration Instruction" or "Special Delivery Instructions" on the
    letter of transmittal; or

  . for the account of an eligible institution.

   If signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, are required to be guaranteed, the guarantee must be by any
eligible guarantor institution that is a member of, or participant in, the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Program or an "eligible guarantor institution" within the
meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, referred to
as an "eligible institution".

   If the letter of transmittal is signed by a person other than the registered
holder of any Series F senior notes listed therein, the Series F senior notes
must be endorsed or accompanied by a properly completed bond power, signed by
the registered holder as that registered holder's name appears on the Series F
senior notes.

   If the letter of transmittal or any Series F senior notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and evidence
satisfactory to us of their authority to so act must be submitted with the
letter of transmittal unless waived by us.

   All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Series F senior notes will be
determined by us in our sole discretion, which determination will be final and
binding. We reserve the absolute right to reject any and all Series F senior
notes not properly tendered or any Series F senior notes that would, in the
opinion of counsel, be unlawful to accept. We also reserve the right to waive
any defects, irregularities or conditions of tender as to particular Series F
senior notes. Our interpretation of the terms and conditions of the exchange
offer (including the instructions in the letter of transmittal) will be final
and binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Series F senior notes must be cured within such time
as we will determine. Although we intend to notify you of defects or
irregularities with respect to tenders of Series F senior notes, neither we,
the exchange agent, nor any other person will incur any liability for failure
to give such notification. Your tender of Series F senior notes will not be
deemed to have been made until such defects or irregularities have been cured
or waived. Any Series F senior notes received by the exchange agent that are
not properly tendered and as to which the defects or irregularities have not
been cured or waived will be returned by the exchange agent to you, unless
otherwise provided in the letter of transmittal, as soon as practicable
following [    ], 2000, unless we extend the exchange offer.

   In addition, we reserve the right in our sole discretion to purchase or make
offers for any Series F senior notes that remain outstanding after the
expiration date or to terminate the exchange offer and, to the extent permitted
by applicable law, purchase Series F senior notes in the open market, in
privately negotiated transactions, or otherwise. The terms of any such
purchases or offers could differ from the terms of the exchange offer.

   In all cases, issuance of Series G senior notes for Series F senior notes
that are accepted for exchange pursuant to the exchange offer will be made only
after timely receipt by the exchange agent of certificates for the notes or a
timely book-entry confirmation of such Series F senior notes into the exchange
agent's account at DTC, a properly completed and duly executed letter of
transmittal (or, with respect to the DTC and its participants, electronic
instructions in which you acknowledge your receipt of and agreement to be bound
by the letter of transmittal) and all other required documents. If any tendered
Series F senior notes are not accepted for any reason set forth in the terms
and conditions of the exchange offer or if unregistered notes are submitted for
a greater principal amount than you desire to exchange, such unaccepted or non-
exchanged notes will be returned without expense to you (or, in the case of
Series F senior notes tendered by book-entry transfer

                                       89


into the exchange agent's account at the DTC pursuant to the book-entry
transfer procedures described below, such nonexchanged notes will be credited
to an account maintained with DTC) as promptly as practicable after the
expiration or termination of the exchange offer.

   If you are a broker-dealer that receives Series G senior notes for your own
account in exchange for Series F senior notes, where your Series F senior notes
were acquired by you as a result of market-making activities or other trading
activities, you must acknowledge that you will deliver a prospectus in
connection with any resale of those Series G senior notes.

Book-entry transfer

   The exchange agent will make a request to establish an account in respect of
the Series F senior notes at DTC for purposes of the exchange offer within two
business days after the date of this prospectus, and any financial institution
that is a participant in DTC's systems may make book-entry delivery of Series F
senior notes being tendered by causing DTC to transfer the Series F senior
notes into the exchange agent's account at DTC in accordance with its transfer
procedures. However, although delivery of Series F senior notes may be effected
through book-entry transfer at DTC, the letter of transmittal or copy thereof,
with any required signature guarantees and any other required documents, must,
in any case other than as set forth in the following paragraph, be transmitted
to and received by the exchange agent on or prior to the expiration date or the
guaranteed delivery procedures described below must be complied with.

   DTC's Automated Tender Offer Program, or "ATOP", is the only method of
processing exchange offers through DTC. To accept the exchange offer through
ATOP, participants in DTC must send electronic instructions to DTC through
DTC's communication system in lieu of sending a signed, hard copy letter of
transmittal. DTC is obligated to communicate those electronic instructions to
the exchange agent. To tender Series F senior notes through ATOP, the
electronic instructions sent to DTC and transmitted by DTC to the exchange
agent must contain the character by which the participant acknowledges its
receipt of and agrees to be bound by the letter of transmittal.

Guaranteed delivery procedures

   If you are a registered holder of the Series F senior notes and you desire
to tender your notes and the notes are not immediately available, or time will
not permit your Series F senior notes or other required documents to reach the
exchange agent before the expiration date, or the procedure for book-entry
transfer cannot be completed on a timely basis, you may effect a tender if:

  . the tender is made through an eligible institution;

  . prior to the expiration date, the exchange agent receives from such
    eligible institution a properly completed and duly executed letter of
    transmittal (or a facsimile thereof) and notice of guaranteed delivery,
    substantially in the form provided by us (by telegram, telex, facsimile
    transmission, mail or hand delivery), setting forth your name and address
    and the amount of Series F senior notes tendered, stating that the tender
    is being made thereby and guaranteeing that within three New York Stock
    Exchange, Inc. trading days after the date of execution of the notice of
    guaranteed delivery, the certificates for all physically tendered
    unregistered notes, in proper form for transfer, or a book- entry
    confirmation, as the case may be, will be deposited by the eligible
    institution with the exchange agent; and

  . the certificates for all physically tendered Series F senior notes, in
    proper form for transfer, or a book-entry confirmation, as the case may
    be, are received by the exchange agent within three NYSE trading days
    after the date of execution of the notice of guaranteed delivery.

Withdrawal rights

   You may withdraw tenders of Series F senior notes at any time prior to 5:00
p.m., New York City time, on the expiration date.

                                       90


   For a withdrawal of your tender of Series F senior notes to be effective, a
written or (for DTC participants) electronic ATOP transmission notice of
withdrawal must be received by the exchange agent prior to 5:00 p.m., New York
City time, on the expiration date. Any notice of withdrawal must:

  . specify the name of the person having deposited the Series F senior notes
    to be withdrawn;

  . identify the Series F senior notes to be withdrawn, including the
    certificate number or numbers and principal amount of the Series F senior
    notes;

  . in the case of a written notice of withdrawal, be signed in the same
    manner as the original signature on the letter of transmittal by which
    the Series F senior notes were tendered (including any required signature
    guarantees) or be accompanied by documents of transfer sufficient to have
    the trustee register the transfer of the Series F senior notes into the
    name of the person withdrawing the tender; and

  . specify the name in which any Series F senior notes are to be registered,
    if different from that of the person having deposited the Series F senior
    notes.

   All questions as to the validity, form, and eligibility (including time of
receipt) of such notices will be determined by us. Our determination will be
final and binding on all parties. Any Series F senior notes so withdrawn will
be deemed not to have been validly tendered for exchange for purposes of the
exchange offer. Any Series F senior notes which you tender for exchange but
which are not exchanged for any reason will be returned to you without cost to
you as soon as practicable after withdrawal, rejection of tender, or
termination of the exchange offer. Properly withdrawn Series F senior notes may
be retendered by following one of the procedures discussed above under "--
Procedures for Tendering" at any time on or prior to the expiration date.

Conditions to the exchange offer

   Notwithstanding any other provision of the exchange offer, we are not
required to accept for exchange, or to issue Series G senior notes in exchange
for, any Series F senior notes and may terminate or amend the exchange offer
if, at any time before the acceptance of Series F senior notes for exchange or
Series G senior notes for Series F senior notes, (1) we determine that the
exchange offer violates applicable law, any applicable interpretation of the
staff of the Commission or any order of any governmental agency or court of
competent jurisdiction, (2) any action or proceeding has been instituted or
threatened in any court or before any governmental agency with respect to the
exchange offer which, in our judgment, might impair our ability to proceed with
the exchange offer or have a material adverse effect on us, or (3) we determine
that there has been a material change in our business or financial affairs
which, in our judgment, would materially impair our ability to consummate the
exchange offer.

   The foregoing conditions are for our sole benefit and may be asserted by us
regardless of the circumstances giving rise to any such condition or may be
waived by us in whole or in part at any time and from time to time in our sole
discretion. Our failure to exercise any of the foregoing rights at any time
will not be deemed a waiver of any such right and each such right will be
deemed an ongoing right which may be asserted at any time and from time to
time.

   In addition, we will not accept for exchange any Series F senior notes
tendered, and no Series G senior notes will be issued in exchange for any
Series F senior notes, if at such time any stop order will be threatened or in
effect with respect to the registration statement of which this prospectus
constitutes a part or the qualification of the indenture under the Trust
Indenture Act of 1939, as amended. In any such event we are required to use
every reasonable effort to obtain the withdrawal of any stop order at the
earliest possible time.

Exchange Agent

   All executed letters of transmittal should be directed to the exchange
agent. HSBC Bank USA, formerly known as Marine Midland Bank, has been appointed
as exchange agent for the exchange offer. Questions, requests for assistance
and requests for additional copies of this prospectus or of the letter of
transmittal should be directed to the exchange agent addressed as follows:


                                       91


                                 HSBC Bank USA

   By Hand Or Overnight Delivery:           By Registered Or Certified Mail:
            140 Broadway                              140 Broadway
               A Level                                   A Level
      New York, N.Y. 10005-1180                 New York, N.Y. 10005-1180
   Attn: Corporate Trust Services            Attn: Corporate Trust Services

                                 By facsimile:
                          (eligible institutions only)

                                 (212) 658-2292
                             Attn: Anthony Bufinsky

                               For information or
                           confirmation by telephone:

                                 (212) 658-5931

   Originals of all documents sent by facsimile should be sent promptly by
registered or certified mail, by hand or by overnight delivery service.

Fees and expenses

   We will not make any payments to brokers, dealers or others soliciting
acceptances of the exchange offer. The principal solicitation is being made by
mail; however, additional solicitations may be made in person or by telephone
by our officers and employees. We will pay the estimated cash expenses to be
incurred in connection with the exchange offer. We estimate such expenses to be
$300,000, which includes fees and expenses of the exchange agent, accounting,
legal, printing and related fees and expenses.

Transfer taxes

   You will not be obligated to pay any transfer taxes in connection with your
tender of Series F senior notes. However, if you instruct us to register Series
G senior notes in the name of, or request that Series F senior notes not
tendered or not accepted in the exchange offer be returned to, a person other
than yourself, you will be responsible for the payment of any applicable
transfer tax thereon.

                                       92


                              DESCRIPTION OF NOTES

   We will issue the Series G senior notes pursuant to an indenture dated as of
August 5, 1998, by and among Host Marriott, L.P., the Subsidiary Guarantors
signatory thereto and HSBC Bank USA (formerly Marine Midland Bank), as trustee,
as amended or supplemented from time to time. The terms of the indenture
include those made part of the indenture by reference to the Trust Indenture
Act of 1939, as amended. The following description is a summary of the material
provisions of the indenture and the related amended and restated pledge and
security agreement, dated as of August 5, 1998 and amended and restated as of
May 31, 2000, which governs property securing, among other things, the
obligations on the notes. It does not restate those agreements in their
entirety. We urge you to read the indenture and the pledge agreement because
they, and not this description, define your rights as holders of these notes.
You may obtain copies of the indenture and the pledge agreement from Host
Marriott, L.P. upon request. The indenture is also listed as an exhibit to a
registration statement on Form S-3 of HMH Properties, file no. 333-50729. You
can find out how to obtain these documents by looking at the section of this
prospectus titled "Where You can Find More Information" on page 135. You can
find the definitions of certain terms used in this description under the
subheading "Certain Definitions."

General

   The Series G senior notes will be limited to $250,000,000 aggregate
principal amount and will mature on October 1, 2007. Interest on the Series G
senior notes will accrue at the rate of 9 1/4% per annum and will be payable
every six months in arrears on April 1 and October 1, commencing on April 1,
2001. We will make each interest payment to the holders of record of the Series
G senior notes on the immediately preceding March 15 and September 15.

   The Series A senior notes, Series B senior notes, Series C senior notes,
Series D senior notes and the Series E senior notes are, and the Series G
senior notes offered hereby will be, senior, general obligations of Host
Marriott, L.P. The Series A through Series F senior notes are, and the Series G
senior notes offered hereby will be initially secured by a pledge of all the
Capital Stock of certain of our subsidiaries, which Capital Stock also equally
and ratably secures our obligation under the Credit Facility, the Series A
through Series F senior notes, and certain other Indebtedness ranking on an
equitable and ratable basis with the Series G senior notes. See "--Security".
The Series A through Series F senior notes are, and the Series G senior notes
offered hereby will be, pari passu with all of our other existing and future
unsubordinated Indebtedness and will rank senior to all of our subordinated
obligations. The Series A through Series F senior notes are, and the Series G
senior notes offered hereby will be, jointly and severally guaranteed on a
senior basis by the Subsidiary Guarantors. The Guarantee of the Subsidiary
Guarantors with respect to the notes, and the pledges of equity interests, are
subject to release upon satisfaction of certain conditions.

   Interest on any series of notes issued under the indenture is or will be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
The notes will be issued only in fully registered form, without coupons, in
denominations of $1,000 and integral multiples thereof. Principal of, premium,
if any, and interest on the notes will be payable at the office or agency of
Host Marriott, L.P. maintained for such purpose, in the Borough of Manhattan,
The City of New York. Except as provided below, at our option payment of
interest may be made by check mailed to the holders of any notes at the
addresses set forth upon our registry books; provided, however, holders of
certificated notes will be entitled to receive interest payments (other than at
maturity) by wire transfer of immediately available funds, if appropriate wire
transfer instructions have been received in writing by the trustee not less
than 15 days prior to the applicable interest payment date. Such wire
instructions, upon receipt by the trustee, will remain in effect until revoked
by such holder. No service charge will be made for any registration of transfer
or exchange of notes, but we may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith. Until we
designate otherwise our office or agency will be the corporate trust office of
the trustee presently located at 140 Broadway, New York, New York 10005-1180.

                                       93


Guarantees

   The Series A through Series F senior notes and the Series G senior notes
offered hereby will be fully and unconditionally guaranteed as to principal,
premium, if any, and interest, jointly and severally, by the Subsidiary
Guarantors. If the partnership defaults in the payment of the principal of, or
premium, if any, or interest on, a guaranteed series of notes issued under the
indenture when and as the same shall become due, whether upon maturity,
acceleration, call for redemption, Change of Control, offer to purchase or
otherwise, without the necessity of action by the trustee or any holder, the
Subsidiary Guarantors shall be required promptly to make such payment in full.
The indenture provides that the Subsidiary Guarantors will be released from
their obligations as guarantors under such series of notes under certain
circumstances. The obligations of the Subsidiary Guarantors will be limited in
a manner intended to avoid such obligations being construed as fraudulent
conveyances under applicable law.

   Each current and future Restricted Subsidiary of Host Marriott, L.P. that
subsequently guarantees any Indebtedness (the "Guaranteed Indebtedness") of
Host Marriott, L.P. (each a "Future Subsidiary Guarantor") will be required to
guarantee the Series G senior notes offered hereby and any other series of
notes guaranteed under the indenture. If the Guaranteed Indebtedness is (A)
pari passu in right of payment with the notes, then the guarantee of such
Guaranteed Indebtedness shall be pari passu in right of payment with, or
subordinated in right of payment to, the Subsidiary guarantee or (B)
subordinated in right of payment to the notes, then the guarantee of such
Guaranteed Indebtedness shall be subordinated in right of payment to the
Subsidiary Guarantee at least to the extent that the Guaranteed Indebtedness is
subordinated in right of payment to the notes.

   Subject to compliance with the preceding paragraph, the indenture also
provides that any guarantee by a Subsidiary Guarantor shall be automatically
and unconditionally released upon (1) the sale or other disposition of Capital
Stock of the Subsidiary Guarantor, if, as a result of such sale or disposition,
such Subsidiary Guarantor ceases to be a Subsidiary of the partnership, (2) the
consolidation or merger of any such Subsidiary Guarantor with any Person other
than the partnership or a Subsidiary of the partnership, if, as a result of
such consolidation or merger, such Subsidiary Guarantor ceases to be Subsidiary
of the partnership, (3) a Legal Defeasance or Covenant Defeasance, or (4) the
unconditional and complete release of such Subsidiary Guarantor from its
guarantee of all Guaranteed Indebtedness.

Security

   The obligations of the operating partnership to pay the principal of,
premium, if any, and interest on the Series G senior notes is secured by a
pledge of the Capital Stock of certain of our direct and indirect subsidiaries,
which pledge is, and will be, shared equally and ratably with the credit
facility, the Series A through Series F senior notes and certain other of our
Indebtedness ranking pari passu in right of payment with the Series F senior
notes, including, unless otherwise provided for in the applicable supplemental
indenture, any series of notes issued under the indenture in the future. The
indenture also provides that, unless otherwise provided in a supplemental
indenture with respect to a series of notes, the Capital Stock of each
Restricted Subsidiary that is subsequently pledged to secure the credit
facility will also be pledged to secure each such series of notes on an equal
and ratable basis with respect to the Liens securing the credit facility and
any other pari passu Indebtedness secured by such Capital Stock, provided,
however, that any shares of the Capital Stock of any Restricted Subsidiary will
not be and will not be required to be pledged to secure any such series of
notes if the pledge of or grant of a security interest in such shares is
prohibited by law. Bankers Trust Company (the administrative agent under the
credit facility) currently serves as the collateral agent with respect to such
stock pledge, subject to replacement in certain circumstances. So long as the
credit facility is in effect, the lenders under the credit facility will have
the right to direct the manner and method of enforcement of remedies with
respect to the stock pledge. Any proceeds realized on a sale or disposition of
collateral would be applied first to expenses of, and other obligations owed
to, the collateral agent, second, pro rata to outstanding principal and
interest of the secured Indebtedness, and third, pro rata to other secured
obligations.

                                       94


   Upon the complete and unconditional release of the pledge of any such
Capital Stock in favor of the credit facility, the pledge of such Capital Stock
as collateral securing the notes shall be released; provided that should the
obligations of the partnership under the credit facility subsequently be
secured by a pledge of such Capital Stock at any time, the partnership must
cause such Capital Stock to be pledged ratably and with at least the same
priority for the benefit of holders of the notes.

Ranking

   The Series A through Series F senior notes are, and the Series G senior
notes offered hereby will be, senior, general obligations of the partnership,
ranking pari passu in right of payment with any other outstanding or future
unsubordinated Indebtedness of the partnership, including, without limitation,
the obligations of the partnership under the credit facility. The Series A
through Series F senior notes are, and the Series G senior notes offered hereby
will be, senior to all subordinated obligations of the partnership. Each of the
Subsidiary guarantees of the Series A through Series F senior notes and any
other series of guaranteed notes, including the Series G senior notes offered
hereby, will rank pari passu with all current and future unsubordinated
Indebtedness, and senior to all current and future subordinated Indebtedness,
of the Subsidiary Guarantors. Holders of the notes will be direct creditors of
the Subsidiary Guarantors by virtue of such guarantees of the notes.

Optional Redemption

   Upon not less than 30 nor more than 60 days' notice, we may redeem the notes
in whole but not in part at any time at a redemption price equal to 100% of the
principal amount thereof plus the Make-Whole Premium, together with accrued and
unpaid interest thereon, if any, to the applicable redemption date (subject to
the right of holders of record on the relevant record date to receive interest
due on an interest payment date that is on or prior to the applicable
redemption date). No sinking fund is provided for the notes.

Notice

   Any notice to the holders of notes of such a redemption need not set forth
the redemption price of such notes but need only set forth the calculation
thereof as described in the immediately preceding paragraph. The redemption
price, calculated as aforesaid, should be set forth in an Officer's Certificate
delivered to the trustee no later than one business day prior to the redemption
date.

   Notices of redemption shall be mailed by first class mail at least 30 but
not more than 60 days before the redemption date to each holder of notes to be
redeemed at its registered address.

   Notes called for redemption become due on the date fixed for redemption. On
and after the redemption date, interest ceases to accrue on notes called for
redemption.

Certain Definitions

   Set forth below are certain defined terms used in the covenants and other
provisions of the indenture. Reference is made to the indenture for the full
definition of all such terms as well as any other capitalized term used herein
for which no definition is provided.

   "Acquired Indebtedness" means Indebtedness or Disqualified Stock of a
Person:

     (1) existing at the time such Person becomes a Restricted Subsidiary of
  the Company, or

     (2) assumed in connection with an Asset Acquisition and not incurred in
  connection with or in contemplation or anticipation of such event

provided that Indebtedness of such Person which is redeemed, defeased
(including the deposit of funds in a valid trust for the exclusive benefit of
holders and the trustee thereof, sufficient to repay such Indebtedness in

                                       95


accordance with its terms), retired or otherwise repaid at the time of or
immediately upon consummation of the transactions by which such Person becomes
a Restricted Subsidiary or such Asset Acquisition shall not be Acquired
Indebtedness.

   "Adjusted Total Assets" means, for any Person, the Total Assets for such
Person and its Restricted Subsidiaries as of any Transaction Date, as adjusted
to reflect the application of the proceeds of the Incurrence of Indebtedness
and issuance of Disqualified Stock on the Transaction Date.

   "Affiliate" means any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company. For
purposes of this definition, the term "control" means the power to direct the
management and policies of a Person, directly or through one or more
intermediaries, whether through the ownership of voting securities, by
contract, or otherwise; provided that:

     (1) a beneficial owner of 10% or more of the total voting power normally
  entitled to vote in the election of directors, managers or trustees, as
  applicable, shall for such purposes be deemed to constitute control;

     (2) the right to designate a member of the Board of a Person or a Parent
  of that Person will not, by itself, be deemed to constitute control; and

     (3) Marriott International and its Subsidiaries shall not be deemed to
  be Affiliates of the Company or its Parent or Restricted Subsidiaries.

   "Asset Acquisition" means:

     (1) an investment by the Company or any of its Restricted Subsidiaries
  in any other Person pursuant to which such Person shall become a Restricted
  Subsidiary or shall be merged or consolidated into or with the Company or
  any of its Restricted Subsidiaries or

     (2) an acquisition by the Company or any of its Restricted Subsidiaries
  from any other Person that constitutes all or substantially all of a
  division or line of business, or one or more real estate properties, of
  such Person.

   "Asset Sale" means any sale, transfer or other disposition (including by way
of merger, consolidation or sale-leaseback transaction) in one transaction or a
series of related transactions by the Company or any of its Restricted
Subsidiaries to any Person other than the Company or any of its Restricted
Subsidiaries of

     (1) all or any of the Capital Stock of any Restricted Subsidiary
  (including by issuance of such Capital Stock);

     (2) all or substantially all of the property and assets of an operating
  unit or business of the Company or any of its Restricted Subsidiaries; or

     (3) any other property and assets of the Company or any of its
  Restricted Subsidiaries (other than Capital Stock of a Person which is not
  a Restricted Subsidiary) outside the ordinary course of business of the
  Company or such Restricted Subsidiary and, in each case, that is not
  governed by the covenant of the indenture entitled "Consolidation, Merger
  and Sale of Assets";

   provided that "Asset Sale" shall not include:

     (a) sales or other dispositions of inventory, receivables and other
  current assets;

     (b) sales, transfers or other dispositions of assets with a fair market
  value not in excess of $10 million in any transaction or series of related
  transactions;

     (c) leases of real estate assets;

     (d) Permitted Investments (other than Investments in Cash Equivalents)
  or Restricted Investments made in accordance with the "Limitation on
  Restricted Payments" covenant;

     (e) any transaction comprising part of the REIT Conversion; and

                                       96


     (f) any transactions that, pursuant to the "Limitation of Asset Sales"
  covenant, are defined not to be an "Asset Sale."

   "Average Life" means at any date of determination with respect to any debt
security, the quotient obtained by dividing:

     (1) the sum of the products of:

       (a) the number of years (calculated to the nearest one-twelfth) from
    such date of determination to the date of each successive scheduled
    principal (or redemption) payment of such debt security, and

       (b) the amount of such principal (or redemption) payment

   by

     (2) the sum of all such principal (or redemption) payments.

   "Blackstone Acquisition" means the acquisition by the Operating Partnership
from The Blackstone Group, a Delaware limited partnership, and a series of
funds controlled by Blackstone Real Estate Partners, a Delaware limited
partnership, of certain hotel properties, mortgage loans and other assets
together with the assumption of related Indebtedness.

   "Board" means:

     (1) with respect to any corporation, the board of directors of such
  corporation or any committee of the board of directors of such corporation
  authorized, with respect to any particular matter, to exercise the power of
  the board of directors of such corporation;

     (2) with respect to any partnership, any partner (including, without
  limitation, in the case of any partner that is a corporation, the board of
  directors of such corporation or any authorized committee thereof) with the
  authority to cause the partnership to act with respect to the matter at
  issue;

     (3) in the case of a trust, any trustee or board of trustees with the
  authority to cause the trust to act with respect to the matter at issue;

     (4) in the case of a limited liability company (an "LLC"), the managing
  member, management committee or other Person or group with the authority to
  cause the LLC to act with respect to the matter at issue; and

     (5) with respect to any other entity, the Person or group exercising
  functions similar to a board of directors of a corporation.

   "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.

   "Capital Contribution" means any contribution to the equity of the Company
for which no consideration is given, or if given, consists only of the issuance
of Qualified Capital Stock (or, if other consideration is given, only the value
of the contribution in excess of such other consideration).

   "Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, or other equivalents (however designated, whether
voting or non-voting), including partnership interests, whether general or
limited, in the equity of such Person, whether outstanding on the Closing Date
or issued thereafter, including, without limitation, all Common Stock,
Preferred Stock and Units.

   "Capitalized Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) of which the discounted present
value of the rental obligations of such Person as lessee, in conformity with
GAAP, is required to be capitalized on the balance sheet of such Person.

                                       97


   "Capitalized Lease Obligations" means the discounted present value of the
rental obligations under a Capitalized Lease as reflected on the balance sheet
of such Person in accordance with GAAP.

   "Cash Equivalent" means:

     (1) securities issued or directly and fully guaranteed or insured by the
  United States of America or any agency or instrumentality thereof (provided
  that the full faith and credit of the United States of America are pledged
  in support thereof);

     (2) time deposits, bankers acceptances and certificates of deposit and
  commercial paper issued by the Parent of any domestic commercial bank of
  recognized standing having capital and surplus in excess of $500 million
  and commercial paper issued by others rated at least A-2 or the equivalent
  thereof by S&P or at least P-2 or the equivalent thereof by Moody's;

     (3) marketable direct obligations issued by the District of Columbia or
  any state of the United States of America or any political subdivision or
  public instrumentality thereof bearing (at the time of investment therein)
  one of the two highest ratings obtainable from either S&P or Moody's; and

     (4) liquid investments in money market funds substantially all of the
  assets of which are securities of the type described in clauses (1) through
  (3) inclusive;

provided that the securities described in clauses (1) through (3) inclusive
have a maturity of one year or less after the date of acquisition.

   "Change of Control" means:

     (1) any sale, transfer or other conveyance, whether direct or indirect,
  of all or substantially all of the assets of the Company or Host or Host
  REIT (for so long as Host or Host REIT is a Parent of the Company
  immediately prior to such transaction or series of related transactions),
  on a consolidated basis, in one transaction or a series of related
  transactions, if, immediately after giving effect to such transaction, any
  "person" or "group" (as such terms are used for purposes of Sections 13(d)
  and 14(d) of the Exchange Act, whether or not applicable) other than an
  Excluded Person is or becomes the "beneficial owner," directly or
  indirectly, of more than 50% of the total voting power in the aggregate
  normally entitled to vote in the election of directors, managers, or
  trustees, as applicable, of the transferee;

     (2) any "person" or "group" (as such terms are used for purposes of
  Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable)
  other than an Excluded Person is or becomes the "beneficial owner,"
  directly or indirectly, of more than 50% of the total voting power in the
  aggregate of all classes of Capital Stock of the Company (or Host or Host
  REIT for so long as Host or Host REIT is a Parent of the Company
  immediately prior to such transaction or series of related transactions)
  then outstanding normally entitled to vote in elections of directors,
  managers or trustees, as applicable;

     (3) during any period of 12 consecutive months after the Issue Date (for
  so long as Host or Host REIT is a Parent of the Company immediately prior
  to such transaction or series of related transactions), Persons who at the
  beginning of such 12-month period constituted the Board of Host or Host
  REIT (together with any new Persons whose election was approved by a vote
  of a majority of the Persons then still comprising the Board who were
  either members of the Board at the beginning of such period or whose
  election, designation or nomination for election was previously so
  approved) cease for any reason to constitute a majority of the Board of
  Host or Host REIT, as applicable, then in office; or

     (4) Host REIT ceases to be a general partner of the Operating
  Partnership or ceases to control the Company;

provided, however, that neither

     (x) the pro rata distribution by Host to its shareholders of shares of
  the Company or shares of any of Host's or Host REIT's other Subsidiaries,
  nor

     (y) the REIT Conversion (or any element thereof)

shall, in and of itself, constitute a Change of Control for purposes of this
definition.

                                       98


   "Change of Control Triggering Event" means the occurrence of both a Change
of Control and a Rating Decline.

   "Closing Date" means August 5, 1998.

   "Code" means the Internal Revenue Code of 1986, as amended.

   "Common Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting), which have no preference on liquidation or with respect
to distributions over any other class of Capital Stock, including partnership
interests, whether general or limited, of such Person's equity, whether
outstanding on the Closing Date or issued thereafter, including, without
limitation, all series and classes of common stock.

   "Company" means Host Marriott, L.P., and its successors and assigns (and,
from the Issue Date to the consummation of the Merger, HMH Properties, Inc.,
and its successors and assigns).

   "Consolidated" or "consolidated" means, with respect to any Person, the
consolidation of the accounts of the Restricted Subsidiaries (including those
of the Non-Consolidated Restricted Entities) of such Person with those of such
Person; provided that:

     (1) "consolidation" will not include consolidation of the accounts of
  any other Person other than a Restricted Subsidiary of such Person with
  such Person; and

     (2) "consolidation" will include consolidation of the accounts of any
  Non-Consolidated Restricted Entities, whether or not such consolidation
  would be required or permitted under GAAP

(it being understood that the accounts of such Person's Consolidated
Subsidiaries shall be consolidated only to the extent of such Person's
proportionate interest therein).

   The terms "consolidated" and "consolidating" have correlative meanings to
the foregoing.

   "Consolidated Coverage Ratio" of any Person on any Transaction Date means
the ratio, on a pro forma basis, of

     (1) the aggregate amount of Consolidated EBITDA of such Person
  attributable to continuing operations and businesses (exclusive of amounts
  attributable to operations and businesses permanently discontinued or
  disposed of) for the Reference Period;

   to

     (2) the aggregate Consolidated Interest Expense of such Person
  (exclusive of amounts attributable to operations and businesses permanently
  discontinued or disposed of, but only to the extent that the obligations
  giving rise to such Consolidated Interest Expense would no longer be
  obligations contributing to such Person's Consolidated Interest Expense
  subsequent to the Transaction Date) during the Reference Period;

   provided that for purposes of such calculation:

     (a) acquisitions of operations, businesses or other income-producing
  assets (including any reinvestment of disposition proceeds in income-
  producing assets held as of and not disposed on the Transaction Date) which
  occurred during the Reference Period or subsequent to the Reference Period
  and on or prior to the Transaction Date shall be assumed to have occurred
  on the first day of the Reference Period;

     (b) transactions giving rise to the need to calculate the Consolidated
  Coverage Ratio shall be assumed to have occurred on the first day of the
  Reference Period;

     (c) the incurrence of any Indebtedness or issuance of any Disqualified
  Stock during the Reference Period or subsequent to the Reference Period and
  on or prior to the Transaction Date (and the application

                                       99


  of the proceeds therefrom to the extent used to refinance or retire other
  Indebtedness or invested in income-producing assets held as of and not
  disposed on the Transaction Date) shall be assumed to have occurred on the
  first day of such Reference Period; and

     (d) the Consolidated Interest Expense of such Person attributable to
  interest on any Indebtedness or dividends on any Disqualified Stock bearing
  a floating interest (or dividend) rate shall be computed on a pro forma
  basis as if the average rate in effect from the beginning of the Reference
  Period to the Transaction Date had been the applicable rate for the entire
  period, unless such Person or any of its Subsidiaries is a party to an
  Interest Swap or Hedging Obligation (which shall remain in effect for the
  12-month period immediately following the Transaction Date) that has the
  effect of fixing the interest rate on the date of computation, in which
  case such rate (whether higher or lower) shall be used.

   "Consolidated EBITDA" means, for any Person and for any period, the
Consolidated Net Income of such Person for such period adjusted to add thereto
(to the extent deducted from net revenues in determining Consolidated Net
Income), without duplication:

     (1) the sum of:

       (a) Consolidated Interest Expense;

       (b) provisions for taxes based on income (to the extent of such
    Person's proportionate interest therein);

       (c) depreciation and amortization expense (to the extent of such
    Person's proportionate interest therein);

       (d) any other noncash items reducing the Consolidated Net Income of
    such Person for such period (to the extent of such Person's
    proportionate interest therein);

       (e) any dividends or distributions during such period to such Person
    or a Consolidated Subsidiary (to the extent of such Person's
    proportionate interest therein) of such Person from any other Person
    which is not a Restricted Subsidiary of such Person or which is
    accounted for by such Person by the equity method of accounting (other
    than a Non-Consolidated Restricted Entity), to the extent that:

         1. such dividends or distributions are not included in the
      Consolidated Net Income of such Person for such period; and

         2. the sum of such dividends and distributions, plus the
      aggregate amount of dividends or distributions from such other
      Person since the Issue Date that have been included in Consolidated
      EBITDA pursuant to this clause (e), do not exceed the cumulative net
      income of such other Person attributable to the equity interests of
      the Person (or Restricted Subsidiary of the Person) whose
      Consolidated EBITDA is being determined;

       (f) any cash receipts of such Person or a Consolidated Subsidiary of
    such Person (to the extent of such Person's proportionate interest
    therein) during such period that represent items included in
    Consolidated Net Income of such Person for a prior period which were
    excluded from Consolidated EBITDA of such Person for such prior period
    by virtue of clause (2) of this definition; and

       (g) any nonrecurring expenses incurred in connection with the REIT
    Conversion;

       minus,

     (2) the sum of:

       (a) all non-cash items increasing the Consolidated Net Income of
    such Person (to the extent of such Person's proportionate interest
    therein) for such period; and

       (b) any cash expenditures of such Person (to the extent of such
    Person's proportionate interest therein) during such period to the
    extent such cash expenditures did not reduce the Consolidated Net
    Income of such Person for such period and were applied against reserves
    or accruals that constituted noncash items reducing the Consolidated
    Net Income of such Person (to the extent of such Person's proportionate
    interest therein) when reserved or accrued;

                                      100


all as determined on a consolidated basis for such Person and its Consolidated
Subsidiaries (it being understood that the accounts of such Person's
Consolidated Subsidiaries shall be consolidated only to the extent of such
Person's proportionate interest therein).

   "Consolidated Interest Expense" of any Person means, for any period, the
aggregate amount (without duplication and determined in each case on a
consolidated basis) of:

     (1) interest expensed or capitalized, paid, accrued, or scheduled to be
  paid or accrued (including, in accordance with the following sentence,
  interest attributable to Capitalized Lease Obligations but excluding the
  amortization of fees or expenses incurred in order to consummate the sale
  of the notes issued under the indenture or to establish the Credit
  Facility) of such Person and its Consolidated Subsidiaries during such
  period, including:

       (a) original issue discount and noncash interest payments or
    accruals on any Indebtedness;

       (b) the interest portion of all deferred payment obligations; and

       (c) all commissions, discounts and other fees and charges owed with
    respect to bankers' acceptances and letters of credit financings and
    Interest Swap and Hedging Obligations, in each case to the extent
    attributable to such period; and

     (2) dividends accrued or payable by such Person or any of its
  Consolidated Subsidiaries in respect of Disqualified Stock (other than by
  Restricted Subsidiaries of such Person to such Person or, to the extent of
  such Person's proportionate interest therein, such Person's Restricted
  Subsidiaries);

provided, however, that any such interest, dividends or other payments or
accruals (referenced in clauses (1) or (2)) of a Consolidated Subsidiary that
is not Wholly Owned shall be included only to the extent of the proportionate
interest of the referent Person in such Consolidated Subsidiary.

   For purposes of this definition:

     (x) interest on a Capitalized Lease Obligation shall be deemed to accrue
  at an interest rate reasonably determined by the Company to be the rate of
  interest implicit in such Capitalized Lease Obligation in accordance with
  GAAP; and

     (y) interest expense attributable to any Indebtedness represented by the
  guaranty by such Person or a Restricted Subsidiary of such Person of an
  obligation of another Person shall be deemed to be the interest expense
  attributable to the Indebtedness guaranteed.

   "Consolidated Net Income" means, with respect to any Person for any period,
the net income (or loss) of such Person and its Consolidated Subsidiaries for
such period, determined on a consolidated basis (it being understood that the
net income of Consolidated Subsidiaries shall be consolidated with that of a
Person only to the extent of the proportionate interest of such Person in such
Consolidated Subsidiaries); provided that:

     (1) net income (or loss) of any other Person which is not a Restricted
  Subsidiary of the Person, or that is accounted for by such specified Person
  by the equity method of accounting (other than a Non-Consolidated
  Restricted Entity), shall be included only to the extent of the amount of
  dividends or distributions paid to the specified Person or a Restricted
  Subsidiary of such Person;

     (2) the net income (or loss) of any other Person acquired by such
  specified Person or a Restricted Subsidiary of such Person in a pooling of
  interests transaction for any period prior to the date of such acquisition
  shall be excluded;

     (3) all gains and losses which are either extraordinary (as determined
  in accordance with GAAP) or are either unusual or nonrecurring (including
  any gain from the sale or other disposition of assets or from the issuance
  or sale of any Capital Stock) shall be excluded; and

     (4) the net income, if positive, of any of such Person's Consolidated
  Subsidiaries other than Consolidated Subsidiaries that are not Subsidiary
  Guarantors to the extent that the declaration or payment of dividends or
  similar distributions is not at the time permitted by operation of the
  terms of its charter or

                                      101


  bylaws or any other agreement, instrument, judgment, decree, order,
  statute, rule or governmental regulation applicable to such Consolidated
  Subsidiary

shall be excluded; provided, however, in the case of exclusions from
Consolidated Net Income set forth in clauses (2), (3) and (4), such amounts
shall be excluded only to the extent included in computing such net income (or
loss) on a consolidated basis and without duplication.

   "Consolidated Subsidiary" means, for any Person, each Restricted Subsidiary
of such Person (including each Non-Consolidated Restricted Entity).

   "Conversion Date" means December 29, 1998.

   "Credit Facility" means the credit facility established pursuant to the
Credit Agreement, dated as of August 5, 1998 among the Company, Host, certain
other Subsidiaries party thereto, the lenders party thereto, Bankers Trust
Company, as Arranger and Administrative Agent, and Wells Fargo Bank, N.A., The
Bank of Nova Scotia and Credit Lyonnais New York Branch, as Co-Arrangers,
together with all other agreements, instruments and documents executed or
delivered pursuant thereto or in connection therewith, in each case as such
agreements, instruments or documents may be amended, supplemented, extended,
renewed, replaced or otherwise modified or restructured from time to time
(including by way of adding Subsidiaries of the Company as additional borrowers
or guarantors thereof), whether by the same or any other agent, lender or group
of lenders.

   "Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement.

   "Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.

   "Disqualified Stock" means except as set forth below, with respect to any
Person, Capital Stock of that Person that by its terms or otherwise is:

     (1) required to be redeemed on or prior to the Stated Maturity of the
  notes for cash or property other than Qualified Capital Stock;

     (2) redeemable for cash or property other than Qualified Capital Stock
  at the option of the holder of such class or series of Capital Stock at any
  time prior to the Stated Maturity of the notes; or

     (3) convertible into or exchangeable mandatorily or at the option of the
  holder for Capital Stock referred to in clause (1) or (2) above or
  Indebtedness of the Company or a Restricted Subsidiary having a scheduled
  maturity prior to the Stated Maturity of the notes;

provided that any Capital Stock that would not constitute Disqualified Stock
but for provisions thereof giving holders thereof the right to require such
Person to repurchase or redeem such Capital Stock upon the occurrence of an
"asset sale" or "change of control" occurring prior to the Stated Maturity of
the notes shall not constitute Disqualified Stock if the "asset sale" or
"change of control" provisions applicable to such Capital Stock are no more
favorable to the holders of such Capital Stock than the provisions contained in
"Limitation on Asset Sales" and "Repurchase of Notes at the Option of Holders
upon a Change of Control Triggering Event" covenants described below and such
Capital Stock specifically provides that such Person will not repurchase or
redeem any such stock pursuant to such provision prior to the Company's
repurchase of such notes as are required to be repurchased pursuant to the
"Limitation on Asset Sales" and "Repurchase of Notes at the Option of Holders
upon a Change of Control Triggering Event" covenants described below.

   With respect to Capital Stock of a Restricted Subsidiary, only the amount
thereof issued to Persons (other than the Company or any of its Restricted
Subsidiaries) in excess of such Persons' Pro Rata Share of such Capital Stock
shall be deemed to be Disqualified Stock for purposes of determining the amount
of Disqualified Stock of the Company and its Restricted Subsidiaries.

                                      102


   Notwithstanding anything to the contrary contained in this definition:

     (a) the QUIPs are not Disqualified Stock;

     (b) any Capital Stock issued by the Operating Partnership to Host REIT
  shall not be deemed to be Disqualified Stock solely by reason of a right by
  Host REIT to require the Company to make a payment to it sufficient to
  enable Host REIT to satisfy its concurrent obligation with respect to
  Capital Stock of Host REIT, provided such Capital Stock of Host REIT would
  not constitute Disqualified Stock; and

     (c) no Capital Stock shall be deemed to be Disqualified Stock as the
  result of the right of the holder thereof to request redemption thereof if
  the issuer of such Capital Stock (or the Parent of such issuer) has the
  right to satisfy such redemption obligations by the issuance of Qualified
  Capital Stock to such holder.

   "E&P Distribution" means:

     (1) one or more distributions to the shareholders of Host and/or Host
  REIT of:

       (a) shares of SLC; and

       (b) cash, securities or other property, with a cumulative aggregate
    value equal to the amount estimated in good faith by Host or Host REIT
    from time to time as being necessary to assure that Host and Host REIT
    have distributed the accumulated earnings and profits (as referenced in
    Section 857(a)(2)(B) of the Code) of Host as of the last day of the
    first taxable year for which Host REIT's election to be taxed as a REIT
    is effective; and

     (2) the distributions from the Operating Partnership to:

       (a) Host REIT necessary to enable Host REIT to make the distributions
    described in clause (1); and

       (b) holders of Units (other than Host REIT) required as a result of
    or a condition to such distributions made pursuant to clause (2)(a).

   "Excluded Person" means, in the case of the Company, Host, Host REIT or any
Wholly Owned Subsidiary of Host or Host REIT.

   "Exempted Affiliate Transaction" means:

     (1) employee compensation arrangements approved by a majority of
  independent (as to such transactions) members of the Board of the Company;

     (2) payments of reasonable fees and expenses to the members of the
  Board;

     (3) transactions solely between the Company and any of its Subsidiaries
  or solely among Subsidiaries of the Company;

     (4) Permitted Tax Payments;

     (5) Permitted Sharing Arrangements;

     (6) Procurement Contracts;

     (7) Operating Agreements;

     (8) Restricted Payments permitted under the "Limitation on Restricted
  Payments" covenant; and

     (9) any and all elements of the REIT Conversion.

   "Existing Senior Notes" means amounts outstanding from time to time of:

     (1) the 9 1/2% Senior Secured Notes due 2005 of the Company;

     (2) the 8 7/8% Senior Notes due 2007 of the Company; and

     (3) the 9% Senior Notes due 2007 of the Company;


                                      103


in each case not in excess of amounts outstanding immediately following the
Issue Date, less amounts retired from time to time.

   "Fair market value" means the price that would be paid in an arm's-length
transaction between an informed and willing seller under no compulsion to sell
and an informed and willing buyer under no compulsion to buy, as determined:

     (1) in good faith by the Board of the Company or the applicable
  Subsidiary involved in such transaction; or

     (2) by an appraisal or valuation firm of national or regional standing
  selected by the Company or such Subsidiary, with experience in the
  appraisal or valuation of properties or assets of the type for which fair
  market value is being determined.

   "Fifty Percent Venture" means a Person:

     (1) in which the Company owns (directly or indirectly) at least 50% of
  the aggregate economic interests;

     (2) in which the Company or a Restricted Subsidiary participates in
  control as a general partner, a managing member or through similar means;
  and

     (3) which is not consolidated for financial reporting purposes with the
  Company under GAAP.

   "FF&E" means furniture, fixtures and equipment, and other tangible personal
property other than real property.

   "Funds From Operations" for any period means the Consolidated Net Income of
the Company and its Restricted Subsidiaries for such period excluding gains or
losses from debt restructurings and sales of property, plus depreciation of
real estate assets and amortization related to real estate assets and other
non-cash charges related to real estate assets, after adjustments for
unconsolidated partnerships and joint ventures plus minority interests, if
applicable (it being understood that the accounts of such Person's Consolidated
Subsidiaries shall be consolidated only to the extent of such Person's
proportionate interest therein).

   "GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Closing Date, including, without limitation,
those set forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession in the United States of America.

   "Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly Guaranteeing any Indebtedness of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person:

     (1) to purchase or pay (or advance or supply funds for the purchase or
  payment of) such Indebtedness of such other Person (whether arising by
  virtue of partnership arrangements, or by agreements to keep-well, to
  purchase assets, goods, securities or services (unless such purchase
  arrangements are on arm's-length terms and are entered into in the ordinary
  course of business), to take-or-pay, or to maintain financial statement
  conditions or otherwise); or

     (2) entered into for purposes of assuring in any other manner the
  obligee of such Indebtedness of the payment thereof or to protect such
  obligee against loss in respect thereof (in whole or in part);

provided that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.

   "HMH Properties" means HMH Properties, Inc, a Delaware corporation, which
was merged into Host Marriott, L.P. on December 16, 1998.

                                      104


   "Host" means Host Marriott Corporation, a Delaware corporation and the
indirect Parent of the Company on the Issue Date, and its successors and
assigns.

   "Host REIT" means Host Marriott Corporation, a Maryland corporation, which
is the sole general partner of Host Marriott, L.P. following the REIT
Conversion, and its successors and assigns.

   "Host REIT Merger" means the merger of Host with and into Host REIT, with
Host REIT surviving the merger, which merger occurred on December 29, 1998.

   "Incur" means, with respect to any Indebtedness, to incur, create, issue,
assume, Guarantee or otherwise become liable for or with respect to (including
as a result of an acquisition), or become responsible for, the payment of,
contingently or otherwise, such Indebtedness (including Acquired Indebtedness);
provided that neither the accrual of interest nor the accretion of original
issue discount shall be considered an Incurrence of Indebtedness.

   "Indebtedness" of any Person means, without duplication:

     (1) all liabilities and obligations, contingent or otherwise, of such
  Person:

       (a) in respect of borrowed money (whether or not the recourse of the
    lender is to the whole of the assets of such Person or only to a
    portion thereof);

       (b) evidenced by bonds, notes, debentures or similar instruments;

       (c) representing the balance deferred and unpaid of the purchase
    price of any property or services, except those incurred in the
    ordinary course of its business that would constitute ordinarily a
    trade payable to trade creditors;

       (d) evidenced by bankers' acceptances;

       (e) for the payment of money relating to a Capitalized Lease
    Obligation; or

       (f) evidenced by a letter of credit or a reimbursement obligation of
    such Person with respect to any letter of credit;

     (2) all net obligations of such Person under Interest Swap and Hedging
  Obligations; and

     (3) all liabilities and obligations of others of the kind described in
  the preceding clause (1) or (2) that such Person has guaranteed or that is
  otherwise its legal liability or which are secured by any assets or
  property of such Person.

   "Interest Swap and Hedging Obligation" means any obligation of any Person
pursuant to any interest rate swaps, caps, collars and similar arrangements
providing protection against fluctuations in interest rates. For purposes of
the Indenture, the amount of such obligations shall be the amount determined in
respect thereof as of the end of the then most recently ended fiscal quarter of
such Person, based on the assumption that such obligation had terminated at the
end of such fiscal quarter, and in making such determination, if any agreement
relating to such obligation provides for the netting of amounts payable by and
to such Person thereunder or if any such agreement provides for the
simultaneous payment of amounts by and to such Person, then in each such case,
the amount of such obligations shall be the net amount so determined, plus any
premium due upon default by such Person.

   "Investment" in any Person means any direct or indirect advance, loan or
other extension of credit (including without limitation by way of Guarantee or
similar arrangement, but excluding advances to customers in the ordinary course
of business that are, in conformity with GAAP, recorded as accounts receivable
on the consolidated balance sheet of the Company and its Restricted
Subsidiaries) or capital contribution to (by means of any transfer of cash or
other property (tangible or intangible) to others or any payment for property
or services solely for the account or use of others, or otherwise), or any
purchase or acquisition of Capital Stock, bonds, notes, debentures or other
similar instruments issued by, such Person and shall include the designation of
a Restricted Subsidiary to be an Unrestricted Subsidiary or a Non-Consolidated
Entity.

                                      105


   For purposes of the definition of "Unrestricted Subsidiary" and the
"Limitation on Restricted Payments" covenant described below:

     (1) "Investment" shall include the proportionate share of the Company
  and its Restricted Subsidiaries in the fair market value of the assets (net
  of liabilities (other than liabilities to the Company or any of its
  Restricted Subsidiaries)) of any Restricted Subsidiary at the time such
  Restricted Subsidiary is designated an Unrestricted Subsidiary or Non-
  Consolidated Entity;

     (2) the proportionate share of the Company and its Restricted
  Subsidiaries in the fair market value of the assets (net of liabilities
  (other than liabilities to the Company or any of its Restricted
  Subsidiaries)) of any Unrestricted Subsidiary or Non-Consolidated Entity at
  the time that such Unrestricted Subsidiary or Non-Consolidated Entity is
  designated a Restricted Subsidiary shall be considered a reduction in
  outstanding Investments; and

     (3) any property transferred to or from an Unrestricted Subsidiary or
  Non-Consolidated Entity shall be valued at its fair market value at the
  time of such transfer.

   "Investment Grade" means a rating of the notes by both S&P and Moody's, each
such rating being in one of such agency's four highest generic rating
categories that signifies investment grade (i.e., currently BBB--(or the
equivalent) or higher by S&P and Baa3 (or the equivalent) or higher by
Moody's); provided in each case such ratings are publicly available; provided,
further, that in the event Moody's or S&P is no longer in existence for
purposes of determining whether the notes are rated "Investment Grade," such
organization may be replaced by a nationally recognized statistical rating
organization (as defined in Rule 436 under the Securities Act) designated by
the Company, notice of which shall be given to the Trustee.

   "Issue Date" means August 5, 1998.

   "Lien" means any mortgage, pledge, security interest, encumbrance, lien,
privilege, hypothecation, other encumbrance or charge of any kind (including,
without limitation, any conditional sale or other title retention agreement or
lease in the nature thereof or any agreement to give any security interest)
upon or with respect to any property of any kind now owned or hereinafter
acquired.

   "Limited Partner Note" means an unsecured note of the Operating Partnership
which a limited partner of a Public Partnership elected to receive at the time
of the Partnership Mergers instead of or in exchange for Units.

   "Make-Whole Premium" means, with respect to any note at any redemption date,
the excess, if any, of (a) the present value of the sum of the principal amount
and premium, if any, that would be payable on such note on its maturity date
and all remaining interest payments (not including any portion of such payments
of interest accrued as of the redemption date) to and including such maturity
date, discounted on a semi-annual bond equivalent basis from such maturity date
to the redemption date at a per annum interest rate equal to the sum of the
Treasury Yield (determined on the Business Day immediately preceding the date
of such redemption), plus 50 basis points, over (b) the principal amount of the
note being redeemed.

   "Merger" means the merger of HMH Properties with and into the Operating
Partnership, with the Operating Partnership as the surviving entity, which
merger occurred on December 16, 1998.

   "Moody's" means Moody's Investors Service, Inc. and its successors.

   "Net Cash Proceeds" means:

     (1) with respect to any Asset Sale other than the sale of Capital Stock
  of a Restricted Subsidiary, the proceeds of such Asset Sale in the form of
  cash or Cash Equivalents, including payments in respect of deferred payment
  obligations (to the extent corresponding to the principal, but not
  interest, component thereof) when received in the form of cash or Cash
  Equivalents (except to the extent such obligations are

                                      106


  financed or sold with recourse to the Company or any of its Restricted
  Subsidiaries) and proceeds from the conversion of other property received
  when converted to cash or Cash Equivalents, net of:

       (a) brokerage commissions and other fees and expenses (including
    fees and expenses of counsel and investment bankers) related to such
    Asset Sale;

       (b) provisions for all Taxes (including Taxes of Host REIT) actually
    paid or payable as a result of such Asset Sale by the Company and its
    Restricted Subsidiaries, taken as a whole;

       (c) payments made to repay Indebtedness (other than Indebtedness
    subordinated in right of payment to the notes or a Subsidiary
    Guarantee) or any other obligations outstanding at the time of such
    Asset Sale that either (I) is secured by a Lien on the property or
    assets sold; or (II) is required to be paid as a result of such sale;

       (d) amounts reserved by the Company and its Restricted Subsidiaries
    against any liabilities associated with such Asset Sale, including,
    without limitation, pension and other post-employment benefit
    liabilities, liabilities related to environmental matters and
    liabilities under any indemnification obligations associated with such
    Asset Sale, all as determined on a consolidated basis in conformity
    with GAAP; and

       (e) unless Taxes thereon are paid by Host REIT as set forth in
    clause (b) above, amounts required to be distributed as a result of the
    realization of gains from Asset Sales in order to maintain or preserve
    Host REIT's status as a REIT;

  (provided, however, that with respect to an Asset Sale by any Person other
  than the Company or a Wholly Owned Subsidiary, Net Cash Proceeds shall be
  the above amount multiplied by the Company's (direct or indirect)
  percentage ownership interest in such Person); and

     (2) with respect to any issuance or sale of Capital Stock, the proceeds
  of such issuance or sale in the form of cash or Cash Equivalents, including
  payments in respect of deferred payment obligations (to the extent
  corresponding to the principal, but not interest, component thereof) when
  received in the form of cash or Cash Equivalents (except to the extent such
  obligations are financed or sold with recourse to the Company or any of its
  Restricted Subsidiaries) and proceeds from the conversion of other property
  received when converted to cash or Cash Equivalents, net of attorney's
  fees, accountant's fees, underwriters' or placement agents' fees, discounts
  or commissions and brokerage, consultant and other fees incurred in
  connection with such issuance or sale and net of tax paid or payable as a
  result thereof (provided, however, that with respect to an issuance or sale
  by any Person other than the Company or a Wholly Owned Subsidiary, Net Cash
  Proceeds shall be the above amount multiplied by the Company's (direct or
  indirect) percentage ownership interest in such Person).

   "Net Investments" means, with respect to any referenced category or group of
Investments:

     (1) the aggregate amount of such Investments made by the Company and its
  Restricted Subsidiaries (to the extent of the Company's proportionate
  interest in such Restricted Subsidiaries) on or subsequent to the Issue
  Date,

   minus

     (2) the aggregate amount of any dividends, distributions, sales proceeds
  or other amounts received by the Company and its Restricted Subsidiaries
  (to the extent of the Company's proportionate interest in such Restricted
  Subsidiaries) in respect of such Investments on or subsequent to the Issue
  Date;

and, in the event that any such Investments are made, or amounts are received,
in property other than cash, such amounts shall be the fair market value of
such property.

   "Non-Conforming Assets" means various assets (principally comprising
partnership or other interests in hotels which are not leased, certain
international hotels in which Host or its Subsidiaries own interests, and
certain FF&E relating to hotels owned by the Operating Partnership and its
Subsidiaries) which assets, if owned by the Operating Partnership, could
jeopardize Host REIT's status as a REIT.

                                      107


   "Non-Consolidated Entity" means a Non-Controlled Entity or a Fifty Percent
Venture which is neither a Non-Consolidated Restricted Entity nor an
Unrestricted Subsidiary.

   "Non-Consolidated Restricted Entity" means a Non-Controlled Entity or a
Fifty Percent Venture which has been designated by the Company (by notice to
the Trustee) as a Restricted Subsidiary and which designation has not been
revoked (by notice to the Trustee). Revocation of a previous designation of a
Non-Controlled Entity or a Fifty Percent Venture as a Non-Consolidated
Restricted Entity shall be deemed to be a designation of such entity to be a
Non-Consolidated Entity.

   "Non-Controlled Entity" means a taxable corporation in which the Operating
Partnership owns (directly or indirectly) 90% or more of the economic interest
but no more than 9.9% of the Voting Stock and whose assets consist primarily of
Non-Conforming Assets.

   "Offering" means the offering of the notes for sale by the Company.

   "Officer's Certificate" means a certificate signed on behalf of the Company,
a Guarantor or Subsidiary Guarantor, as applicable, by an officer of the
Company, a Guarantor or Subsidiary Guarantor, as applicable, who must be the
principal executive officer, the principal financial officer, the treasurer or
the principal accounting officer of the Company, Guarantor or Subsidiary
Guarantor, as applicable.

   "Old Notes" means the approximately $35 million aggregate principal amount
of four series of Indebtedness of Host outstanding on the Issue Date.

   "Operating Agreements" means the asset or property management agreements,
franchise agreements, lease agreements and other similar agreements between the
Company, any Subsidiary Guarantor or any of their respective Restricted
Subsidiaries, on the one hand, and Marriott International, SLC or another
entity engaged in and having pertinent experience with the operation of such
similar properties, on the other, relating to the operation of the real estate
properties owned by the Company, any Subsidiary Guarantor or any of their
respective Restricted Subsidiaries, provided that the management of the Company
determines in good faith that such arrangements are fair to the Company and to
such Restricted Subsidiary.

   "Operating Partnership" means Host Marriott, L.P., a Delaware limited
partnership.

   "Parent" of any Person means a corporation which at the date of
determination owns, directly or indirectly, a majority of the Voting Stock of
such Person or of a Parent of such Person.

   "Partnership Mergers" means the merger of one of more Subsidiaries of the
Operating Partnership into one or more of the Public Partnerships.

   "Paying Agent" means, until otherwise designated, the Trustee.

   "Permitted Investment" means any of the following:

     (1) an Investment in Cash Equivalents;

     (2) Investments in a Person substantially all of whose assets are of a
  type generally used in a Related Business (an "Acquired Person") if, as a
  result of such Investments:

       (a) the Acquired Person immediately thereupon is or becomes a
    Restricted Subsidiary of the Company; or

       (b) the Acquired Person immediately thereupon either (I) is merged
    or consolidated with or into the Company or any of its Restricted
    Subsidiaries and the surviving Person is the Company or a Restricted
    Subsidiary of the Company or (II) transfers or conveys all or
    substantially all of its assets to, or is liquidated into, the Company
    or any of its Restricted Subsidiaries;

     (3) an Investment in a Person, provided that:


                                      108


       (a) such Person is principally engaged in a Related Business;

       (b) the Company or one or more of its Restricted Subsidiaries
    participates in the management of such Person, as a general partner,
    member of such Person's governing board or otherwise; and

       (c) any such Investment shall not be a Permitted Investment if,
    after giving effect thereto, the aggregate amount of Net Investments
    outstanding made in reliance on this clause (3) subsequent to the Issue
    Date would exceed 5% of Total Assets;

     (4) Permitted Sharing Arrangement Payments;

     (5) securities received in connection with an Asset Sale so long as such
  Asset Sale complied with the Indenture including the covenant "Limitation
  on Asset Sales" (but, only to the extent the fair market value of such
  securities and all other non-cash and non-Cash Equivalent consideration
  received complies with clause (2) of the first paragraph of the "Limitation
  on Asset Sales" covenant);

     (6) Investments in the Company or in Restricted Subsidiaries of the
  Company;

     (7) Permitted Mortgage Investments;

     (8) any Investments constituting part of the REIT Conversion; and

     (9) any Investments in a Non-Consolidated Entity, provided that (after
  giving effect to such Investment) the total assets (before depreciation and
  amortization) of all Non-Consolidated Entities attributable to the
  Company's proportionate ownership interest therein, plus an amount equal to
  the Net Investments outstanding made in reliance upon clause (3) above,
  does not exceed 20% of the total assets (before depreciation and
  amortization) of the Company and its Consolidated Subsidiaries (to the
  extent of the Company's proportionate ownership interest therein).

   "Permitted Lien" means any of the following:

     (1) Liens imposed by governmental authorities for taxes, assessments or
  other charges where nonpayment thereof is not subject to penalty or which
  are being contested in good faith and by appropriate proceedings, if
  adequate reserves with respect thereto are maintained on the books of the
  Company in accordance with GAAP;

     (2) statutory liens of carriers, warehousemen, mechanics, materialmen,
  landlords, repairmen or other like Liens arising by operation of law in the
  ordinary course of business, provided that:

       (a) the underlying obligations are not overdue for a period of more
    than 30 days;

       (b) such Liens are being contested in good faith and by appropriate
    proceedings and adequate reserves with respect thereto are maintained
    on the books of the Company in accordance with GAAP;

     (3) Liens securing the performance of bids, trade contracts (other than
  for borrowed money), leases, statutory obligations, surety and appeal
  bonds, performance bonds and other obligations of a like nature incurred in
  the ordinary course of business;

     (4) easements, rights-of-way, zoning, similar restrictions and other
  similar encumbrances or title defects which, singly or in the aggregate, do
  not in any case materially detract from the value of the property, subject
  thereto (as such property is used by the Company or any of its Restricted
  Subsidiaries) or interfere with the ordinary conduct of the business of the
  Company or any of its Restricted Subsidiaries;

     (5) Liens arising by operation of law in connection with judgments, only
  to the extent, for an amount and for a period not resulting in an Event of
  Default with respect thereto;

     (6) pledges or deposits made in the ordinary course of business in
  connection with workers' compensation, unemployment insurance and other
  types of social security legislation; and

     (7) Liens securing on an equal and ratable basis the notes and any other
  Indebtedness.

                                      109


   "Permitted Mortgage Investment" means an Investment in Indebtedness secured
by real estate assets or Capital Stock of Persons (other than the Company or
its Restricted Subsidiaries) owning such real estate assets; provided that:

     (1) the Company is able to consolidate the operations of the real estate
  assets in its GAAP financial statements;

     (2) such real estate assets are owned by a partnership, LLC or other
  entity which is controlled by the Company or a Restricted Subsidiary as a
  general partner, managing member or through similar means; or

     (3) the aggregate amount of such Permitted Mortgage Investments
  (excluding those referenced in clauses (1) and (2) above), determined at
  the time each such Investment was made, does not exceed 10% of Total Assets
  after giving effect to such Investment.

   "Permitted REIT Distributions" means a declaration or payment of any
dividend or the making of any distribution:

     (1) to Host REIT that is necessary to maintain Host REIT's status as a
  REIT under the Code or to satisfy the distributions required to be made by
  reason of Host REIT's making of the election provided for in Notice 88-19
  (or Treasury regulations issued pursuant thereto), if:

       (a) the aggregate principal amount of all outstanding Indebtedness
    (other than the QUIPs Debt) of the Company and its Restricted
    Subsidiaries on a consolidated basis at such time is less than 80% of
    Adjusted Total Assets of the Company; and

       (b) no Default or Event of Default shall have occurred and be
    continuing; and

     (2) to any Person in respect of any Units, which distribution is
  required as a result of or a condition to the distribution or payment of
  such dividend or distribution to Host REIT; provided that such Person's
  investment in the Operating Partnership in consideration of which such
  Person received such Units shall have been consummated in a transaction
  determined by the Company to be fair to the Operating Partnership as set
  forth in an Officer's Certificate for Investments in an amount less than
  $50 million and as set forth in a Board Resolution for Investments equal to
  or greater than such amount.

   "Permitted REIT Payments" means, without duplication, payments to Host REIT
and its Subsidiaries that hold only Qualified Assets in an amount necessary
and sufficient to permit Host REIT and such Subsidiaries to pay all of their
operating expenses and other general corporate expenses and liabilities
(including any reasonable professional fees and expenses).

   "Permitted Sharing Arrangements" means any contracts, agreements or other
arrangements between the Company and/or one or more of its Subsidiaries and a
Parent of the Company and/or one or more Subsidiaries of such Parent, pursuant
to which such Persons share centralized services, establish joint payroll
arrangements, procure goods or services jointly or otherwise make payments
with respect to goods or services on a joint basis, or allocate corporate
expenses (other than taxes based on income) (provided that (i) such Permitted
Sharing Arrangements are, in the determination of management of the Company,
the Subsidiary Guarantors, or their Restricted Subsidiaries in the best
interests of the Company, the Subsidiary Guarantors, or their Restricted
Subsidiaries and (ii) the liabilities of the Company, the Subsidiary
Guarantors and their Restricted Subsidiaries under such Permitted Sharing
Arrangements are determined in good faith and on a reasonable basis).

   "Permitted Sharing Arrangements Payment" means payments under Permitted
Sharing Arrangements.

   "Permitted Tax Payments" means payment of any liability of the Company,
Host, Host REIT or any of their respective Subsidiaries for Taxes.

   "Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.

                                      110


   "Preferred Stock" means, with respect to any Person, any and all shares,
interests, participation or other equivalents (however designated, whether
voting or non-voting), which have a preference on liquidation or with respect
to distributions over any other class of Capital Stock, including preferred
partnership interests, whether general or limited, or such Person's preferred
or preference stock, whether outstanding on the Closing Date or issued
thereafter, including, without limitation, all series and classes of such
preferred or preference stock.

   "Private Partnership" means a partnership (other than a Public Partnership)
or limited liability company that owns one or more full service hotels and
that, prior to the REIT Conversion, was partially but not Wholly Owned by Host
or one of its Subsidiaries.

   "Private Partnership Acquisition" means the acquisition by the Operating
Partnership or a Restricted Subsidiary thereof from unaffiliated partners of
certain Private Partnerships of partnership interests in such Private
Partnerships in exchange for Units or the assets of such Private Partnerships
by merger or conveyance in exchange for Units.

   "Procurement Contracts" means contracts for the procurement of goods and
services entered into in the ordinary course of business and consistent with
industry practices.

   "Pro Rata Share" means "PRS" where:

   PRS equals CR divided by TC multiplied by OPTC

   where:

     CR equals the redemption value of such Capital Stock in the issuing
  Restricted Subsidiary held in the aggregate by the Company and its
  Restricted Subsidiaries.

     TC equals the total contribution to the equity of the issuing Restricted
  Subsidiary made by the Company and its Restricted Subsidiaries, and

     OPTC equals the total contribution to the equity of the issuing
  Restricted Subsidiary made by other Persons.

   "Public Partnerships" mean, collectively:

     (1) Atlanta Marriott Marquis II Limited Partnership, a Delaware limited
  partnership (with which HMC Atlanta Merger Limited Partnership was merged);

     (2) Desert Springs Marriott Limited Partnership, a Delaware limited
  partnership (with which HMC Desert Merger Limited Partnership was merged);

     (3) Hanover Marriott Limited Partnership, a Delaware limited partnership
  (with which HMC Hanover Merger Limited Partnership was merged);

     (4) Marriott Diversified American Hotels, L.P., a Delaware limited
  partnership (with which HMC Diversified Merger Limited Partnership was
  merged);

     (5) Marriott Hotel Properties Limited Partnership, a Delaware limited
  partnership (with which HMC Properties I Merger Limited Partnership was
  merged);

     (6) Marriott Hotel Properties II Limited Partnership, a Delaware limited
  partnership (with which HMC Properties II Merger Limited Partnership was
  merged);

     (7) Mutual Benefit Chicago Marriott Suite Hotel Partners, L.P., a Rhode
  Island Limited partnership (with which HMC Chicago Merger Limited
  Partnership was merged);

     (8) Potomac Hotel Limited Partnership, a Delaware limited partnership
  (with which HMC Potomac Merger Limited Partnership was merged); and

     (9) Marriott Suites Limited Partnership (with which MS Merger Limited
  Partnership was merged);

   or, as the context may require, any such entity together with its
Subsidiaries, or any of such Subsidiaries.

                                      111


   "Qualified Assets" means:

     (1) Capital Stock of the Company or any of its Subsidiaries or of other
  Subsidiaries of the Guarantors substantially all of whose sole assets are
  direct or indirect interests in Capital Stock of the Company; and

     (2) other assets related to corporate operations of the Guarantors which
  are de minimus in relation to those of the Guarantors and their Restricted
  Subsidiaries, taken as a whole.

   "Qualified Capital Stock" means any Capital Stock of the Company that is not
Disqualified Stock and, when used in the definition of "Disqualified Stock,"
also includes any Capital Stock of a Restricted Subsidiary, Host REIT or any
Parent of the Company that is not Disqualified Stock.

   "Qualified Exchange" means:

     (1) any legal defeasance, redemption, retirement, repurchase or other
  acquisition of then outstanding Capital Stock or Indebtedness of the
  Company issued on or after the Issue Date with the Net Cash Proceeds
  received by the Company from the substantially concurrent sale of Qualified
  Capital Stock; or

     (2) any exchange of Qualified Capital Stock for any then outstanding
  Capital Stock or Indebtedness issued on or after the Issue Date.

   "QUIPS" means the 6 3/4% Convertible Preferred Securities issued by Host
Marriott Financial Trust, a statutory business trust.

   "QUIPs Debt" means the $567 million aggregate principal amount of 6 3/4%
convertible subordinated debentures due 2026 of Host, held by Host Marriott
Financial Trust, a statutory business trust.

   "Rating Agencies" means (i) S&P and (ii) Moody's or (iii) if S&P or Moody's
or both shall not make a rating of all of the notes publicly available, a
nationally recognized securities rating agency or agencies, as the case may be,
selected by the Company, which shall be substituted for S&P or Moody's or both,
as the case may be.

   "Rating Category" means currently:

     (1) with respect to S&P, any of the following categories: BB, B, CCC,
  CC, C and D (or equivalent successor categories);

     (2) with respect to Moody's, any of the following categories: Ba, B,
  Caa, Ca, C and D (or equivalent successor categories); and

     (3) the equivalent of any such category of S&P or Moody's used in
  another Rating Agency.

   In determining whether the rating of the notes has decreased by one or more
gradations, gradations within Rating Categories (currently + and - for S&P, 1,
2 and 3 for Moody's; or the equivalent gradations for another Rating Agency)
shall be taken into account (e.g., with respect to S&P, a decline in a rating
from BB+ to BB, as well as from BB- to B+, will constitute a decrease of one
gradation).

   "Rating Date" means the date which is 90 days prior to the earlier of:

     (1) a Change of Control; and

     (2) the first public notice of the occurrence of a Change of Control or
  of the intention by the Company to effect a Change of Control.

   "Rating Decline" means the occurrence, on or within 90 days after the
earliest to occur of:

     (1) a Change of Control; and

     (2) the date of the first public notice of the occurrence of a Change of
  Control or of the intention by any Person to effect a Change of Control
  (which period shall be extended so long as the rating of the notes is under
  publicly announced consideration for possible downgrade by any of the
  Rating Agencies), of

                                      112


       (a) in the event the notes are rated by either Moody's or S&P on the
    Rating Date as Investment Grade, a decrease in the rating, of the notes
    by either of such Rating Agencies to a rating that is below Investment
    Grade; or

       (b) in the event the notes are rated below Investment Grade by both
    Rating Agencies on the Rating Date, a decrease in the rating of the
    notes by either Rating Agency by one or more gradations (including
    gradations with Rating Categories as well as between Rating Categories).

   "real estate assets" means real property and all FF&E associated or used in
connection therewith.

   "Reference Period" with regard to any Person means the four full fiscal
quarters ended immediately preceding any date upon which any determination is
to be made pursuant to the terms of the securities or the indenture.

   "Refinancing Indebtedness" means Indebtedness or Disqualified Stock:

     (1) issued in exchange for, or the proceeds from the issuance and sale
  of which are used substantially concurrently to repay, redeem, defease,
  refund, refinance, discharge or otherwise retire for value, in whole or in
  part; or

     (2) constituting an amendment, modification or supplement to, or a
  deferral or renewal of ((1) and (2) above are, collectively, a
  "Refinancing"),

any Indebtedness or Disqualified Stock in a principal amount or, in the case
of Disqualified Stock, liquidation preference, not to exceed the sum of :

       (a) the reasonable and customary fees and expenses incurred in
    connection with the Refinancing,

    plus

       (b) the lesser of:

         1. the principal amount or, in the case of Disqualified Stock,
      liquidation preference, of the Indebtedness or Disqualified Stock so
      refinanced; and

         2. if such Indebtedness being refinanced was issued with an
      original issue discount, the accreted value thereof (as determined
      in accordance with GAAP) at the time of such Refinancing;

provided that Refinancing Indebtedness (other than a revolving line of credit
from a commercial lender or other Indebtedness whose proceeds are used to
repay a revolving line of credit from a commercial lender to the extent such
revolving line of credit or other Indebtedness was not put in place for
purposes of evading the limitations described in this definition) shall:

     (x) not have an Average Life shorter than the Indebtedness or
  Disqualified Stock to be so refinanced at the time of such Refinancing; and

     (y) be subordinated in right of payment to the rights of holders of the
  notes if the Indebtedness or Disqualified Stock to be refinanced was so
  subordinated.

   "REIT Conversion" means the various transactions which were carried out in
connection with Host's conversion to a REIT, as generally described in the S-4
Registration Statement, including without limitation:

     (1) the contribution to the Operating Partnership and its Subsidiaries
  of substantially all of the assets (excluding the assets of SLC) held by
  Host and its other Subsidiaries;

     (2) the assumption by the Operating Partnership and/or its Subsidiaries
  of substantially all of the liabilities of Host and its other Subsidiaries
  (including, without limitation, the QUIPs Debt and the Old Notes);

     (3) the Partnership Mergers;

     (4) the Private Partnership Acquisitions;

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     (5) the issuance of Limited Partner Notes in connection with the
  foregoing;

     (6) the Blackstone Acquisition;

     (7) the contribution, prior to or substantially concurrent with the
  Conversion Date, to Non-Controlled Entities of Non-Conforming Assets;

     (8) the leases to SLC or Subsidiaries of SLC of the hotels owned by the
  Operating Partnership and its Subsidiaries;

     (9) the Host REIT Merger;

     (10) the E&P Distribution; and

     (11) such other related transactions and steps, occurring prior to or
  substantially concurrent with or within a reasonable time after the
  Conversion Date as may be reasonably necessary to complete the above
  transactions or otherwise to permit Host REIT to elect to be treated as a
  REIT for Federal income tax purposes.

   "Related Business" means the businesses conducted (or proposed to be
conducted) by the Company and its Restricted Subsidiaries as of the Closing
Date and any and all businesses that in the good faith judgment of the Board of
the Company are materially related businesses or real estate related
businesses. Without limiting the generality of the foregoing, Related Business
shall include the ownership and operation of lodging properties.

   "Restricted Investment" means, in one or a series of related transactions,
any Investment, other than a Permitted Investment.

   "Restricted Payment" means, with respect to any Person (but without
duplication):

     (1) the declaration or payment of any dividend or other distribution in
  respect of Capital Stock of such Person or the Parent or any Restricted
  Subsidiary of such Person;

     (2) any payment on account of the purchase, redemption or other
  acquisition or retirement for value of Capital Stock of such Person or the
  Parent or any Restricted Subsidiary of such Person;

     (3) other than with the proceeds from the substantially concurrent sale
  of, or in exchange for, Refinancing Indebtedness, any purchase, redemption,
  or other acquisition or retirement for value of, any payment in respect of
  any amendment of the terms of or any defeasance of, any Subordinated
  Indebtedness, directly or indirectly, by such Person or the Parent or a
  Restricted Subsidiary of such Person prior to the scheduled maturity, any
  scheduled repayment of principal, or scheduled sinking fund payment, as the
  case may be, of such Indebtedness;

     (4) any Restricted Investment by such Person; and

     (5) the payment to any Affiliate (other than the Company or its
  Restricted Subsidiaries) in respect of taxes owed by any consolidated group
  of which both such Person or a Subsidiary of such Person and such Affiliate
  are members;

provided, however, that the term "Restricted Payment" does not include:

     (a) any dividend, distribution or other payment on or with respect to
  Capital Stock of the Company to the extent payable solely in shares of
  Qualified Capital Stock;

     (b) any dividend, distribution or other payment to the Company, or to
  any of the Subsidiary Guarantors, by the Company or any of its Restricted
  Subsidiaries;

     (c) Permitted Tax Payments;

     (d) the declaration or payment of dividends or other distributions by
  any Restricted Subsidiary of the Company, provided such distributions are
  made to the Company (or a Subsidiary of the Company, as applicable) on a
  pro rata basis (and in like form) with all dividends and distributions so
  made;

                                      114


     (e) the retirement of Units upon conversion of such Units to Capital
  Stock of Host REIT;

     (f) any transactions comprising part of the REIT Conversion;

     (g) any payments with respect to Disqualified Stock or Indebtedness at
  the stated time and amounts pursuant to the original terms of the
  instruments governing such obligations;

     (h) Permitted REIT Payments; and

     (i) payments in accordance with the existing terms of the QUIPS;

and provided, further, that any payments of bona fide obligations of the
Company or any Restricted Subsidiary shall not be deemed to be Restricted
Payments solely by virtue of the fact of another Person's co-obligation with
respect thereto.

   "Restricted Subsidiary" means any Subsidiary of the Company other than (i)
an Unrestricted Subsidiary or (ii) a Non-Consolidated Entity.

   "S-4 Registration Statement" means the registration statement of the
Operating Partnership on Form S-4, filed with the Commission on June 2, 1998,
as amended and supplemented.

   "Secured Indebtedness" means any Indebtedness or Disqualified Stock secured
by a Lien (other than Permitted Liens) upon the property of the Company, the
Subsidiary Guarantors or any of their respective Restricted Subsidiaries.

   "Significant Subsidiary" means any Subsidiary which is a "significant
subsidiary" of the Company within the meaning of Rule 1-02(w) of Regulation S-X
promulgated by the Commission as in effect as of the Issue Date.

   "SLC" means HMC Senior Communities, Inc., a Delaware corporation, and its
successor Crestline Capital Corporation, a Maryland corporation, and its
successors and assigns.

   "S&P" means Standard & Poor's Ratings Services and its successors.

   "Stated Maturity" means:

     (1) with respect to any debt security, the date specified in such debt
  security as the fixed date on which the final installment of principal of
  such debt security is due and payable; and

     (2) with respect to any scheduled installment of principal of or
  interest on any debt security, the date specified in such debt security as
  the fixed date on which such installment is due and payable.

   "Subordinated Indebtedness" means Indebtedness of the Company or a
Subsidiary Guarantor that is expressly subordinated in right of payment to the
notes or a Subsidiary Guarantee thereof, as applicable.

   "Subsidiary" means, with respect to any Person:

     (1) any corporation, association or other business entity of which more
  than 50% of the voting power of the outstanding Voting Stock is owned,
  directly or indirectly, by such Person, by such Person and one or more
  Subsidiaries of such Person or by one or more Subsidiaries of such Person,
  or the accounts of which would be consolidated with those of such Person in
  its consolidated financial statements in accordance with GAAP, if such
  statements were prepared as of such date;

     (2) any partnership:

       (a) in which such Person or one or more Subsidiaries of such Person
    is, at the time, a general partner and owns alone or together with the
    Company a majority of the partnership interest; or

       (b) in which such Person or one or more Subsidiaries of such Person
    is, at the time, a general partner and which is controlled by such
    Person in a manner sufficient to permit its financial

                                      115


    statements to be consolidated with the financial statements of such
    Person in conformance with GAAP and the financial statements of which
    are so consolidated;

     (3) any Non-Controlled Entity; and

     (4) any Fifty Percent Venture.

   "Subsidiary Guarantee" means a Guarantee by each Subsidiary Guarantor for
payment of principal, premium and interest on the notes by such Subsidiary
Guarantor. Each Subsidiary Guarantee will be a senior obligation of the
Subsidiary Guarantor and will be full and unconditional regardless of the
enforceability of the notes and the Indenture.

   "Subsidiary Guarantors" means:

     (1) the current Subsidiary Guarantors identified in the following
  sentence; and

     (2) any Future Subsidiary Guarantors that become Subsidiary Guarantors
  pursuant to the terms of the Indenture

  but in each case excluding any Persons whose guarantees have been released
  pursuant to the terms of the Indenture.

   The current Subsidiary Guarantors are:

     (1) Airport Hotels LLC;

     (2) Host of Boston, Ltd.;

     (3) Host of Houston, Ltd.;

     (4) Host of Houston 1979;

     (5) Chesapeake Financial Services LLC;

     (6) City Center Interstate Partnership LLC;

     (7) HMC Retirement Properties, L.P.;

     (8) HMH Marina LLC;

     (9) Farrell's Ice Cream Parlour Restaurants LLC;

     (10) HMC Atlanta LLC;

     (11) HMC BCR Holdings LLC;

     (12) HMC Burlingame LLC;

     (13) HMC California Leasing LLC;

     (14) HMC Capital LLC;

     (15) HMC Capital Resources LLC;

     (16) HMC Park Ridge LP;

     (17) HMC Partnership Holdings LLC;

     (180) Host Park Ridge LLC;

     (19) HMC Suites LLC;

     (20) HMC Suites Limited Partnership;

     (21) PRM LLC;

     (22) Wellsford-Park Ridge Host Hotel Limited Partnership;

     (23) YBG Associates LLC;

     (24) HMC Chicago LLC;

                                      116


     (25) HMC Desert LLC;

     (26) HMC Palm Desert LLC;

     (27) MDSM Finance LLC;

     (28) HMC Diversified LLC;

     (29) HMC East Side II LLC;

     (30) HMC Gateway LLC;

     (31) HMC Grand LLC;

     (32) HMC Hanover LLC;

     (33) HMC Hartford LLC;

     (34) HMC Hotel Development LLC;

     (35) HMC HPP LLC;

     (36) HMC IHP Holding LLC;

     (37) HMC Manhattan Beach LLC;

     (38) HMC Market Street LLC;

     (39) New Market Street LP;

     (40) HMC Georgia LLC;

     (41) HMC Mexpark LLC;

     (42) HMC Polanco LLC;

     (43) HMC NGL LLC;

     (44) HMC OLS I L.P.;

     (45) HMC OP BN LLC;

     (46) HMC Pacific Gateway LLC;

     (47) HMC PLP LLC;

     (48) Chesapeake Hotel Limited Partnership;

     (49) HMC Potomac LLC;

     (50) HMC Properties I LLC;

     (51) HMC Properties II LLC;

     (52) HMC RTZ Loan I LLC;

     (53) HMC RTZ II LLC;

     (54) HMC SBM Two LLC;

     (55) HMC Seattle LLC;

     (56) HMC SFO LLC;

     (57) HMC Swiss Holdings LLC;

     (58) HMC Waterford LLC;

     (59) HMH General Partner Holdings LLC;

     (60) HMH Norfolk LLC;

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     (61) HMH Norfolk, L.P.;

     (62) HMH Pentagon LLC;

     (63) HMH Restaurants LLC;

     (64) HMH Rivers LLC;

     (65) HMH Rivers, L.P.;

     (66) HMH WTC LLC;

     (67) HMP Capital Ventures LLC;

     (68) HMP Financial Services LLC;

     (69) Host La Jolla LLC;

     (70) City Center Hotel Limited Partnership;

     (71) Times Square LLC;

     (72) Ivy Street LLC;

     (73) Market Street Host LLC;

     (74) MFR of Illinois LLC;

     (75) MFR of Vermont LLC;

     (76) MFR of Wisconsin LLC;

     (77) Philadelphia Airport Hotel LLC;

     (78) PM Financial LLC;

     (79) PM Financial LP;

     (80) HMC Property Leasing LLC;

     (81) HMC Host Restaurants LLC;

     (82) Santa Clara HMC LLC;

     (83) S.D. Hotels LLC;

     (84) Times Square GP LLC;

     (85) Durbin LLC;

     (86) HMC HT LLC;

     (87) HMC JWDC GP LLC;

     (88) HMC JWDC LLC;

     (89) HMC OLS I LLC; and

     (90) HMC OLS II L.P..

   "Subsidiary Indebtedness" means, without duplication, all Unsecured
Indebtedness (including Guarantees (other than Guarantees by Restricted
Subsidiaries of Secured Indebtedness)) of which a Restricted Subsidiary other
than a Subsidiary Guarantor is the obligor. A release of the Guarantee of a
Subsidiary Guarantor which remains a Restricted Subsidiary shall be deemed to
be an Incurrence of Subsidiary Indebtedness in amount equal to the Company's
proportionate interest in the Unsecured Indebtedness of such Subsidiary
Guarantor.

   "Tax" or "Taxes" means all Federal, state, local, and foreign taxes, and
other assessments of a similar nature (whether imposed directly or through
withholding), including any interest, additions to tax, or penalties applicable
thereto, imposed by any domestic or foreign governmental authority responsible
for the administration of any such taxes.

                                      118


   "Total Assets" means the sum of:

     (1) Undepreciated Real Estate Assets; and

     (2) all other assets (excluding intangibles) of the Company, the
  Subsidiary Guarantors, and their respective Restricted Subsidiaries
  determined on a consolidated basis (it being understood that the accounts
  of Restricted Subsidiaries shall be consolidated with those of the Company
  only to the extent of the Company's proportionate interest therein).

   "Total Unencumbered Assets" as of any date means the sum of :

     (1) Undepreciated Real Estate Assets not securing any portion of Secured
  Indebtedness; and

     (2) all other assets (but excluding intangibles and minority interests
  in Persons who are obligors with respect to outstanding secured debt) of
  the Company, the Subsidiary Guarantors and their respective Restricted
  Subsidiaries not securing any portion of Secured Indebtedness, determined
  on a consolidated basis (it being understood that the accounts of
  Restricted Subsidiaries shall be consolidated with those of the Company
  only to the extent of the Company's proportionate interest therein).

   "Transaction Date" means, with the respect to the Incurrence of any
Indebtedness or issuance of Disqualified Stock by the Company or any of its
Restricted Subsidiaries, the date such Indebtedness is to be Incurred or such
Disqualified Stock is to be issued and, with respect to any Restricted Payment,
the date such Restricted Payment is to be made.

   "Treasury Yield" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled by and
published in the most recent Federal Reserve Statistical Release H.15 (519)
which has become publicly available at least two business days prior to the
date fixed for redemption (or, if such Statistical Release is no longer
published, any publicly available source of similar data)) most nearly equal to
the then remaining average life of the notes, provided that if the average life
of the notes is not equal to the constant maturity of a United States Treasury
security for which a weekly average yield is given, the Treasury yield shall be
obtained by linear interpolation (calculated to the nearest one-twelfth of a
year) from the weekly average yields of United States Treasury securities for
which such yields are given, except that if the average life of the notes is
less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.

   "Undepreciated Real Estate Assets" means, as of any date, the cost (being
the original cost to the Company, the Subsidiary Guarantors or any of their
respective Restricted Subsidiaries plus capital improvements) of real estate
assets of the Company, the Subsidiary Guarantors and their respective
Restricted Subsidiaries on such date, before depreciation and amortization of
such real estate assets, determined on a consolidated basis (it being
understood that the accounts of Restricted Subsidiaries shall be consolidated
with those of the Company only to the extent of the Company's proportionate
interest therein).

   "Units" means the limited partnership units of the Operating Partnership.

   "Unrestricted Subsidiary" means any Subsidiary of the Company that at the
time of determination shall be designated an Unrestricted Subsidiary by the
Board of the Company in the manner provided below. The Board of the Company may
designate any Subsidiary (including any newly acquired or newly formed
Subsidiary of the Company) to be an Unrestricted Subsidiary, unless such
Subsidiary owns any Capital Stock of the Company, the Subsidiary Guarantors or
any of their respective Restricted Subsidiaries (other than the designated
Subsidiary and any other Subsidiary concurrently being designated as an
Unrestricted Subsidiary); provided that:

     (1) any Guarantee by the Company, the Subsidiary Guarantors or any of
  their respective Restricted Subsidiaries (other than the designated
  Subsidiary and any other Subsidiary concurrently being designated as an
  Unrestricted Subsidiary) of any Indebtedness of the Subsidiary being so
  designated shall be deemed an "Incurrence" of such Indebtedness and an
  "Investment" by the Company, the Subsidiary Guarantors or such Restricted
  Subsidiaries at the time of such designation;

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     (2) either:

       (a) the Subsidiary to be so designated has total assets of $1,000 or
    less; or

       (b) if such Subsidiary has assets greater than $1,000, such
    designation would not be prohibited under the "Limitation on Restricted
    Payments" covenant described below; and

     (3) if applicable, the Incurrence of Indebtedness and the Investment
  referred to in clause (1) of this proviso would be permitted under the
  "Limitation on Incurrences of Indebtedness and Issuances of Disqualified
  Stock" and "Limitation on Restricted Payments" covenants.

   The Board of the Company may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that:

     (1) no Default or Event of Default shall have occurred and be continuing
  at the time of or after giving effect to such designation; and

     (2) all Liens, Indebtedness and Disqualified Stock of such Unrestricted
  Subsidiary outstanding immediately after such designation would, if
  Incurred, granted or issued at such time, have been permitted to be
  Incurred, granted or issued and shall be deemed to have been Incurred,
  granted or issued for all purposes of the Indenture.

   Any such designation by the Board of the Company shall be evidenced to the
Trustee by promptly filing with the Trustee a copy of the Board Resolution
giving effect to such designation and an Officer's Certificate certifying that
such designation complied with the foregoing provisions.

   "Unsecured Indebtedness" means any Indebtedness or Disqualified Stock of the
Company, the Subsidiary Guarantors or any of their respective Restricted
Subsidiaries that is not Secured Indebtedness.

   "Voting Stock" means with respect to any Person, Capital Stock of any class
or kind ordinarily having the power to vote for the election of directors,
managers or other voting, members of the governing body of such Person.

   "Wholly Owned" means, with respect to any Subsidiary of any Person, the
ownership of all of the outstanding Capital Stock of such Subsidiary (other
than any director's qualifying shares or Investments by individuals mandated by
applicable law) by such Person and/or one or more Wholly Owned Subsidiaries of
such Person.

Covenants

   The following covenants apply to the notes being offered pursuant to this
prospectus:

Repurchase of Notes at the Option of the Holder Upon a Change of Control
Triggering Event

   Upon the occurrence of a Change of Control Triggering Event, each holder of
notes will have the right to require the Company to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of such holder's notes
pursuant to the unconditional, irrevocable offer to purchase described below
(the "Change of Control Offer") at an offer price in cash equal to 101% of the
aggregate principal amount thereof, plus accrued and unpaid interest thereon to
the date of purchase (the "Change of Control Payment") on a date that is not
more than 45 Business Days after the occurrence of such Change of Control
Triggering Event (the "Change of Control Payment Date").

   On or before the Change of Control Payment Date, the Company will:

     (1) accept for payment notes or portions thereof properly tendered
  pursuant to the Change of Control Offer;

     (2) deposit with the Paying Agent cash sufficient to pay the Change of
  Control Payment (together with accrued and unpaid interest) of all notes so
  tendered; and

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     (3) deliver to the trustee notes so accepted together with an Officer's
  Certificate listing the aggregate principal amount of the notes or portions
  thereof being purchased by the Company.

   The Paying Agent will promptly mail to the holders of notes so accepted
payment in an amount equal to the Change of Control Payment, and the trustee
will promptly authenticate and mail or deliver (or cause to be transferred by
book entry) to such holders a new note equal in principal amount to any
unpurchased portion of the note surrendered; provided that each such new note
will be in a principal amount of $1,000 or an integral multiple thereof. Any
notes not so accepted will be promptly mailed or delivered by the Company to
the holder thereof. The Company will publicly announce the results of the
Change of Control Offer on or as soon as practicable after the consummation
thereof.

   The provisions of the indenture relating to a Change of Control Triggering
Event may not afford the holders protection in the event of a highly leveraged
transaction, reorganization, restructuring, merger, spin-off or similar
transaction that may adversely affect holders, if such transaction does not
constitute a Change of Control Triggering Event, as defined. In addition, the
Company may not have sufficient financial resources available to fulfill its
obligation to repurchase the notes upon a Change of Control Triggering Event.

   Any Change of Control Offer will be made in compliance with all applicable
laws, rules and regulations, including, if applicable, Regulation 14E under the
Securities Exchange Act of 1934, as amended, and the rules thereunder and all
other applicable Federal and state securities laws.

Limitation on Incurrences of Indebtedness and Issuances of Disqualified Stock

   (1) Except as set forth below, neither the Company, the Subsidiary
Guarantors nor any of their respective Restricted Subsidiaries will, directly
or indirectly, Incur any Indebtedness (including Acquired Indebtedness) or
issue any Disqualified Stock. Notwithstanding the foregoing sentence, if, on
the date of any such Incurrence or issuance, after giving effect to, on a pro
forma basis, such Incurrence or issuance and the receipt and application of the
proceeds therefrom:

     (a) the aggregate amount of all outstanding Indebtedness (other than the
  QUIPs Debt) and Disqualified Stock of the Company, the Subsidiary
  Guarantors and their respective Restricted Subsidiaries (including amounts
  of Refinancing Indebtedness outstanding pursuant to paragraph (4)(c) hereof
  or otherwise), determined on a consolidated basis (it being understood that
  the amounts of Indebtedness and Disqualified Stock of Restricted
  Subsidiaries shall be consolidated with that of the Company only to the
  extent of the Company's proportionate interest in such Restricted
  Subsidiaries), without duplication, is less than or equal to 65% of
  Adjusted Total Assets of the Company; and

     (b) the Consolidated Coverage Ratio of the Company would be greater than
  or equal to 2.0 to 1, the Company and its Restricted Subsidiaries may Incur
  such Indebtedness or issue such Disqualified Stock.

   (2) In addition to the foregoing limitations set forth in (1) above, except
as set forth below, the Company, the Subsidiary Guarantors and their Restricted
Subsidiaries will not Incur any Secured Indebtedness or Subsidiary
Indebtedness. Notwithstanding the foregoing sentence, if, immediately after
giving effect to the Incurrence of such additional Secured Indebtedness and/or
Subsidiary Indebtedness and the application of the proceeds thereof, the
aggregate amount of all outstanding Secured Indebtedness and Subsidiary
Indebtedness of the Company, the Subsidiary Guarantors and their Restricted
Subsidiaries (including amounts of Refinancing Indebtedness outstanding
pursuant to paragraph (4)(c) hereof or otherwise), determined on a consolidated
basis (it being understood that the amounts of Secured Indebtedness and
Subsidiary Indebtedness of Restricted Subsidiaries shall be consolidated with
that of the Company only to the extent of the Company's proportionate interest
in such Restricted Subsidiaries), without duplication, is less than or equal to
45% of Adjusted Total Assets of the Company, the Company and its Restricted
Subsidiaries may Incur such Secured Indebtedness and/or Subsidiary
Indebtedness.

   (3) In addition to the limitations set forth in (1) and (2) above, the
Company, the Subsidiary Guarantors and their Restricted Subsidiaries will
maintain at all times Total Unencumbered Assets of not less than 125% of

                                      121


the aggregate outstanding amount of the Unsecured Indebtedness (other than the
QUIPs Debt) (including amounts of Refinancing Indebtedness outstanding
pursuant to paragraph (4)(c) hereof or otherwise) determined on a consolidated
basis (it being understood that the Unsecured Indebtedness of the Restricted
Subsidiaries shall be consolidated with that of the Company only to the extent
of the Company's proportionate interest in such Restricted Subsidiaries).

   (4) Notwithstanding paragraphs (1) or (2), the Company, the Subsidiary
Guarantors and their respective Restricted Subsidiaries (except as specified
below) may Incur or issue each and all of the following:

     (a) Indebtedness outstanding (including Indebtedness issued to replace,
  refinance or refund such Indebtedness) under the Credit Facility at any
  time in an aggregate principal amount not to exceed $1.5 billion, less any
  amount of such Indebtedness permanently repaid as provided under the
  "Limitation on Asset Sales" covenant (including that, in the case of a
  revolver or similar arrangement, such commitment is permanently reduced by
  such amount);

     (b) Indebtedness or Disqualified Stock owed:

       a) to the Company; or

       b) to any Subsidiary Guarantor; provided that any event which results
    in any Restricted Subsidiary holding such Indebtedness or Disqualified
    Stock ceasing to be a Restricted Subsidiary or any subsequent transfer
    of such Indebtedness or Disqualified Stock (other than to the Company or
    a Subsidiary Guarantor) shall be deemed, in each case, to constitute an
    Incurrence of such Indebtedness or issuance of Disqualified Stock not
    permitted by this clause (b);

     (c) Refinancing Indebtedness with respect to outstanding Indebtedness
  (other than Indebtedness Incurred under clause (a), (b), (d), (f) or (h) of
  this paragraph) and any refinancings thereof;

     (d) Indebtedness:

       (i) in respect of performance, surety or appeal bonds Incurred in the
    ordinary course of business;

       (ii) under Currency Agreements and Interest Swap and Hedging
    Obligations; provided that such agreements:
         (A) are designed solely to protect the Company, the Subsidiary
      Guarantors or any of their Restricted Subsidiaries against
      fluctuations in foreign currency exchange rates or interest rates;
      and

         (B) do not increase the Indebtedness of the obligor outstanding,
      at any time other than as a result of fluctuations in foreign
      currency exchange rates or interest rates or by reason of fees,
      indemnities and compensation payable thereunder; or

       (iii) arising from agreements providing for indemnification,
    adjustment of purchase price or similar obligations, or from Guarantees
    or letters of credit, surety bonds or performance bonds securing any
    obligations of the Company, the Subsidiary Guarantors or any of their
    Restricted Subsidiaries pursuant to such agreements, in any case
    Incurred in connection with the disposition of any business, assets or
    Restricted Subsidiary (other than Guarantees of Indebtedness Incurred by
    any Person acquiring all or any portion of such business, assets or
    Restricted Subsidiary for the purpose of financing such acquisition), in
    an amount not to exceed the gross proceeds actually received by the
    Company, the Subsidiary Guarantors and their Restricted Subsidiaries on
    a consolidated basis in connection with such disposition;

     (e) Indebtedness of the Company, to the extent the net proceeds thereof
  are promptly:

       (i) used to purchase all of the notes tendered in a Change of Control
    Offer made as a result of a Change of Control; or

       (ii) deposited to defease the notes as described below under "Legal
    Defeasance and Covenant Defeasance";

                                      122


     (f) Guarantees of the notes and Guarantees of Indebtedness of the
  Company or any of the Subsidiary Guarantors by any of their respective
  Restricted Subsidiaries; provided the guarantee of such Indebtedness is
  permitted by and made in accordance with the terms of the Indenture at the
  time of the incurrence of such underlying Indebtedness or at the time such
  guarantor becomes a Restricted Subsidiary;

     (g) Indebtedness evidenced by the notes and the Guarantees thereof and
  represented by the indenture up to the amounts issued pursuant thereto as
  of the Issue Date;

     (h) the QUIPs Debt;

     (i) Limited Partner Notes; and

     (j) Indebtedness Incurred pursuant to the Blackstone Acquisition and any
  Indebtedness of Host, its Subsidiaries, a Public Partnership or a Private
  Partnership incurred in connection with the REIT Conversion.

   (5) For purposes of determining any particular amount of Indebtedness under
this covenant:

     (a) Indebtedness Incurred under the Credit Facility on or prior to the
  Issue Date shall be treated as Incurred pursuant to clause (a) of paragraph
  (4) of this covenant; and

     (b) Guarantees, Liens or obligations with respect to letters of credit
  supporting Indebtedness otherwise included in the determination of such
  particular amount shall not be included as additional Indebtedness. For
  purposes of determining compliance with this covenant, in the event that an
  item of Indebtedness meets the criteria of more than one of the types of
  Indebtedness described in the above clauses, the Company, in its sole
  discretion, shall classify such item of Indebtedness as being Incurred
  under only one of such clauses.

   Indebtedness or Disqualified Stock of any Person that is not a Restricted
Subsidiary of the Company, which Indebtedness or Disqualified Stock is
outstanding at the time such Person becomes a Restricted Subsidiary of the
Company (including by designation) or is merged with or into or consolidated
with the Company or a Restricted Subsidiary of the Company, shall be deemed to
have been Incurred or issued at the time such Person becomes a Restricted
Subsidiary of the Company or is merged with or into or consolidated with the
Company, or a Restricted Subsidiary of the Company, and Indebtedness or
Disqualified Stock which is assumed at the time of the acquisition of any asset
shall be deemed to have been Incurred or issued at the time of such
acquisition.

Limitation on Liens

   Neither the Company, the Subsidiary Guarantors, nor any Restricted
Subsidiary shall secure any Indebtedness under the Credit Facility by a Lien or
suffer to exist any Lien on their respective properties or assets securing
Indebtedness under the Credit Facility unless effective provision is made to
secure the notes equally and ratably with the Lien securing such Indebtedness
for so long as Indebtedness under the Credit Facility is secured by such Lien.

Limitation on Restricted Payments

   The Company and the Subsidiary Guarantors will not, and the Company and the
Subsidiary Guarantors will not permit any of their respective Restricted
Subsidiaries to, directly or indirectly, make a Restricted Payment if, at the
time of, and after giving effect to, the proposed Restricted Payment:

     (1) a Default or Event of Default shall have occurred and be continuing;

     (2) the Company could not Incur at least $1.00 of Indebtedness under
  paragraph (a) of the "Limitation on Incurrence of Indebtedness and Issuance
  of Disqualified Stock" covenant; or

                                      123


     (3) the aggregate amount of all Restricted Payments (the amount, if
  other than in cash, the fair market value of any property used therefor)
  made on and after the Issue Date shall exceed the sum of, without
  duplication:

       (a) 95% of the aggregate amount of the Funds From Operations (or, if
    the Funds From Operations is a loss, minus 100% of the amount of such
    loss) accrued on a cumulative basis during the period (taken as one
    accounting period) beginning on the first day of the fiscal quarter in
    which the Issue Date occurs and ending on the last day of the last
    fiscal quarter preceding the Transaction Date;

       (b) 100% of the aggregate Net Cash Proceeds received by the Company
    after the Issue Date from the issuance and sale permitted by the
    Indenture of its Capital Stock (other than Disqualified Stock) to a
    Person who is not a Subsidiary of the Company including from an
    issuance to a Person who is not a Subsidiary of the Company of any
    options, warrants or other rights to acquire Capital Stock of the
    Company (in each case, exclusive of any Disqualified Stock or any
    options, warrants or other rights that are redeemable at the option of
    the holder, or are required to be redeemed, prior to the Stated
    Maturity of the notes), and the amount of any Indebtedness (other than
    Indebtedness subordinate in right of payment to the notes) of the
    Company that was issued and sold for cash upon the conversion of such
    Indebtedness after the Issue Date into Capital Stock (other than
    Disqualified Stock) of the Company, or otherwise received as Capital
    Contributions;

       (c) an amount equal to the net reduction in Investments (other than
    Permitted Investments) in any Person other than a Restricted Subsidiary
    after the Issue Date resulting from payments of interest on
    Indebtedness, dividends, repayments of loans or advances, or other
    transfers of assets, in each case to the Company or any of its
    Restricted Subsidiaries or from the Net Cash Proceeds from the sale of
    any such Investment (except, in each case, to the extent any such
    payment or proceeds are included in the calculation of Funds From
    Operations) or from designations of Unrestricted Subsidiaries or Non-
    Consolidated Entities as Restricted Subsidiaries (valued in each case
    as provided in the definition of "Investments");

       (d) the fair market value of noncash tangible assets or Capital
    Stock (other than that of the Company or its Parent) representing
    interests in Persons acquired after the Issue Date in exchange for an
    issuance of Qualified Capital Stock; and

       (e) the fair market value of noncash tangible assets or Capital
    Stock (other than that of the Company or its Parent) representing
    interests in Persons contributed as a Capital Contribution to the
    Company after the Issue Date.

   Notwithstanding the foregoing, the Company may make Permitted REIT
Distributions.

   The Company estimates that as of June 16, 2000, the sum of the amounts
referenced in clauses (a) through (e) above was approximately $3.4 billion.

Limitation on Dividend and Other Payment Restrictions Affecting Subsidiary
Guarantors

   The Company and the Subsidiary Guarantors will not create or otherwise cause
or suffer to exist or become effective any consensual encumbrance or
restriction of any kind on the ability of any Subsidiary Guarantor to:

     (1) pay dividends or make any other distributions permitted by
  applicable law on any Capital Stock of such Subsidiary Guarantor held by
  the Company or its Restricted Subsidiaries;

     (2) pay any Indebtedness owed to the Company or any Subsidiary
  Guarantor;

     (3) make loans or advances to the Company or any Subsidiary Guarantor;
  or

     (4) transfer its property or assets to the Company or any Subsidiary
  Guarantor.

                                      124


   The foregoing provisions shall not prohibit any encumbrances or
restrictions:

     (1) imposed under the indenture as in existence immediately following
  the Issue Date or under the Credit Facility, and any extensions,
  refinancings, renewals or replacements of such agreements; provided that
  the encumbrances and restrictions in any such extensions, refinancings,
  renewals or replacements are no less favorable in any material respect to
  the holders than those encumbrances or restrictions that are then in effect
  and that are being extended, refinanced, renewed or replaced;

     (2) imposed under any applicable documents or instruments pertaining to
  any Secured Indebtedness (and relating solely to assets constituting
  collateral thereunder or cash proceeds from or generated by such assets);

     (3) existing under or by reason of applicable law;

     (4) existing with respect to any Person or the property or assets of
  such Person acquired by the Company or any Restricted Subsidiary, existing
  at the time of such acquisition and not incurred in contemplation thereof,
  which encumbrances or restrictions are not applicable to any Person or the
  property or assets of any Person other than such Person or the property or
  assets of such Person so acquired;

     (5) in the case of clause (4) of the first paragraph of this covenant,
  (a) that restrict in a customary manner the subletting, assignment or
  transfer of any property or asset that is a lease, license, conveyance or
  contract or similar property or asset, (b) existing by virtue of any
  transfer of, agreement to transfer, option or right with respect to, or
  Lien on, any property or assets of the Company or any Restricted Subsidiary
  not otherwise prohibited by the indenture or (c) arising or agreed to in
  the ordinary course of business, not relating to any Indebtedness, and that
  do not, individually or in the aggregate, detract from the value of
  property or assets of the Company or any Restricted Subsidiary in any
  manner material to the Company and its Restricted Subsidiaries, taken as a
  whole;

     (6) with respect solely to a Restricted Subsidiary and imposed pursuant
  to an agreement that has been entered into for the sale or disposition of
  all or substantially all of the Capital Stock of, or property and assets
  of, such Restricted Subsidiary;

     (7) contained in the terms of any Indebtedness or any agreement pursuant
  to which such Indebtedness was issued if (a) the encumbrance or restriction
  applies only in the event of a payment default or a default with respect to
  a financial covenant contained in such Indebtedness or agreement, (b) the
  encumbrance or restriction is not materially more disadvantageous to the
  holders of the notes than is customary in comparable financings (as
  determined by the Company) and (c) the Company determines that any such
  encumbrance or restriction will not materially affect its ability to make
  principal or interest payments on the notes, or

     (8) in connection with and pursuant to permitted refinancings thereof,
  replacements of restrictions imposed pursuant to clause (4) of this
  paragraph that are not more restrictive than those being replaced and do
  not apply to any other Person or assets other than those that would have
  been covered by the restrictions in the Indebtedness so refinanced.

   Nothing contained in this covenant shall prevent the Company, the Subsidiary
Guarantors or any of their respective Restricted Subsidiaries from:

     (a) creating, incurring, assuming or suffering to exist any Permitted
  Liens or Liens not prohibited by the "Limitation on Liens" covenant; or

     (b) restricting the sale or other disposition of property or assets of
  the Company or any of its Restricted Subsidiaries that secure Indebtedness
  of the Company or any of its Restricted Subsidiaries in accordance with the
  terms of such Indebtedness or any related security document.

Limitation on Transactions with Affiliates

   Neither the Company, the Subsidiary Guarantors, nor any of their respective
Restricted Subsidiaries will be permitted to, directly or indirectly, enter
into, renew or extend any transaction or series of transactions

                                      125


(including, without limitation, the purchase, sale, lease or exchange of
property or assets, or the rendering of any service) with any Affiliate of the
Company or any of its Restricted Subsidiaries ("Affiliate Transactions"), other
than Exempted Affiliate Transactions, except upon fair and reasonable terms no
less favorable to the Company, the Subsidiary Guarantor or such Restricted
Subsidiary than could be obtained, at the time of such transaction or, if such
transaction is pursuant to a written agreement, at the time of the execution of
the agreement providing therefor, in a comparable arm's length transaction with
a Person that is not an Affiliate.

   The foregoing limitation does not limit, and shall not apply to:

     (1) transactions approved by a majority of the Board of the Company;

     (2) the payment of reasonable and customary fees and expenses to members
  of the Board of the Company who are not employees of the Company;

     (3) any Restricted Payments not prohibited by the "Limitation on
  Restricted Payments" covenant or any payments specifically exempted from
  the definition of Restricted Payments; and

     (4) Permitted REIT Payments.

   Notwithstanding the foregoing, any Affiliate Transaction or series of
related Affiliate Transactions, other than Exempted Affiliate Transactions and
any transaction or series of related transactions specified in any of clauses
(2) through (4) of the preceding paragraph:

     (a) with an aggregate value in excess of $10 million must first be
  approved pursuant to a Board Resolution by a majority of the Board of the
  Company who are disinterested in the subject matter of the transaction; and

     (b) with an aggregate value in excess of $25 million, will require the
  Company to obtain a favorable written opinion from an independent financial
  advisor of national reputation as to the fairness from a financial point of
  view of such transaction to the Company, such Subsidiary Guarantor or such
  Restricted Subsidiary, except that in the case of a real estate transaction
  or related real estate transactions with an aggregate value in excess of
  $25 million but not in excess of $50 million, an opinion may instead be
  obtained from an independent, qualified real estate appraiser that the
  consideration received in connection with such transaction is fair to the
  Company, such Subsidiary Guarantor or such Restricted Subsidiary.

Limitation on Asset Sales

   The Company and the Subsidiary Guarantors will not, and the Company and the
Subsidiary Guarantors will not permit any of their respective Restricted
Subsidiaries to, consummate any Asset Sale, unless:

     (1) the consideration received by the Company, the Subsidiary Guarantor
  or such Restricted Subsidiary is at least equal to the fair market value of
  the assets sold or disposed of as determined by the Board of the Company,
  in good faith; and

     (2) at least 75% of the consideration received consists of cash, Cash
  Equivalents and/or real estate assets; provided that, with respect to the
  sale of one or more real estate properties, up to 75% of the consideration
  may consist of indebtedness of the purchaser of such real estate properties
  so long as such Indebtedness is secured by a first priority Lien on the
  real estate property or properties sold; and provided that, for purposes of
  this clause (2) the amount of:

       (a) any Indebtedness (other than Indebtedness subordinated in right
    of payment to the notes or a Subsidiary Guarantee) that is required to
    be repaid or assumed (and is either repaid or assumed by the transferee
    of the related assets) by virtue of such Asset Sale and which is
    secured by a Lien on the property or assets sold; and

       (b) any securities or other obligations received by the Company, any
    Subsidiary Guarantor or any such Restricted Subsidiary from such
    transferee that are immediately converted by the Company, the
    Subsidiary Guarantor or such Restricted Subsidiary into cash (or as to
    which the Company, any Subsidiary Guarantor or such Restricted
    Subsidiary has received at or prior to the consummation of

                                      126


    the Asset Sale a commitment (which may be subject to customary
    conditions) from a nationally recognized investment, merchant or
    commercial bank to convert into cash within 90 days of the consummation
    of such Asset Sale and which are thereafter actually converted into
    cash within such 90-day period) will be deemed to be cash.

   In the event that the aggregate Net Cash Proceeds received by the Company,
any Subsidiary Guarantors or such Restricted Subsidiaries from one or more
Asset Sales occurring on or after the Closing Date in any period of 12
consecutive months exceed 1% of Total Assets (determined as of the date closest
to the commencement of such 12 month period for which a consolidated balance
sheet of the Company and its Restricted Subsidiaries has been filed with the
Securities and Exchange Commission or provided to the trustee pursuant to the
"Reports" covenant), then prior to 12 months after the date Net Cash Proceeds
so received exceeded 1% of Total Assets, the Net Cash Proceeds may be:

     (1) invested in or committed to be invested in, pursuant to a binding
  commitment subject only to reasonable, customary closing conditions, and
  providing such Net Cash Proceeds are, in fact, so invested, within an
  additional 180 days:

       (a) fixed assets and property (other than notes, bonds, obligations
    and securities) which in the good faith reasonable judgment of the
    Board of the Company will immediately constitute or be part of a
    Related Business of the Company, the Subsidiary Guarantor or such
    Restricted Subsidiary (if it continues to be a Restricted Subsidiary)
    immediately following such transaction;

       (b) Permitted Mortgage Investments; or

       (c) a controlling interest in the Capital Stock of an entity engaged
    in a Related Business;

provided that concurrently with an Investment specified in clause (c), such
entity becomes a Restricted Subsidiary; or

     (2) used to repay and permanently reduce Indebtedness outstanding under
  the Credit Facility (including that, in the case of a revolver or similar
  arrangement, such commitment is permanently reduced by such amount).

   Pending the application of any such Net Cash Proceeds as described above,
the Company may invest such Net Cash Proceeds in any manner that is not
prohibited by the Indenture. Any Net Cash Proceeds from Asset Sales that are
not applied or invested as provided in the first sentence of this paragraph
(including any Net Cash Proceeds which were committed to be invested as
provided in such sentence but which are not in fact invested within the time
period provided) will be deemed to constitute "Excess Proceeds."

   Within 30 days following each date on which the aggregate amount of Excess
Proceeds exceeds $25 million, the Company will make an offer to purchase from
the holders of the notes and holders of any other Indebtedness of the Company
ranking pari passu with the notes from time to time outstanding with similar
provisions requiring the Company to make an offer to purchase or redeem such
Indebtedness with the proceeds from such Asset Sale, on a pro rata basis, an
aggregate principal amount (or accreted value, as applicable) of notes and such
other Indebtedness equal to the Excess Proceeds on such date, at a purchase
price in cash equal to 100% of the principal amount (or accreted value, as
applicable) of the notes and such other Indebtedness, plus, in each case,
accrued interest (if any) to the Payment Date. To the extent that the aggregate
amount of notes and other senior Indebtedness tendered pursuant to an Asset
Sale Offer is less than the Excess Proceeds, the Company may use any remaining
Excess Proceeds for general corporate purposes. If the aggregate principal
amount (or accreted value, as applicable) of notes and such other Indebtedness
tendered pursuant to an Asset Sale Offer exceeds the amount of Excess Proceeds,
the notes to be purchased and such other Indebtedness shall be selected on a
pro rata basis. Upon completion of such Offer to Purchase, the amount of Excess
Proceeds shall be reset at zero.

                                      127


   Notwithstanding, and without complying with, any of the foregoing
provisions:

     (1) the Company, the Subsidiary Guarantors and their respective
  Restricted Subsidiaries may, in the ordinary course of business, convey,
  sell, lease, transfer, assign or otherwise dispose of inventory acquired
  and held for resale in the ordinary course of business;

     (2) the Company, the Subsidiary Guarantors and their respective
  Restricted Subsidiaries may convey, sell, lease, transfer, assign or
  otherwise dispose of assets pursuant to and in accordance with the
  "Consolidation, Merger and Sale of Assets" and "Limitation on Merger of
  Subsidiary Guarantors and Release of Subsidiary Guarantors" covenants in
  the indenture;

     (3) the Company, the Subsidiary Guarantors and their respective
  Restricted Subsidiaries may sell or dispose of damaged, worn out or other
  obsolete property in the ordinary course of business so long as such
  property is no longer necessary for the proper conduct of the business of
  the Company, the Subsidiary Guarantor or such Restricted Subsidiary, as
  applicable; and

     (4) the Company, the Subsidiary Guarantors and their respective
  Restricted Subsidiaries may exchange assets held by the Company, the
  Subsidiary Guarantor or a Restricted Subsidiary for one or more real estate
  properties and/or one or more Related Businesses of any Person or entity
  owning one or more real estate properties and/or one or more Related
  Businesses; provided that the Board of the Company has determined in good
  faith that the fair market value of the assets received by the Company are
  approximately equal to the fair market value of the assets exchanged by the
  Company.

   No transaction listed in clauses (1) through (4) inclusive shall be deemed
to be an "Asset Sale."

Limitation on Merger of Subsidiary Guarantors and Release of Subsidiary
Guarantors

   No Subsidiary Guarantor shall consolidate or merge with or into (whether or
not such Subsidiary Guarantor is the surviving Person) another Person (other
than the Company or another Subsidiary Guarantor), unless:

     (1) subject to the provisions of the following paragraph, the Person
  formed by or surviving any such consolidation or merger (if other than such
  Subsidiary Guarantor) assumes all the obligations of such Subsidiary
  Guarantor pursuant to a supplemental indenture in form reasonably
  satisfactory to the trustee, pursuant to which such Person shall
  unconditionally and fully guarantee, on a senior basis, all of such
  Subsidiary Guarantor's obligations under such Subsidiary Guarantor's
  Guarantee under the indenture on the terms set forth in the indenture; and

     (2) immediately before and immediately after giving effect to such
  transaction on a pro forma basis, no Default or Event of Default shall have
  occurred or be continuing.

   The Guarantee of the notes by a Subsidiary Guarantor shall be automatically
released upon:

     (a) the sale or other disposition of Capital Stock of such Subsidiary
  Guarantor if, as a result of such sale or disposition, such Subsidiary
  Guarantor ceases to be a Subsidiary of the Company;

     (b) the consolidation or merger of any such Subsidiary Guarantor with
  any Person other than the Company or a Subsidiary of the Company if, as a
  result of such consolidation or merger, such Subsidiary Guarantor ceases to
  be Subsidiary of the Company;

     (c) a Legal Defeasance or Covenant Defeasance; or

     (d) the unconditional and complete release of such Subsidiary Guarantor
  from its Guarantee of all Guaranteed Indebtedness.

Limitation on Status as Investment Company

   The indenture prohibits the Company and its Restricted Subsidiaries from
being required to register as an "investment company" (as that term is defined
in the Investment Company Act of 1940, as amended).

                                      128


Covenants upon Attainment and Maintenance of an Investment Grade Rating.

   The covenants "--Limitation on Liens," "--Limitation on Restricted
Payments," "--Limitation on Dividend and other Payment Restrictions Affecting
Subsidiary Guarantors," "--Limitation on Asset Sales," and "--Limitation on
Transactions with Affiliates" will not be applicable in the event, and only for
so long as, the notes are rated Investment Grade.

Reports

   Whether or not the Company is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall deliver to the
trustee and to each holder, within 15 days after it is or would have been
required to file such with the Commission, annual and quarterly financial
statements substantially equivalent to financial statements that would have
been included in reports filed with the Commission, if the Company were subject
to the requirements of Section 13 or 15(d) of the Exchange Act, including, with
respect to annual information only, a report thereon by the certified
independent public accountants of the Company, as such would be required in
such reports to the Commission, and, in each case, together with a management's
discussion and analysis of financial condition and results of operations which
would be so required. Whether or not required by the rules and regulations of
the Commission, the Company will file a copy of all such information and
reports with the Commission for public availability and will make such
information available to securities analysts and prospective investors upon
request.

Events of Default

   An Event of Default with respect to any series of notes issued under the
indenture is defined as:

     (1) the failure by the Company to pay any installment of interest on the
  notes of that series as and when the same becomes due and payable and the
  continuance of any such failure for 30 days;

     (2) the failure by the Company to pay all or any part of the principal
  of, or premium, if any, on, the notes of that series when and as the same
  becomes due and payable at maturity, redemption, by acceleration or
  otherwise;

     (3) the failure by the Company, a Guarantor or any Subsidiary Guarantor
  to observe or perform any other covenant or agreement contained in the
  notes of that series or the Indenture with respect to that series of notes
  and, subject to certain exceptions, the continuance of such failure for a
  period of 30 days after written notice is given to the Company by the
  trustee or to the Company and the trustee by the holders of at least 25% in
  aggregate principal amount of the notes of that series outstanding;

     (4) certain events of bankruptcy, insolvency or reorganization in
  respect of the Company or any of its Significant Subsidiaries;

     (5) a default in (a) Secured Indebtedness of the Company or any of its
  Restricted Subsidiaries with an aggregate principal amount in excess of 5%
  of Total Assets, or (b) other Indebtedness of the Company or any of its
  Restricted Subsidiaries with an aggregate principal amount in excess of $50
  million, in either case, (A) resulting from the failure to pay principal or
  interest when due (after giving effect to any applicable extensions or
  grace or cure periods) or (B) as a result of which the maturity of such
  Indebtedness has been accelerated prior to its final Stated Maturity; and

     (6) final unsatisfied judgments not covered by insurance aggregating in
  excess of 0.5% of Total Assets, at any one time rendered against the
  Company or any of its Significant Subsidiaries and not stayed, bonded or
  discharged within 60 days.

The indenture provides that if a Default occurs and is continuing, the trustee
must, within 90 days after the occurrence of such default, give to the holders
notice of such default; provided that the trustee may withhold from holders of
the notes notice of any continuing Default or Event of Default (except a
Default or Events of Default relating to the payment of principal or interest
on the notes of that series) if it determines that withholding notice is in
their interest.

                                      129


   If an Event of Default with respect to the notes of any series occurs and is
continuing (other than an Event of Default specified in clause (4), above,
relating to the Company), then either the trustee or the holders of 25% in
aggregate principal amount of the notes of that series then outstanding, by
notice in writing to the Company (and to the trustee if given by holders) (an
"Acceleration Notice"), may declare all principal, determined as set forth
below, and accrued interest thereon to be due and payable immediately. If an
Event of Default specified in clause (4) above relating to the Company occurs,
all principal and accrued interest thereon will be immediately due and payable
on all outstanding notes without any declaration or other act on the part of
trustee or the holders. The holders of a majority in aggregate principal amount
of notes of any series generally are authorized to rescind such acceleration if
all existing Events of Default with respect to the notes of such series, other
than the non-payment of the principal of, premium, if any, and interest on the
notes of that series which have become due solely by such acceleration, have
been cured or waived. Subject to certain limitations, holders of a majority in
principal amount of the then outstanding notes of a series may direct the
trustee in its exercise of any trust or power with respect to such series.

   The holders of a majority in aggregate principal amount of the notes of a
series at the time outstanding may waive on behalf of all the holders any
default with respect to such series, except a default with respect to any
provision requiring supermajority approval to amend, which default may only be
waived by such a supermajority with respect to such series, and except a
default in the payment of principal of or interest on any note of that series
not yet cured or a default with respect to any covenant or provision which
cannot be modified or amended without the consent of the holder of each
outstanding note of that series affected.

   Subject to the provisions of the indenture relating to the duties of the
trustee, the trustee will be under no obligation to exercise any of its rights
or powers under the indenture at the request, order or direction of any of the
holders, unless such holders have offered to the trustee reasonable security or
indemnity. Subject to all provisions of the Indenture and applicable law, the
holders of a majority in aggregate principal amount of the notes of any series
at the time outstanding will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the trustee, or
exercising any trust or power conferred on the trustee, with respect to such
series.

Consolidation, Merger and Sale of Assets

   The Company will not merge with or into, or sell, convey, or transfer, or
otherwise dispose of all or substantially of its property and assets (as an
entirety or substantially as an entirety in one transaction or a series of
related transactions) to any Person or permit any Person to merge with or into
the Company, unless:

     (1) either the Company shall be the continuing Person or the Person (if
  other than the Company) formed by such consolidation or into which the
  Company is merged or that acquired such property and assets of the Company
  shall be an entity organized and validly existing under the laws of the
  United States of America or any state or jurisdiction thereof and shall
  expressly assume, by a supplemental indenture, executed and delivered to
  the trustee, all of the obligations of the Company, on the notes and under
  the indenture;

     (2) immediately after giving effect, on a pro forma basis, to such
  transaction, no Default or Event of Default shall have occurred and be
  continuing; and

     (3) the Company will have delivered to the trustee an Officer's
  Certificate and an Opinion of Counsel, in each case stating that such
  consolidation, merger or transfer and such supplemental indenture complies
  with this provision and that all conditions precedent provided for herein
  relating to such transaction have been complied with.

   Upon any consolidation or merger or any transfer of all or substantially all
of the assets of the Company, in accordance with the foregoing, the successor
Person formed by such consolidation or into which the Company is merged or to
which such transfer is made, shall succeed to, be substituted for, and may
exercise every right and power of the Company under the indenture with the same
effect as if such successor Person had been named therein as the Company and
the Company shall be released from the obligations under the notes and the
indenture.

                                      130


Legal Defeasance and Covenant Defeasance

   The Company may, at its option, elect to have its obligations and the
obligations of the Guarantors and Subsidiary Guarantors discharged with
respect to the outstanding notes of any series ("Legal Defeasance"). Such
Legal Defeasance means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented, and the indenture shall cease
to be of further effect as to all outstanding notes of such series and
Guarantees thereof, except as to:

     (1) rights of holders to receive payments in respect of the principal
  of, premium, if any, and interest on such notes when such payments are due
  from the trust funds;

     (2) the Company's obligations with respect to such notes concerning
  issuing temporary notes, registration of notes, mutilated, destroyed, lost
  or stolen notes, and the maintenance of an office or agency for payment and
  money for security payments held in trust;

     (3) the rights, powers, trust, duties, and immunities of the trustee,
  and the Company's, the Guarantors' and the Subsidiary Guarantors'
  obligations in connection therewith; and

     (4) the Legal Defeasance provisions of the indenture.

   In addition, the Company may, at its option and at any time, elect, with
respect to any series of notes, to have the obligations of the Company, the
Guarantors and the Subsidiary Guarantors released with respect to certain
covenants that are described in the indenture ("Covenant Defeasance") and
thereafter any failure to comply with such obligations shall not constitute a
Default or Event of Default with respect to the notes of such series. In the
event Covenant Defeasance occurs, certain events (not including non-payment,
bankruptcy, receivership, rehabilitation and insolvency events) described
under "Events of Default" will no longer constitute an Event of Default with
respect to the notes of such series.

   In order to exercise either Legal Defeasance or Covenant Defeasance, with
respect to any series of notes:

     (1) the Company must irrevocably deposit with the trustee, in trust, for
  the benefit of the holders of the notes of such series, U.S. legal tender,
  noncallable government securities or a combination thereof, in such amounts
  as will be sufficient, in the opinion of a nationally recognized firm of
  independent public accountants, to pay the principal of, premium, if any,
  and interest on such notes on the stated date for payment thereof or on the
  redemption date of such principal or installment of principal of, premium,
  if any, or interest on such notes;

     (2) in the case of the Legal Defeasance, the Company shall have
  delivered to the trustee an opinion of counsel in the United States
  reasonably acceptable to trustee confirming that (A) the Company has
  received from, or there has been published by the Internal Revenue Service,
  a ruling or (B) since the date of the indenture, there has been a change in
  the applicable Federal income tax law, in either case to the effect that,
  and based thereon such opinion of counsel shall confirm that, the holders
  of such notes will not recognize income, gain or loss for Federal income
  tax purposes as a result of such Legal Defeasance and will be subject to
  Federal income tax on the same amounts, in the same manner and at the same
  times as would have been the case if such Legal Defeasance had not
  occurred;

     (3) in the case of Covenant Defeasance, the Company shall have delivered
  to the trustee an opinion of counsel in the United States reasonably
  acceptable to such trustee confirming that the holders of such notes will
  not recognize income, gain or loss for Federal income tax purposes as a
  result of such Covenant Defeasance and will be subject to Federal income
  tax on the same amounts, in the same manner and at the same times as would
  have been the case if such Covenant Defeasance had not occurred;

     (4) no Default or Event of Default shall have occurred with respect to
  such series and be continuing on the date of such deposit or insofar as
  Events of Default from bankruptcy or insolvency events are concerned, at
  any time in the period ending on the 91st day after the date of deposit;

     (5) such Legal Defeasance or Covenant Defeasance shall not result in a
  breach or violation of, or constitute a default under the indenture or any
  other material agreement or instrument to which the Company or any of its
  Restricted Subsidiaries is a party or by which the Company or any of its
  Restricted Subsidiaries is bound;

                                      131


     (6) the Company shall have delivered to the trustee an Officer's
  Certificate stating that the deposit was not made by the Company with the
  intent of preferring the holders of such notes over any other creditors of
  the Company or with the intent of defeating, hindering, delaying or
  defrauding any other creditors of the Company or others; and

     (7) the Company shall have delivered to the trustee an Officer's
  Certificate stating that the conditions precedent provided for have been
  complied with.

Amendments and Supplements

   The indenture contains provisions permitting the Company, the Guarantors,
the Subsidiary Guarantors and the trustee to enter into a supplemental
indenture for certain limited purposes without the consent of the holders.
Subject to certain limited exceptions, modifications and amendments of the
indenture or any supplemental indenture with respect to any series may be made
by the Company, the Guarantors, the Subsidiary Guarantors and the trustee with
the consent of the holders of not less than a majority in aggregate principal
amount of the outstanding notes of such series (except that any amendments or
supplements to the provisions relating to security interests or with respect to
the Guarantees of the Subsidiary Guarantors shall require the consent of the
holders of not less than 66 2/3% of the aggregate principal amount of the notes
of such series at the time outstanding); provided that no such modification or
amendment may, without the consent of each holder affected thereby:

     (1) change the Stated Maturity of the principal of, or any installment
  of interest on, any note;

     (2) reduce the principal amount of, or premium, if any, or interest on,
  any note;

     (3) change the place of payment of principal of, or premium, if any, or
  interest on, any note;

     (4) impair the right to institute suit for the enforcement of any
  payment on or after the Stated Maturity (or, in the case of a redemption,
  on or after the Redemption Date) of any note;

     (5) reduce the above-stated percentages of outstanding notes the consent
  of whose holders is necessary to modify or amend the indenture;

     (6) waive a default in the payment of principal of, premium, if any, or
  interest on the notes;

     (7) alter the provisions relating to the redemption of the notes at the
  option of the Company;

     (8) reduce the percentage or aggregate principal amount of outstanding
  notes the consent of whose holders is necessary for waiver of compliance
  with certain provisions of the indenture or for waiver of certain defaults;
  or

     (9) make the notes subordinate in right of payment to any other
  Indebtedness.

No Personal Liability of Partners, Stockholders, Officers, Directors

   No recourse for the payment of the principal of, premium, if any, or
interest on any of the notes or for any claim based thereon or otherwise in
respect thereof, and no recourse under or upon any obligation, covenant or
agreement of the Company, the Guarantors or the Subsidiary Guarantors in the
indenture, or in any of the notes or because of the creation of any
Indebtedness represented thereby, shall be had against any incorporator,
partner, stockholder, officer, director, employee or controlling Person of the
Company, the Guarantors or the Subsidiary Guarantors or of any successor Person
thereof, except as an obligor or guarantor of the notes pursuant to the
indenture. Each holder, by accepting the notes, waives and releases all such
liability.

Concerning the Trustee

   The indenture provides that, except during the continuance of a Default, the
trustee will not be liable, except for the performance of such duties as are
specifically set forth in such indenture. If an Event of Default has occurred
and is continuing, the trustee will use the same degree of care and skill in
its exercise of the rights and powers vested in it under the indenture as a
prudent person would exercise under the circumstances in the conduct of such
person's own affairs.

                                      132


   The indenture and provisions of the Trust Indenture Act of 1939, as amended,
incorporated by reference therein contain limitations on the rights of the
trustee, should it become a creditor of the Company or the Guarantors, to
obtain payment of claims in certain cases or to realize on certain property
received by it in respect of any such claims, as security or otherwise. The
trustee is permitted to engage in other transactions; provided that if it
acquires any conflicting interest, it must eliminate such conflict or resign.

Book Entry; Delivery; Form and Transfer

   The certificates representing the notes will be issued in fully registered
form without interest coupons. Notes sold in offshore transactions in reliance
on Regulation S under the Securities Act will initially be represented by one
or more permanent global notes in definitive, fully registered form without
interest coupons (each a "Regulation S Global Note") and will be deposited with
the trustee as custodian for, and registered in the name of a nominee of, DTC
for the accounts of The Bank of New York, as depositary for the Euroclear
System (Euroclear) and Clearstream, Luxembourg societe anonyme ("Clearstream").
Prior to the 40th day after the closing date of the notes, beneficial interests
in the Regulation S Global Notes may only be held through Euroclear or
Clearstream, and any resale or transfer of such interests to U.S. persons shall
not be permitted during such period unless such resale or transfer is made
pursuant to Rule 144A or Regulation S.

   Notes sold in reliance on Rule 144A will be represented by one or more
permanent global notes in definitive, fully registered form without interest
coupons (each a "Restricted Global Note"; and together with the Regulation S
Global Notes, the "Global Notes") and will be deposited with the trustee as
custodian for, and registered in the name of a nominee of, DTC.

   Each Global Note (and any notes issued for exchange thereof) will be subject
to certain restrictions on transfer set forth therein as described under
"Notice to Investors."

   Notes transferred to Institutional Accredited Investors who are not
qualified institutional buyers ("Non-Global Purchasers") will be in registered
form without interest coupons ("Certificated Notes"). Upon the transfer of
Certificated Notes initially issued to a Non-Global Purchaser to a qualified
institutional buyer or in accordance with Regulation S, such Certificated Notes
will, unless the relevant Global Note has previously been exchanged in whole
for Certificated Notes, be exchanged for an interest in a Global Note. For a
description of the restrictions on the transfer of Certificated Notes, see
"Notice to Investors."

   Ownership of beneficial interests in a Global Note will be limited to
persons who have accounts with DTC ("participants") or persons who hold
interests through participants. Ownership of beneficial interests in a Global
Note will be shown on, and the transfer of that ownership will be effected only
through, records maintained by DTC or its nominee (with respect to interests of
participants) and the records of participants (with respect to interests of
persons other than participants). Qualified institutional buyers may hold their
interests in a Restricted Global Note directly through DTC if they are
participants in such system, or indirectly through organizations which are
participants in such system.

   Investors may hold their interests in a Regulation S Global Note directly
through Clearstream or Euroclear, if they are participants in such systems, or
indirectly through organizations that are participants in such system. On or
after the 40th day following the closing date of the notes, investors may also
hold such interests through organizations other than Clearstream or Euroclear
that are participants in the DTC system. Clearstream and Euroclear will hold
interests in the Regulation S Global Notes on behalf of their participants
through DTC.

   So long as DTC, or its nominee, is the registered owner or holder of a
Global Note, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the notes represented by such Global Note for all
purposes under the indenture and the notes. No beneficial owner of an interest
in a Global Note will be able to transfer that interest except in accordance
with DTC's applicable procedures, in addition to those provided for under the
indenture and, if applicable, those of Euroclear and Clearstream.


                                      133


   Payments of the principal of, and interest on, a Global Note will be made to
DTC or its nominee, as the case may be, as the registered owner thereof.
Neither Host Marriott, L.P., the trustee nor any paying agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a Global Note or
for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.

   Host Marriott, L.P., expects that DTC or its nominee, upon receipt of any
payment of principal or interest in respect of a Global Note, will credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global Note as
shown on the records of DTC or its nominee. Host Marriott, L.P. also expects
that payments by participants to owners of beneficial interests in such Global
Note held through such participants will be governed by standing instructions
and customary practices, as is now the case with securities held for the
accounts of customers registered in the names of nominees for such customers.
Such payments will be the responsibility of such participants.

   Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in same day funds. Transfers
between participants in Euroclear and Clearstream will be effected in the
ordinary way in accordance with their respective rules and operating
procedures.

   Host Marriott, L.P. expects that DTC will take any action permitted to be
taken by a holder of notes (including the presentation of notes for exchange as
described below) only at the direction of one or more participants to whose
account the DTC interests in a Global Note is credited and only in respect of
such portion of the aggregate principal amount of notes to which such
participant or participants has or have given such direction. However, if there
is an Event of Default under the notes, DTC will exchange the applicable Global
Note for Certificated Notes, which it will distribute to its participants and
which may be legended as set forth under the heading "Notice to Investors."

   Host Marriott, L.P. understands that DTC is a limited purpose trust company
organized under the laws of the State of New York, a "banking organization"
within the meaning of New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the Uniform Commercial
Code and a "Clearing Agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC was created to hold securities for its
participants and facilitate the clearance and settlement of securities
transactions between participants through electronic book-entry changes in
accounts of its participants, thereby eliminating the need for physical
movement of certificates. Indirect access to the DTC system is available to
others such as banks, brokers, dealers and trust companies and certain other
organizations that clear through or maintain a custodial relationship with a
participant, either directly or indirectly ("indirect participants").

   Although DTC, Euroclear and Clearstream are expected to follow the foregoing
procedures in order to facilitate transfers of interests in a Global Note among
participants of DTC, Euroclear and Clearstream they are under no obligation to
perform or continue to perform such procedures, and such procedures may be
discontinued at any time. Neither Host Marriott, L.P. nor the trustee will have
any responsibility for the performance by DTC, Euroclear or Clearstream or
their respective participants or indirect participants of their respective
obligations under the rules and procedures governing their operations.

   If DTC is at any time unwilling or unable to continue as a despositary for
the Global Notes and a successor depositary is not appointed by Host Marriott,
L.P. within 90 days, Host Marriott, L.P. will issue Certificated Notes, which
may bear the legend referred to under "Notice to Investors," in exchange for
the Global Notes. Holders of an interest in a Global Note may receive
Certificated Notes, which may bear the legend referred to under "Notice to
Investors," in accordance with the DTC's rules and procedures in addition to
those provided for under the indenture.

   Initially, the trustee will act as paying agent and registrar. The notes may
be presented for registration of transfer and exchange at the offices of the
Registrar. It is expected that the notes will be eligible for inclusion in the
NASD's PORTAL system.


                                      134


Same Day Settlement and Payment

   The indenture will require that payments in respect of the notes represented
by the Global Notes (including principal, premium, if any, interest and
liquidated damages, if any) be made by wire transfer of immediately available
same day funds to the accounts specified by the holder of interests in such
Global Note. With respect to Certificated Notes, we will make all payments of
principal, premium, if any, interest and liquidated damages, if any, by wire
transfer of immediately available same day funds to the accounts specified by
the holders thereof or, if no such account is specified, by mailing a check to
each such holder's registered address. We expect that secondary trading in the
Certificated Notes will also be settled in immediately available funds.

            MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE

   The following discussion, to the extent that it constitutes matters of law,
summaries of legal matters or legal conclusions, is the opinion of Latham &
Watkins, our special tax counsel, as to the material federal income tax
consequences expected to result to holders whose Series F senior notes are
exchanged for Series G senior notes in the exchange offer. Their opinion is
based upon the facts set forth in the registration statement of which this
prospectus is a part, current provisions of the Internal Revenue Code of 1986,
as amended, applicable U.S. Treasury regulations, judicial authority and
administrative rulings and practice. We can not assure you that the Internal
Revenue Service will not take a contrary view. We have not sought nor will we
seek any ruling from the IRS with respect to the exchange offer. Legislative,
judicial or administrative changes or interpretations could occur that would
alter or modify these statements and conclusions set forth in this prospectus.
Any changes or interpretations may or may not be retroactive and could affect
the tax consequences to holders. Holders of Series F senior notes (including
insurance companies, tax-exempt organizations, financial institutions, broker-
dealers, foreign corporations, and persons who are not citizens or residents of
the United States) may be subject to special rules not discussed below. Each
holder of Series F senior notes should consult its tax advisor as to the
particular tax consequences of exchanging Series F senior notes for Series G
senior notes, including the applicability and effect of any state, local or
foreign laws.

   The exchange of Series F senior notes for Series G senior notes will be
treated as a "non-event" for federal income tax purposes. That is, the exchange
will not be treated as an exchange for federal income tax purposes because the
Series G senior notes will not be considered to differ materially in kind or
extent from the Series F senior notes. As a result, no material federal income
tax consequences will result to holders exchanging Series F senior notes for
Series G senior notes.

                                      135


                              PLAN OF DISTRIBUTION

   If you are a broker-dealer that receives Series G senior notes for your own
account pursuant to the exchange offer, you must acknowledge that you will
deliver a prospectus in connection with any resale of such Series G senior
notes. This prospectus, as it may be amended or supplemented from time to time,
may be used in connection with resales of Series G senior notes received in
exchange for Series F senior notes where such Series F senior notes were
acquired as a result of market-making activities or other trading activities.
To the extent any broker-dealer participates in the exchange offer and so
notifies us, we have agreed that we will make this prospectus, as amended or
supplemented, available to that broker-dealer for use in connection with
resales, and will promptly send additional copies of this prospectus and any
amendment or supplement to this prospectus to any broker-dealer that requests
those documents in the letter of transmittal.

  . We will not receive any proceeds from any sale of Series G senior notes
    by broker-dealers.

  . Series G senior notes received by broker-dealers for their own account
    pursuant to the exchange offer may be sold from time to time in one or
    more transactions in the over-the-counter market, in negotiated
    transactions, through the writing of options on the Series G senior notes
    or a combination of such methods of resale, at prevailing market prices
    at the time of resale, at prices related to such prevailing market prices
    or at negotiated prices.

  . Any resale may be made directly to purchasers or to or through brokers or
    dealers who may receive compensation in the form of commissions or
    concessions from any such broker-dealer or the purchasers or any such
    Series G senior notes.

  . Any broker-dealer that resells Series G senior notes that were received
    by it for its own account pursuant to the exchange offer and any broker
    or dealer that participates in a distribution of such Series G senior
    notes may be deemed to be an "underwriter" within the meaning of the
    Securities Act, and any profit on any such resale of Series G senior
    notes and any commissions or concessions received by any such persons may
    be deemed to be underwriting compensation under the Securities Act.

  . The letter of transmittal states that, by acknowledging that it will
    deliver and by delivering a prospectus, a broker-dealer will not be
    deemed to admit that it is an "underwriter" within the meaning of the
    Securities Act.

   We have agreed to pay all expenses incident to the exchange offer (other
than commissions and concessions of any broker-dealer), subject to certain
prescribed limitations, and will provide indemnification against certain
liabilities, including certain liabilities that may arise under the Securities
Act, to broker-dealers that make a market in the Series F senior notes and
exchange Series F senior notes in the exchange offer for Series G senior notes.

   By its acceptance of the exchange offer, any broker-dealer that receives
Series G senior notes pursuant to the exchange offer hereby agrees to notify us
prior to using the prospectus in connection with the sale or transfer of Series
G senior notes. It also agrees that, upon receipt of notice from us of the
happening of any event which makes any statement in this prospectus untrue in
any material respect or which requires the making of any changes in this
prospectus in order to make the statements therein not misleading or which may
impose upon us disclosure obligations that may have a material adverse effect
on us (which notice we agree to deliver promptly to such broker-dealer), such
broker-dealer will suspend use of this prospectus until we have notified such
broker-dealer that delivery of this prospectus may resume and has furnished
copies of any amendment or supplement to this prospectus to such broker-dealer.

                                      136


                                 LEGAL MATTERS

   Certain legal matters relating to the Series G senior notes will be passed
upon for us by Christopher G. Townsend, Senior Vice President and General
Counsel of Host REIT, Bethesda, Maryland. Mr. Townsend owns shares of Host REIT
common stock, and holds stock options, deferred stock and restricted stock
awards under Host REIT compensation plans. Mr. Townsend may receive additional
awards under these plans in the future. Certain other legal matters in
connection with the exchange of the notes will be passed upon for us by Latham
& Watkins, Washington, D.C.

                                    EXPERTS

   The audited consolidated financial statements of Host Marriott, L.P., CCHP I
Corporation, CCHP II Corporation, CCHP III Corporation and CCHP IV Corporation
included in this prospectus and elsewhere in the registration statement to the
extent and for the periods indicated in their reports have been audited by
Arthur Andersen LLP, independent public accountants, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.

                                      137


                         INDEX TO FINANCIAL STATEMENTS

The following financial information is included on the pages indicated:

                        Historical Financial Statements

Host Marriott, L.P.



                                                                           Page
                                                                           ----
                                                                        
Report of Independent Public Accountants.................................   F-2
Consolidated Balance Sheets as of December 31, 1999 and 1998.............   F-3
Consolidated Statements of Operations for the Fiscal Years Ended December
 31, 1999 and 1998, and January 2, 1998..................................   F-4
Consolidated Statements of Shareholders' Equity and Comprehensive Income
 for the Fiscal Years Ended December 31, 1998 and January 2, 1998........   F-5
Consolidated Statements of Partners' Capital and Comprehensive Income for
 the Fiscal Years Ended December 31, 1999 and 1998.......................   F-6
Consolidated Statements of Cash Flows for the Fiscal Years Ended December
 31, 1999 and 1998 and January 2, 1998...................................   F-7
Notes to Consolidated Financial Statements...............................   F-9

Lease Pool Financial Statements

 CCHP I Corporation:

Report of Independent Public Accountants.................................  F-44
Consolidated Balance Sheet as of December 31, 1999.......................  F-45
Consolidated Statement of Operations for the Fiscal Year Ended December
 31, 1999................................................................  F-46
Consolidated Statement of Shareholders' Equity for the Fiscal Year Ended
 December 31, 1999.......................................................  F-47
Consolidated Statement of Cash Flows for the Fiscal Year Ended December
 31, 1999................................................................  F-48
Notes to Consolidated Financial Statements...............................  F-49

 CCHP II Corporation:

Report of Independent Public Accountants.................................  F-56
Consolidated Balance Sheet as of December 31, 1999.......................  F-57
Consolidated Statement of Operations for the Fiscal Year Ended December
 31, 1999................................................................  F-58
Consolidated Statement of Shareholders' Equity for the Fiscal Year Ended
 December 31, 1999.......................................................  F-59
Consolidated Statement of Cash Flows for the Fiscal Year Ended December
 31, 1999................................................................  F-60
Notes to Consolidated Financial Statements...............................  F-61

 CCHP III Corporation:

Report of Independent Public Accountants.................................  F-68
Consolidated Balance Sheet as of December 31, 1999.......................  F-69
Consolidated Statement of Operations for the Fiscal Year Ended December
 31, 1999................................................................  F-70
Consolidated Statement of Shareholders' Equity for the Fiscal Year Ended
 December 31, 1999.......................................................  F-71
Consolidated Statement of Cash Flows for the Fiscal Year Ended December
 31, 1999................................................................  F-72
Notes to Consolidated Financial Statements...............................  F-73

 CCHP IV Corporation:

Report of Independent Public Accountants.................................  F-80
Consolidated Balance Sheet as of December 31, 1999.......................  F-81
Consolidated Statement of Operations for the Fiscal Year Ended December
 31, 1999................................................................  F-82
Consolidated Statement of Shareholders' Equity for the Fiscal Year Ended
 December 31, 1999.......................................................  F-83
Consolidated Statement of Cash Flows for the Fiscal Year Ended December
 31, 1999................................................................  F-84
Notes to Consolidated Financial Statements...............................  F-85

Host Marriott, L.P.

Condensed Consolidated Balance Sheets--September 8, 2000.................  F-91
Condensed Consolidated Statements of Operations--Twelve Weeks and Thirty-
 six Weeks Ended September 8, 2000 and September 10, 1999................  F-92
Condensed Consolidated Statements of Cash Flows--Thirty-six Weeks Ended
 September 8, 2000 and September 10, 1999................................  F-94
Notes to Condensed Consolidated Financial Statements.....................  F-95


                                      F-1


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Host Marriott Corporation as general partner to Host Marriott, L.P.:

   We have audited the accompanying consolidated balance sheets of Host
Marriott, L.P. and subsidiaries as of December 31, 1999 and 1998, and the
related consolidated statements of operations, partner's capital and
comprehensive income and cash flows of Host Marriott, L.P. for the fiscal year
ended December 31, 1999 and the consolidated statements of operations,
shareholders' equity and comprehensive income and cash flows of Host Marriott
Corporation (as predecessor to Host Marriott L.P. -- See Note 1) for the fiscal
years ended December 31, 1998 and January 2, 1998. These financial statements
and the schedule referred to below are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and the schedule based on our audits.

   We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

   In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Host
Marriott, L.P. and subsidiaries as of December 31, 1999, and the results of
operations and cash flows of Host Marriott, L.P. for the fiscal year ended
December 31, 1999 and of Host Marriott Corporation for the fiscal years ended
December 31, 1998 and January 2, 1998, in conformity with accounting principles
generally accepted in the United States.

   Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index at Item
21(B) is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly states in all
material respects, the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.

                                          Arthur Andersen LLP

Vienna, Virginia
March 8, 2000

                                      F-2


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS



                                                                   1999   1998
                                                                  ------ ------
                                                                  (in millions)
                                                                   
                             ASSETS
Property and equipment, net.....................................  $7,108 $7,201
Notes and other receivables, net (including amounts due from
 affiliates of $127 million and $134 million, respectively).....     175    203
Rent receivable.................................................      72    --
Due from managers...............................................     --      19
Investments in affiliates.......................................      49     33
Other assets....................................................     515    370
Cash and cash equivalents.......................................     277    436
                                                                  ------ ------
                                                                  $8,196 $8,262
                                                                  ====== ======
               LIABILITIES AND PARTNERS' CAPITAL
Debt
  Senior notes..................................................  $2,539 $2,246
  Mortgage debt.................................................   2,309  2,438
  Convertible debt obligation to Host Marriott Corporation......     514    567
  Other.........................................................     221    447
                                                                  ------ ------
                                                                   5,583  5,698
Accounts payable and accrued expenses...........................     148    204
Deferred income taxes...........................................      49     97
Other liabilities...............................................     426    460
                                                                  ------ ------
  Total liabilities.............................................   6,206  6,459
                                                                  ------ ------
Minority interest...............................................     136    147
Cumulative redeemable preferred limited partnership interests of
 third parties at redemption value ("Preferred OP Units")
 (representing 0.6 million units and 0 units at December 31,
 1999 and 1998, respectively)...................................       5    --
Limited partnership interests of third parties at redemption
 value (representing 64.0 million units and 64.6 million units
 at December 31, 1999 and 1998, respectively)...................     528    892
Partners' capital
  General partner...............................................       1      1
  Cumulative redeemable preferred limited partner...............     196    --
  Limited partner...............................................   1,122    767
  Accumulated other comprehensive income (loss).................       2     (4)
                                                                  ------ ------
    Total partners' capital.....................................   1,321    764
                                                                  ------ ------
                                                                  $8,196 $8,262
                                                                  ====== ======


                See Notes to Consolidated Financial Statements.


                                      F-3


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS

       Fiscal years ended December 31, 1999 and 1998, and January 2, 1998
                 (in millions, except per common share amounts)



                                                         1999    1998    1997
                                                        ------  ------  ------
                                                               
REVENUES
 Rental income (Note 1)...............................  $1,295  $  --   $  --
 Hotel sales
 Rooms................................................     --    2,220   1,850
 Food and beverage....................................     --      984     776
 Other................................................     --      238     180
                                                        ------  ------  ------
  Total hotel revenues................................     --    3,442   2,806
 Interest income......................................      39      51      52
 Net gains (losses) on property transactions..........      28      57     (11)
 Equity in earnings of affiliates and other...........      14      14      28
                                                        ------  ------  ------
  Total revenues......................................   1,376   3,564   2,875
                                                        ------  ------  ------
EXPENSES
 Depreciation and amortization........................     289     242     231
 Property-level expenses..............................     264     271     247
 Hotel operating expenses
 Rooms................................................     --      524     428
 Food and beverage....................................     --      731     592
 Other department costs and deductions................     --      843     693
 Management fees and other (including Marriott
  International management fees of $196 million in
  1998 and $162 million in 1997)......................     --      213     171
 Minority interest....................................      21      52      31
 Corporate expenses...................................      37      50      45
 REIT conversion expenses.............................     --       64     --
 Loss on litigation settlement........................      40     --      --
 Interest expense.....................................     469     335     288
 Dividends on Host Marriott-obligated mandatorily
  redeemable convertible preferred securities of a
  subsidiary trust whose sole assets are the
  convertible subordinated debentures due 2026
  ("Convertible Preferred Securities")................     --       37      37
 Other................................................      16      28      29
                                                        ------  ------  ------
  Total expenses......................................   1,136   3,390   2,792
                                                        ------  ------  ------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME
 TAXES................................................     240     174      83
 Benefit (provision) for income taxes.................      16     (86)    (36)
 Benefit from change in tax status....................     --      106     --
                                                        ------  ------  ------
INCOME FROM CONTINUING OPERATIONS.....................     256     194      47
DISCONTINUED OPERATIONS
 Income from discontinued operations (net of income
  tax expense of $4 million in 1998)..................     --        6     --
 Provision for loss on disposal (net of income tax
  benefit of $3 million in 1998)......................     --       (5)    --
                                                        ------  ------  ------
INCOME BEFORE EXTRAORDINARY ITEMS.....................     256     195      47
 Extraordinary gain (loss), net of income tax expense
  (benefit) of $4 million, ($80) million and $1
  million in 1999, 1998 and 1997, respectively........      29    (148)      3
                                                        ------  ------  ------
NET INCOME............................................  $  285  $   47  $   50
                                                        ======  ======  ======
 Less: Distributions on preferred limited partner
  units to Host Marriott, net of income tax expense of
  $4 million..........................................      (6)    --      --
                                                        ------  ------  ------
NET INCOME AVAILABLE TO COMMON UNITHOLDERS............  $  279  $   47  $   50
                                                        ======  ======  ======
BASIC EARNINGS (LOSS) PER COMMON UNIT:
 Continuing operations................................  $  .86  $  .90  $  .22
 Discontinued operations (net of income taxes)........     --      .01     --
 Extraordinary gain (loss)............................     .10    (.69)    .01
                                                        ------  ------  ------
BASIC EARNINGS PER COMMON UNIT........................  $  .96  $  .22  $  .23
                                                        ======  ======  ======
DILUTED EARNINGS (LOSS) PER COMMON UNIT:
 Continuing operations................................  $  .83  $  .84  $  .22
 Discontinued operations (net of income taxes)........     --      .01     --
 Extraordinary gain (loss)............................     .10    (.58)    .01
                                                        ------  ------  ------
DILUTED EARNINGS PER COMMON UNIT......................  $  .93  $  .27  $  .23
                                                        ======  ======  ======

                See Notes to Consolidated Financial Statements.

                                      F-4


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
             AND COMPREHENSIVE INCOME OF HOST MARRIOTT CORPORATION

            Fiscal years ended December 31, 1998 and January 2, 1998
                                 (in millions)


 Shares Outstanding
 ----------------------
                                                                                           Accumulated
                                                                     Additional Retained      Other
                                                    Preferred Common  Paid-in   Earnings  Comprehensive Comprehensive
 Preferred   Common                                   Stock   Stock   Capital   (Deficit) Income (Loss) Income (Loss)
 ---------   ----------                             --------- ------ ---------- --------- ------------- -------------
                                                                                
          --      202.0  Balance, January 3,
                         1997....................      $--     $202    $  921     $  (1)       $ 5           $--
          --         --  Net income available to
                         common shareholders.....       --       --        --        50         --            50
          --         --  Other comprehensive
                         income:
          --         --  Unrealized gain on HM
                         Services common stock...       --       --        --        --          7             7
                                                                                                             ---
          --         --  Comprehensive income
                         available to common
                         shareholders............                                                            $57
                                                                                                             ===
          --        1.8  Common stock issued for
                         the comprehensive stock
                         and employee stock
                         purchase plans..........       --        2        14        --         --
- ---------------------------------------------------------------------------------------------------------------------
          --      203.8  Balance, January 2,
                         1998....................       --      204       935        49         12            --
          --         --  Net income available to
                         common shareholders.....       --       --        --        47         --            47
          --         --  Other comprehensive
                         income (loss):
          --             Unrealized loss on HM
                         Services common stock...       --       --        --        --         (5)           (5)
          --             Foreign currency
                         translation adjustment..       --       --        --        --         (9)           (9)
          --             Reclassification of gain
                         realized on HM Services
                         common stock--net
                         income..................       --       --        --        --         (2)           (2)
                                                                                                             ---
          --         --  Comprehensive income
                         available to common
                         shareholders............                                                            $31
                                                                                                             ===
          --        1.4  Common stock issued for
                         the comprehensive stock
                         and employee stock
                         purchase plans..........       --       --         8        --         --
          --         --  Adjustment of stock par
                         value from $1 to $.01
                         per share...............       --     (202)      202        --         --
          --       11.9  Common stock issued for
                         Special Dividend........       --       --       143      (143)        --
          --         --  Distribution of stock of
                         Crestline Capital
                         Corporation.............       --       --        --      (438)        --
          --         --  Cash portion of Special
                         Dividend................       --       --        --       (69)        --
- ---------------------------------------------------------------------------------------------------------------------
          --      217.1  Balance, Before
                         contribution to Host
                         Marriott, L.P. .........      $--     $  2    $1,288     $(554)       $(4)
                         Net assets retained by
                         Host Marriott...........                         (23)
                                                                       ------
                         Balance contributed to
                         Host Marriott, L.P. ....                      $  709
                                                                       ======


                See Notes to Consolidated Financial Statements.


                                      F-5


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

                  CONSOLIDATED STATEMENT OF PARTNER'S CAPITAL
                AND COMPREHENSIVE INCOME OF HOST MARRIOTT, L.P.

                 Fiscal years ended December 31, 1999 and 1998
                                 (in millions)



 Class A and                                                                    Accumulated
 B Preferred   Common                               Preferred                      Other
    Units     OP Units                               Limited  General Limited  Comprehensive Comprehensive
 Outstanding Outstanding                             Partner  Partner Partner  Income (Loss) Income (Loss)
 ----------- -----------                            --------- ------- -------  ------------- -------------
                                                                        
      --        217.1    Contribution by Host
                         Marriott................     $ --      $ 1   $  712        $(4)         $ --
      --          8.5    Issuance of OP Units to
                         Host Marriott in
                         connection with the
                         Partnership Mergers.....       --       --      113         --
      --           --    Market Adjustment to
                         record OP Units of third
                         parties at redemption
                         value...................       --       --      (58)        --
- ----------------------------------------------------------------------------------------------------------
      --        225.6    Balance, December 31,
                         1998....................       --        1      767         (4)           --
      --           --    Net income..............       --       --      285         --           285
      --           --    Other comprehensive
                         income (loss):
                         Unrealized gain on HM
                         Services common stock...       --       --       --          4             4
                         Foreign currency
                         translation adjustment..       --       --       --          3             3
                         Reclassification of gain
                         realized on HM Services
                         common stock--net
                         income..................       --       --       --         (1)           (1)
                                                                                                 ----
      --           --    Comprehensive income....       --       --       --         --          $291
                                                                                                 ====
      --          3.6    Units issued to Host
                         Marriott for the
                         comprehensive stock and
                         employee stock purchase
                         plans...................       --       --        8         --
      --          0.5    Redemptions of limited
                         partnership interests of
                         third parties for cash..       --       --       (3)        --
      --           --    Other comprehensive
                         income attributed to OP
                         Units of third parties..       --       --        2         --
      --           --    Distributions on OP
                         Units...................       --       --     (245)        --
      --           --    Distributions on
                         Preferred Limited
                         Units...................       --       --       (6)        --
      --         (0.4)   Adjustment to Special
                         Dividend................       --       --       (4)        --
      --         (5.8)   Repurchases of OP
                         Units...................       --       --      (50)        --
      --           --    Market adjustment to
                         record Preferred OP
                         Units and OP Units of
                         third parties at
                         redemption value........       --       --      368         --
     8.2           --    Issuance of Preferred OP
                         Units...................      196       --       --         --
- ----------------------------------------------------------------------------------------------------------
     8.2        223.5    Balance, December 31,
                         1999....................     $196      $ 1   $1,122        $ 2

- --------------------------------------------------------------------------------


                See Notes to Consolidated Financial Statements.


                                      F-6


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
       Fiscal years ended December 31, 1999 and 1998, and January 2, 1998



                                                      1999     1998     1997
                                                     -------  -------  -------
                                                          (in millions)
                                                              
OPERATING ACTIVITIES
Income from continuing operations................... $   256  $   194  $    47
Adjustments to reconcile to cash from operations:
 Depreciation and amortization......................     293      243      231
 Income taxes.......................................     (66)    (103)     (20)
 Amortization of deferred income....................      (4)      (4)      (4)
 Net (gains) losses on property transactions........     (24)     (50)      19
 Equity in earnings of affiliates...................      (6)      (1)      (4)
 Other..............................................      26       39       62
 Changes in operating accounts:
  Other assets......................................     (55)     (56)      57
  Other liabilities.................................     (60)      50       44
                                                     -------  -------  -------
 Cash from continuing operations....................     360      312      432
 Cash from discontinued operations..................     --        29       32
                                                     -------  -------  -------
 Cash from operations...............................     360      341      464
                                                     -------  -------  -------
INVESTING ACTIVITIES
Proceeds from sales of assets.......................     195      227       51
Acquisitions........................................     (29)    (988)    (359)
Capital expenditures:
 Capital expenditures for renewals and
  replacements......................................    (197)    (165)    (129)
 New investment capital expenditures................    (150)     (87)     (29)
 Other Investments..................................     (14)     --       --
Purchases of short-term marketable securities.......     --      (134)    (354)
Sales of short-term marketable securities...........     --       488      --
Notes receivable collections (advances), net........      19        4        6
Affiliate notes receivable issuances and
 collections, net...................................     --       (13)      (6)
Other...............................................     --        13       13
                                                     -------  -------  -------
 Cash used in investing activities from continuing
  operations........................................    (176)    (655)    (807)
 Cash used in investing activities from discontinued
  operations........................................     --       (50)    (239)
                                                     -------  -------  -------
 Cash used in investing activities..................    (176)    (705)  (1,046)
                                                     -------  -------  -------
FINANCING ACTIVITIES
Issuances of debt, net..............................   1,345    2,496      857
Debt prepayments....................................  (1,397)  (1,898)    (403)
Cash contributed to Crestline at inception..........     --       (52)     --
Cash contributed to Non-Controlled Subsidiary.......     --       (30)     --
Cost of extinguishment of debt......................      (2)    (175)     --
Scheduled principal repayments......................     (34)     (51)     (90)
Issuances of OP Units...............................       5        1        6
Issuances of preferred limited partner units........     196      --       --
Distributions on common OP Units....................    (258)     --       --
Distributions on preferred limited partner units....      (2)     --       --
Redemption or repurchase of OP Units for cash.......     (54)     --       --
Repurchases of Convertible Preferred Securities.....     (36)     --       --
Other...............................................    (106)     (26)      22
                                                     -------  -------  -------
 Cash from (used in) financing activities from
  continuing operations.............................    (343)     265      392
 Cash from (used in) financing activities from
  discontinued operations...........................     --        24       (3)
                                                     -------  -------  -------
 Cash from (used in) financing activities...........    (343)     289      389
                                                     -------  -------  -------
DECREASE IN CASH AND CASH EQUIVALENTS...............    (159)     (75)    (193)
CASH AND CASH EQUIVALENTS, beginning of year........     436      511      704
                                                     -------  -------  -------
CASH AND CASH EQUIVALENTS, end of year.............. $   277  $   436  $   511
                                                     =======  =======  =======


                See Notes to Consolidated Financial Statements.


                                      F-7


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

               CONSOLIDATED STATEMENTS OF CASH FLOWS--(Continued)
       Fiscal years ended December 31, 1999 and 1998, and January 2, 1998

Supplemental schedule of noncash investing and financing activities:

   In 1999, approximately 612,000 cumulative redeemable preferred limited
partnership units valued at $7.6 million were issued in connection with the
acquisition of minority interests in two hotels.

   The Company assumed mortgage debt of $1,215 million and $733 million in 1998
and 1997, respectively, for the acquisition of, or purchase of controlling
interest in, certain hotel properties and senior living communities.

   In 1998, the Company distributed $438 million of net assets in connection
with the discontinued operations and contributed $12 million of net assets to
the Non-Controlled Subsidiaries in connection with the REIT Conversion.





                See Notes to Consolidated Financial Statements.


                                      F-8


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

 Description of Business

   Host Marriott Corporation, a Maryland corporation formerly named HMC Merger
Corporation ("Host REIT"), 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") 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 or other lessees (collectively the "Lessee") as further discussed
at Note 9.

   As of December 31, 1999, the Operating Partnership owned, or had controlling
interests in, 121 upscale and luxury, full-service hotel lodging properties
generally located throughout the United States and operated primarily under the
Marriott, Ritz-Carlton, Four Seasons, Hyatt and Swissotel brand names. 108 of
these properties are managed or franchised by Marriott International, Inc.
("Marriott International"). Host REIT also has economic, non-voting interests
in certain Non-Controlled Subsidiaries, whose hotels are also managed by
Marriott International (see Note 4).

 Basis of Presentation

   On December 15, 1998, shareholders of Host Marriott Corporation, ("Host
Marriott"), a Delaware corporation and the predecessor to Host REIT, 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. Host Marriott and its subsidiaries' contribution
of its hotels and certain assets and liabilities to the Operating Partnership
and its subsidiaries (the "Contribution") in exchange for units of partnership
interest in the Operating Partnership ("OP Units") was accounted for at Host
Marriott's historical basis. As of December 31, 1999, Host REIT owned
approximately 78% of the Operating Partnership.

   In these 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 29, 1998, the Company completed the previously discussed spin-
off of Crestline (see Note 2), 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 common
stock owned (the "Distribution").

   As a result of the Distribution, the Company's financial statements have
been restated to present the senior living communities business results of
operations and cash flows as discontinued operations. See Note 2 for further
discussion of the Distribution. All historical financial statements presented
have been restated to conform to this presentation.

                                      F-9


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


 Principles of Consolidation

   The consolidated financial statements include the accounts of the Company
and its subsidiaries and controlled affiliates. Investments in affiliates over
which the Company has the ability to exercise significant influence, but does
not control, are accounted for using the equity method. All material
intercompany transactions and balances have been eliminated.

 Fiscal Year End Change

   The U.S. Internal Revenue Code of 1986, as amended, requires REITs to file
their U.S. income tax return on a calendar year basis. Accordingly in 1998, the
Company changed its fiscal year-end to December 31 for both financial and tax
reporting requirements. Previously, the Company's fiscal year ended on the
Friday nearest to December 31.

 Revenues

   The Company's 1999 revenue primarily represents the rental income from its
leased hotels and is not comparable to 1998 hotel revenues which reflect gross
sales generated by the properties. 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 revenue 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. As of year end all annual thresholds have been
achieved.

   The comparison of the 1999 results with 1998 and 1997 is also affected by a
change in the reporting period for the Company's hotels not managed by Marriott
International. In prior years, operations for certain of the Company's hotels
were recorded from the beginning of December of the prior year to November of
the current year due to a one-month delay in receiving results from those hotel
properties. Upon conversion to a REIT, operations are required to be reported
on a calendar year basis in accordance with Federal income tax regulations. As
a result, the Company recorded one additional period of operations in fiscal
year 1998 for these properties. The effect on revenues and net income was to
increase revenues by $44 million and net income by $6 million and diluted
earning per share by $0.02 in 1998.

 Earnings (Loss) Per Unit

   Basic earnings per unit is computed by dividing net income available to
common unitholders by the weighted average number of 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 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, warrants and the Convertible Preferred Securities (see Note 6). Dilutive
securities also include those common and preferred OP Units issuable or
outstanding that are held by minority partners which are assumed to be
converted. Diluted earnings per unit was not adjusted for the impact of the
Convertible Preferred Securities for 1999 and 1997 as they were anti-dilutive.
In December 1998, the Company declared the Special Dividend (Note 2) and, in
February 1999, Host REIT distributed 11.5 million shares to existing
shareholders in conjunction with the Special Dividend. The weighted average
number of units outstanding and the basic and diluted earnings per unit
computations have been restated to reflect these shares as outstanding for all
periods presented.

   In February 1999, the Company distributed 8.5 million units to Host Marriott
Corporation for 8.5 million shares of Host Marriott Corporation common stock
issued in exchange for 8.5 million OP Units issued to certain limited partners
in connection with the Partnership Mergers (see Note 12) which are deemed
outstanding at December 31, 1998.

                                      F-10


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   A reconciliation of the number of units utilized for the calculation of
diluted earnings per unit follows:



                                                                  Year Ended
                      --------------------------------------------------------------------------------------------------
                                    1999                             1998                             1997
                      -------------------------------- -------------------------------- --------------------------------
                                                 Per                              Per                              Per
                        Income        Units      Unit    Income        Units      Unit    Income        Units      Unit
                      (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
                      ----------- ------------- ------ ----------- ------------- ------ ----------- ------------- ------
                                                                                       
Net income..........     $285         291.6      $.98      $47         216.3      $.22      $50         215.0      $.23
 Distributions on
  preferred limited
  partner units and
  preferred OP
  Units.............       (6)          --       (.02)     --            --        --       --            --        --
                         ----         -----      ----      ---         -----      ----      ---         -----      ----
Basic earnings
 available to common
 unitholders
 per unit...........     $279         291.6      $.96      $47         216.3      $.22      $50         215.0      $.23
 Assuming
  distribution of
  units to Host
  Marriott
  Corporation for
  Host Marriott
  Corporation common
  shares granted
  under the
  comprehensive
  stock plan, less
  shares assumed
  purchased at
  average market
  price.............      --            5.3      (.02)     --            4.0      (.01)     --            4.8       --
 Assuming conversion
  of Preferred
  OP Units..........      --            0.3       --       --            --        --       --            --        --
 Assuming issuance
  of minority OP
  Units issuable
  under certain
  purchase
  agreements........        7          10.9      (.01)     --            0.3       --       --            --        --
 Assuming conversion
  of Convertible
  Preferred
  Securities........      --            --        --        22          35.8       .06      --            --        --
 Assuming conversion
  of warrants.......      --            --        --       --            --        --       --            0.3       --
                         ----         -----      ----      ---         -----      ----      ---         -----      ----
Diluted Earnings per
 Unit...............     $286         308.1      $.93      $69         256.4      $.27      $50         220.1      $.23
                         ====         =====      ====      ===         =====      ====      ===         =====      ====


 International Operations

   The consolidated statements of operations include the following amounts
related to non-U.S. subsidiaries and affiliates: revenues of $24 million, $121
million and $105 million, and income (loss) before income taxes of $8 million,
$7 million and ($9 million) in 1999, 1998 and 1997, respectively.

 Minority Interest

   Minority interest consists of limited partnership interests in consolidated
investments of $136 million and $147 million as of December 31, 1999 and 1998,
respectively.

 Property and Equipment

   Property and equipment is recorded at cost. For newly developed properties,
cost includes interest, ground rent and real estate taxes incurred during
development and construction. Replacements and improvements are capitalized.

   Depreciation is computed using the straight-line method over the estimated
useful lives of the assets, generally 40 years for buildings and three to ten
years for furniture and equipment. Leasehold improvements are amortized over
the shorter of the lease term or the useful lives of the related assets.

   Gains on sales of properties are recognized at the time of sale or deferred
to the extent required by generally accepted accounting principles. Deferred
gains are recognized as income in subsequent periods as conditions requiring
deferral are satisfied or expire without further cost to the Company.

   In cases where management is holding for sale particular hotel properties,
the Company assesses impairment based on whether the estimated sales price less
costs of disposal of each individual property to be sold is less than the net
book value. A property is considered to be held for sale when the Company has
made the decision to dispose of the property. Otherwise, the Company assesses
impairment of its real estate properties based on whether it is probable that
undiscounted future cash flows from each individual property will be less than
its net book value. If a property is impaired, its basis is adjusted to its
fair market value.

                                      F-11


                     HOST MARRIOTT, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


 Deferred Charges

   Financing costs related to long-term debt are deferred and amortized over
the remaining life of the debt.

 Cash, Cash Equivalents and Short-term Marketable Securities

   The Company considers all highly liquid investments with a maturity of 90
days or less at the date of purchase to be cash equivalents. Cash and cash
equivalents includes approximately $5 million and $22 million at December 31,
1999 and 1998, respectively, of cash related to certain consolidated
partnerships, the use of which is restricted generally for partnership
purposes to the extent it is not distributed to the partners. Short-term
marketable securities include investments with a maturity of 91 days to one
year at the date of purchase. The Company's short-term marketable securities
represent investments in U.S. government agency notes and high quality
commercial paper. The short-term marketable securities are categorized as
available for sale and, as a result, are stated at fair market value.
Unrealized holding gains and losses are included as a separate component of
partners' capital until realized.

 Concentrations of Credit Risk

   Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash, cash equivalents
and short-term marketable securities. The Company maintains cash and cash
equivalents and short-term marketable securities with various high credit-
quality financial institutions. The Company performs periodic evaluations of
the relative credit standing of these financial institutions and limits the
amount of credit exposure with any institution.

   In addition, on January 1, 1999, subsidiaries of Crestline became the
lessees of virtually all the hotels and, as such, their rent payments are the
primary source of the Company's revenues. 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. However, management believes
that due to Crestline's substantial assets, net worth and ability to operate
as a separate publicly traded company, Crestline will have the financial
stability and access to capital necessary to meet the substantial obligations
as lessee under the leases. The separate financial statements of each full-
service lease pool are included in this offering memorandum. For a more
detailed discussion of the guarantee, see Note 9.

 Use of Estimates in the Preparation of Financial Statements

   The preparation of financial statements in conformity with United States
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

 REIT Conversion Expenses

   The Company incurred certain costs related to the REIT Conversion. These
costs consist of professional fees, printing and filing costs, consent fees
and certain other related fees and are classified as REIT conversion expenses
on the consolidated statement of operations. The Company recognized REIT
conversion expense of $64 million in 1998.


                                     F-12


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

 Interest Rate Swap Agreements

   In the past, the Company entered into a limited number of interest rate swap
agreements for non-trading purposes. The Company used such agreements to fix
certain of its variable rate debt to a fixed rate basis. The interest rate
differential to be paid or received on interest rate swap agreements is
recognized as an adjustment to interest expense.

 Other Comprehensive Income

   As of January 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income" (SFAS 130) which establishes new rules for the reporting
and display of comprehensive income and its components. SFAS 130 requires
unrealized gains or losses on the Company's right to receive Host Marriott
Services stock (see Note 10) and foreign currency translation adjustments, to
be included in other comprehensive income. Prior year financial statements have
been reclassified to conform to the requirements of SFAS 130.

   The components of total accumulated other comprehensive income in the
balance sheet are as follows (in millions):



                                                                     1999  1998
                                                                     ----  ----
                                                                     
   Net unrealized gains............................................. $ 8   $ 5
   Foreign currency translation adjustment..........................  (6)   (9)
                                                                     ---   ---
   Total accumulated other comprehensive income (loss).............. $ 2   $(4)
                                                                     ===   ===


 Application of New Accounting Standards

   On December 3, 1999 the Securities and Exchange Commission staff issued
Staff Accounting Bulletin (SAB) No. 101, which codified the staff's position on
revenue recognition. The Company retroactively changed its method of accounting
for contingent rental revenues to conform to SAB No. 101. As a result, base
rent is recognized as it is earned according to the applicable lease
provisions. Percentage rent is recorded as deferred revenue on the balance
sheet until the applicable hotel revenues exceed the threshold amounts. The
Company has adopted SAB No. 101 with retroactive effect beginning January 1,
1999.

   In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." The Statement
establishes accounting and reporting standards requiring that derivative
instruments (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or liability
measured at its fair value. The statement is effective for fiscal years
beginning after June 15, 2000. The Company has not determined the impact of
SFAS No. 133, but management does not believe it will be material.

2. Distribution and Special Dividend

   In December 1998, the Company distributed to its shareholders through a
taxable distribution the outstanding shares of common stock of Crestline (the
"Distribution"), formerly a wholly owned subsidiary of the Company, which, as
of the date of the Distribution, owned and operated the Company's senior living
communities, owned certain other assets and held leasehold interests in
substantially all of the Company's hotels. The Distribution provided Company
shareholders with one share of Crestline common stock for every ten shares of
Company common stock held by such shareholders on the record date of December
28, 1998. As a result of the Distribution, the Company's financial statements
have been restated to present the senior living communities' business results
of operations and cash flows as discontinued operations. Revenues for the
Company's discontinued operations totaled $241 million and $111 million in 1998
and 1997, respectively. The provision for loss on disposal includes
organizational and formation costs related to Crestline.

                                      F-13


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   For purposes of governing certain of the ongoing relationships between the
Company and Crestline after the Distribution and to provide for an orderly
transition, the Company and Crestline entered into various agreements,
including a Distribution Agreement, an Employee Benefits Allocation Agreement
and a Tax Sharing Agreement. Effective as of December 29, 1998, these
agreements provide, among other things, for the division between the Company
and Crestline of certain assets and liabilities.

   On December 18, 1998, the Board of Directors declared a special dividend
which entitled shareholders of record on December 28, 1998 to elect to receive
either $1.00 in cash or .087 of a share of common stock of the Company for each
outstanding share of the Company's common stock owned by such shareholder on
the record date (the "Special Dividend"). Cash totaling $73 million and 11.5
million shares of common stock that were elected in the Special Dividend were
paid and/or issued in 1999.

3. Property and Equipment

   Property and equipment consists of the following:



                                                                 1999     1998
                                                                -------  ------
                                                                (in millions)
                                                                   
   Land and land improvements.................................. $   687  $  740
   Buildings and leasehold improvements........................   6,687   6,613
   Furniture and equipment.....................................     712     740
   Construction in progress....................................     243      78
                                                                -------  ------
                                                                  8,329   8,171
   Less accumulated depreciation and amortization..............  (1,221)   (970)
                                                                -------  ------
                                                                $ 7,108  $7,201
                                                                =======  ======


   Interest cost capitalized in connection with the Company's development and
construction activities totaled $7 million in 1999, $4 million in 1998, and $1
million in 1997.

4. Investments in and Receivables from Affiliates

   Investments in and receivables from affiliates consist of the following:



                                                            Ownership
                                                            Interests 1999 1998
                                                            --------- ---- ----
                                                               (in millions)
                                                                  
   Equity investments
     Rockledge Hotel Properties, Inc. .....................     95%   $ 47 $ 31
     Fernwood Hotel Assets, Inc. ..........................     95%      2    2
   Notes and other receivables from affiliates, net........    --      127  134
                                                                      ---- ----
                                                                      $176 $167
                                                                      ==== ====


   In connection with the REIT Conversion, Rockledge Hotel Properties, Inc. and
Fernwood Hotel Assets, Inc. (together, the "Non-Controlled Subsidiaries") were
formed to own various assets of approximately $264 million contributed by Host
Marriott Corporation to the Operating Partnership, the direct ownership of
which by Host REIT or the Operating Partnership could jeopardize Host REIT's
status as a REIT. These assets primarily consist of partnership or other
interests in hotels which are not leased and certain furniture, fixtures and
equipment ("FF&E") used in the hotels. In exchange for the contribution of
these assets to the Non-Controlled Subsidiaries, the Operating Partnership
received only non-voting common stock of the Non-Controlled Subsidiaries,
representing 95% of the total economic interests therein. The Host Marriott
Statutory Employee/Charitable Trust, the beneficiaries of which are certain
employees of the Company and the J.W. Marriott Foundation concurrently acquired
all of the voting common stock representing the remaining 5% of

                                      F-14


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

the total economic interest. The Non-Controlled Subsidiaries own three full-
service hotels and interests in partnerships that own an additional two full-
service hotels and 209 limited-service hotels.

   In connection with the REIT Conversion, the Company completed the
Partnership Mergers and, as a result, investments in affiliates in prior years
include earnings and assets, which are now consolidated. (See Note 12 for
discussion.)

   Receivables from affiliates are reported net of reserves of $7 million at
December 31, 1999 and 1998. Net amounts funded by the Company totaled $10
million in 1997, and repayments were $2 million in 1999, $14 million in 1998
and $2 million in 1997. There were no fundings in 1999 and 1998.

   The Company's pre-tax income from affiliates includes the following:



                                                                 1999 1998 1997
                                                                 ---- ---- ----
                                                                 (in millions)
                                                                  
   Interest income.............................................. $11  $ 1  $11
   Equity in net income.........................................   6    1    5
                                                                 ---  ---  ---
                                                                 $17  $ 2  $16
                                                                 ===  ===  ===


   Combined summarized balance sheet information for the Company's affiliates
follows:



                                                                   1999   1998
                                                                  ------ ------
                                                                  (in millions)
                                                                   
   Property and equipment, net................................... $1,556 $1,656
   Other assets..................................................    344    258
                                                                  ------ ------
     Total assets................................................ $1,900 $1,914
                                                                  ====== ======
   Debt, principally mortgages................................... $1,533 $1,622
   Other liabilities.............................................    310    300
   Equity (deficit)..............................................     57     (8)
                                                                  ------ ------
     Total liabilities and equity................................ $1,900 $1,914
                                                                  ====== ======


   Combined summarized operating results for the Company's affiliates follow:



                                                         1999    1998    1997
                                                         -----  ------  -------
                                                            (in millions)
                                                               
   Hotel revenues....................................... $ 911  $1,123  $ 1,393
   Operating expenses:
     Cash charges (including interest)..................  (710)   (930)  (1,166)
     Depreciation and other non-cash charges............  (153)   (151)    (190)
                                                         -----  ------  -------
   Income before extraordinary items....................    48      42       37
   Extraordinary items--forgiveness of debt.............   --        4       40
                                                         -----  ------  -------
     Net income......................................... $  48  $   46  $    77
                                                         =====  ======  =======


                                      F-15


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


5. Debt

   Debt consists of the following:



                                                                    1999   1998
                                                                   ------ ------
                                                                   (in millions)
                                                                    
Series A senior notes, with a rate of 7 7/8% due August 2005.....  $  500 $  500
Series B senior notes, with a rate of 7 7/8% due August 2008.....   1,193  1,192
Series C senior notes, with a rate of 8.45% due December 2008....     498    498
Series E senior notes, with a rate of 8 3/8% due February 2006...     300    --
Senior secured notes, with a rate of 9 1/2% due May 2005.........      13     21
Senior notes, with an average rate of 9 3/4% at December 31,
 1999, maturing through 2012.....................................      35     35
                                                                   ------ ------
  Total senior notes.............................................   2,539  2,246
                                                                   ------ ------
Mortgage debt (non-recourse) secured by $3.5 billion of real es-
 tate assets, with an average rate of 7.95% at December 31, 1999,
 maturing through April 2037.....................................   2,309  2,438
Line of credit, with a variable rate of Eurodollar plus 1.65%
 (7.57% at December 31, 1999)....................................     125    350
Other notes, with an average rate of 7.36% at December 31, 1999,
 maturing through December 2017..................................      90     90
Capital lease obligations........................................       6      7
                                                                   ------ ------
  Total other....................................................     221    447
                                                                   ------ ------
                                                                   $5,069 $5,131
                                                                   ====== ======


   Public Debt. In February 1999, the Company issued $300 million of 8 3/8%
Series D senior notes due in 2006 under the same indenture and with the same
covenants as the New Senior Notes (described below). The debt was used to
refinance, or purchase, approximately $299 million of debt acquired in the
Partnership Mergers, including a $40 million variable rate mortgage and
terminate the associated swap agreement, incurring a termination fee of $1
million. The notes were exchanged in August 1999 for Series E senior notes on a
one-for-one basis, which are freely transferable by the holders.

   In December 1998, the Operating Partnership issued $500 million of 8.45%
Series C senior notes due in 2008 under the same indenture and with the same
covenants as the New Senior Notes (described below).

   On August 5, 1998, the Company issued an aggregate of $1.7 billion in new
senior notes (the "New Senior Notes"). The New Senior Notes were issued in two
series, $500 million of 7 7/8% Series A senior notes due in 2005 and $1.2
billion of 7 7/8% Series B senior notes due in 2008. The indenture under which
the New Senior Notes were issued contains covenants restricting the ability of
the Company and certain of its subsidiaries to incur indebtedness, grant liens
on their assets, acquire or sell assets or make investments in other entities,
and make certain distributions to equity holders of the Company and the
Operating Partnership. The Company utilized the proceeds from the New Senior
Notes to purchase substantially all of its (i) $600 million in 9 1/2% senior
notes due 2005; (ii) $350 million in 9% senior notes due 2007; and (iii) $600
million in 8 7/8% senior notes due 2007 (collectively, the "Old Senior Notes").
Approximately $13 million of the Old Senior Notes remain outstanding. In
connection with the purchase of substantially all of the Old Senior Notes, the
Company recorded a charge of approximately $148 million (net of income tax
benefit of $80 million) as an extraordinary item representing the amount paid
for bond premiums and consent fees, as well as the write-off of deferred
financing fees on the Old Senior Notes.

   Concurrently with each offer to purchase, the Company successfully solicited
consents (the "1998 Consent Solicitations") from registered holders of the Old
Senior Notes to certain amendments to eliminate or

                                      F-16


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

modify substantially all of the restrictive covenants and certain other
provisions contained in the indentures pursuant to which the Old Senior Notes
were issued.

   Bank Credit Facility. In August 1998, the Company entered into a $1.25
billion credit facility (the "Bank Credit Facility") with a group of commercial
banks. The Bank Credit Facility has an initial three-year term with two one-
year extension options. At origination, the facility consisted of a $350
million term loan and a $900 million revolver. Borrowings under the Bank Credit
Facility bear interest currently at the Eurodollar rate plus 1.65% (7.57% at
December 31, 1999). The interest rate and commitment fee on the unused portion
of the Bank Credit Facility fluctuate based on certain financial ratios. The
New Senior Notes and the Bank Credit Facility were assumed by the Operating
Partnership in connection with the REIT Conversion.

   During 1999, the Company repaid $225 million of the outstanding balance on
the $350 million term loan portion of the Bank Credit Facility, permanently
reducing the term loan portion to $125 million. In connection with these
prepayments, an extraordinary loss of $2 million representing the write-off of
deferred financing costs was recognized. As a result of these repayments, the
available capacity under the revolver remains $900 million while the total Bank
Credit Facility has been permanently reduced to $1.025 billion.

   The Bank Credit Facility contains covenants restricting the ability of the
Company and certain of its subsidiaries to incur indebtedness, grant liens on
their assets, acquire or sell assets or make investments in other entities, and
make certain distributions to equity holders of Host REIT and the Operating
Partnership. The Bank Credit Facility also contains certain financial covenants
relating to, among other things, maintaining certain levels of tangible net
worth and certain ratios of EBITDA to interest and fixed charges, total debt to
EBITDA, unencumbered assets to unsecured debt, and secured debt to total debt.

   Mortgage Debt. In August 1999, the Company made a prepayment of $19 million
to pay down in full the mezzanine mortgage on the Marriott Desert Springs
Resort and Spa. In September 1999, the Company made a prepayment of $45 million
to pay down in full the mortgage note on the Philadelphia Four Seasons Hotel.

   In July 1999, the Company entered into a financing agreement pursuant to
which it borrowed $665 million due 2009 at a fixed rate of 7.47% with eight
hotels serving as collateral. In connection with this refinancing, an
extraordinary loss of $3 million was recognized, representing the write-off of
deferred financing fees. The proceeds from this financing were used to
refinance existing mortgage indebtedness maturing at various times through
2000, including approximately $590 million of outstanding variable rate
mortgage debt.

   In June 1999, the Company refinanced the debt on the San Diego Marriott
Hotel and Marina. The mortgage is $195 million with a term of 10 years at a
rate of 8.45%. In addition, the Company entered into a mortgage for the
Philadelphia Marriott expansion in July 1999 for $23 million at an interest
rate of approximately 8.6%, maturing in 2009.

   In April 1999, a subsidiary of the Company completed the refinancing of the
$245 million mortgage on the New York Marriott Marquis, maturing June 2000. In
connection with the refinancing, the Company renegotiated the management
agreement and recognized an extraordinary gain of $14 million on the
forgiveness of accrued incentive management fees by the manager. This mortgage
was subsequently refinanced as part of the $665 million financing agreement
discussed above.

   In connection with the refinancing of certain mortgage debt for
approximately $152 million in December 1997, the Company recognized an
extraordinary loss of $2 million which represents payment of a prepayment
penalty and the write-off of unamortized deferred financing fees, net of taxes.

   In 1997, the Company purchased 100% of the outstanding bonds secured by a
first mortgage on the San Francisco Marriott for $219 million, an $11 million
discount to the face value of $230 million. An

                                      F-17


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

extraordinary gain of $5 million was recognized, which represents the $11
million discount less the write-off of unamortized deferred financing fees, net
of taxes.

   Interest Rate Swap Agreements. During 1999, the Company terminated its
outstanding interest rate swap agreements recognizing an extraordinary gain of
approximately $8 million. The Company was party to an interest rate swap
agreement with a financial institution with an aggregate notional amount of
$100 million which expired in December 1998. In 1997, the Company was party to
two additional interest rate swap agreements with an aggregate notional amount
of $400 million which expired in May 1997. The Company realized a net reduction
of interest expense of $338,000 and $1 million in 1999 and 1997, respectively,
related to interest rate swap agreements.

   The Company's debt balance at December 31, 1999, includes $87 million of
debt that is recourse to the parent company. Aggregate debt maturities at
December 31, 1999 are (in millions):

                                                                   
   2000................................................................. $  180
   2001.................................................................    169
   2002.................................................................    157
   2003.................................................................    132
   2004.................................................................     47
   Thereafter...........................................................  4,900
                                                                         ------
                                                                          5,585
   Discount on senior notes.............................................     (9)
   Capital lease obligation.............................................      7
                                                                         ------
                                                                         $5,583
                                                                         ======

   

   Cash paid for interest for continuing operations, net of amounts
capitalized, was $413 million in 1999, $325 million in 1998, and $278 million
in 1997. Deferred financing costs, which are included in other assets, amounted
to $111 million and $98 million, net of accumulated amortization, as of
December 31, 1999 and 1998, respectively. Amortization of deferred financing
costs totaled $17 million, $10 million, and $7 million in 1999, 1998, and 1997,
respectively.

6. Convertible Debt Obligation to Host Marriott Corporation

   The obligation for the $514 million and $567 million of 6 3/4% Convertible
Subordinated Debentures (the "Debentures") as of December 31, 1999 and 1998,
respectively, has been included in these financial statements as debt of the
Company because upon the REIT Conversion the Operating Partnership assumed
primary liability for repayment of the Debentures of Host Marriott underlying
the Convertible Preferred Securities (defined below) of the Host Marriott
Financial Trust (the "Issuer"), a wholly-owned subsidiary trust of Host
Marriott. The common securities of the Issuer were not contributed to the
Operating Partnership and therefore the Issuer is not consolidated by the
Operating Partnership. Upon conversion by a Convertible Preferred Securities
holder, Host Marriott will issue shares of its common stock which will be
delivered to such holder. Upon the issuance of such shares by Host Marriott,
the Operating Partnership will issue to Host Marriott the number of OP Units
equal to the number of shares of Host Marriott common stock issued in exchange
for the Debentures.

   In December 1996, the Issuer issued 11 million shares of 6 3/4% convertible
quarterly income preferred securities (the "Convertible Preferred Securities"),
with a liquidation preference of $50 per share (for a total liquidation amount
of $550 million). The Convertible Preferred Securities represent an undivided
beneficial interest in the assets of the Issuer. The payment of distributions
out of moneys held by the Issuer and payments on liquidation of the Issuer or
the redemption of the Convertible Preferred Securities are guaranteed by the

                                      F-18


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Company to the extent the Issuer has funds available therefor. This guarantee,
when taken together with the Company's obligations under the indenture pursuant
to which the Debentures (defined below) were issued, the Debentures, the
Company's obligations under the Trust Agreement and its obligations under the
indenture to pay costs, expenses, debts and liabilities of the Issuer (other
than with respect to the Convertible Preferred Securities) provides a full and
unconditional guarantee of amounts due on the Convertible Preferred Securities.
Proceeds from the issuance of the Convertible Preferred Securities were
invested in 6 3/4% Convertible Subordinated Debentures (the "Debentures") due
December 2, 2026 issued by the Company. The Issuer exists solely to issue the
Convertible Preferred Securities and its own common securities (the "Common
Securities") and invest the proceeds therefrom in the Debentures. The note
receivable from the Operating Partnership is the Issuer's sole asset.

   Each of the Convertible Preferred Securities and the related debentures are
convertible at the option of the holder into shares of Host Marriott
Corporation common stock at the rate of 3.2537 shares per Convertible Preferred
Security (equivalent to a conversion price of $15.367 per share of Host
Marriott Corporation common stock). The Issuer will only convert Debentures
pursuant to a notice of conversion by a holder of Convertible Preferred
Securities. During 1999, 1998 and 1997, no shares were converted into common
stock. The conversion ratio and price were adjusted to reflect the impact of
the Distribution and the Special Dividend.

   Holders of the Convertible Preferred Securities are entitled to receive
preferential cumulative cash distributions at an annual rate of 6 3/4% accruing
from the original issue date, commencing March 1, 1997, and payable quarterly
in arrears thereafter. The distribution rate and the distribution and other
payment dates for the Convertible Preferred Securities will correspond to the
interest rate and interest and other payment dates on the Debentures. The
Company may defer interest payments on the Debentures for a period not to
exceed 20 consecutive quarters. If interest payments on the Debentures are
deferred, so too are payments on the Convertible Preferred Securities. Under
this circumstance, the Company will not be permitted to declare or pay any cash
distributions with respect to its capital stock or debt securities that rank
pari passu with or junior to the Debentures.

   Subject to certain restrictions, the Convertible Preferred Securities are
redeemable at the Issuer's option upon any redemption by the Company of the
Debentures after December 2, 1999. Upon repayment at maturity or as a result of
the acceleration of the Debentures upon the occurrence of a default, the
Debentures shall be subject to mandatory redemption, from which the proceeds
will be applied to redeem Convertible Preferred Securities and Common
Securities, together with accrued and unpaid distributions.

   As part of the share repurchase program described below in Note 7, the
Company purchased 1.1 million shares of Convertible Preferred Securities in
1999 and has purchased an additional 0.4 million shares through March 8, 2000,
resulting in the retirement of an equivalent amount of Debentures.

7. Equity and Partner's Capital

   223.5 million and 225.6 million OP Units were outstanding as of December 31,
1999 and 1998, respectively. 8.16 million preferred limited partner units were
outstanding as of December 31, 1999. No preferred limited partner units were
outstanding as of December 31, 1998.

   A quarterly distribution of $0.21 per unit was paid on April 14, July 14,
and October 15 of 1999. A fourth quarter distribution of $0.21 per unit was
declared on December 20, 1999 and paid on January 17, 2000.

   During 1999, approximately 585,000 Class TS cumulative redeemable preferred
operating partnership units and approximately 26,000 Class AM cumulative
redeemable preferred operating partnership units (together the "Preferred OP
Units") were issued in connection with the acquisition of minority interests in
two

                                      F-19


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

hotels. The Preferred OP Units are convertible into OP Units on a one-for-one
basis, subject to adjustment in specified events, at any time beginning one
year after acquisition, and after conversion to OP Units are redeemable for
cash or at Host REIT's option, Host REIT common shares. The Company has the
right to convert the Preferred OP Units to OP Units two years from the date of
issuance. Preferred OP Unitholders are entitled to receive a preferential cash
distribution of $0.21 per quarter.

   In September 1999, the Board of Directors of Host REIT 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, operating partnership units, or a corresponding amount of the
Convertible Preferred Securities, which are convertible into a like number of
shares of common stock, based on the appropriate conversion ratio. Such
repurchases will be made at management's discretion, subject to market
conditions, and may be suspended at any time at the Company's discretion. For
the year ended December 31, 1999, Host REIT repurchased 5.8 million common
shares, 1.1 million shares of the Convertible Preferred Securities and 0.3
million OP Units for a total investment of $89 million. Through March 8, 2000,
Host REIT repurchased an additional 4.7 million common shares, 0.4 million
Convertible Preferred Securities, and 0.3 million operating partnership units
for an additional investment of $60 million.

   In August 1999, Host REIT sold 4.16 million shares of 10% Class A preferred
stock, and in November 1999, Host REIT sold 4.0 million shares of 10% Class B
preferred stock. The Operating Partnership, in turn, issued equivalent
securities, the Class A Preferred Units and Class B Preferred Units ("Class A
and B Preferred Units"), to Host REIT. Holders of the Class A and B Preferred
Units are entitled to receive cumulative cash dividends at a rate of 10% per
annum of the $25.00 per unit liquidation preference, payable quarterly in
arrears commencing October 15, 1999 and January 15, 2000 for the Class A and
Class B preferred stock, respectively. After August 3, 2004 and April 29, 2005,
Host REIT has the option to redeem the Class A and Class B Preferred Stock,
respectively, for $25.00 per share, plus accrued and unpaid dividends to the
date of redemption. The Class A and B Preferred Units rank senior to the OP
Units, and on a parity with each other. The preferred unitholders generally
have no voting rights. Accrued distributions at December 31, 1999 were
$4 million.

   In conjunction with the Merger, the Blackstone Acquisition and the
Partnership Mergers (Note 12), the Company issued approximately 64.5 million OP
Units which are convertible into cash (or at Host Marriott's option, shares of
Host Marriott common stock).

   Host Marriott Corporation issued 11.5 million shares of common stock as part
of the Special Dividend and 8.5 million shares of common stock in exchange for
8.5 million OP Units issued to certain limited partners in connection with the
Partnership Mergers (Note 12). Also, as part of the REIT Conversion, Host
Marriott Corporation changed its par value from $1 to $0.01 per share. The
change in par value did not affect the number of shares outstanding.

8. Income Taxes

   The Operating Partnership is not a tax paying entity. However, the Operating
Partnership under the Operating Partnership Agreement is required to reimburse
Host REIT for any tax payments Host REIT is required to make. Accordingly, the
tax information included herein represents disclosures regarding Host REIT. As
a result of the requirement of the Company to reimburse Host REIT for these
liabilities, such liabilities and related disclosures are included in the
Company's financial statements.


                                      F-20


                     HOST MARRIOTT, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

   In December 1998, Host Marriott restructured itself to enable Host REIT to
qualify for treatment as a REIT, pursuant to the U.S. Internal Revenue Code of
1986, as amended, effective January 1, 1999. In general, a corporation that
elects REIT status and distributes at least 95% of its taxable income to its
shareholders and complies with certain other requirements (relating primarily
to the nature of its assets and the sources of its revenues) is not subject to
Federal income taxation to the extent it distributes its taxable income. In
1999, Host REIT distributed 100% if its 1999 taxable income which amounted to
$.84 per outstanding common share. Of the total distribution, $.83 per share
was taxable as ordinary income with the remaining $.01 per share taxable as a
capital gain. Management believes that Host REIT was organized to qualify as a
REIT for 1999 and intends for it to qualify in subsequent years (including
distribution of at least 95% of its REIT taxable income to shareholders each
year). Management expects that Host REIT will pay taxes on "built-in gains" on
only certain of its assets. Based on these considerations and the settlement
of certain tax contingencies in 1999, management does not believe that Host
REIT will be liable for income taxes at the federal level or in most of the
states in which it operates in future years, and Host REIT eliminated $26
million and $106 million of its net tax liabilities as of December 31, 1999
and 1998. Host REIT does not expect to provide for any material deferred
income taxes in future periods except in certain states and foreign countries.
In connection with the Distribution and formation of the Non-Controlled
Subsidiaries, Host REIT further reduced deferred income tax liabilities by
$102 million in 1998.

   In order to qualify as a REIT for federal income tax purposes, among other
things, Host REIT was required to distribute all of its accumulated earnings
and profits ("E&P") to its stockholders in one or more taxable dividends prior
to December 31, 1999. To accomplish the requisite distributions of accumulated
E&P, Host Marriott made distributions consisting of approximately 20.4 million
shares of Crestline valued at $297 million, $73 million in cash, and
approximately 11.5 million shares of Host Marriott stock valued at $138
million. Management believes it has distributed all required E&P as of
December 31, 1999. Host REIT's final calculation of E&P and the distribution
thereof is subject to review by the Internal Revenue Service.

   Where required, deferred income taxes are accounted for using the asset and
liability method. Under this method, deferred income taxes are recognized for
temporary differences between the financial reporting bases of assets and
liabilities and their respective tax bases and for operating loss and tax
credit carryforwards based on enacted tax rates expected to be in effect when
such amounts are realized or settled. However, deferred tax assets are
recognized only to the extent that it is more likely than not that they will
be realized based on consideration of available evidence, including tax
planning strategies and other factors.

   Total deferred tax assets and liabilities at December 31, 1999 and December
31, 1998 were as follows:



                                                                1999    1998
                                                               ------  -------
                                                               (in millions)
                                                                 
   Deferred tax assets........................................ $   10  $    32
   Deferred tax liabilities...................................    (59)    (129)
                                                               ------  -------
     Net deferred income tax liability........................ $  (49) $   (97)
                                                               ======  =======


   The tax effect of each type of temporary difference and carryforward that
gives rise to a significant portion of deferred tax assets and liabilities as
of December 31, 1999 and December 31, 1998 follows:



                                                                1999    1998
                                                               ------  -------
                                                               (in millions)
                                                                 
   Safe harbor lease investments.............................. $  (24) $   (24)
   Deferred tax gain..........................................    (35)    (105)
   Alternative minimum tax credit carryforwards...............     10       32
                                                               ------  -------
     Net deferred income tax liability........................ $  (49) $   (97)
                                                               ======  =======



                                     F-21


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

   The provision (benefit) for income taxes consists of:



                                                                1999  1998  1997
                                                                ----  ----  ----
                                                                (in millions)
                                                                   
   Current--Federal...........................................  $ 26  $116  $19
      --State.................................................     3    27    4
      --Foreign...............................................     3     4    3
                                                                ----  ----  ---
                                                                  32   147   26
                                                                ----  ----  ---
   Deferred--Federal..........................................   (37)  (49)   8
      --State.................................................   (11)  (12)   2
                                                                ----  ----  ---
                                                                 (48)  (61)  10
                                                                ----  ----  ---
                                                                $(16) $ 86  $36
                                                                ====  ====  ===


   At December 31, 1999, Host REIT had approximately $10 million of alternative
minimum tax credit carryforwards available which do not expire.

   As of December 31, 1999, Host REIT had settled with the Internal Revenue
Service substantially all issues for tax years through 1996. Host REIT expects
to resolve any remaining issues with no material impact on the consolidated
financial statements. Host REIT made net payments to the IRS of approximately
$14 million, $27 million, and $10 million in 1999, 1998 and 1997, respectively,
related to these settlements.

   A reconciliation of the statutory Federal tax rate to Host REIT's effective
income tax rate follows (excluding the impact of the change in tax status):



                                                             1999    1998  1997
                                                             -----   ----  ----
                                                                  
   Statutory Federal tax rate...............................   --  % 35.0% 35.0%
   Built-in-gains...........................................   2.8    --    --
   State income taxes, net of Federal tax benefit...........   1.2    5.8   4.9
   Tax credits..............................................   --    (1.7) (2.7)
   Tax contingencies........................................ (16.9)   --    --
   Additional tax on foreign source income..................   1.6    4.2   6.0
   Permanent non-deductible REIT Conversion expenses........   --     4.6   --
   Other permanent items....................................   --     1.2    .1
   Other, net...............................................   --     0.3    .1
                                                             -----   ----  ----
     Effective income tax rate.............................. (11.3)% 49.4% 43.4%
                                                             =====   ====  ====


   Cash paid for income taxes, including IRS settlements, net of refunds
received, was $50 million in 1999, $83 million in 1998 and $56 million in 1997.

9. Leases

   Due to current federal income tax law restrictions on a REIT's ability to
derive revenues directly from the operation of a hotel, the Company leases its
hotels (the "Leases") to one or more lessees (the "Lessees").

   Hotel Leases. There generally is a separate Lessee for each hotel or group
of hotels that is owned by a separate subsidiary of the Company. The operating
agreements for such Lessees provide that the Crestline member of the Lessee has
full control over the management of the business of the Lessee, subject to
blocking rights by Marriott International, where it is the manager, over
certain decisions by virtue of its non-economic, limited voting interest in the
lessee subsidiaries. Each full-service hotel Lease has a fixed term generally

                                      F-22


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

ranging from seven to ten years, subject to earlier termination upon the
occurrence of certain contingencies as defined in the Leases. Each Lease
requires the Lessee to pay 1) minimum rent in a fixed dollar amount per annum
plus 2) to the extent it exceeds minimum rent, percentage rent based upon
specified percentages of aggregate sales from the applicable hotel, including
room sales, food and beverage sales, and other income in excess of specified
thresholds. The amount of minimum rent and the percentage rent thresholds will
be adjusted each year based upon any increases in the Consumer Price Index and
the Employment Cost Index during the previous 10 months, as well as for certain
capital expenditures and casualty occurrences. The Company has received notices
of termination from Crestline on five leases, with effective dates ranging from
March through June 2000, which we are currently negotiating. We expect to be
able to obtain replacement leases for these leases without material impact to
our future operations.

   Effective November 15, 1999, we amended substantially all of our leases with
Crestline 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, to be
determined either by agreement between us and Crestline or through arbitration
at the time the renewal option is exercised. Crestline is under no obligation
to exercise these renewal options, and the Company has the right to terminate
the renewal options during certain time periods specified in the amendments. In
addition, the amendments provide that the fair rental value payable by the
Company to Crestline in connection with the purchase of a lease as described
above does not include any amounts relating to any renewal period. Therefore,
the fair rental value of a lease after expiration of the initial term for such
lease would be zero. The Company intends to evaluate our options regarding the
Crestline leases and have not yet made a decision whether or not to purchase
those leases.

   If the Company anticipates that the average tax basis of the Company's FF&E
and other personal property that are leased by any individual lessor entity
will exceed 15% of the aggregate average tax basis of the fixed assets in that
entity, then the Lessee would be obligated either to acquire such excess FF&E
from the Company or to cause a third party to purchase such FF&E. The Lessee
has agreed to give a right of first opportunity to a Non-Controlled Subsidiary
to acquire the excess FF&E and to lease the excess FF&E to the Lessee.

   Each Lessee is responsible for paying all of the expenses of operating the
applicable hotel(s), including all personnel costs, utility costs and general
repair and maintenance of the hotel(s). The Lessee also is responsible for all
fees payable to the applicable manager, including base and incentive management
fees, chain services payments and franchise or system fees, with respect to
periods covered by the term of the Lease. The Company also remains liable under
each management agreement.

   The Company is responsible for paying real estate taxes, personal property
taxes (to the extent the Company owns the personal property), casualty
insurance on the structures, ground lease rent payments, required expenditures
for FF&E (including maintaining the FF&E reserve, to the extent such is
required by the applicable management agreement) and other capital
expenditures.

   Crestline Guarantees. 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 (determined on the basis of the
term of the particular Lease with all leases having generally the same lease
term placed in the same "pool"). For each of the four identified pools, the
cumulative limit of Crestline's guaranty obligation is the greater of 10% of
the aggregate rent payable for the immediately preceding fiscal year under all
Leases in the pool or 10% of the aggregate rent payable under all Leases in the
pool. For each pool, the subsidiary of Crestline that is the parent of the
Lessees in the pool (a "Pool Parent") also is a party to the guaranty of the
Lease obligations for that pool.

   The obligations of the Pool Parent under each guaranty is secured by all
funds received by the applicable Pool Parent from the hotels in the pool, and
the hotels in the pool are required to distribute their excess cash flow to the
Pool Parent for each accounting period, under certain conditions as described
by the guaranty.

                                      F-23


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   As a result of the limited guarantees of the lease obligations of the
lessees, the Company believes that the operating results of each full-service
lease pool may be material to the Company's financial statements. Separate
financial statements for the year ended December 31, 1999 for each of the four
lease pools in which the Company's hotels are organized are presented in this
Offering Memorandum. 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 Commission.

   In the event that Crestline's obligation under a guaranty is reduced to
zero, the applicable Pool Parent can elect to terminate its guaranty and the
pooling agreement for that pool by giving notice to the Operating Partnership.
In that event, subject to certain conditions, the Pool Parent's guaranty will
terminate six months after the effective date of such notice, subject to
reinstatement in certain limited circumstances.

   The Company sold the existing working capital to the applicable Lessee upon
the commencement of the Lease at a price equal to the fair market value of such
assets. The purchase price is represented by a note evidencing a loan that
bears interest at a rate of 5.12%. Interest accrued on the working capital loan
is due simultaneously with each periodic rent payment, and the amount of each
payment of interest is credited against such rent payment. The principal amount
of the working capital loan is payable upon termination of the Lease. The
Lessee can return the working capital in satisfaction of the note. As of
December 31, 1999, the note receivable from Crestline for working capital was
$90 million.

   In the event the Company enters into an agreement to sell or otherwise
transfer any full-service hotel free and clear of the applicable Lease, the
Lessor must pay the Lessee a termination fee equal to the fair market value of
the Lessee's leasehold interest in the remaining term of the Lease using a
discount rate of 12%. Alternatively, the Lessor will be entitled to (i)
substitute a comparable hotel or hotels for any hotel that is sold or (ii) sell
the hotel subject to the Lease and certain conditions without being required to
pay a termination fee.

   REIT Modernization Act. Under the REIT Modernization Act, beginning January
1, 2001, the Company could lease its hotels to one of its subsidiaries that is
a taxable corporation and that elects to be treated as a "taxable REIT
subsidiary". In addition, as a result of passage of the REIT Modernization Act,
the Company has the right to purchase the leases from Crestline on or after
January 1, 2001, for a price equal to the fair rental value of the lessee's
interest in the leases over their remaining terms (which could be significant).

   Hospitality Properties Trust Relationship. The Company sold and leased back
37 of its Courtyard properties in 1995 and an additional 16 Courtyard
properties in 1996 to Hospitality Properties Trust ("HPT"). Additionally, in
1996, the Company sold and leased back 18 of its Residence Inns to HPT. These
leases, which are accounted for as operating leases and are included in the
table below, have initial terms expiring through 2012 for the Courtyard
properties and 2010 for the Residence Inn properties, and are renewable at the
option of the Company. Minimum rent payments are $51 million annually for the
Courtyard properties and $17 million annually for the Residence Inn properties,
and additional rent based upon sales levels are payable to the owner under the
terms of the leases.

   In connection with the REIT Conversion, the Company sublet the HPT hotels
(the "Subleases") to separate indirect sublessee subsidiaries of Crestline
("Sublessee"), subject to the terms of the applicable HPT Lease. The term of
each Sublease expires simultaneously with the expiration of the initial term of
the HPT lease to which it relates and automatically renews for the
corresponding renewal term under the HPT lease, unless either the HPT lessee
(the "Sublessor") elects not to renew the HPT lease, or the Sublessee elects
not to renew the Sublease at the expiration of the initial term provided,
however, that neither party can elect to terminate fewer than all of the
Subleases in a particular pool of HPT hotels (one for Courtyard by Marriott

                                      F-24


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

hotels and one for Residence Inn hotels). Rent under the Sublease consists of
the Minimum Rent payable under the HPT lease and an additional percentage rent
payable to the Sublessor. The percentage rent is sufficient to cover the
additional rent due under the HPT lease, with any excess being retained by the
Sublessor. The rent payable under the Subleases is guaranteed by Crestline, up
to a maximum amount of $30 million which amount is allocated between the two
pools of HPT hotels.

   Other Lease Information. A number of the Company's leased hotel properties
also include long-term ground leases for certain hotels, generally with
multiple renewal options. Certain leases contain provision for the payment of
contingent rentals based on a percentage of sales in excess of stipulated
amounts. Future minimum annual rental commitments for all non-cancelable leases
for which the Company is the lessee are as follows:



                                                               Capital Operating
                                                               Leases   Leases
                                                               ------- ---------
                                                                 (in millions)
                                                                 
   2000.......................................................   $ 2    $  109
   2001.......................................................     1       105
   2002.......................................................     1       101
   2003.......................................................     1        97
   2004.......................................................     1       103
   Thereafter.................................................     3     1,236
                                                                 ---    ------
   Total minimum lease payments...............................     9    $1,751
                                                                 ===    ======
   Less amount representing interest..........................    (3)
                                                                 ---
     Present value of minimum lease payments..................   $ 6
                                                                 ===


   Certain of the lease payments included in the table above relate to
facilities used in the Company's former restaurant business. Most leases
contain one or more renewal options, generally for five or 10-year periods.
Future rentals on leases have not been reduced by aggregate minimum sublease
rentals from restaurants and HPT subleases of $71 million and $851 million,
respectively, payable to the Company under non-cancellable subleases.

   In conjunction with the refinancing of the mortgage of the New York Marriott
Marquis, the Company also renegotiated the terms of the ground lease,
retroactive to 1998. The renegotiated ground lease provides for the payment of
a percentage of the hotel sales (3% in 1998, 4% in 1999 and 5% thereafter)
through 2017, which is to be used to amortize the then existing deferred ground
rent obligation of $116 million. The Company has the right to purchase the land
under certain circumstances. The balance of the deferred ground rent obligation
was $86 million at December 31, 1999.

   The Company remains contingently liable at December 31, 1999 on certain
leases relating to divested non-lodging properties. Such contingent liabilities
aggregated $80 million at December 31, 1999. However, management considers the
likelihood of any substantial funding related to these leases to be remote.

   Rent expense consists of:



                                                                 1999 1998 1997
                                                                 ---- ---- ----
                                                                 (in millions)
                                                                  
   Minimum rentals on operating leases.......................... $106 $104 $ 98
   Additional rentals based on sales............................   29   26   20
                                                                 ---- ---- ----
                                                                 $135 $130 $118
                                                                 ==== ==== ====



                                      F-25


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

10. Employee Stock Plans

   In connection with the REIT conversion, the Company assumed the employee
obligations of Host REIT. Upon the exercise of stock options in Host REIT
common stock, Host REIT will issue shares of its common stock in return for the
issuance of an equal number of OP Units of the Company. Accordingly, those
liabilities and related disclosures are included in the Company's financial
statements.

   At December 31, 1999, Host REIT maintained two stock-based compensation
plans, including the comprehensive stock plan (the "Comprehensive Plan"),
whereby Host REIT may award to participating employees (i) options to purchase
Host REIT's common stock, (ii) deferred shares of Host REIT's common stock and
(iii) restricted shares of Host REIT's common stock and the employee stock
purchase plan (the "Employee Stock Purchase Plan").

   Employee stock options may be granted to officers and key employees with an
exercise price not less than the fair market value of the common stock on the
date of grant. Non-qualified options generally expire up to 15 years after the
date of grant. Most options vest ratably over each of the first four years
following the date of the grant.

   In connection with the Host Marriott Services ("HM Services") spin-off in
1995, outstanding options held by current and former employees of Host Marriott
were redenominated in both Host Marriott and Host Marriott Services stock and
the exercise prices of the options were adjusted based on the relative trading
prices of shares of the common stock of the two companies. Pursuant to the
distribution agreement between the Company and HM Services, the Company
originally had the right to receive up to 1.4 million shares of HM Services'
common stock or an equivalent cash value subsequent to exercise of the options
held by certain former and current employees of Marriott International. On
August 27, 1999, Autogrill Acquisition Co., a wholly-owned subsidiary of
Autogrill SpA of Italy, acquired Host Marriott Services Corporation. Since Host
Marriott Services is no longer publicly traded, all future payments to the
Company will be made in cash as Host Marriott Services Corporation has
indicated that the receivable will not be settled in Autogrill SpA stock. As of
December 31, 1999, the receivable balance is approximately $11.9 million, which
is included in other assets.

   Effective December 29, 1998, the Company adjusted the number of outstanding
stock options and the related exercise prices to maintain the intrinsic value
of the options to account for the Special Dividend and the Distribution. The
vesting provisions and option period of the original grant was retained. No
compensation expense was recorded by the Company as a result of these
adjustments. Employee optionholders that remained with the Company received
options only in Host REIT's stock and those employee optionholders that became
Crestline employees received Crestline options in exchange for the Company's
options.

   The Company continues to account for expense under its plans according to
the provisions of Accounting Principle Board Opinion 25 and related
interpretations as permitted under SFAS No. 123. Consequently, no compensation
cost has been recognized for its fixed stock options under the Comprehensive
Plan and its Employee Stock Purchase Plan.

   For purposes of the following disclosures required by SFAS No. 123, the fair
value of each option granted has been estimated on the date of grant using an
option-pricing model with the following weighted average assumptions used for
grants in 1999 and 1997, respectively: risk-free interest rate of 6.4% and
6.2%, volatility of 32% and 35%, expected lives of 12 years and 12 years, and
dividend yield of $0.84 per share and no dividend yield. The weighted average
fair value per option granted during the year was $1.15 in 1999 and $13.13 in
1997. No options were granted in 1998. Pro forma compensation cost for 1999,
1998 and 1997 would have reduced net income by approximately $919,000, $524,000
and $330,000. Basic and diluted earnings per share on a pro forma basis were
not impacted by the pro forma compensation cost in 1999, 1998 and 1997.

                                      F-26


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   The effects of the implementation of SFAS No. 123 are not representative of
the effects on reported net income in future years because only the effects of
stock option awards granted in 1997 and subsequent have been considered.

   A summary of the status of the Company's stock option plan for 1999, 1998
and 1997 follows:



                                   1999                   1998                   1997
                          ---------------------- ---------------------- ----------------------
                                        Weighted               Weighted               Weighted
                                        Average                Average                Average
                             Shares     Exercise    Shares     Exercise    Shares     Exercise
                          (in millions)  Price   (in millions)  Price   (in millions)  Price
                          ------------- -------- ------------- -------- ------------- --------
                                                                    
Balance, at beginning of
 year...................       5.6        $  3        6.8        $ 4         8.3        $ 4
Granted.................       0.6          10        --         --           .1         20
Exercised...............      (1.3)          3       (1.3)         5        (1.6)         4
Forfeited/Expired.......       --          --        (0.6)         4         --         --
Adjustment for Distribu-
 tion and Special
 Dividend...............       --          --         0.7          3         --         --
                              ----                   ----                   ----
Balance, at end of
 year...................       4.9           4        5.6          3         6.8          4
                              ====                   ====                   ====
Options exercisable at
 year-end...............       4.2                    5.5                    6.4
                              ====                   ====                   ====


   The following table summarizes information about stock options at December
31, 1999:



                                     Options Outstanding          Options Exercisable
                              ---------------------------------- ----------------------
                                             Weighted
                                              Average   Weighted               Weighted
                                             Remaining  Average                Average
                                 Shares     Contractual Exercise    Shares     Exercise
   Range of Exercise Prices   (in millions)    Life      Price   (in millions)  Price
   ------------------------   ------------- ----------- -------- ------------- --------
                                                                
           $  1 - 3                3.4            7       $ 2         3.4        $ 2
              4 - 6                0.4            9         6         0.4          6
              7 - 9                0.9           13         9         0.4          8
            10 - 12                0.2           14        12         --          12
            13 - 15                --            13        15         --          15
            16 - 19                --            13        18         --          18
                                   ---                                ---
                                   4.9                                4.2
                                   ===                                ===


   Deferred stock incentive plan shares granted to officers and key employees
after 1990 generally vest over 10 years in annual installments commencing one
year after the date of grant. Certain employees may elect to defer payments
until termination or retirement. The Company accrues compensation expense for
the fair market value of the shares on the date of grant, less estimated
forfeitures. In 1999, 1998 and 1997, 11,000, 12,000 and 14,000 shares were
granted, respectively, under this plan. The compensation cost that has been
charged against income for deferred stock was not material in 1999, 1998 and
1997. The weighted average fair value per share granted during each year was
$14.31 in 1999, $19.21 in 1998 and $15.81 in 1997.

   The Company from time to time awards restricted Host REIT stock plan shares
under the Comprehensive Plan to officers and key executives to be distributed
over the next three to 10 years in annual installments based on continued
employment and the attainment of certain performance criteria. The Company
recognizes compensation expense over the restriction period equal to the fair
market value of the shares on the date of issuance adjusted for forfeitures,
and where appropriate, the level of attainment of performance criteria and
fluctuations in the fair market value of Host REIT's common stock. In 1999,
1998 and 1997, 3,203,000, 2,900

                                      F-27


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

and 198,000 shares of additional restricted stock plan shares were granted to
certain key employees under these terms and conditions. Approximately 5,000 and
17,000 shares were forfeited in 1999 and 1998, respectively. There were no
shares forfeited in 1997. The Company recorded compensation expense of $7.7
million, $11 million and $13 million in 1999, 1998 and 1997, respectively,
related to these awards. The weighted average fair value per share granted
during each year was $12.83 in 1999, $18.13 in 1998 and $16.88 in 1997. Under
these awards 3,203,000 shares were outstanding at December 31, 1999.

   In 1998, 568,408 stock appreciation rights ("SARs") were issued under the
Comprehensive Plan to certain directors of the Company as a replacement for
previously issued options that were cancelled during the year. The conversion
to SARs was completed in order to comply with ownership limits applicable to
Host REIT upon conversion to a REIT. The SARs are fully vested and the grant
prices range from $1.20 to $5.13. In 1999 and 1998, the Company recognized
compensation (income) expense of $(2.7) million and $4.8 million, respectively,
related to this grant. Additionally, in future periods, the Company will
recognize compensation expense for outstanding SARs as a result of fluctuations
in the market price of Host REIT's common stock.

   Under the terms of the Employee Stock Purchase Plan, eligible employees may
purchase common stock through payroll deductions at 90% of the lower of market
value at the beginning or market value at the end of the plan year.

11. Profit Sharing and Postemployment Benefit Plans

   The Company contributes to profit sharing and other defined contribution
plans for the benefit of employees meeting certain eligibility requirements and
electing participation in the plans. The amount to be matched by the Company is
determined annually by Host REIT's Board of Directors. The Company provides
medical benefits to a limited number of retired employees meeting restrictive
eligibility requirements. Amounts for these items were not material in 1997
through 1999.

12. Acquisitions and Dispositions

   The Company completed a 210-room expansion of the Philadelphia Marriott in
April 1999 at a cost of approximately $37 million. Additionally, we acquired
the remaining unaffiliated partnership interests in two full-service hotels by
issuing approximately 612,000 cumulative preferred OP Units and paid cash of
approximately $6.8 million.

   The Company acquired or gained controlling interest in 36 hotels with 15,166
rooms in 1998 and 18 hotels with 9,128 rooms in 1997. Twenty-five of the 1998
acquisitions, consisting of the Blackstone Acquisition and the Partnership
Mergers, were completed on December 30, 1998 in conjunction with the REIT
Conversion. Additionally, three full-service properties were contributed to one
of the Non-Controlled Subsidiaries (Note 4). These acquisitions are summarized
below.

   In December 1998, the Company completed the acquisition of, or controlling
interests in, twelve hotels and one mortgage loan secured by an additional
hotel (the "Blackstone Acquisition") from the Blackstone Group, a Delaware
limited partnership, and a series of funds controlled by affiliates of
Blackstone Real Estate Partners (together, the "Blackstone Entities"). In
addition, the Company acquired a 25% interest in Swissotel Management (USA)
L.L.C., which operates five Swissotel hotels in the United States, which the
Company transferred to Crestline in connection with the Distribution. The
Operating Partnership issued approximately 47.7 million OP Units, which are
redeemable for the Company's common stock (or cash equivalent at Host
Marriott's option) assumed debt and made cash payments totaling approximately
$920 million and distributed 1.4 million of the shares of Crestline common
stock to the Blackstone Entities. During 1999, approximately 467,000 OP Units
were redeemed for common stock and an additional 233,000 OP Units were redeemed
for $2 million in cash. As of December 31, 1999, the Blackstone Entities own
approximately 16% of the outstanding OP Units of the Operating Partnership.

                                      F-28


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   In December 1998, the Company announced the completion of the Partnership
Mergers which was the roll-up of eight public partnerships and four private
partnerships which own or control 28 properties, 13 of which were already
consolidated (the "Partnership Mergers"). The Operating Partnership issued
approximately 25.8 million OP Units to partners for their interests valued at
approximately $333 million. As of December 31, 1999, approximately 16.8 million
OP Units remain outstanding.

   As a result of these transactions, the Company increased its ownership of
most of the 28 properties to 100% while consolidating 15 additional hotels
(4,445 rooms).

   During 1998, the Company acquired an additional interest in the Atlanta
Marriott Marquis II Limited Partnership, which owns an interest in the 1,671-
room Atlanta Marriott Marquis for approximately $239 million. The Company also
acquired a controlling interest in two partnerships that own four hotels for
approximately $74 million. In addition, the Company acquired four Ritz-Carlton
hotels and two additional hotels totaling over 2,200 rooms for approximately
$465 million.

   In 1997, the Company acquired eight full-service hotels totaling 3,600 rooms
for approximately $145 million. In addition, the Company acquired controlling
interests in nine full-service hotels totaling 5,024 rooms for approximately
$621 million, including the assumption of approximately $418 million of debt.
The Company also completed the acquisition of the 504-room New York Marriott
Financial Center, after acquiring the mortgage on the hotel for $101 million in
late 1996.

   Also in 1997, the Company acquired the outstanding common stock of the Forum
Group from Marriott Senior Living Services. The Company purchased the Forum
Group portfolio of 29 senior living communities for approximately $460 million,
including approximately $270 million in debt. The Company also acquired 49% of
the remaining 50% interest in the partnership which owned the 418-unit Leisure
Park retirement community for approximately $23 million, including the
assumption of approximately $15 million of debt. The Company contributed these
assets in conjunction with the Distribution of Crestline.

   The following table summarizes property dispositions for 1999 and 1998:



                                                                      Pre-tax
                                                         Total      Gain/(Loss)
                                                     Consideration  on Disposal
Property                     Location     Year Rooms (in millions) (in millions)
- --------                 ---------------- ---- ----- ------------- -------------
                                                    
Minneapolis/Bloomington
 Marriott............... Bloomington, MN  1999  479      $ 35           $10
Saddle Brook Marriott... Saddle Brook, NJ 1999  221        15             3
Marriott's Grand Hotel
 Resort and Golf Club... Point Clear, AL  1999  306        28            (2)
The Ritz-Carlton,
 Boston................. Boston, MA       1999  275       119            15
El Paso Marriott........ El Paso, TX      1999  296         1            (2)
New York Marriott East
 Side................... New York, NY     1998  662       191            40
Napa Valley Marriott.... Napa, CA         1998  191        21            10


                                      F-29


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


13. Fair Value of Financial Instruments

   The fair values of certain financial assets and liabilities and other
financial instruments are shown below:



                                                    1999            1998
                                               --------------- ---------------
                                               Carrying  Fair  Carrying  Fair
                                                Amount  Value   Amount  Value
                                               -------- ------ -------- ------
                                                        (in millions)
                                                            
   Financial assets
     Receivables from affiliates..............  $  127  $  133  $  134  $  141
     Notes receivable.........................      48      48      69      69
     Other....................................      12      12       9       9
   Financial liabilities
     Debt, net of capital leases..............   5,063   4,790   5,110   5,125
     Other financial instruments
     Convertible Debt Obligation to Host
      Marriott................................     514     357     567     466


   Short-term marketable securities and Convertible Preferred Securities are
valued based on quoted market prices. Receivables from affiliates, notes and
other financial assets are valued based on the expected future cash flows
discounted at risk-adjusted rates. Valuations for secured debt are determined
based on the expected future payments discounted at risk-adjusted rates. The
fair values of the Bank Credit Facility and other notes are estimated to be
equal to their carrying value. Senior notes are valued based on quoted market
prices.

   The fair value of the liability related to the interest rate swap agreements
assumed in the Blackstone Acquisition was $14 million. The fair value is based
on the estimated amount the Company would pay or receive to terminate the swap
agreements. The aggregate notional amount of the agreements was $365 million at
December 31, 1998 and $100 million at January 2, 1998. The Company terminated
all the swap agreements in 1999.

14. Marriott International Distribution and Relationship with Marriott
International

   The Company and Marriott International (formerly a wholly owned subsidiary,
the common stock of which was distributed to the Company's shareholders on
October 8, 1993) have entered into various agreements in connection with the
Marriott International Distribution and thereafter which provide, among other
things, that (i) the majority of the Company's hotel lodging properties are
managed by Marriott International (see Note 15); (ii) 13 of the Company's full-
service properties are operated under franchise agreements with Marriott
International with terms of 15 to 30 years; (iii) Marriott International
provided the Company with $92 million of financing at an average rate of 9% in
1997 related to the Company's discontinued senior living operations; (iv) the
Company acquired 49% of Marriott International's 50% interest in the Leisure
Park retirement community in 1997 for $23 million, including approximately $15
million of assumed debt; (v) Marriott International guarantees the Company's
performance in connection with certain obligations ($24 million at December 31,
1999); (vi) the Company borrowed and repaid $109 million of first mortgage
financing for construction of the Philadelphia Marriott (see Note 5); (vii)
Marriott International and the Company formed a joint venture and Marriott
International provided the Company with $29 million in debt financing at an
average interest rate of 12.7% and $28 million in preferred equity in 1996 for
the acquisition of two full-service properties in Mexico City, Mexico; and
(viii) Marriott International provides certain limited administrative services.

   In 1998 and 1997, the Company paid to Marriott International $196 million
and $162 million, respectively, in hotel management fees and $9 million and $4
million, respectively, in franchise fees. Beginning in 1999, these fees,
totaling $218 million in 1999, were paid by the lessees (see Note 9). In 1999,
1998 and 1997, the Company paid to Marriott International $0.3 million, $4
million and $13 million, respectively, in interest and commitment fees under
the debt financing and line of credit provided by Marriott International, and

                                      F-30


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

$3 million for each of those years for limited administrative services. In
connection with the discontinued senior living communities' business, the
Company paid Marriott International $13 million and $6 million in management
fees during 1998 and 1997, respectively.

   Additionally, Marriott International has the right to purchase up to 20% of
the voting stock of the Company if certain events involving a change in control
of the Company occur.

15. Hotel Management Agreements

   Most of the Company's hotels are subject to management agreements (the
"Agreements") under which Marriott International manages the Company's hotels,
generally for an initial term of 15 to 20 years with renewal terms at the
option of Marriott International of up to an additional 16 to 30 years. The
Agreements generally provide for payment of base management fees equal to one
to four percent of sales and incentive management fees generally equal to 20%
to 50% of Operating Profit (as defined in the Agreements) over a priority
return (as defined) to the Company, with total incentive management fees not to
exceed 20% of cumulative Operating Profit, or 20% of current year Operating
Profit. In the event of early termination of the Agreements, Marriott
International will receive additional fees based on the unexpired term and
expected future base and incentive management fees. The Company has the option
to terminate certain management agreements if specified performance thresholds
are not satisfied. No agreement with respect to a single lodging facility is
cross-collateralized or cross-defaulted to any other agreement and a single
agreement may be canceled under certain conditions, although such cancellation
will not trigger the cancellation of any other agreement.

   As a result of the REIT Conversion, all fees payable under the Agreements
for subsequent periods are the primary obligations of the Lessees. The
obligations of the Lessees are guaranteed to a limited extent by Crestline. The
Company remains obligated to the managers in case the Lessee fails to pay these
fees (but it would be entitled to reimbursement from the Lessee under the terms
of the Leases).

   Pursuant to the terms of the Agreements, Marriott International is required
to furnish the hotels with certain services ("Chain Services") which are
generally provided on a central or regional basis to all hotels in the Marriott
International hotel system. Chain Services include central training,
advertising and promotion, a national reservation system, computerized payroll
and accounting services, and such additional services as needed which may be
more efficiently performed on a centralized basis. Costs and expenses incurred
in providing such services are allocated among all domestic hotels managed,
owned or leased by Marriott International or its subsidiaries. In addition, the
Company's hotels also participate in the Marriott Rewards program. The cost of
this program is charged to all hotels in the Marriott hotel system.

   Crestline, as the Company's Lessee, is obligated to provide the manager with
sufficient funds to cover the cost of (a) certain non-routine repairs and
maintenance to the hotels which are normally capitalized; and (b) replacements
and renewals to the hotels' property and improvements. Under certain
circumstances, Crestline will be required to establish escrow accounts for such
purposes under terms outlined in the Agreements.

   Crestline assumed franchise agreements with Marriott International for 10
hotels. Pursuant to these franchise agreements, Crestline generally pays a
franchise fee based on a percentage of room sales and food and beverage sales
as well as certain other fees for advertising and reservations. Franchise fees
for room sales vary from four to six percent of sales, while fees for food and
beverage sales vary from two to three percent of sales. The terms of the
franchise agreements are from 15 to 30 years.

   Crestline assumed management agreements with The Ritz-Carlton Hotel Company,
LLC ("Ritz-Carlton"), an affiliate of Marriott International, to manage ten of
the Company's hotels. These agreements have an initial term of 15 to 25 years
with renewal terms at the option of Ritz-Carlton of up to an additional 10 to
40 years.

                                      F-31


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Base management fees vary from two to five percent of sales and incentive
management fees are generally equal to 20% of available cash flow or operating
profit, as defined in the agreements.

   Crestline also assumed management agreements with hotel management companies
other than Marriott International and Ritz-Carlton for 23 of the Company's
hotels (10 of which are franchised under the Marriott brand). These agreements
generally provide for an initial term of 10 to 20 years with renewal terms at
the option of either party or, in some cases, the hotel management company of
up to an additional one to 15 years. The agreements generally provide for
payment of base management fees equal to one to four percent of sales.
Seventeen of the 23 agreements also provide for incentive management fees
generally equal to 10 to 25 percent of available cash flow, operating profit,
or net operating income, as defined in the agreements.

16. Relationship with Crestline Capital Corporation

   The Company and Crestline have entered into various agreements in connection
with the Distribution as discussed in Note 2 and further outlined below.

 Distribution Agreement

   Crestline and the Company entered into a distribution agreement (the
"Distribution Agreement"), which provided for, among other things, (i) the
distribution of shares of Crestline in connection with the Distribution; (ii)
the division between Crestline and the Company of certain assets and
liabilities; (iii) the transfer to Crestline of the 25% interest in the
Swissotel management company acquired in the Blackstone Acquisition and (iv)
certain other agreements governing the relationship between Crestline and the
Company following the Distribution. Crestline also granted the Company a
contingent right to purchase Crestline's interest in Swissotel Management (USA)
L.L.C. at fair market value in the event the tax laws are changed so that the
Company could own such interest without jeopardizing its status as a REIT.

   Subject to certain exceptions, the Distribution Agreement provides for,
among other things, assumptions of liabilities and cross-indemnities designed
to allocate to Crestline, effective as of the date of the Distribution,
financial responsibilities for liabilities arising out of, or in connection
with, the business of the senior living communities.

 Asset Management Agreement

   The Company and the Non-Controlled Subsidiaries entered into asset
management agreements (the "Asset Management Agreements") with Crestline
whereby Crestline agrees to provide advice on the operation of the hotels and
review financial results, projections, loan documents and hotel management
agreements. Crestline also agrees to consult on market conditions and
competition, as well as monitor and negotiate with governmental agencies,
insurance companies and contractors. Crestline will be paid a fee not to exceed
$4.5 million for each calendar year for its consulting services under the Asset
Management Agreements, which includes $0.25 million related to the Non-
Controlled Subsidiaries. The Asset Management Agreements each have terms of two
years with an automatic one year renewal, unless earlier terminated by either
party in accordance with the terms thereof.

 Non-Competition Agreement

   Crestline and the Company entered into a non-competition agreement that
limits the respective parties' future business opportunities. Pursuant to this
non-competition agreement, Crestline agrees, among other things, that until the
earlier of December 31, 2008, or the date on which it is no longer a Lessee of
more than 25% of the number of hotels owned by the Company at the time of the
Distribution, it will not own any full service hotel, manage any limited
service or full service hotel owned by the Company, or own or operate a full
service hotel franchise system operating under a common name brand, subject to
certain exceptions. In addition, the

                                      F-32


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Company agrees not to participate in the business of leasing, operating or
franchising limited service or full service properties, subject to certain
exceptions.

 1998 Employee Benefits and Other Employment Matters Allocation Agreement

   As part of the REIT Conversion, the Company, the Operating Partnership and
Crestline entered into the 1998 Employee Benefits Allocation Agreement relating
to various compensation, benefits and labor matters. Under the agreement, the
Operating Partnership and Crestline each assumed certain liabilities related to
covered benefits and labor matters arising prior to the effective date of the
Distribution and relating to employees of each organization, respectively,
after the Distribution. The agreements also govern the treatment of awards
under the Comprehensive Plan and requires the adoption of such a plan by
Crestline and the Operating Partnership.

17. Litigation

   In connection with the REIT Conversion, the Company assumed all liability
arising under legal proceedings filed against Host REIT and will indemnify Host
REIT as to all such matters. We believe all of the lawsuits in which we are a
defendant, including the following lawsuits, are without merit and we intend to
defend vigorously against such claims; however, no assurance can be given as to
the outcome of any of the lawsuits.

   On March 16, 1998, limited partners in several limited partnerships filed a
lawsuit, the Texas Multi-Partnership Lawsuit, naming the Company, 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.

   Host REIT and Marriott International announced they had 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 two Courtyard partnerships for
approximately $372 million. The Company's share of the acquisition costs of the
Courtyard partnerships is expected to be $82 million. Second, the Company and
Marriott International will each pay approximately $31 million to the limited
partners of the remaining five partnerships in exchange for settlement of the
litigation and a full release of claims. As a result of the proposed
settlement, the Company has recorded a non-recurring, pre-tax charge of $40
million in 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.


                                      F-33


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

18. Geographic and Business Segment Information

   The Company operates one business segment, hotel ownership. The Company's
hotels are primarily operated under the Marriott or Ritz-Carlton brands,
contain an average of approximately 474 rooms as of March 1, 2000, as well as
supply other amenities such as meeting space and banquet facilities; a variety
of restaurants and lounges; gift shops and swimming pools. They are typically
located in downtown, airport, suburban and resort areas throughout the United
States. During most of 1998, the Company's foreign operations consisted of six
full-service hotel properties located in Mexico and Canada. As of December 31,
1999, the Company's foreign operations had decreased to four Canadian hotel
properties, as the hotels in Mexico were contributed to Rockledge Hotel
Properties, Inc. at year end 1998. There were no intercompany sales between the
properties and the Company. The following table presents revenues and long-
lived assets for each of the geographical areas in which the Company operates
(in millions):



                                      1999            1998            1997
                                 --------------- --------------- ---------------
                                          Long-           Long-           Long-
                                          lived           lived           lived
                                 Revenues Assets Revenues Assets Revenues Assets
                                 -------- ------ -------- ------ -------- ------
                                                        
United States...................  $1,352  $6,987  $3,443  $7,112  $2,770  $4,412
International...................      24     121     121      89     105     222
                                  ------  ------  ------  ------  ------  ------
  Total.........................  $1,376  $7,108  $3,564  $7,201  $2,875  $4,634
                                  ======  ======  ======  ======  ======  ======


   The long-lived assets for 1997 exclude $583 million of assets related to the
discontinued senior living business.

19. Supplemental Guarantor and Non-Guarantor Subsidiary Information

   All subsidiaries of the Company guarantee the Senior Notes except those
among the twenty one full service hotels listed below and HMH HPT Residence
Inn, LLC and HMH HPT Courtyard, LLC, the leasees of the Residence Inn and
Courtyard properties, respectively. The separate financial statements of each
guaranteeing subsidiary (each, a "Guarantor Subsidiary") are not presented
because the Company's 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, 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 financial information sets
forth the financial position as of December 31, 1999 and 1998 and results of
operations and cash flows for the three fiscal years in the period ended
December 31, 1999 of the parent, Guarantor Subsidiaries and the Non-Guarantor
Subsidiaries:


                                      F-34


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

          Supplemental Condensed Combined Consolidating Balance Sheets
                                 (in millions)

                               December 31, 1999



                                  Guarantor   Non-Guarantor
                          Parent Subsidiaries Subsidiaries  Eliminations Consolidated
                          ------ ------------ ------------- ------------ ------------
                                                          
Property and equipment,
 net....................  $1,227    $3,642       $2,239       $   --        $7,108
Investments in
 affiliates.............   1,593       --           --         (1,544)          49
Notes and other
 receivables............     685        51           24          (585)         175
Rent receivable.........      11        23           38           --            72
Other assets............     175       214          175           (49)         515
Cash, cash equivalents
 and marketable
 securities.............     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...      10        32            7           --            49
Other liabilities.......     314       346          198          (284)         574
                          ------    ------       ------       -------       ------
  Total liabilities.....   2,027     3,440        1,373          (634)       6,206
Minority interests......       9        54           73           --           136
Limited partner interest
 of third parties at
 redemption value.......     533       --           --            --           533
Owner's capital.........   1,321       494        1,050        (1,544)       1,321
                          ------    ------       ------       -------       ------
  Total liabilities and
   owner's capital......  $3,890    $3,988       $2,496       $(2,178)      $8,196
                          ======    ======       ======       =======       ======


                               December 31, 1998



                                  Guarantor   Non-Guarantor
                          Parent Subsidiaries Subsidiaries  Eliminations Consolidated
                          ------ ------------ ------------- ------------ ------------
                                                          
Property and equipment,
 net....................  $1,172    $3,796       $2,233       $    --       $7,201
Investments in
 affiliates.............   1,475       --           --         (1,442)          33
Notes and other
 receivables............     782        52           19          (650)         203
Other assets............     259       145          141          (156)         389
Cash and cash
 equivalents............     330        91           15           --           436
                          ------    ------       ------       -------       ------
  Total assets..........  $4,018    $4,084       $2,408       $(2,248)      $8,262
                          ======    ======       ======       =======       ======
Debt....................  $1,438    $2,837       $1,183       $  (327)      $5,131
Convertible debt
 obligation to Host
 Marriott...............     567       --           --            --           567
Deferred income taxes...      51        39            7           --            97
Other liabilities.......     291       600          252          (479)         664
                          ------    ------       ------       -------       ------
  Total liabilities.....   2,347     3,476        1,442          (806)       6,459
Minority interests......      15        56           76           --           147
Limited partner interest
 of third parties at
 redemption value.......     892       --           --            --           892
Owner's capital.........     764       552          890        (1,442)         764
                          ------    ------       ------       -------       ------
  Total liabilities and
   owner's capital......  $4,018    $4,084       $2,408       $(2,248)      $8,262
                          ======    ======       ======       =======       ======



                                      F-35


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

     Supplemental Condensed Combined Consolidating Statements of Operations
                                 (in millions)

                      Fiscal Year Ended December 31, 1999



                                   Guarantor   Non-Guarantor
                          Parent  Subsidiaries Subsidiaries  Eliminations Consolidated
                          ------  ------------ ------------- ------------ ------------
                                                           
REVENUES................  $  584    $   660       $  425        $(293)      $ 1,376
Depreciation............     (65)      (143)         (81)         --           (289)
Property-level
 expenses...............     (51)       (93)        (120)         --           (264)
Hotel operating
 expenses...............     --         --           --           --            --
Minority interest.......      (5)        (7)          (9)         --            (21)
Corporate expenses......      (6)       (20)         (11)         --            (37)
Interest expense........    (157)      (263)        (100)          51          (469)
Other expenses..........     (44)       (11)          (1)         --            (56)
                          ------    -------       ------        -----       -------
Income from continuing
 operations before
 taxes..................     256        123          103         (242)          240
Benefit (provision) for
 income taxes...........      20         (2)          (2)         --             16
                          ------    -------       ------        -----       -------
INCOME BEFORE
 EXTRAORDINARY ITEM.....     276        121          101         (242)          256
Extraordinary item--gain
 on extinguishment of
 debt (net of income
 taxes).................       9          1           19          --             29
                          ------    -------       ------        -----       -------
NET INCOME..............  $  285    $   122       $  120        $(242)      $   285
                          ======    =======       ======        =====       =======

                      Fiscal Year Ended December 31, 1998


                                   Guarantor   Non-Guarantor
                          Parent  Subsidiaries Subsidiaries  Eliminations Consolidated
                          ------  ------------ ------------- ------------ ------------
                                                           
REVENUES................  $1,012    $ 1,680       $1,023        $(151)      $ 3,564
Depreciation............     (69)      (124)         (49)         --           (242)
Property-level
 expenses...............     (63)      (128)         (80)         --           (271)
Hotel operating
 expenses...............    (535)    (1,094)        (682)         --         (2,311)
Minority interest.......     (30)       (11)         (11)         --            (52)
Corporate expenses......      (8)       (27)         (15)         --            (50)
REIT conversion
 expenses...............     (64)       --           --           --            (64)
Interest expense........     (93)      (208)         (67)          33          (335)
Dividends on convertible
 preferred securities...     (37)       --           --           --            (37)
Other expenses..........     (25)        (2)          (1)         --            (28)
                          ------    -------       ------        -----       -------
Income from continuing
 operations before
 taxes..................      88         86          118         (118)          174
Benefit (provision) for
 income taxes...........     101        (34)         (47)         --             20
                          ------    -------       ------        -----       -------
Income from continuing
 operations.............     189         52           71         (118)          194
Income from discontinued
 operations.............       1        --           --           --              1
                          ------    -------       ------        -----       -------
INCOME BEFORE
 EXTRAORDINARY ITEM.....     190         52           71         (118)          195
Extraordinary item--loss
 on extinguishment of
 debt (net of income
 taxes).................    (143)        (5)         --           --           (148)
                          ------    -------       ------        -----       -------
NET INCOME..............  $   47    $    47       $   71        $(118)      $    47
                          ======    =======       ======        =====       =======



                                      F-36


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

    Supplemental Condensed Combined Consolidating Statements of Operations--
                                  (Continued)
                                 (in millions)

                       Fiscal Year Ended January 2, 1998



                                   Guarantor   Non-Guarantor
                          Parent  Subsidiaries Subsidiaries  Eliminations Consolidated
                          ------  ------------ ------------- ------------ ------------
                                                           
REVENUES................  $ 915      $1,195        $ 808         $(43)      $ 2,875
Depreciation............    (98)        (94)         (39)         --           (231)
Property-level
 expenses...............    (72)       (105)         (70)         --           (247)
Hotel operating
 expenses...............   (552)       (800)        (532)         --         (1,884)
Minority interest.......     (5)        (60)          (5)          39           (31)
Corporate expenses......    (11)        (25)          (9)         --            (45)
REIT conversion
 expenses...............    --          --           --           --            --
Interest expense........    (27)       (189)         (72)         --           (288)
Dividends on convertible
 preferred securities...    (37)        --           --           --            (37)
Other expenses..........    (29)        --           --           --            (29)
                          -----      ------        -----         ----       -------
Income from operations
 before taxes...........     84         (78)          81           (4)           83
Benefit (provision) for
 income taxes...........    (35)         31          (32)         --            (36)
                          -----      ------        -----         ----       -------
INCOME (LOSS) BEFORE
 EXTRAORDINARY ITEM.....     49         (47)          49           (4)           47
Extraordinary item--gain
 on extinguishment of
 debt (net of income
 taxes).................    --            3          --           --              3
                          -----      ------        -----         ----       -------
NET INCOME..............  $  49      $  (44)       $  49         $ (4)      $    50
                          =====      ======        =====         ====       =======


                                      F-37


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

     Supplemental Condensed Combined Consolidating Statements of Cash Flows
                                 (in millions)

                      Fiscal Year Ended December 31, 1999



                                         Guarantor   Non-Guarantor
                                Parent  Subsidiaries Subsidiaries  Consolidated
                                ------  ------------ ------------- ------------
                                                       
OPERATING ACTIVITIES
Cash from operations..........  $  84      $ 117         $ 159       $   360
                                -----      -----         -----       -------
INVESTING ACTIVITIES
Net cash received from sales
 of assets....................      3        192           --            195
Capital expenditures..........   (132)      (179)          (50)         (361)
Acquisitions..................     (1)        (8)          (20)          (29)
Other.........................     19        --            --             19
                                -----      -----         -----       -------
Cash used in investing
 activities...................   (111)         5           (70)         (176)
                                -----      -----         -----       -------
FINANCING ACTIVITIES
Repayment of debt.............   (230)      (392)         (809)       (1,431)
Issuance of debt..............    290         99           956         1,345
Issuance of OP Units..........      5        --            --              5
Issuance of preferred limited
 partner units................    196        --            --            196
Distributions on common and
 preferred limited partner
 units........................   (260)       --            --           (260)
Redemption or repurchase of OP
 Units for cash...............    (54)       --            --            (54)
Repurchase of Convertible
 Preferred Securities.........    (36)       --            --            (36)
Cost of extinguishment of
 debt.........................    --         --             (2)           (2)
Transfer to/from Parent.......    (15)       138          (123)          --
Other.........................    --         --           (106)         (106)
                                -----      -----         -----       -------
Cash from financing
 activities...................   (104)      (155)          (84)         (343)
                                -----      -----         -----       -------
INCREASE IN CASH AND CASH
 EQUIVALENTS..................   (131)       (33)            5          (159)
CASH AND CASH EQUIVALENTS,
 beginning of year............    330         91            15           436
                                -----      -----         -----       -------
CASH AND CASH EQUIVALENTS, end
 of year......................  $ 199      $  58         $  20       $   277
                                =====      =====         =====       =======


                                      F-38


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

    Supplemental Condensed Combined Consolidating Statements of Cash Flows--
                                  (Continued)
                                 (in millions)

                      Fiscal Year Ended December 31, 1998



                                         Guarantor   Non-Guarantor
                               Parent   Subsidiaries Subsidiaries  Consolidated
                               -------  ------------ ------------- ------------
                                                       
OPERATING ACTIVITIES
Cash from continuing
 operations..................  $   145     $ 124         $  43       $   312
Cash from discontinued
 operations..................       29       --            --             29
                               -------     -----         -----       -------
Cash from operations.........      174       124            43           341
                               -------     -----         -----       -------
INVESTING ACTIVITIES
Cash received from sales of
 assets......................      227       --            --            227
Capital expenditures.........      (61)     (147)          (44)         (252)
Acquisitions.................     (336)     (325)         (327)         (988)
Sales of short-term
 marketable securities.......      354       --            --            354
Other........................        4       --            --              4
                               -------     -----         -----       -------
Cash from (used in) investing
 activities from continuing
 operations..................      188      (472)         (371)         (655)
Cash from (used in) investing
 activities from discontinued
 operations..................      (50)      --            --            (50)
                               -------     -----         -----       -------
Cash used in investing
 activities..................      138      (472)         (371)         (705)
                               -------     -----         -----       -------
FINANCING ACTIVITIES
Repayment of debt............   (1,902)      (51)         (171)       (2,124)
Issuances of debt............    2,483         6             7         2,496
Transfers to/from Parent.....     (875)      385           490           --
Cash contributed to Crestline
 at inception................      (52)      --            --            (52)
Cash contributed to Non-
 Contributed Subsidiary......      (30)      --            --            (30)
Other........................      (25)      --            --            (25)
                               -------     -----         -----       -------
Cash from (used in) financing
 activities from continuing
 operations..................     (401)      340           326           265
Cash from (used in) financing
 activities from discontinued
 operations..................       24       --            --             24
                               -------     -----         -----       -------
Cash from (used in) financing
 activities..................     (377)      340           326           289
                               -------     -----         -----       -------
DECREASE IN CASH AND CASH
 EQUIVALENTS.................      (65)       (8)           (2)          (75)
CASH AND CASH EQUIVALENTS,
 beginning of year...........      395        99            17           511
                               -------     -----         -----       -------
CASH AND CASH EQUIVALENTS,
 end of year.................  $   330     $  91         $  15       $   436
                               =======     =====         =====       =======



                                      F-39


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

    Supplemental Condensed Combined Consolidating Statements of Cash Flows--
                                  (Continued)
                                 (in millions)

                       Fiscal Year Ended January 2, 1998



                                         Guarantor   Non-Guarantor
                                Parent  Subsidiaries Subsidiaries  Consolidated
                                ------  ------------ ------------- ------------
                                                       
OPERATING ACTIVITIES
Cash from continuing
 operations...................  $ 203      $  98         $ 131       $   432
Cash from discontinued
 operations...................     32        --            --             32
                                -----      -----         -----       -------
Cash from operations..........    235         98           131           464
                                -----      -----         -----       -------
INVESTING ACTIVITIES
Cash received from sales of
 assets.......................     51        --            --             51
Capital expenditures..........    (52)       (77)          (29)         (158)
Acquisitions..................    (56)      (190)         (113)         (359)
Purchase of short-term
 marketable securities........   (354)       --            --           (354)
Other.........................    --         --             13            13
                                -----      -----         -----       -------
Cash used in investing
 activities from continuing
 operations...................   (411)      (267)         (129)         (807)
Cash used in investing
 activities from discontinued
 operations...................   (239)       --            --           (239)
                                -----      -----         -----       -------
Cash used in investing
 activities...................   (650)      (267)         (129)       (1,046)
                                -----      -----         -----       -------
FINANCING ACTIVITIES
Repayment of debt.............     (5)      (447)          (41)         (493)
Issuances of debt.............    586        270             1           857
Transfers to/from Parent......   (417)       392            25           --
Other.........................      5        --             23            28
                                -----      -----         -----       -------
Cash from financing activities
 from continuing operations...    169        215             8           392
Cash used in financing
 activities from discontinued
 operations...................     (3)       --            --             (3)
                                -----      -----         -----       -------
Cash from financing
 activities...................    166        215             8           389
                                -----      -----         -----       -------
INCREASE (DECREASE) IN CASH
 AND CASH EQUIVALENTS.........   (249)        46            10          (193)
CASH AND CASH EQUIVALENTS,
 beginning of year............    644         53             7           704
                                -----      -----         -----       -------
CASH AND CASH EQUIVALENTS, end
 of year......................  $ 395      $  99         $  17       $   511
                                =====      =====         =====       =======



                                      F-40


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

20. Quarterly Financial Data (unaudited)



                                                1999
                          ----------------------------------------------------------
                            First      Second       Third      Fourth      Fiscal
                           Quarter     Quarter     Quarter     Quarter      Year
                          ---------   ---------   ---------   ----------  ----------
                           (in millions, except per common share amounts)
                                                           
Revenues................   $    192    $    203    $    203   $      778  $    1,376
Income from continuing
 operations before in-
 come taxes.............        (56)        (55)        (44)         395         240
Income from continuing
 operations.............        (56)        (55)        (44)         411         256
Income before extraordi-
 nary item..............        (56)        (55)        (44)         411         256
Net income (loss).......        (56)        (42)        (40)         423         285
Net income (loss) avail-
 able to unitholders....        (56)        (42)        (41)         418         279
Basic earnings (loss)
 per unit:
  Income from continuing
   operations...........       (.19)       (.19)       (.16)        1.40         .86
  Income before extraor-
   dinary items.........       (.19)       (.19)       (.16)        1.40         .86
  Net income (loss).....       (.19)       (.15)       (.14)        1.44         .96
Diluted earnings (loss)
 per unit:
  Income from continuing
   operations...........       (.19)       (.19)       (.16)        1.23         .83
  Income before extraor-
   dinary items.........       (.19)       (.19)       (.16)        1.23         .83
  Net income (loss).....       (.19)       (.15)       (.14)        1.27         .93


                                                1998
                          ----------------------------------------------------------
                            First      Second       Third      Fourth      Fiscal
                           Quarter     Quarter     Quarter     Quarter      Year
                          ---------   ---------   ---------   ----------  ----------
                           (in millions, except per common share amounts)
                                                           
Revenues................   $    805    $    849    $    756   $    1,154  $    3,564
Income from continuing
 operations before in-
 come taxes.............         48         105           8           13         174
Income from continuing
 operations.............         28          62           2          102         194
Income before extraordi-
 nary items.............         30          66           4           95         195
Net income (loss).......         30          66        (144)          95          47
Net income (loss) avail-
 able to unitholders....         30          66        (144)          95          47
Basic earnings per unit:
  Income from continuing
   operations...........        .13         .29         .01          .47         .90
  Income before extraor-
   dinary items.........        .14         .31         .02          .44         .91
  Net income (loss).....        .14         .31        (.67)         .44         .22
Diluted earnings per
 unit:
  Income from continuing
   operations...........        .13         .26         .01          .43         .84
  Income before extraor-
   dinary items.........        .14         .28         .02          .40         .85
  Net income (loss).....        .14         .28        (.65)         .40         .27


   The quarterly data in the table above has been restated to reflect the
Company's senior living business as a discontinued operation and the impact of
the 1998 stock portion of the Special Dividend on earnings per share.

   The first three quarters consist of 12 weeks each in both 1999 and 1998, and
the fourth quarter includes 16 weeks. The sum of the basic and diluted earnings
(loss) per unit for the four quarters in 1999 and 1998 differs from the annual
earnings per common share due to the required method of computing the weighted
average number of shares in the respective periods.

   In December 1999, the Company changed its method of accounting for
contingent rental revenues to conform to the Securities and Exchange
Commission's Staff Accounting Bulletin (SAB) No. 101. As a result, contingent
rental revenue will be deferred on the balance sheet until certain revenue
thresholds are realized. We

                                      F-41


                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

have adopted SAB No. 101 with retroactive effect beginning January 1, 1999 to
conform to the new presentation. SAB No. 101 has no impact on full-year 1999
revenues, net income, or earnings per share because all rental revenues
considered contingent under SAB No. 101 were earned as of December 31, 1999.
The change in accounting principle has no effect on prior years because
percentage rent relates to rental income on our leases, which began in 1999.

                                      F-42





                      CCHP I CORPORATION AND SUBSIDIARIES

                       CONSOLIDATED FINANCIAL STATEMENTS

                               December 31, 1999

              With Independent Public Accountants' Report Thereon


                                      F-43


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To CCHP I Corporation:

   We have audited the accompanying consolidated balance sheet of CCHP I
Corporation and its subsidiaries (a Maryland corporation) as of December 31,
1999, and the related consolidated statements of operations, shareholder's
equity and cash flows for the fiscal year ended December 31, 1999. These
consolidated financial statements are the responsibility of CCHP I
Corporation's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.

   We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

   In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of CCHP I
Corporation and its subsidiaries as of December 31, 1999 and the results of
their operations and their cash flows for the fiscal year then ended in
conformity with accounting principles generally accepted in the United States.

                                          Arthur Andersen LLP

Vienna, Virginia
February 24, 2000

                                      F-44


                      CCHP I CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET
                            AS OF DECEMBER 31, 1999

                       (in thousands, except share data)

                                                                     
                                ASSETS
Current assets
  Cash and cash equivalents............................................ $ 9,467
  Due from hotel managers..............................................   3,890
                                                                        -------
                                                                         13,357
Hotel working capital..................................................  26,011
                                                                        -------
                                                                        $39,368
                                                                        =======

                 LIABILITIES AND SHAREHOLDER'S EQUITY

Current liabilities
  Lease payable to Host Marriott....................................... $ 5,792
  Other................................................................   3,334
                                                                        -------
                                                                          9,126
Hotel working capital notes payable to Host Marriott...................  26,011
Deferred income taxes..................................................   1,027
                                                                        -------
    Total liabilities..................................................  36,164
                                                                        -------
Shareholder's equity
  Common stock (100 shares issued at $1.00 par value)..................     --
  Retained earnings....................................................   3,204
                                                                        -------
    Total shareholder's equity.........................................   3,204
                                                                        =======
                                                                        $39,368
                                                                        =======




                See Notes to Consolidated Financial Statements.

                                      F-45


                      CCHP I CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF OPERATIONS

                      Fiscal Year Ended December 31, 1999
                                 (in thousands)

                                                                    
REVENUES
  Rooms............................................................... $585,381
  Food and beverage...................................................  277,684
  Other...............................................................   65,069
                                                                       --------
    Total revenues....................................................  928,134
                                                                       --------

OPERATING COSTS AND EXPENSES
Property-level operating costs and expenses
  Rooms...............................................................  141,898
  Food and beverage...................................................  211,964
  Other...............................................................  241,996
Other operating costs and expenses
  Lease expense to Host Marriott......................................  276,058
  Management fees.....................................................   40,659
                                                                       --------
    Total operating costs and expenses................................  912,575
                                                                       --------

OPERATING PROFIT BEFORE CORPORATE EXPENSES AND INTEREST...............   15,559
Corporate expenses....................................................   (1,367)
Interest expense......................................................   (1,585)
                                                                       --------
INCOME BEFORE INCOME TAXES............................................   12,607
Provision for income taxes............................................   (5,169)
                                                                       --------
NET INCOME............................................................ $  7,438
                                                                       ========




                See Notes to Consolidated Financial Statements.

                                      F-46


                      CCHP I CORPORATION AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF SHAREHOLDER'S EQUITY

                      Fiscal Year Ended December 31, 1999

                                 (in thousands)



                                                         Common Retained
                                                         Stock  Earnings Total
                                                         ------ -------- ------
                                                                
Balance, January 1, 1999................................  $--    $  --   $  --
  Dividend to Crestline Capital.........................   --    (4,234) (4,234)
  Net income............................................   --     7,438   7,438
                                                          ----   ------  ------
Balance, December 31, 1999..............................  $--    $3,204  $3,204
                                                          ====   ======  ======





                See Notes to Consolidated Financial Statements.

                                      F-47


                      CCHP I CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF CASH FLOWS

                      Fiscal Year Ended December 31, 1999
                                 (in thousands)

                                                                     
OPERATING ACTIVITIES
Net income............................................................. $ 7,438
Change in amounts due from hotel managers..............................    (678)
Change in lease payable to Host Marriott...............................   5,792
Changes in other operating accounts....................................   1,149
                                                                        -------
  Cash from operations.................................................  13,701
INVESTING ACTIVITIES...................................................     --
                                                                        -------
FINANCING ACTIVITIES
Dividend to Crestline Capital..........................................  (4,234)
                                                                        -------
Increase in cash and cash equivalents..................................   9,467
Cash and cash equivalents, beginning of year...........................     --
                                                                        -------
Cash and cash equivalents, end of year................................. $ 9,467
                                                                        =======





                See Notes to Consolidated Financial Statements.

                                      F-48


                      CCHP I CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Summary of Significant Accounting Policies

 Organization

   CCHP I Corporation (the "Company") was incorporated in the state of Delaware
on November 23, 1998 as a wholly owned subsidiary of Crestline Capital
Corporation ("Crestline"). On December 29, 1998, Crestline became a publicly
traded company when Host Marriott Corporation ("Host Marriott") completed its
plan of reorganizing its business operations by spinning-off Crestline to the
shareholders of Host Marriott as part of a series of transactions pursuant to
which Host Marriott converted into a real estate investment trust ("REIT").

   On December 31, 1998, wholly owned subsidiaries of the Company (the "Tenant
Subsidiaries") entered into lease agreements with Host Marriott to lease 35 of
Host Marriott's full-service hotels with the existing management agreements of
the leased hotels assigned to the Tenant Subsidiaries. During 1999, Host
Marriott sold three of the hotels and terminated the leases on those hotels. As
of December 31, 1999, the Company leased 32 full-service hotels from Host
Marriott.

   The Company operates as a unit of Crestline, utilizing Crestline's
employees, insurance and administrative services since the Company does not
have any employees. Certain direct expenses are paid by Crestline and charged
directly or allocated to the Company. Certain general and administrative costs
of Crestline are allocated to the Company, using a variety of methods,
principally including Crestline's specific identification of individual costs
and otherwise through allocations based upon estimated levels of effort devoted
by general and administrative departments to the Company or relative measures
of the size of the Company based on revenues. In the opinion of management, the
methods for allocating general and administrative expenses and other direct
costs are reasonable.

 Principles of Consolidation

   The consolidated financial statements include the accounts of the Company
and its subsidiaries. All material intercompany transactions and balances
between the Company and its subsidiaries have been eliminated.

 Fiscal Year

   The Company's fiscal year ends on the Friday nearest December 31.

 Cash and Cash Equivalents

   The Company considers all highly liquid investments with a maturity of three
months or less at date of purchase as cash equivalents.

 Revenues

   The Company records the gross property-level revenues generated by the
hotels as revenues.

 Use of Estimates in the Preparation of Financial Statements

   The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

                                      F-49


                      CCHP I CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Note 2. Leases

 Hotel Leases

   The Tenant Subsidiaries entered into leases with Host Marriott effective
January 1, 1999 for 35 full-service hotels. Each hotel lease has an initial
term generally ranging from three to seven years. The hotel leases generally
have four seven-year renewal options at the option of the Company, however,
Host Marriott may terminate any unexercised renewal options. The Tenant
Subsidiaries are required to pay the greater of (i) a minimum rent specified in
each hotel lease or (ii) a percentage rent based upon a specified percentage of
aggregate revenues from the hotel, including room revenues, food and beverage
revenues, and other income, in excess of specified thresholds. The amount of
minimum rent is increased each year based upon 50% of the increase in CPI
during the previous twelve months. Percentage rent thresholds are increased
each year based on a blend of the increases in CPI and the Employment Cost
Index during the previous twelve months. The hotel leases generally provide for
a rent adjustment in the event of damage, destruction, partial taking or
certain capital expenditures. The rent during any renewal periods will be
negotiated at fair market value at the time the renewal option is exercised.

   The Tenant Subsidiaries are responsible for paying all of the expenses of
operating the hotels, including all personnel costs, utility costs, and general
repair and maintenance of the hotels. In addition, the Tenant Subsidiaries are
responsible for all fees payable to the hotel manager, including base and
incentive management fees, chain services payments and franchise or system
fees. Host Marriott is responsible for real estate and personal property taxes,
property casualty insurance, equipment rent, ground lease rent, maintaining a
reserve fund for FF&E replacements and capital expenditures.

   In the event that Host Marriott disposes of a hotel free and clear of the
hotel lease, Host Marriott would generally have to pay a termination fee equal
to the fair market value of the Company's leasehold interest in the remaining
term of the hotel lease using a discount rate of 12%. Alternatively, Host
Marriott would be entitled to (i) substitute a comparable hotel for any hotel
that is sold, with the terms agreed to by the Company, or (ii) sell the hotel
subject to the hotel lease, subject to the Company's approval under certain
circumstances, without having to pay a termination fee. In addition, Host
Marriott also has the right to terminate up to twelve of Crestline's leases
without having to pay a termination fee. During 1999, Host Marriott exercised
its right to terminate three hotel leases of the Company and Crestline without
having to pay a termination fee. Conversely, Crestline may terminate up to
twelve full-service hotel leases without penalty upon 180 days notice to Host
Marriott. During 1999, Crestline exercised its right to terminate two of the
Company's hotel leases as well as three additional Crestline hotel leases.
These hotel leases will terminate in 2000, 180 days after each respective
notification date.

   As a result of the recent tax legislation discussed below, Host Marriott may
purchase all, but not less than all, of its hotel leases with Crestline,
beginning January 2, 2001, with the purchase price calculated as discussed
above. The payment of the termination fee will be payable in cash or, subject
to certain conditions, shares of Host Marriott common stock at the election of
Host Marriott.

   For those hotels where Marriott International is the manager, it has a
noneconomic membership interest with certain limited voting rights in the
Tenant Subsidiaries.

 FF&E Leases

   Prior to entering into the hotel leases, if the average tax basis of a
hotel's FF&E and other personal property exceeded 15% of the aggregate average
tax basis of the hotel's real and personal property (the "Excess FF&E"), the
Tenant Subsidiaries and affiliates of Host Marriott entered into lease
agreements (the "FF&E Leases") for the Excess FF&E. The terms of the FF&E
Leases generally range from two to three years

                                      F-50


                      CCHP I CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

and rent under the FF&E Leases is a fixed amount. The Company will have the
option at the expiration of the FF&E Lease term to either (i) renew the FF&E
Leases for consecutive one-year renewal terms at fair market rental rate, or
(ii) purchase the Excess FF&E for a price equal to its fair market value. If
the Company does not exercise its purchase or renewal option, the Company is
required to pay a termination fee equal to approximately one month's rent.

 Guaranty and Pooling Agreement

   In connection with entering into the hotel leases, the Company, Crestline
and Host Marriott, entered into a pool guarantee and a pooling and security
agreement by which the Company provides a full guarantee and Crestline provides
a limited guarantee of all of the hotel lease obligations.

   The cumulative limit of Crestline's guarantee obligation is the greater of
ten percent of the aggregate rent payable for the immediately preceding fiscal
year under all of the Company's hotel leases or ten percent of the aggregate
rent payable under all of the Company's hotel leases for 1999. In the event
that Crestline's obligation under the pooling and guarantee agreement is
reduced to zero, the Company can terminate the agreement and Host Marriott can
terminate the Company's hotel leases without penalty.

   All of the Company's leases are cross-defaulted and the Company's
obligations under the guaranty are secured by all the funds received from its
Tenant Subsidiaries.

 Recent Tax Legislation

   On December 17, 1999 President Clinton signed the Work Incentives
Improvement Act of 1999. Included in this legislation are provisions that,
effective January 1, 2001, will allow a REIT to lease hotels to a "taxable REIT
subsidiary" if the hotel is operated and managed on behalf of such subsidiary
by an independent third party. A taxable REIT subsidiary is a corporation that
is owned more than 35 percent by a REIT. This law will enable Host Marriott,
beginning in 2001 to lease its hotels to a taxable REIT subsidiary. Host
Marriott may, at its discretion, elect to terminate the Company's leases,
beginning in 2001, and pay termination fees determined according to formulas
specified in the leases. If Host Marriott elects to terminate the full-service
hotel leases, it would have to terminate all of Crestline's full-service hotel
leases.

   Future minimum annual rental commitments for all non-cancelable leases as of
December 31, 1999 are as follows (in thousands):

                                                                 
   2000............................................................... $161,094
   2001...............................................................  158,406
   2002...............................................................  156,630
   2003...............................................................  156,630
   2004...............................................................  141,614
   Thereafter.........................................................  141,614
                                                                       --------
     Total minimum lease payments..................................... $915,988
                                                                       ========
   Lease expense for 1999 consisted of the following (in thousands):
   Base rent.......................................................... $167,996
   Percentage rent....................................................  108,062
                                                                       --------
                                                                       $276,058
                                                                       ========

   

                                      F-51


                      CCHP I CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Note 3. Working Capital Notes

   Upon the commencement of the hotel leases, the Company purchased the working
capital of the leased hotels from Host Marriott for $26,832,000 with the
purchase price evidenced by notes that bear interest at 5.12%. Interest on each
note is due simultaneously with the rent payment of each hotel lease. The
principal amount of each note is due upon the termination of each hotel lease.
Upon termination of the hotel lease, the Company will sell Host Marriott the
existing working capital at its current value. To the extent the working
capital delivered to Host Marriott is less than the value of the note, the
Company will pay Host Marriott the difference in cash. However, to the extent
the working capital delivered to Host Marriott exceeds the value of the note,
Host Marriott will pay the Company the difference in cash. As of December 31,
1999, the outstanding balance of the working capital notes was $26,011,000.

   Debt maturities at December 31, 1999 are as follows (in thousands):

                                                                   
   2000................................................................. $   135
   2001.................................................................   1,205
   2002.................................................................     --
   2003.................................................................   3,005
   2004.................................................................     --
   Thereafter...........................................................  21,666
                                                                         -------
                                                                         $26,011
                                                                         =======

   

   Cash paid for interest expense in 1999 totaled $1,463,000.

Note 4. Management Agreements

   All of the Company's hotels are operated by hotel management companies under
long-term hotel management agreements between Host Marriott and hotel
management companies.

 Assignment of Management Agreements

   The existing management agreements were assigned to the Tenant Subsidiaries
upon the execution of the hotel leases for the term of each corresponding hotel
lease. The Tenant Subsidiaries are obligated to perform all of the obligations
of Host Marriott under the hotel management agreements including payment of
fees due under the management agreements other than certain obligations
including payment of property taxes, property casualty insurance and ground
rent, maintaining a reserve fund for FF&E replacements and capital expenditures
for which Host Marriott retains responsibility.

 Marriott International Management Agreements

   Marriott International manages 28 of the 32 hotels under long-term
management agreements assigned to the Tenant Subsidiaries, generally for an
initial term of 15 to 20 years with renewal terms at the option of Marriott
International of up to an additional 16 to 30 years. The management agreements
generally provide for payment of base management fees equal to one to four
percent of revenues and incentive management fees generally equal to 20% to 50%
of Operating Profit (as defined in the management agreements) over a priority
return (as defined) to the Tenant Subsidiaries, with total incentive management
fees not to exceed 20% of cumulative Operating Profit, or 20% of current year
Operating Profit.

                                      F-52


                      CCHP I CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   Pursuant to the terms of the management agreements, Marriott International
is required to furnish the hotels with certain services ("Chain Services")
which are generally provided on a central or regional basis to all hotels in
the Marriott International hotel system. Chain Services include central
training, advertising and promotion, a national reservation system,
computerized payroll and accounting services, and such additional services as
needed which may be more efficiently performed on a centralized basis. Costs
and expenses incurred in providing such services are allocated among all
domestic hotels managed, owned or leased by Marriott International or its
subsidiaries. In addition, the Company's hotels also participate in the
Marriott Rewards program. The cost of this program is charged to all hotels in
the Marriott hotel system.

 Other Hotel Management Agreements

   The Company's remaining four hotels are managed by other hotel management
companies. One of the hotels is managed by Swissotel Management (USA) LLC, one
is managed by Four Seasons Hotel Limited, and the remaining two hotels are
managed by other independent hotel management companies under the "Marriott"
brand pursuant to franchise agreements. The managers of the hotels provide
similar services as Marriott International under its management agreements and
receive base management fees, generally calculated as a percentage of revenues,
and in most cases, incentive management fees, which are generally calculated as
a percentage of operating profits.

   The Company has the option to terminate certain management agreements if
specified performance thresholds are not satisfied, with the consent of Host
Marriott under certain conditions. No agreement with respect to a single
lodging facility is cross-collateralized or cross-defaulted to any other
agreement and a single agreement may be canceled under certain conditions,
although such cancellation will not trigger the cancellation of any other
agreement.

 Franchise Agreements

   Two of the Company's hotels are managed under franchise agreements between
Host Marriott and Marriott International for terms ranging from 15 to 30 years.
In connection with the assignment of the corresponding management agreement,
the Tenant Subsidiaries assumed the franchise agreements for these hotels and
will be the franchisee for the term of the corresponding hotel lease. Pursuant
to the franchise agreements, the Tenant Subsidiaries generally pay a franchise
fee based on a percentage of room revenues and food and beverage revenues as
well as certain other fees for advertising and reservations. Franchise fees for
room revenues vary from four to six percent, while fees for food and beverage
revenues vary from two to three percent of revenues.

Note 5. Income Taxes

   The Company is included in the consolidated Federal income tax return of
Crestline and its affiliates (the "Group"). Tax expense is allocated to the
Company as a member of the Group based upon the relative contribution to the
Group's consolidated taxable income/loss and changes in temporary differences.
This allocation method results in Federal and state tax expense allocated for
the period presented that is substantially equal to the expense that would have
been recognized if the Company had filed separate tax returns.

                                      F-53


                      CCHP I CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   The provision for income taxes for 1999 consists of the following (in
thousands):
                                                                    
   Current--Federal...................................................... $3,536
       --State...........................................................    606
                                                                          ------
                                                                           4,142
                                                                          ------
   Deferred--Federal.....................................................    877
       --State...........................................................    150
                                                                          ------
                                                                           1,027
                                                                          ------
                                                                          $5,169
                                                                          ======

   

   A reconciliation of the statutory Federal tax rate to the Company's
effective income tax rate for 1999 follows:

                                                                     
   Statutory federal tax rate............................................. 35.0%
   State income taxes, net of federal tax benefit.........................  6.0
                                                                           ----
                                                                           41.0%
                                                                           ====

   

   As of December 31, 1999, the Company had no deferred tax assets. The tax
effect of the temporary difference that gives rise to the Company's deferred
tax liability is attributable to the hotel working capital.

Note 6. Sale of the Company's Lessee Entities (unaudited), Subsequent to Date
of Auditor's Report

   On November 13, 2000, Crestline, the Company and other subsidiaries of
Crestline entered into an acquisition and exchange agreement with a subsidiary
of Host Marriott for the sale of Crestline's entities owning the lease rights
to Host Marriott's portfolio of full-service hotels, including the lessee
entities of the Company. The transaction will generally transfer ownership of
those lessee entities currently owned by Crestline, including the Company, to a
subsidiary of Host Marriott for a total consideration of $205 million, the
proceeds of which will be paid entirely in cash. The transaction is expected to
close at the beginning of 2001. In connection with the sale of its full-service
hotel lessee entities, Crestline's full-service hotel working capital and full-
service hotel working capital notes will be transferred to a subsidiary of Host
Marriott.

                                      F-54


                      CCHP II CORPORATION AND SUBSIDIARIES

                       CONSOLIDATED FINANCIAL STATEMENTS

                               December 31, 1999

              With Independent Public Accountants' Report Thereon

                                      F-55


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To CCHP II Corporation:

   We have audited the accompanying consolidated balance sheet of CCHP II
Corporation and its subsidiaries (a Maryland corporation) as of December 31,
1999, and the related consolidated statements of operations, shareholder's
equity and cash flows for the fiscal year ended December 31, 1999. These
consolidated financial statements are the responsibility of CCHP II
Corporation's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.

   We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

   In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of CCHP II
Corporation and its subsidiaries as of December 31, 1999 and the results of
their operations and their cash flows for the fiscal year then ended in
conformity with accounting principles generally accepted in the United States.

                                          Arthur Andersen LLP

Vienna, Virginia
February 24, 2000

                                      F-56


                      CCHP II CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

                            As of December 31, 1999
                       (in thousands, except share data)

                                                                     
                                ASSETS
Current assets
  Cash and cash equivalents............................................ $ 8,856
  Due from hotel managers..............................................  10,280
                                                                        -------
                                                                         19,136
Hotel working capital..................................................  18,090
                                                                        -------
                                                                        $37,226
                                                                        =======

                 LIABILITIES AND SHAREHOLDER'S EQUITY

Current liabilities
  Lease payable to Host Marriott....................................... $16,197
  Other................................................................   1,246
                                                                        -------
                                                                         17,443
Hotel working capital notes payable to Host Marriott...................  18,090
Deferred income taxes..................................................     996
                                                                        -------
    Total liabilities..................................................  36,529
Shareholder's equity
Common stock (100 shares issued at $1.00 par value)....................     --
Retained earnings......................................................     697
                                                                        -------
    Total shareholder's equity.........................................     697
                                                                        -------
                                                                        $37,226
                                                                        =======




                See Notes to Consolidated Financial Statements.

                                      F-57


                      CCHP II CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF OPERATIONS

                      Fiscal Year Ended December 31, 1999
                                 (in thousands)

                                                                   
REVENUES
  Rooms.............................................................. $ 646,624
  Food and beverage..................................................   306,320
  Other..............................................................    64,876
                                                                      ---------
    Total revenues................................................... 1,017,820
                                                                      ---------
OPERATING COSTS AND EXPENSES
Property-level operating costs and expenses
  Rooms..............................................................   158,279
  Food and beverage..................................................   230,001
  Other..............................................................   231,668
Other operating costs and expenses
  Lease expense to Host Marriott.....................................   312,112
  Management fees....................................................    66,672
                                                                      ---------
    Total operating costs and expenses...............................   998,732
                                                                      ---------
OPERATING PROFIT BEFORE CORPORATE EXPENSES AND INTEREST..............    19,088
Corporate expenses...................................................    (1,499)
Interest expense.....................................................      (928)
                                                                      ---------
INCOME BEFORE INCOME TAXES...........................................    16,661
Provision for income taxes...........................................    (6,831)
                                                                      ---------
NET INCOME........................................................... $   9,830
                                                                      =========





                See Notes to Consolidated Financial Statements.

                                      F-58


                      CCHP II CORPORATION AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF SHAREHOLDER'S EQUITY

                      Fiscal Year Ended December 31, 1999
                                 (in thousands)



                                                       Common Retained
                                                       Stock  Earnings   Total
                                                       ------ --------  -------
                                                               
Balance, January 1, 1999..............................  $--   $   --    $   --
  Dividend to Crestline Capital.......................   --    (9,133)   (9,133)
  Net income..........................................   --     9,830     9,830
                                                        ----  -------   -------
Balance, December 31, 1999............................  $--   $   697   $   697
                                                        ====  =======   =======







                See Notes to Consolidated Financial Statements.

                                      F-59


                      CCHP II CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF CASH FLOWS

                      Fiscal Year Ended December 31, 1999
                                 (in thousands)

                                                                     
OPERATING ACTIVITIES
Net income............................................................. $ 9,830
Change in amounts due from hotel managers..............................  (9,322)
Change in lease payable to Host Marriott...............................  16,197
Changes in other operating accounts....................................   1,284
                                                                        -------
  Cash from operations.................................................  17,989
                                                                        -------
INVESTING ACTIVITIES...................................................     --
                                                                        -------
FINANCING ACTIVITIES
Dividend to Crestline Capital..........................................  (9,133)
                                                                        -------
Increase in cash and cash equivalents..................................   8,856
Cash and cash equivalents, beginning of year...........................     --
                                                                        -------
Cash and cash equivalents, end of year................................. $ 8,856
                                                                        =======







                See Notes to Consolidated Financial Statements.


                                      F-60


                      CCHP II CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Summary of Significant Accounting Policies

 Organization

   CCHP II Corporation (the "Company") was incorporated in the state of
Delaware on November 23, 1998 as a wholly owned subsidiary of Crestline Capital
Corporation ("Crestline"). On December 29, 1998, Crestline became a publicly
traded company when Host Marriott Corporation ("Host Marriott") completed its
plan of reorganizing its business operations by spinning-off Crestline to the
shareholders of Host Marriott as part of a series of transactions pursuant to
which Host Marriott converted into a real estate investment trust ("REIT").

   On December 31, 1998, wholly owned subsidiaries of the Company (the "Tenant
Subsidiaries") entered into lease agreements with Host Marriott to lease 28 of
Host Marriott's full-service hotels with the existing management agreements of
the leased hotels assigned to the Tenant Subsidiaries. As of December 31, 1999,
the Company leased 28 full-service hotels from Host Marriott.

   The Company operates as a unit of Crestline, utilizing Crestline's
employees, insurance and administrative services since the Company does not
have any employees. Certain direct expenses are paid by Crestline and charged
directly or allocated to the Company. Certain general and administrative costs
of Crestline are allocated to the Company, using a variety of methods,
principally including Crestline's specific identification of individual costs
and otherwise through allocations based upon estimated levels of effort devoted
by general and administrative departments to the Company or relative measures
of the size of the Company based on revenues. In the opinion of management, the
methods for allocating general and administrative expenses and other direct
costs are reasonable.

 Principles of Consolidation

   The consolidated financial statements include the accounts of the Company
and its subsidiaries. All material intercompany transactions and balances
between the Company and its subsidiaries have been eliminated.

 Fiscal Year

   The Company's fiscal year ends on the Friday nearest December 31.

 Cash and Cash Equivalents

   The Company considers all highly liquid investments with a maturity of three
months or less at date of purchase as cash equivalents.

 Revenues

   The Company records the gross property-level revenues generated by the
hotels as revenues.

 Use of Estimates in the Preparation of Financial Statements

   The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

                                      F-61


                      CCHP II CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Note 2. Leases

 Hotel Leases

   The Tenant Subsidiaries entered into leases with Host Marriott effective
January 1, 1999 for 28 full-service hotels. Each hotel lease has an initial
term of eight years. The hotel leases generally have four seven-year renewal
options at the option of the Company, however, Host Marriott may terminate any
unexercised renewal options. The Tenant Subsidiaries are required to pay the
greater of (i) a minimum rent specified in each hotel lease or (ii) a
percentage rent based upon a specified percentage of aggregate revenues from
the hotel, including room revenues, food and beverage revenues, and other
income, in excess of specified thresholds. The amount of minimum rent is
increased each year based upon 50% of the increase in CPI during the previous
twelve months. Percentage rent thresholds are increased each year based on a
blend of the increases in CPI and the Employment Cost Index during the previous
twelve months. The hotel leases generally provide for a rent adjustment in the
event of damage, destruction, partial taking or certain capital expenditures.
The rent during any renewal periods will be negotiated at fair market value at
the time the renewal option is exercised.

   The Tenant Subsidiaries are responsible for paying all of the expenses of
operating the hotels, including all personnel costs, utility costs, and general
repair and maintenance of the hotels. In addition, the Tenant Subsidiaries are
responsible for all fees payable to the hotel manager, including base and
incentive management fees, chain services payments and franchise or system
fees. Host Marriott is responsible for real estate and personal property taxes,
property casualty insurance, equipment rent, ground lease rent, maintaining a
reserve fund for FF&E replacements and capital expenditures.

   In the event that Host Marriott disposes of a hotel free and clear of the
hotel lease, Host Marriott would generally have to pay a termination fee equal
to the fair market value of the Company's leasehold interest in the remaining
term of the hotel lease using a discount rate of 12%. Alternatively, Host
Marriott would be entitled to (i) substitute a comparable hotel for any hotel
that is sold, with the terms agreed to by the Company, or (ii) sell the hotel
subject to the hotel lease, subject to the Company's approval under certain
circumstances, without having to pay a termination fee. In addition, Host
Marriott also has the right to terminate up to twelve of Crestline's leases
without having to pay a termination fee. During 1999, Host Marriott exercised
its right to terminate three of Crestline's hotel leases, however, none of
these were the Company's hotel leases. Conversely, Crestline may terminate up
to twelve full-service hotel leases without penalty upon 180 days notice to
Host Marriott. During 1999, Crestline exercised its right to terminate five of
its hotel leases, however, none of these were the Company's hotel leases.

   As a result of the recent tax legislation discussed below, Host Marriott may
purchase all, but not less than all, of its hotel leases with Crestline
beginning January 1, 2001, with the purchase price calculated as discussed
above. The payment of the termination fee will be payable in cash or, subject
to certain conditions, shares of Host Marriott common stock at the election of
Host Marriott.

   For those hotels where Marriott International is the manager, it has a
noneconomic membership interest with certain limited voting rights in the
Tenant Subsidiaries.

 FF&E Leases

   Prior to entering into the hotel leases, if the average tax basis of a
hotel's FF&E and other personal property exceeded 15% of the aggregate average
tax basis of the hotel's real and personal property (the "Excess FF&E"), the
Tenant Subsidiaries and affiliates of Host Marriott entered into lease
agreements (the "FF&E Leases") for the Excess FF&E. The terms of the FF&E
Leases generally range from two to three years and rent under the FF&E Leases
is a fixed amount. The Company will have the option at the expiration of the

                                      F-62


                      CCHP II CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

FF&E Lease term to either (i) renew the FF&E Leases for consecutive one-year
renewal terms at fair market rental rate, or (ii) purchase the Excess FF&E for
a price equal to its fair market value. If the Company does not exercise its
purchase or renewal option, the Company is required to pay a termination fee
equal to approximately one month's rent.

 Guaranty and Pooling Agreement

   In connection with entering into the hotel leases, the Company, Crestline
and Host Marriott, entered into a pool guarantee and a pooling and security
agreement by which the Company provides a full guarantee and Crestline provides
a limited guarantee of all of the hotel lease obligations.

   The cumulative limit of Crestline's guarantee obligation is the greater of
ten percent of the aggregate rent payable for the immediately preceding fiscal
year under all of the Company's hotel leases or ten percent of the aggregate
rent payable under all of the Company's hotel leases for 1999. In the event
that Crestline's obligation under the pooling and guarantee agreement is
reduced to zero, the Company can terminate the agreement and Host Marriott can
terminate the Company's hotel leases without penalty.

   All of the Company's leases are cross-defaulted and the Company's
obligations under the guaranty are secured by all the funds received from its
Tenant Subsidiaries.

 Recent Tax Legislation

   On December 17, 1999 President Clinton signed the Work Incentives
Improvement Act of 1999. Included in this legislation are provisions that,
effective January 1, 2001, will allow a REIT to lease hotels to a "taxable REIT
subsidiary" if the hotel is operated and managed on behalf of such subsidiary
by an independent third party. A taxable REIT subsidiary is a corporation that
is owned more than 35 percent by a REIT. This law will enable Host Marriott,
beginning in 2001 to lease its hotels to a taxable REIT subsidiary. Host
Marriott may, at its discretion, elect to terminate the Company's leases,
beginning in 2001, and pay termination fees determined according to formulas
specified in the leases. If Host Marriott elects to terminate the full-service
hotel leases, it would have to terminate all of Crestline's full-service hotel
leases.

   Future minimum annual rental commitments for all non-cancelable leases as of
December 31, 1999 are as follows (in thousands):

                                                              
   2000............................................................ $  174,747
   2001............................................................    174,747
   2002............................................................    174,747
   2003............................................................    174,747
   2004............................................................    174,747
   Thereafter......................................................    349,493
                                                                    ----------
     Total minimum lease payments.................................. $1,223,228
                                                                    ==========
   Lease expense for 1999 consisted of the following (in
    thousands):
   Base rent....................................................... $  167,755
   Percentage rent.................................................    144,357
                                                                    ----------
                                                                    $  312,112
                                                                    ==========

   

                                      F-63


                      CCHP II CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Note 3. Working Capital Notes

   Upon the commencement of the hotel leases, the Company purchased the working
capital of the leased hotels from Host Marriott for $18,090,000 with the
purchase price evidenced by notes that bear interest at 5.12%. Interest on each
note is due simultaneously with the rent payment of each hotel lease. The
principal amount of each note is due upon the termination of each hotel lease.
Upon termination of the hotel lease, the Company will sell Host Marriott the
existing working capital at its current value. To the extent the working
capital delivered to Host Marriott is less than the value of the note, the
Company will pay Host Marriott the difference in cash. However, to the extent
the working capital delivered to Host Marriott exceeds the value of the note,
Host Marriott will pay the Company the difference in cash. As of December 31,
1999, the outstanding balance of the working capital notes was $18,090,000.

   Debt maturities at December 31, 1999 are as follows (in thousands):

                                                                 
     2000............................................................... $   --
     2001...............................................................     --
     2002...............................................................     --
     2003...............................................................     --
     2004...............................................................     --
     Thereafter.........................................................  18,090
                                                                         -------
                                                                         $18,090
                                                                         =======

     

   Cash paid for interest expense in 1999 totaled $856,000.

Note 4. Management Agreements

   All of the Company's hotels are operated by hotel management companies under
long-term hotel management agreements between Host Marriott and hotel
management companies.

 Assignment of Management Agreements

   The existing management agreements were assigned to the Tenant Subsidiaries
upon the execution of the hotel leases for the term of each corresponding hotel
lease. The Tenant Subsidiaries are obligated to perform all of the obligations
of Host Marriott under the hotel management agreements including payment of
fees due under the management agreements other than certain obligations
including payment of property taxes, property casualty insurance and ground
rent, maintaining a reserve fund for FF&E replacements and capital expenditures
for which Host Marriott retains responsibility.

 Marriott International Management Agreements

   Marriott International manages 20 of the 28 hotels under long-term
management agreements assigned to the Tenant Subsidiaries, generally for an
initial term of 15 to 20 years with renewal terms at the option of Marriott
International of up to an additional 16 to 30 years. The management agreements
generally provide for payment of base management fees equal to one to four
percent of revenues and incentive management fees generally equal to 20% to 50%
of Operating Profit (as defined in the management agreements) over a priority
return (as defined) to the Tenant Subsidiaries, with total incentive management
fees not to exceed 20% of cumulative Operating Profit, or 20% of current year
Operating Profit.

   Pursuant to the terms of the management agreements, Marriott International
is required to furnish the hotels with certain services ("Chain Services")
which are generally provided on a central or regional basis to

                                      F-64


                      CCHP II CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

all hotels in the Marriott International hotel system. Chain Services include
central training, advertising and promotion, a national reservation system,
computerized payroll and accounting services, and such additional services as
needed which may be more efficiently performed on a centralized basis. Costs
and expenses incurred in providing such services are allocated among all
domestic hotels managed, owned or leased by Marriott International or its
subsidiaries. In addition, the Company's hotels also participate in the
Marriott Rewards program. The cost of this program is charged to all hotels in
the Marriott hotel system.

 Ritz-Carlton Hotel Management Agreements

   The Ritz-Carlton Hotel Company, LLC ("Ritz-Carlton"), an affiliate of
Marriott International, manages three of the leased hotels under long-term
Hotel Management Agreements assigned to the Tenant Subsidiaries. These
agreements have an initial term of 15 to 25 years with renewal terms at the
option of Ritz-Carlton of up to an additional 10 to 40 years. Base management
fees vary from two to four percent of revenues and incentive management fees
are generally equal to 20% of available cash flow or operating profit, up to a
maximum of 2.1% of revenues, as defined in the agreements.

 Other Hotel Management Agreements

   The Company's remaining five hotels are managed by other hotel management
companies. One of the hotels is managed by the Hyatt Corporation and the
remaining four hotels are managed by other independent hotel management
companies under other brands pursuant to franchise agreements. The managers of
the hotels provide similar services as Marriott International under its
management agreements and receive base management fees, generally calculated as
a percentage of revenues, and in most cases, incentive management fees, which
are generally calculated as a percentage of operating profits.

   The Company has the option to terminate certain management agreements if
specified performance thresholds are not satisfied, with the consent of Host
Marriott under certain conditions. No agreement with respect to a single
lodging facility is cross-collateralized or cross-defaulted to any other
agreement and a single agreement may be canceled under certain conditions,
although such cancellation will not trigger the cancellation of any other
agreement.

 Franchise Agreements

   Four of the Company's hotels are managed under franchise agreements between
Host Marriott and other hotel companies for terms ranging from 15 to 30 years.
In connection with the assignment of the corresponding management agreement,
the Tenant Subsidiaries assumed the franchise agreements for these hotels and
will be the franchisee for the term of the corresponding hotel lease. Pursuant
to the franchise agreements, the Tenant Subsidiaries generally pay a franchise
fee based on a percentage of room revenues and food and beverage revenues as
well as certain other fees for advertising and reservations. Franchise fees for
room revenues vary from four to six percent, while fees for food and beverage
revenues vary from two to three percent of revenues.

Note 5. Income Taxes

   The Company is included in the consolidated Federal income tax return of
Crestline and its affiliates (the "Group"). Tax expense is allocated to the
Company as a member of the Group based upon the relative contribution to the
Group's consolidated taxable income/loss and changes in temporary differences.
This allocation method results in Federal and net state tax expense allocated
for the period presented that is substantially equal to the expense that would
have been recognized if the Company had filed separate tax returns.

                                      F-65


                      CCHP II CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   The provision for income taxes for 1999 consists of the following (in
thousands):

                                                                   
   Current--Federal..................................................... $4,981
       --State..........................................................    854
                                                                         ------
                                                                          5,835
                                                                         ------
   Deferred--Federal....................................................    850
       --State..........................................................    146
                                                                         ------
                                                                            996
                                                                         ------
                                                                         $6,831
                                                                         ======

   

   A reconciliation of the statutory Federal tax rate to the Company's
effective income tax rate for 1999 follows:

                                                                     
   Statutory federal tax rate............................................. 35.0%
   State income taxes, net of federal tax benefit.........................  6.0
                                                                           ----
                                                                           41.0%
                                                                           ====

   

   As of December 31, 1999, the Company had no deferred tax assets. The tax
effect of the temporary differences that gives rise to the Company's federal
deferred tax liability is attributable to the hotel working capital.

Note 6. Sale of the Company's Lessee Entities (unaudited), Subsequent to Date
of Auditor's Report

   On November 13, 2000, Crestline, the Company and other subsidiaries of
Crestline entered into an acquisition and exchange agreement with a subsidiary
of Host Marriott for the sale of Crestline's entities owning the lease rights
to Host Marriott's portfolio of full-service hotels, including the lessee
entities of the Company. The transaction will generally transfer ownership of
those lessee entities currently owned by Crestline, including the Company, to a
subsidiary of Host Marriott for a total consideration of $205 million, the
proceeds of which will be paid entirely in cash. The transaction is expected to
close at the beginning of 2001. In connection with the sale of its full-service
hotel lessee entities, Crestline's full-service hotel working capital and full-
service hotel working capital notes will be transferred to a subsidiary of Host
Marriott.

                                      F-66


                     CCHP III CORPORATION AND SUBSIDIARIES

                       CONSOLIDATED FINANCIAL STATEMENTS

                               December 31, 1999

              With Independent Public Accountants' Report Thereon

                                      F-67


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To CCHP III Corporation:

   We have audited the accompanying consolidated balance sheet of CCHP III
Corporation and its subsidiaries (a Maryland corporation) as of December 31,
1999, and the related consolidated statements of operations, shareholder's
equity and cash flows for the fiscal year ended December 31, 1999. These
consolidated financial statements are the responsibility of CCHP III
Corporation's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.

   We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

   In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of CCHP III
Corporation and its subsidiaries as of December 31, 1999 and the results of
their operations and their cash flows for the fiscal year then ended in
conformity with accounting principles generally accepted in the United States.

                                          Arthur Andersen LLP

Vienna, Virginia
February 24, 2000

                                      F-68


                     CCHP III CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

                            As of December 31, 1999
                       (in thousands, except share data)

                                                                     
                                ASSETS
Current assets
  Cash and cash equivalents............................................ $ 6,638
  Due from hotel managers..............................................   8,214
  Restricted cash......................................................   4,519
                                                                        -------
                                                                         19,371
Hotel working capital..................................................  21,697
                                                                        -------
                                                                        $41,068
                                                                        =======

                 LIABILITIES AND SHAREHOLDER'S EQUITY

Current liabilities
  Lease payable to Host Marriott....................................... $13,706
  Other................................................................   4,139
                                                                        -------
                                                                         17,845
Hotel working capital notes payable to Host Marriott...................  21,697
Deferred income taxes..................................................     342
                                                                        -------
    Total liabilities..................................................  39,884
                                                                        -------
Shareholder's equity
  Common stock (100 shares issued at $1.00 par value)..................     --
  Retained earnings....................................................   1,184
                                                                        -------
    Total shareholder's equity.........................................   1,184
                                                                        -------
                                                                        $41,068
                                                                        =======




                See Notes to Consolidated Financial Statements.

                                      F-69


                     CCHP III CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF OPERATIONS

                      Fiscal Year Ended December 31, 1999
                                 (in thousands)

                                                                    
REVENUES
  Rooms............................................................... $570,611
  Food and beverage...................................................  274,233
  Other...............................................................   80,149
                                                                       --------
    Total revenues....................................................  924,993
                                                                       --------
OPERATING COSTS AND EXPENSES
Property-level operating costs and expenses
  Rooms...............................................................  137,338
  Food and beverage...................................................  202,181
  Other...............................................................  236,721
Other operating costs and expenses
  Lease expense to Host Marriott......................................  295,563
  Management fees.....................................................   41,893
                                                                       --------
    Total operating costs and expenses................................  913,696
                                                                       --------
OPERATING PROFIT BEFORE CORPORATE EXPENSES AND INTEREST...............   11,297
Corporate expenses....................................................   (1,357)
Interest expense......................................................   (1,129)
                                                                       --------
INCOME BEFORE INCOME TAXES............................................    8,811
Provision for income taxes............................................   (3,612)
                                                                       --------
NET INCOME............................................................ $  5,199
                                                                       ========





                See Notes to Consolidated Financial Statements.

                                      F-70


                     CCHP III CORPORATION AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF SHAREHOLDER'S EQUITY

                      Fiscal Year Ended December 31, 1999
                                 (in thousands)



                                                       Common Retained
                                                       Stock  Earnings   Total
                                                       ------ --------  -------
                                                               
Balance, January 1, 1999..............................  $--   $   --    $   --
  Dividend to Crestline Capital.......................   --    (4,015)   (4,015)
  Net income..........................................   --     5,199     5,199
                                                        ----  -------   -------
Balance, December 31, 1999............................  $--   $ 1,184   $ 1,184
                                                        ====  =======   =======







                See Notes to Consolidated Financial Statements.

                                      F-71


                     CCHP III CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF CASH FLOWS

                      Fiscal Year Ended December 31, 1999
                                 (in thousands)

                                                                      
OPERATING ACTIVITIES
Net income.............................................................. $5,199
Change in amounts due from hotel managers............................... (4,084)
Change in lease payable to Host Marriott................................ 13,706
Changes in other operating accounts..................................... (4,168)
                                                                         ------
  Cash from operations.................................................. 10,653
INVESTING ACTIVITIES....................................................    --
                                                                         ------
FINANCING ACTIVITIES
Dividend to Crestline Capital........................................... (4,015)
                                                                         ------
Increase in cash and cash equivalents...................................  6,638
Cash and cash equivalents, beginning of year............................    --
                                                                         ------
Cash and cash equivalents, end of year.................................. $6,638
                                                                         ======





                See Notes to Consolidated Financial Statements.

                                      F-72


                     CCHP III CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Summary of Significant Accounting Policies

 Organization

   CCHP III Corporation (the "Company") was incorporated in the state of
Delaware on November 23, 1998 as a wholly owned subsidiary of Crestline Capital
Corporation ("Crestline"). On December 29, 1998, Crestline became a publicly
traded company when Host Marriott Corporation ("Host Marriott") completed its
plan of reorganizing its business operations by spinning-off Crestline to the
shareholders of Host Marriott as part of a series of transactions pursuant to
which Host Marriott converted into a real estate investment trust ("REIT").

   On December 31, 1998, wholly owned subsidiaries of the Company (the "Tenant
Subsidiaries") entered into lease agreements with Host Marriott to lease 31 of
Host Marriott's full-service hotels with the existing management agreements of
the leased hotels assigned to the Tenant Subsidiaries. During 1999, Host
Marriott sold two of the hotels and terminated the leases on those hotels. As
of December 31, 1999, the Company leased 29 full-service hotels from Host
Marriott.

   The Company operates as a unit of Crestline, utilizing Crestline's
employees, insurance and administrative services since the Company does not
have any employees. Certain direct expenses are paid by Crestline and charged
directly or allocated to the Company. Certain general and administrative costs
of Crestline are allocated to the Company, using a variety of methods,
principally including Crestline's specific identification of individual costs
and otherwise through allocations based upon estimated levels of effort devoted
by general and administrative departments to the Company or relative measures
of the size of the Company based on revenues. In the opinion of management, the
methods for allocating general and administrative expenses and other direct
costs are reasonable.

 Principles of Consolidation

   The consolidated financial statements include the accounts of the Company
and its subsidiaries. All material intercompany transactions and balances
between the Company and its subsidiaries have been eliminated.

 Fiscal Year

   The Company's fiscal year ends on the Friday nearest December 31.

 Cash and Cash Equivalents

   The Company considers all highly liquid investments with a maturity of three
months or less at date of purchase as cash equivalents.

 Restricted Cash

   In connection with the lender requirements of one of the leased hotels, the
Company is required to maintain a separate account with the lender on behalf of
the Company for the operating profit and incentive management fees of the
hotel. Following the annual audit, amounts will be distributed to the hotel's
manager and to the Company, in accordance with the loan agreement.

 Revenues

   The Company records the gross property-level revenues generated by the
hotels as revenues.

                                      F-73


                     CCHP III CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


 Use of Estimates in the Preparation of Financial Statements

   The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Note 2. Leases

 Hotel Leases

   The Tenant Subsidiaries entered into leases with Host Marriott effective
January 1, 1999 for 31 full-service hotels. Each hotel lease has an initial
term of nine years. The hotel leases generally have four seven-year renewal
options at the option of the Company, however, Host Marriott may terminate any
unexercised renewal options. The Tenant Subsidiaries are required to pay the
greater of (i) a minimum rent specified in each hotel lease or (ii) a
percentage rent based upon a specified percentage of aggregate revenues from
the hotel, including room revenues, food and beverage revenues, and other
income, in excess of specified thresholds. The amount of minimum rent is
increased each year based upon 50% of the increase in CPI during the previous
twelve months. Percentage rent thresholds are increased each year based on a
blend of the increases in CPI and the Employment Cost Index during the previous
twelve months. The hotel leases generally provide for a rent adjustment in the
event of damage, destruction, partial taking or certain capital expenditures.
The rent during any renewal periods will be negotiated at fair market value at
the time the renewal option is exercised.

   The Tenant Subsidiaries are responsible for paying all of the expenses of
operating the hotels, including all personnel costs, utility costs, and general
repair and maintenance of the hotels. In addition, the Tenant Subsidiaries are
responsible for all fees payable to the hotel manager, including base and
incentive management fees, chain services payments and franchise or system
fees. Host Marriott is responsible for real estate and personal property taxes,
property casualty insurance, equipment rent, ground lease rent, maintaining a
reserve fund for FF&E replacements and capital expenditures.

   In the event that Host Marriott disposes of a hotel free and clear of the
hotel lease, Host Marriott would generally have to pay a termination fee equal
to the fair market value of the Company's leasehold interest in the remaining
term of the hotel lease using a discount rate of 12%. Alternatively, Host
Marriott would be entitled to (i) substitute a comparable hotel for any hotel
that is sold, with the terms agreed to by the Company, or (ii) sell the hotel
subject to the hotel lease, subject to the Company's approval under certain
circumstances, without having to pay a termination fee. In addition, Host
Marriott also has the right to terminate up to twelve of Crestline's leases
without having to pay a termination fee. During 1999, Host Marriott exercised
its right to terminate three of Crestline's hotel leases, however, none of
these were the Company's hotel leases. Conversely, Crestline may terminate up
to twelve full-service hotel leases without penalty upon 180 days notice to
Host Marriott. During 1999, Crestline exercised its right to terminate three of
the Company's hotel leases, as well as two additional Crestline hotel leases.
These hotel leases will terminate in 2000, 180 days after each respective
notification date. In 1999, Host Marriott terminated two of the Company's hotel
leases with no termination fee as stipulated in those specific lease
agreements.

   As a result of the recent tax legislation discussed below, Host Marriott may
purchase all, but not less than all, of its hotel leases with Crestline
beginning January 1, 2001 with the purchase price calculated as discussed
above. The payment of the termination fee will be payable in cash or, subject
to certain conditions, shares of Host Marriott common stock at the election of
Host Marriott.


                                      F-74


                     CCHP III CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

   For those hotels where Marriott International is the manager, it has a
noneconomic membership interest with certain limited voting rights in the
Tenant Subsidiaries.

 FF&E Leases

   Prior to entering into the hotel leases, if the average tax basis of a
hotel's FF&E and other personal property exceeded 15% of the aggregate average
tax basis of the hotel's real and personal property (the "Excess FF&E"), the
Tenant Subsidiaries and affiliates of Host Marriott entered into lease
agreements (the "FF&E Leases") for the Excess FF&E. The terms of the FF&E
Leases generally range from two to three years and rent under the FF&E Leases
is a fixed amount. The Company will have the option at the expiration of the
FF&E Lease term to either (i) renew the FF&E Leases for consecutive one-year
renewal terms at fair market rental rate, or (ii) purchase the Excess FF&E for
a price equal to its fair market value. If the Company does not exercise its
purchase or renewal option, the Company is required to pay a termination fee
equal to approximately one month's rent.

 Guaranty and Pooling Agreement

   In connection with entering into the hotel leases, the Company, Crestline
and Host Marriott, entered into a pool guarantee and a pooling and security
agreement by which the Company provides a full guarantee and Crestline provides
a limited guarantee of all of the hotel lease obligations.

   The cumulative limit of Crestline's guarantee obligation is the greater of
ten percent of the aggregate rent payable for the immediately preceding fiscal
year under all of the Company's hotel leases or ten percent of the aggregate
rent payable under all of the Company's hotel leases for 1999. In the event
that Crestline's obligation under the pooling and guarantee agreement is
reduced to zero, the Company can terminate the agreement and Host Marriott can
terminate the Company's hotel leases without penalty.

   All of the Company's leases are cross-defaulted and the Company's
obligations under the guaranty are secured by all the funds received from its
Tenant Subsidiaries.

 Recent Tax Legislation

   On December 17, 1999 President Clinton signed the Work Incentives
Improvement Act of 1999. Included in this legislation are provisions that,
effect January 1, 2001, will allow a REIT to lease hotels to a "taxable REIT
subsidiary" if the hotel is operated and managed on behalf of such subsidiary
by an independent third party. A taxable REIT subsidiary is a corporation that
is owned more than 35 percent by a REIT. This law will enable Host Marriott,
beginning in 2001 to lease its hotels to a taxable REIT subsidiary. Host
Marriott may, at its discretion, elect to terminate the Company's leases,
beginning in 2001, and pay termination fees determined according to formulas
specified in the leases. If Host Marriott elects to terminate the full-service
hotel leases, it would have to terminate all of Crestline's full-service hotel
leases.

                                      F-75


                     CCHP III CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   Future minimum annual rental commitments for all non-cancelable leases as of
December 31, 1999 are as follows (in thousands):

                                                              
   2000............................................................ $  162,014
   2001............................................................    155,465
   2002............................................................    155,465
   2003............................................................    155,465
   2004............................................................    155,465
   Thereafter......................................................    466,395
                                                                    ----------
     Total minimum lease payments.................................. $1,250,269
                                                                    ==========
   Lease expense for 1999 consisted of the following (in
    thousands):
   Base rent....................................................... $  168,910
   Percentage rent.................................................    126,653
                                                                    ----------
                                                                    $  295,563
                                                                    ==========

   

Note 3. Working Capital Notes

   Upon the commencement of the hotel leases, the Company purchased the working
capital of the leased hotels from Host Marriott for $22,046,000 with the
purchase price evidenced by notes that bear interest at 5.12%. Interest on each
note is due simultaneously with the rent payment of each hotel lease. The
principal amount of each note is due upon the termination of each hotel lease.
Upon termination of the hotel lease, the Company will sell Host Marriott the
existing working capital at its current value. To the extent the working
capital delivered to Host Marriott is less than the value of the note, the
Company will pay Host Marriott the difference in cash. However, to the extent
the working capital delivered to Host Marriott exceeds the value of the note,
Host Marriott will pay the Company the difference in cash. As of December 31,
1999, the outstanding balance of the working capital notes was $21,697,000.

   Debt maturities at December 31, 1999 are as follows (in thousands):

                                                                   
   2000................................................................. $   --
   2001.................................................................     --
   2002.................................................................     --
   2003.................................................................     --
   2004.................................................................     --
   Thereafter...........................................................  21,697
                                                                         -------
                                                                         $21,697
                                                                         =======

   

   Cash paid for interest expense in 1999 totaled $1,042,000.

Note 4. Management Agreements

   All of the Company's hotels are operated by hotel management companies under
long-term hotel management agreements between Host Marriott and hotel
management companies.

 Assignment of Management Agreements

   The existing management agreements were assigned to the Tenant Subsidiaries
upon the execution of the hotel leases for the term of each corresponding hotel
lease. The Tenant Subsidiaries are obligated to perform all of the obligations
of Host Marriott under the hotel management agreements including payment of
fees due under the management agreements other than certain obligations
including payment of property taxes, property

                                      F-76


                     CCHP III CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

casualty insurance and ground rent, maintaining a reserve fund for FF&E
replacements and capital expenditures for which Host Marriott retains
responsibility.

 Marriott International Management Agreements

   Marriott International manages 18 of the 29 hotels under long-term
management agreements assigned to the Tenant Subsidiaries, generally for an
initial term of 15 to 20 years with renewal terms at the option of Marriott
International of up to an additional 16 to 30 years. The management agreements
generally provide for payment of base management fees equal to one to four
percent of revenues and incentive management fees generally equal to 20% to 50%
of Operating Profit (as defined in the management agreements) over a priority
return (as defined) to the Tenant Subsidiaries, with total incentive management
fees not to exceed 20% of cumulative Operating Profit, or 20% of current year
Operating Profit.

   Pursuant to the terms of the management agreements, Marriott International
is required to furnish the hotels with certain services ("Chain Services")
which are generally provided on a central or regional basis to all hotels in
the Marriott International hotel system. Chain Services include central
training, advertising and promotion, a national reservation system,
computerized payroll and accounting services, and such additional services as
needed which may be more efficiently performed on a centralized basis. Costs
and expenses incurred in providing such services are allocated among all
domestic hotels managed, owned or leased by Marriott International or its
subsidiaries. In addition, the Company's hotels also participate in the
Marriott Rewards program. The cost of this program is charged to all hotels in
the Marriott hotel system.

 Ritz-Carlton Hotel Management Agreements

   The Ritz-Carlton Hotel Company, LLC ("Ritz-Carlton"), an affiliate of
Marriott International, manages three of the leased hotels under long-term
Hotel Management Agreements assigned to the Company. These agreements have an
initial term of 15 to 25 years with renewal terms at the option of Ritz-Carlton
of up to an additional 10 to 40 years. Base Management fees vary from two to
four percent of revenues and incentive management fees are generally equal to
20% of available cash flow or operating profit, up to a maximum of 2.1% of
revenues, as defined in the agreements.

 Other Hotel Management Agreements

   The Company's remaining eight hotels are managed by other hotel management
companies. Two of the hotels are managed by Swissotel Management (USA) LLC, one
is managed by the Hyatt Corporation, and the remaining five hotels are managed
by other independent hotel management companies under the "Marriott" brand
pursuant to franchise agreements. The managers of the hotels provide similar
services as Marriott International under its management agreements and receive
base management fees, generally calculated as a percentage of revenues, and in
most cases, incentive management fees, which are generally calculated as a
percentage of operating profits.

   The Company has the option to terminate certain management agreements if
specified performance thresholds are not satisfied, with the consent of Host
Marriott under certain conditions. No agreement with respect to a single
lodging facility is cross-collateralized or cross-defaulted to any other
agreement and a single agreement may be canceled under certain conditions,
although such cancellation will not trigger the cancellation of any other
agreement.

 Franchise Agreements

   Five of the Company's hotels are managed under franchise agreements between
Host Marriott and Marriott International for terms ranging from 15 to 30 years.
In connection with the assignment of the

                                      F-77


                     CCHP III CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

corresponding management agreement, the Tenant Subsidiaries assumed the
franchise agreements for these hotels and will be the franchisee for the term
of the corresponding hotel lease. Pursuant to the franchise agreements, the
Tenant Subsidiaries generally pay a franchise fee based on a percentage of room
revenues and food and beverage revenues as well as certain other fees for
advertising and reservations. Franchise fees for room revenues vary from four
to six percent, while fees for food and beverage revenues vary from two to
three percent of revenues.

Note 5. Income Taxes

   The Company is included in the consolidated Federal income tax return of
Crestline and its affiliates (the "Group"). Tax expense is allocated to the
Company as a member of the Group based upon the relative contribution to the
Group's consolidated taxable income/loss and changes in temporary differences.
This allocation method results in Federal and net state tax expense allocated
for the period presented that is substantially equal to the expense that would
have been recognized if the Company had filed separate tax returns.

   The provision for income taxes for 1999 consists of the following (in
thousands):

                                                                   
   Current--Federal..................................................... $2,792
       --State..........................................................    478
                                                                         ------
                                                                          3,270
                                                                         ------
   Deferred--Federal....................................................    292
       --State..........................................................     50
                                                                         ------
                                                                            342
                                                                         ------
                                                                         $3,612
                                                                         ======

   

   A reconciliation of the statutory Federal tax rate to the Company's
effective income tax rate for 1999 follows:

                                                                     
   Statutory federal tax rate............................................. 35.0%
   State income taxes, net of federal tax benefit.........................  6.0
                                                                           ----
                                                                           41.0%
                                                                           ====

   

   As of December 31, 1999, the Company had no deferred tax assets. The tax
effect of the temporary differences that gives rise to the Company's deferred
tax liability is attributable to the hotel working capital.

Note 6. Sale of the Company's Lessee Entities (unaudited), Subsequent to Date
of Auditor's Report

   On November 13, 2000, Crestline, the Company and other subsidiaries of
Crestline entered into an acquisition and exchange agreement with a subsidiary
of Host Marriott for the sale of Crestline's entities owning the lease rights
to Host Marriott's portfolio of full-service hotels, including the lessee
entities of the Company. The transaction will generally transfer ownership of
those lessee entities currently owned by Crestline, including the Company, to a
subsidiary of Host Marriott for a total consideration of $205 million, the
proceeds of which will be paid entirely in cash. The transaction is expected to
close at the beginning of 2001. In connection with the sale of its full-service
hotel lessee entities, Crestline's full-service hotel working capital and full-
service hotel working capital notes will be transferred to a subsidiary of Host
Marriott.

                                      F-78


                      CCHP IV CORPORATION AND SUBSIDIARIES

                       CONSOLIDATED FINANCIAL STATEMENTS

                               December 31, 1999

              With Independent Public Accountants' Report Thereon

                                      F-79


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To CCHP IV Corporation:

   We have audited the accompanying consolidated balance sheet of CCHP IV
Corporation and its subsidiaries (a Maryland corporation) as of December 31,
1999, and the related consolidated statements of operations, shareholder's
equity and cash flows for the fiscal year ended December 31, 1999. These
consolidated financial statements are the responsibility of CCHP IV
Corporation's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.

   We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

   In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of CCHP IV
Corporation and its subsidiaries as of December 31, 1999 and the results of
their operations and their cash flows for the fiscal year then ended in
conformity with accounting principles generally accepted in the United States.

                                          Arthur Andersen LLP

Vienna, Virginia
February 24, 2000

                                      F-80


                      CCHP IV CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

                            As Of December 31, 1999
                       (in thousands, except share data)

                                                                     
                                ASSETS
Current assets
  Cash and cash equivalents............................................ $ 3,487
  Due from hotel managers..............................................  14,571
  Due from Crestline Capital...........................................   3,487
                                                                        -------
                                                                         21,545
Hotel working capital..................................................  16,522
                                                                        -------
                                                                        $38,067
                                                                        =======

                 LIABILITIES AND SHAREHOLDER'S EQUITY

Current liabilities
  Lease payable to Host Marriott....................................... $20,348
  Other................................................................     456
                                                                        -------
                                                                         20,804
Hotel working capital notes payable to Host Marriott...................  16,522
Deferred income taxes..................................................     741
                                                                        -------
    Total liabilities..................................................  38,067
                                                                        -------
Shareholder's equity
  Common stock (100 shares issued at $1.00 par value)..................     --
  Retained earnings....................................................     --
    Total shareholder's equity.........................................     --
                                                                        -------
                                                                        $38,067
                                                                        =======





                See Notes to Consolidated Financial Statements.

                                      F-81


                      CCHP IV CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF OPERATIONS

                      Fiscal Year Ended December 31, 1999
                                 (in thousands)

                                                                    
REVENUES
  Rooms............................................................... $578,321
  Food and beverage...................................................  333,120
  Other...............................................................   77,368
                                                                       --------
    Total revenues....................................................  988,809
                                                                       --------
OPERATING COSTS AND EXPENSES
Property-level operating costs and expenses
  Rooms...............................................................  129,051
  Food and beverage...................................................  234,310
  Other...............................................................  231,547
Other operating costs and expenses
  Lease expense to Host Marriott......................................  316,654
  Management fees.....................................................   66,514
                                                                       --------
    Total operating costs and expenses................................  978,076
                                                                       --------
OPERATING PROFIT BEFORE CORPORATE EXPENSES AND INTEREST...............   10,733
Corporate expenses....................................................   (1,449)
Interest expense......................................................     (846)
Interest income.......................................................       16
                                                                       --------
INCOME BEFORE INCOME TAXES............................................    8,454
Provision for income taxes............................................   (3,466)
                                                                       --------
NET INCOME............................................................ $  4,988
                                                                       ========





                See Notes to Consolidated Financial Statements.

                                      F-82


                      CCHP IV CORPORATION AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF SHAREHOLDER'S EQUITY

                      Fiscal Year Ended December 31, 1999
                                 (in thousands)



                                                         Common Retained
                                                         Stock  Earnings Total
                                                         ------ -------- ------
                                                                
Balance, January 1, 1999................................  $--    $  --   $  --
  Dividend to Crestline Capital.........................   --    (4,988) (4,988)
  Net income............................................   --     4,988   4,988
                                                          ----   ------  ------
Balance, December 31, 1999..............................  $--    $  --   $  --
                                                          ====   ======  ======







                See Notes to Consolidated Financial Statements.

                                      F-83


                      CCHP IV CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF CASH FLOWS

                      Fiscal Year Ended December 31, 1999
                                 (in thousands)

                                                                     
OPERATING ACTIVITIES
Net income............................................................. $ 4,988
Change in amounts due from hotel managers.............................. (14,124)
Change in lease payable to Host Marriott...............................  20,348
Changes in other operating accounts....................................     750
                                                                        -------
  Cash from operations.................................................  11,962
                                                                        -------
INVESTING ACTIVITIES...................................................     --
                                                                        -------
FINANCING ACTIVITIES
Amounts advanced to Crestline Capital..................................  (3,487)
Dividend to Crestline Capital..........................................  (4,988)
                                                                        -------
  Cash used in financing activities....................................  (8,475)
                                                                        -------
Increase in cash and cash equivalents..................................   3,487
Cash and cash equivalents, beginning of year...........................     --
                                                                        -------
Cash and cash equivalents, end of year................................. $ 3,487
                                                                        =======







                See Notes to Consolidated Financial Statements.

                                      F-84


                      CCHP IV CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Summary of Significant Accounting Policies

 Organization

   CCHP IV Corporation (the "Company") was incorporated in the state of
Delaware on November 23, 1998 as a wholly owned subsidiary of Crestline Capital
Corporation ("Crestline"). On December 29, 1998, Crestline became a publicly
traded company when Host Marriott Corporation ("Host Marriott") completed its
plan of reorganizing its business operations by spinning-off Crestline to the
shareholders of Host Marriott as part of a series of transactions pursuant to
which Host Marriott converted into a real estate investment trust ("REIT").

   On December 31, 1998, wholly owned subsidiaries of the Company (the "Tenant
Subsidiaries") entered into lease agreements with Host Marriott to lease 27 of
Host Marriott's full-service hotels with the existing management agreements of
the leased hotels assigned to the Tenant Subsidiaries. As of December 31, 1999,
the Company leased 27 full-service hotels from Host Marriott.

   The Company operates as a unit of Crestline, utilizing Crestline's
employees, insurance and administrative services since the Company does not
have any employees. Certain direct expenses are paid by Crestline and charged
directly or allocated to the Company. Certain general and administrative costs
of Crestline are allocated to the Company, using a variety of methods,
principally including Crestline's specific identification of individual costs
and otherwise through allocations based upon estimated levels of effort devoted
by general and administrative departments to the Company or relative measures
of the size of the Company based on revenues. In the opinion of management, the
methods for allocating general and administrative expenses and other direct
costs are reasonable.

 Principles of Consolidation

   The consolidated financial statements include the accounts of the Company
and its subsidiaries. All material intercompany transactions and balances
between the Company and its subsidiaries have been eliminated.

 Fiscal Year

   The Company's fiscal year ends on the Friday nearest December 31.

 Cash and Cash Equivalents

   The Company considers all highly liquid investments with a maturity of three
months or less at date of purchase as cash equivalents.

 Revenues

   The Company records the gross property-level revenues generated by the
hotels as revenues.

 Use of Estimates in the Preparation of Financial Statements

   The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

                                      F-85


                      CCHP IV CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Note 2. Leases

 Hotel Leases

   The Tenant Subsidiaries entered into leases with Host Marriott effective
January 1, 1999 for 27 full-service hotels. Each hotel lease has an initial
term of ten years. The hotel leases generally have four seven-year renewal
options at the option of the Company, however, Host Marriott may terminate any
unexercised renewal options. The Tenant Subsidiaries are required to pay the
greater of (i) a minimum rent specified in each hotel lease or (ii) a
percentage rent based upon a specified percentage of aggregate revenues from
the hotel, including room revenues, food and beverage revenues, and other
income, in excess of specified thresholds. The amount of minimum rent is
increased each year based upon 50% of the increase in CPI during the previous
twelve months. Percentage rent thresholds are increased each year based on a
blend of the increases in CPI and the Employment Cost Index during the previous
twelve months. The hotel leases generally provide for a rent adjustment in the
event of damage, destruction, partial taking or certain capital expenditures.
The rent during any renewal periods will be negotiated at fair market value at
the time this renewal option is exercised.

   The Tenant Subsidiaries are responsible for paying all of the expenses of
operating the hotels, including all personnel costs, utility costs, and general
repair and maintenance of the hotels. In addition, the Tenant Subsidiaries are
responsible for all fees payable to the hotel manager, including base and
incentive management fees, chain services payments and franchise or system
fees. Host Marriott is responsible for real estate and personal property taxes,
property casualty insurance, equipment rent, ground lease rent, maintaining a
reserve fund for FF&E replacements and capital expenditures.

   In the event that Host Marriott disposes of a hotel free and clear of the
hotel lease, Host Marriott would generally have to pay a termination fee equal
to the fair market value of the Company's leasehold interest in the remaining
term of the hotel lease using a discount rate of 12%. Alternatively, Host
Marriott would be entitled to (i) substitute a comparable hotel for any hotel
that is sold, with the terms agreed to by the Company, or (ii) sell the hotel
subject to the hotel lease, subject to the Company's approval under certain
circumstances, without having to pay a termination fee. In addition, Host
Marriott also has the right to terminate up to twelve of Crestline's leases
without having to pay a termination fee. During 1999, Host Marriott exercised
its right to terminate three of Crestline's hotel leases, however, none of
these were the Company's hotel leases. Conversely, Crestline may terminate up
to twelve full-service hotel leases without penalty upon 180 days notice to
Host Marriott. During 1999, Crestline exercised its right to terminate five of
its hotel leases, however, none of these were the Company's hotel leases.

   As a result of the recent tax legislation discussed below, Host Marriott may
purchase all, but not less than all, of its hotel leases with Crestline
beginning January 1, 2001 with the purchase price calculated as discussed
above. The payment of the termination fee will be payable in cash or, subject
to certain conditions, shares of Host Marriott common stock at the election of
Host Marriott.

   For those hotels where Marriott International is the manager, it has a
noneconomic membership interest with certain limited voting rights in the
Tenant Subsidiaries.

 FF&E Leases

   Prior to entering into the hotel leases, if the average tax basis of a
hotel's FF&E and other personal property exceeded 15% of the aggregate average
tax basis of the hotel's real and personal property (the "Excess FF&E"), the
Tenant Subsidiaries and affiliates of Host Marriott entered into lease
agreements (the "FF&E Leases") for the Excess FF&E. The terms of the FF&E
Leases generally range from two to three years and rent under the FF&E Leases
is a fixed amount. The Company will have the option at the expiration of the

                                      F-86


                      CCHP IV CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

FF&E Lease term to either (i) renew the FF&E Leases for consecutive one-year
renewal terms at fair market rental rate, or (ii) purchase the Excess FF&E for
a price equal to its fair market value. If the Company does not exercise its
purchase or renewal option, the Company is required to pay a termination fee
equal to approximately one month's rent.

 Guaranty and Pooling Agreement

   In connection with entering into the hotel leases, the Company, Crestline
and Host Marriott, entered into a pool guarantee and a pooling and security
agreement by which the Company provides a full guarantee and Crestline provides
a limited guarantee of all of the hotel lease obligations.

   The cumulative limit of Crestline's guarantee obligation is the greater of
ten percent of the aggregate rent payable for the immediately preceding fiscal
year under all of the Company's hotel leases or ten percent of the aggregate
rent payable under all of the Company's hotel leases for 1999. In the event
that Crestline's obligation under the pooling and guarantee agreement is
reduced to zero, the Company can terminate the agreement and Host Marriott can
terminate the Company's hotel leases without penalty.

   All of the Company's leases are cross-defaulted and the Company's
obligations under the guaranty are secured by all the funds received from its
Tenant Subsidiaries.

 Recent Tax Legislation

   On December 17, 1999 President Clinton signed the Work Incentives
Improvement Act of 1999. Included in this legislation are provisions that,
effect January 1, 2001, will allow a REIT to lease hotels to a "taxable REIT
subsidiary" if the hotel is operated and managed on behalf of such subsidiary
by an independent third party. A taxable REIT subsidiary is a corporation that
is owned more than 35 percent by a REIT. This law will enable Host Marriott,
beginning in 2001 to lease its hotels to a taxable REIT subsidiary. Host
Marriott may, at its discretion, elect to terminate the Company's leases,
beginning in 2001, and pay termination fees determined according to formulas
specified in the leases. If Host Marriott elects to terminate the full-service
hotel leases, it would have to terminate all of Crestline's full-service hotel
leases.

   Future minimum annual rental commitments for all non-cancelable leases as of
December 31, 1999 are as follows (in thousands):

                                                              
   2000............................................................ $  186,420
   2001............................................................    186,420
   2002............................................................    186,420
   2003............................................................    186,420
   2004............................................................    186,420
   Thereafter......................................................    745,679
                                                                    ----------
     Total minimum lease payments.................................. $1,677,779
                                                                    ==========
   Lease expense for 1999 consisted of the following (in
    thousands):
   Base rent....................................................... $  183,048
   Percentage rent.................................................    133,606
                                                                    ----------
                                                                    $  316,654
                                                                    ==========

   

                                      F-87


                      CCHP IV CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Note 3. Working Capital Notes

   Upon the commencement of the hotel leases, the Company purchased the working
capital of the leased hotels from Host Marriott for $16,522,000 with the
purchase price evidenced by notes that bear interest at 5.12%. Interest on each
note is due simultaneously with the rent payment of each hotel lease. The
principal amount of each note is due upon the termination of each hotel lease.
Upon termination of the hotel lease, the Company will sell Host Marriott the
existing working capital at its current value. To the extent the working
capital delivered to Host Marriott is less than the value of the note, the
Company will pay Host Marriott the difference in cash. However, to the extent
the working capital delivered to Host Marriott exceeds the value of the note,
Host Marriott will pay the Company the difference in cash. As of December 31,
1999, the outstanding balance of the working capital notes was $16,522,000

   Debt maturities at December 31, 1999 are as follows (in thousands):

                                                                   
   2000................................................................. $   --
   2001.................................................................     --
   2002.................................................................     --
   2003.................................................................     --
   2004.................................................................     --
   Thereafter...........................................................  16,522
                                                                         -------
                                                                         $16,522
                                                                         =======

   

   Cash paid for interest expense in 1999 totaled $781,000.

Note 4. Management Agreements

   All of the Company's hotels are operated by hotel management companies under
long-term hotel management agreements between Host Marriott and hotel
management companies.

 Assignment of Management Agreements

   The existing management agreements were assigned to the Tenant Subsidiaries
upon the execution of the hotel leases for the term of each corresponding hotel
lease. The Tenant Subsidiaries are obligated to perform all of the obligations
of Host Marriott under the hotel management agreements including payment of
fees due under the management agreements other than certain obligations
including payment of property taxes, property casualty insurance and ground
rent, maintaining a reserve fund for FF&E replacements and capital expenditures
for which Host Marriott retains responsibility.

 Marriott International Management Agreements

   Marriott International manages 20 of the 27 hotels under long-term
management agreements assigned to the Tenant Subsidiaries, generally for an
initial term of 15 to 20 years with renewal terms at the option of Marriott
International of up to an additional 16 to 30 years. The management agreements
generally provide for payment of base management fees equal to one to four
percent of revenues and incentive management fees generally equal to 20% to 50%
of Operating Profit (as defined in the management agreements) over a priority
return (as defined) to the Tenant Subsidiaries, with total incentive management
fees not to exceed 20% of cumulative Operating Profit, or 20% of current year
Operating Profit.

   Pursuant to the terms of the management agreements, Marriott International
is required to furnish the hotels with certain services ("Chain Services")
which are generally provided on a central or regional basis to

                                      F-88


                      CCHP IV CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

all hotels in the Marriott International hotel system. Chain Services include
central training, advertising and promotion, a national reservation system,
computerized payroll and accounting services, and such additional services as
needed which may be more efficiently performed on a centralized basis. Costs
and expenses incurred in providing such services are allocated among all
domestic hotels managed, owned or leased by Marriott International or its
subsidiaries. In addition, the Company's hotels also participate in the
Marriott Rewards program. The cost of this program is charged to all hotels in
the Marriott hotel system.

 Ritz-Carlton Hotel Management Agreements

   The Ritz-Carlton Hotel Company, LLC ("Ritz-Carlton"), an affiliate of
Marriott International, manages three of the leased hotels under long-term
Hotel Management Agreements assigned to the Company. These agreements have an
initial term of 15 to 25 years with renewal terms at the option of Ritz-Carlton
of up to an additional 10 to 40 years. Base Management fees vary from two to
four percent of revenues and incentive management fees are generally equal to
20% of available cash flow or operating profit, as defined in the agreements.

 Other Hotel Management Agreements

   The Company's remaining four hotels are managed by other hotel management
companies. Two of the hotels are managed by the Hyatt Corporation, one of the
hotels is managed by Swissotel Management (USA) LLC, and one is managed by Four
Seasons Hotel Limited. The managers of the hotels provide similar services as
Marriott International under its management agreements and receive base
management fees, generally calculated as a percentage of revenues, and in most
cases, incentive management fees, which are generally calculated as a
percentage of operating profits.

   The Company has the option to terminate certain management agreements if
specified performance thresholds are not satisfied, with the consent of Host
Marriott under certain conditions. No agreement with respect to a single
lodging facility is cross-collateralized or cross-defaulted to any other
agreement and a single agreement may be canceled under certain conditions,
although such cancellation will not trigger the cancellation of any other
agreement.

Note 5. Income Taxes

   The Company is included in the consolidated Federal income tax return of
Crestline and its affiliates (the "Group"). Tax expense is allocated to the
Company as a member of the Group based upon the relative contribution to the
Group's consolidated taxable income/loss and changes in temporary differences.
This allocation method results in Federal and net state tax expense allocated
for the period presented that is substantially equal to the expense that would
have been recognized if the Company had filed separate tax returns.

   The provision for income taxes for 1999 consists of the following (in
thousands):

                                                                    
   Current--Federal...................................................... $2,326
       --State...........................................................    399
                                                                          ------
                                                                           2,725
                                                                          ------
   Deferred--Federal.....................................................    633
       --State...........................................................    108
                                                                          ------
                                                                             741
                                                                          ------
                                                                          $3,466
                                                                          ======

   

                                      F-89


                      CCHP IV CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   A reconciliation of the statutory Federal tax rate to the Company's
effective income tax rate for 1999 follows:

                                                                     
   Statutory federal tax rate............................................. 35.0%
   State income taxes, net of federal tax benefit.........................  6.0
                                                                           ----
                                                                           41.0%
                                                                           ====

   

   As of December 31, 1999, the Company had no deferred tax assets. The tax
effect of the temporary differences that gives rise to the Company's deferred
tax liability is attributable to the hotel working capital.

Note 6. Sale of the Company's Lessee Entities (unaudited), Subsequent to Date
of Auditor's Report

   On November 13, 2000, Crestline, the Company and other subsidiaries of
Crestline entered into an acquisition and exchange agreement with a subsidiary
of Host Marriott for the sale of Crestline's entities owning the lease rights
to Host Marriott's portfolio of full-service hotels, including the lessee
entities of the Company. The transaction will generally transfer ownership of
those lessee entities currently owned by Crestline, including the Company, to a
subsidiary of Host Marriott for a total consideration of $205 million, the
proceeds of which will be paid entirely in cash. The transaction is expected to
close at the beginning of 2001. In connection with the sale of its full-service
hotel lessee entities, Crestline's full-service hotel working capital and full-
service hotel working capital notes will be transferred to a subsidiary of Host
Marriott.

                                      F-90


                              HOST MARRIOTT, L.P.

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (in millions)



                                                       September 8, December 31,
                                                           2000         1999
                                                       ------------ ------------
                                                       (unaudited)
                                                              
                       ASSETS
Property and equipment, net..........................     $7,101       $7,108
Notes and other receivables (including amounts due
 from affiliates of $125 million and $127 million,
 respectively).......................................        172          175
Rent receivable......................................         72           72
Investments in affiliates............................         99           49
Other assets.........................................        395          345
Restricted cash......................................        155          170
Cash and cash equivalents............................        188          277
                                                          ------       ------
                                                          $8,182       $8,196
                                                          ======       ======
          LIABILITIES AND PARTNERS' CAPITAL
Debt
  Senior notes.......................................     $2,540       $2,539
  Mortgage debt......................................      2,289        2,309
  Convertible debt obligation to Host Marriott.......        492          514
  Other..............................................        272          221
                                                          ------       ------
                                                           5,593        5,583
Accounts payable and accrued expenses................        147          148
Deferred income taxes................................         48           49
Deferred rent........................................        366          --
Other liabilities....................................        373          426
                                                          ------       ------
    Total liabilities................................      6,527        6,206
                                                          ------       ------
Minority interest....................................        133          136
Cumulative redeemable preferred limited partnership
 interests of third parties at redemption value
 ("Preferred OP Units") (representing 0.6 million
 units)..............................................          7            5
Limited Partnership interests of third parties at
 redemption value (representing 63.2 million and 64.0
 million units at September 8, 2000 and December 31,
 1999)...............................................        687          528
Partners' Capital
  General partner....................................          1            1
  Cumulative redeemable preferred limited partner....        196          196
  Limited partner....................................        628        1,120
  Accumulated other comprehensive income.............          3            4
                                                          ------       ------
    Total partners' capital..........................        828        1,321
                                                          ------       ------
                                                          $8,182       $8,196
                                                          ======       ======


            See Notes to Condensed Consolidated Financial Statements

                                      F-91


                              HOST MARRIOTT, L.P.

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

          Twelve Weeks Ended September 8, 2000 and September 10, 1999
               (unaudited, in millions, except per unit amounts)



                                                                2000    1999
                                                               ------  ------
                                                                 
REVENUES
  Rental income............................................... $  224  $  188
  Interest income.............................................      9      10
  Net gains on property transactions..........................      1     --
  Equity in earnings of affiliates............................      2       3
  Other.......................................................      3       2
                                                               ------  ------
    Total revenues............................................    239     203
                                                               ------  ------
EXPENSES
  Depreciation and amortization...............................     75      68
  Property-level owner expenses...............................     66      62
  Minority interest expense...................................      1       2
  Interest expense............................................    107     108
  Corporate expenses..........................................      7       5
  Other expenses..............................................    --        1
                                                               ------  ------
    Total expenses............................................    256     246
                                                               ------  ------
LOSS FROM OPERATIONS BEFORE INCOME TAXES AND EXTRAORDINARY
 ITEMS........................................................    (17)    (43)
  Provision for income taxes..................................     (4)     (1)
                                                               ------  ------
LOSS FROM OPERATIONS BEFORE EXTRAORDINARY ITEMS...............    (21)    (44)
  Extraordinary gain..........................................    --        4
                                                               ------  ------
NET LOSS...................................................... $  (21) $  (40)
                                                               ======  ======
  Less: Distributions on preferred limited partner units......     (6)     (1)
                                                               ------  ------
NET LOSS AVAILABLE TO COMMON UNITHOLDERS...................... $  (27) $  (41)
                                                               ======  ======
BASIC LOSS PER UNIT:
  Loss from operations before extraordinary items............. $(0.09) $(0.16)
  Extraordinary gain (loss)...................................    --     0.02
                                                               ------  ------
BASIC LOSS PER UNIT........................................... $(0.09) $(0.14)
                                                               ======  ======
DILUTED LOSS PER UNIT:
  Loss from operations before extraordinary items............. $(0.09) $(0.16)
  Extraordinary gain (loss)...................................    --     0.02
                                                               ------  ------
DILUTED LOSS PER UNIT......................................... $(0.09) $(0.14)
                                                               ======  ======


            See Notes to Condensed Consolidated Financial Statements

                                      F-92


                              HOST MARRIOTT, L.P.

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

        Thirty-six Weeks Ended September 8, 2000 and September 10, 1999
               (unaudited, in millions, except per unit amounts)



                                                                2000    1999
                                                               ------  ------
                                                                 
REVENUES
  Rental income............................................... $  580  $  546
  Interest income.............................................     26      26
  Net gains on property transactions..........................      4      16
  Equity in earnings of affiliates............................      5       5
  Other.......................................................      8       5
                                                               ------  ------
    Total revenues............................................    623     598
                                                               ------  ------
EXPENSES
  Depreciation and amortization...............................    224     203
  Property-level owner expenses...............................    191     184
  Minority interest expense...................................     11      13
  Interest expense............................................    315     325
  Corporate expenses..........................................     27      20
  Other expenses..............................................      9       5
                                                               ------  ------
    Total expenses............................................    777     750
                                                               ------  ------
LOSS FROM OPERATIONS BEFORE INCOME TAXES AND EXTRAORDINARY
 ITEMS........................................................   (154)   (152)
  Provision for income taxes..................................     (7)     (3)
                                                               ------  ------
LOSS FROM OPERATIONS BEFORE EXTRAORDINARY ITEMS...............   (161)   (155)
  Extraordinary gain..........................................      3      17
                                                               ------  ------
NET LOSS...................................................... $ (158) $ (138)
                                                               ======  ======
  Less: Distributions on preferred limited partner units......    (16)     (1)
                                                               ------  ------
NET LOSS AVAILABLE TO COMMON UNITHOLDERS...................... $ (174) $ (139)
                                                               ======  ======
BASIC LOSS PER UNIT:
  Loss from operations before extraordinary items............. $(0.62) $(0.54)
  Extraordinary gain..........................................   0.01    0.06
                                                               ------  ------
BASIC LOSS PER UNIT:                                           $(0.61) $(0.48)
                                                               ======  ======
DILUTED LOSS PER UNIT:
  Loss from operations before extraordinary items............. $(0.62) $(0.54)
  Extraordinary gain..........................................   0.01    0.06
                                                               ------  ------
DILUTED LOSS PER UNIT......................................... $(0.61) $(0.48)
                                                               ======  ======


            See Notes to Condensed Consolidated Financial Statements

                                      F-93


                              HOST MARRIOTT, L.P.

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

           Thirty-six Weeks Ended September 8, 2000 and Sept 10, 1999
                            (unaudited, in millions)



                                                                2000    1999
                                                                -----  -------
                                                                 
OPERATING ACTIVITIES
Loss from operations before extraordinary items................ $(161) $  (155)
Adjustments to reconcile to cash from continuing operations:
  Depreciation and amortization................................   224      203
  Income taxes.................................................   (20)     (20)
  Deferred contingent rental income............................   366      339
  Net gains on property transactions...........................    (4)     (16)
  Equity in earnings of affiliates.............................    (5)      (5)
  Changes in operating accounts................................    22      (90)
  Other........................................................    17      --
                                                                -----  -------
  Cash from operations.........................................   439      256
                                                                -----  -------
INVESTING ACTIVITIES
Proceeds from sales of assets..................................   --        49
Acquisitions...................................................   (40)     (17)
Capital expenditures:
  Capital expenditures for renewals and replacements...........  (155)    (143)
  New investment capital expenditures..........................   (88)    (102)
  Other investments............................................   (28)     (16)
Note receivable collections, net...............................     4      (47)
                                                                -----  -------
  Cash used in investing activities............................  (307)    (276)
                                                                -----  -------
FINANCING ACTIVITIES
Issuances of debt, net.........................................   292    1,282
Issuances of Class A Preferred Units...........................   --       100
Costs of extinguishment of debt................................   --        (2)
Scheduled principal repayments.................................   (27)     (26)
Debt prepayment................................................  (245)  (1,275)
Issuances of common units......................................     3        2
Distributions..................................................  (194)    (195)
Redemptions or repurchases of OP Units.........................   (47)     --
Repurchases of Convertible Preferred Securities................   (15)     --
Other..........................................................    12      (12)
                                                                -----  -------
  Cash used in financing activities............................  (221)    (126)
                                                                -----  -------
DECREASE IN CASH AND CASH EQUIVALENTS.......................... $ (89) $  (146)
                                                                =====  =======


Supplemental schedule of noncash investing and financing activities:

   Approximately 586,000 Class TS Preferred Units valued at $7.4 million were
issued during the third quarter of 1999 in connection with the acquisition by
merger of two partnerships that own limited partnership interests in the
partnership that owns the New York Marriott Marquis.

            See Notes of Condensed Consolidated Financial Statements

                                      F-94


                              HOST MARRIOTT, L.P.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

1. Organization

   Host Marriott, L.P. (the "Operating Partnership" or "Host LP") is a Delaware
limited partnership whose sole general partner is Host Marriott Corporation
("Host REIT"). Host REIT, a Maryland 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 the
Operating Partnership and its subsidiaries. As REITs are not currently
permitted to derive revenues directly from the operation 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 LP, 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 REIT
has elected, effective January 1, 1999, to be treated as a REIT for federal
income tax purposes 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
September 8, 2000, Host REIT owned approximately 78% 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 of September 8, 2000, and the
results of operations for the twelve and thirty-six weeks ended September 8,
2000 and September 10, 1999, and cash flows for the thirty-six weeks ended
September 8, 2000 and September 10, 1999. Interim results are not necessarily
indicative of fiscal year performance because of the impact of seasonal and
short-term variations.

   Certain reclassifications were made to the prior year financial statements
to conform to the current presentation.

   The Company's leases have initial 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

                                      F-95


                              HOST MARRIOTT, L.P.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                                  (Unaudited)

were amended to give Crestline the right to renew each of these leases for up
to four additional terms of seven years each. 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.

   Under the REIT Modernization Act, which was passed in December 1999 and is
effective beginning January 1, 2001, the Company will be able to lease its
hotels to a wholly-owned subsidiary that is a taxable corporation and that
elects to be treated as a "taxable REIT subsidiary," rather than to a third
party. Under the terms of the leases with Crestline, the Company has the right
to purchase the leases from Crestline on or after January 1, 2001, for a price
equal to the fair rental value of such leases.

   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 $75 million
and $86 million, respectively, for the twelve weeks ended September 8, 2000 and
September 10, 1999, and $366 million and $339 million, respectively, for the
thirty-six weeks ended September 8, 2000 and September 10, 1999, have been
deferred.

3. Earnings Per Unit

   Basic earnings per 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.



                                                Twelve Weeks Ended
                         ------------------------------------------------------------------
                                September 8, 2000                 September 10, 1999
                         --------------------------------  --------------------------------
                                                    Per                               Per
                           Income        Units      Unit     Income        Units      Unit
                         (Numerator) (Denominator) Amount  (Numerator) (Denominator) Amount
                         ----------- ------------- ------  ----------- ------------- ------
                                                                   
Net Loss................    $(21)        283.8     $(.07)     $(40)        292.9     $(.14)
 Distributions on
  preferred limited
  partner units and
  Preferred OP Units....      (6)          --       (.02)       (1)          --        --
                            ----         -----     -----      ----         -----     -----
Basic loss available to
 common unitholders per
 unit...................     (27)        283.8      (.09)      (41)        292.9      (.14)
 Assuming distribution
  of units to Host
  Marriot Corporation
  for Host Marriot
  Corporation common
  shares granted under
  the Host Marriot
  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...    $(27)        283.8     $(.09)     $(41)        292.9     $(.14)
                            ====         =====     =====      ====         =====     =====



                                      F-96


                              HOST MARRIOTT, L.P.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                                  (Unaudited)



                                              Thirty-six Weeks Ended
                         ------------------------------------------------------------------
                                September 8, 2000                 September 10, 1999
                         --------------------------------  --------------------------------
                                                    Per                               Per
                           Income        Units      Unit     Income        Units      Unit
                         (Numerator) (Denominator) Amount  (Numerator) (Denominator) Amount
                         ----------- ------------- ------  ----------- ------------- ------
                                                                   
Net Loss................    $(158)       284.2     $(.55)     $(138)       292.4     $(.48)
 Distributions on
  preferred limited
  partner units and
  Preferred OP Units....      (16)         --       (.06)        (1)         --        --
                            -----        -----     -----      -----        -----     -----
Basic loss available to
 common unitholders per
 unit...................     (174)       284.2      (.61)      (139)       292.4      (.48)
 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...    $(174)       284.2     $(.61)     $(139)       292.4     $(.48)
                            =====        =====     =====      =====        =====     =====


4. Unit 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-to-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. 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
approximately $5 million on this transaction, based on the discount at which we
purchased the Convertible Preferred Securities. No repurchases were made during
the second and third quarters of 2000. Since the inception of the program in
September 1999, Host Marriott has spent, in the aggregate, approximately $150
million to repurchase 16.2 million equivalent shares.

5. Dividends and Distributions Payable

   On September 19, 2000, the Board of Directors of Host Marriott declared
quarterly cash dividends of $0.23 per share of Host REIT common stock and
corresponding distributions of $0.23 per unit of limited partnership interest.
The third quarter dividends and distributions were paid on October 16, 2000 to
shareholders and unitholders of record on September 29, 2000. First and second
quarter cash distributions of $0.21 per common OP Unit were paid on April 14
and July 14, 2000.

                                      F-97


                              HOST MARRIOTT, L.P.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                                  (Unaudited)


   On September 19, 2000, the Board of Directors declared quarterly
distributions of $0.625 per cumulative redeemable preferred limited partner
unit, which were paid on October 16, 2000, to unitholders of record on
September 29, 2000. First and second quarter cash distributions of $0.625 per
cumulative redeemable preferred limited partner unit were paid on April 14 and
July 14, 2000.

6. Acquisitions and Developments

   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.

   On May 16, 2000, the Company acquired a non-controlling partnership interest
in the JWDC Limited Partnership, which owns the JW Marriott Hotel, a 772-room
hotel located on Pennsylvania Avenue in Washington, DC. The Company, which
previously held a small interest in the venture, invested approximately $40
million in the form of a preferred equity contribution.

   In late June 2000, an expansion that included the additions of a 500-room
tower and 15,000 square feet of meeting space at the Orlando World Center
Marriott was completed at an approximate development cost of $88 million. The
convention/resort property now offers 2,000 guest rooms.

7. Debt Issuances and Refinancings

   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.

   During June 2000, the Company modified its bank credit facility. As
modified, the total facility has been permanently reduced to $775 million,
consisting of a $150 million term loan and a $625 million revolver. In
addition, the original term was extended for two additional years, through
August 2003. In connection with the renegotiation of the bank credit facility,
the Company recognized an extraordinary loss of approximately $2 million during
the second quarter of 2000, representing the write-off of deferred financing
costs and certain fees paid to the lender. As of September 8, 2000, $176
million was outstanding under the bank credit facility, and the available
capacity under the line of credit balance was $599 million.

   In October 2000, the Company issued $250 million of 9 1/4% Series F senior
notes due in 2007, under the same indenture and with the same covenants as the
Series A, Series B, Series C, and Series E senior notes. The net proceeds to
the Company were approximately $245 million, after deduction of a discount at
issuance of approximately $3 million and commissions and expenses of
approximately $2 million. The proceeds have been used for the $26 million
repayment of the outstanding balance of the revolver portion of the bank credit
facility, and the remainder will be used for general working capital purposes,
which may include the purchase of the leases from Crestline, and litigation
settlements, as discussed in Note 12. As a result of the repayment, the
available capacity under the revolver was increased to $625 million, and total
borrowings under the bank credit facility were reduced to $150 million,
representing the term loan.

                                      F-98


                              HOST MARRIOTT, L.P.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                                  (Unaudited)


8. Geographic Information

   As of September 8, 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):



                               Twelve Weeks Ended       Thirty-six Weeks Ended
                           -------------------------- --------------------------
                           September 8, September 10, September 8, September 10,
                               2000         1999          2000         1999
                           ------------ ------------- ------------ -------------
                                                       
United States.............     $236         $199          $615         $588
International.............        3            4             8           10
                               ----         ----          ----         ----
  Total...................     $239         $203          $623         $598
                               ====         ====          ====         ====


9. 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 and thirty-six weeks ended September 8,
2000, the comprehensive loss totaled $22 million and $159 million,
respectively. The comprehensive loss was $34 million and $131 million for the
twelve and thirty-six weeks ended September 10, 1999, respectively. As of
September 8, 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 2, as of September 8, 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
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 for the twelve
and thirty-six weeks ended September 8, 2000 and September 10, 1999 and
summarized balance sheet data as of September 8, 2000 and December 31, 1999 of
the lease pools in which the Company's hotels are organized are as follows (in
millions):

                                      F-99


                              HOST MARRIOTT, L.P.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                                  (Unaudited)




                                            Twelve Weeks Ended September 8, 2000
                                            ------------------------------------
                                            Pool 1 Pool 2 Pool 3 Pool 4 Combined
                                            ------ ------ ------ ------ --------
                                                         
Hotel Sales
  Rooms....................................  $147   $156   $137   $141    $581
  Food and beverage........................    60     66     57     69     252
  Other....................................    14     16     16     19      65
                                             ----   ----   ----   ----    ----
    Total hotel sales......................   221    238    210    229     898
Operating Costs and Expenses
  Rooms....................................    36     40     34     33     143
  Food and beverage........................    49     54     45     54     202
  Other....................................    62     58     57     57     234
  Management fees..........................    10     15     10     14      49
  Lease expense............................    63     67     62     70     262
                                             ----   ----   ----   ----    ----
    Total operating expenses...............   220    234    208    228     890
                                             ----   ----   ----   ----    ----
Operating Profit...........................     1      4      2      1       8
Corporate and Interest Expenses............   --     --      (1)   --       (1)
                                             ----   ----   ----   ----    ----
  Income before taxes......................     1      4      1      1       7
  Income taxes.............................    (1)    (2)   --     --       (3)
                                             ----   ----   ----   ----    ----
    Net Income.............................  $--    $  2   $  1   $  1    $  4
                                             ====   ====   ====   ====    ====

                                              Twelve Weeks Ended September 10,
                                                            1999
                                            ------------------------------------
                                            Pool 1 Pool 2 Pool 3 Pool 4 Combined
                                            ------ ------ ------ ------ --------
                                                         
Hotel Sales
  Rooms....................................  $135   $142   $126   $128    $531
  Food and beverage........................    57     59     55     67     238
  Other....................................    16     15     16     17      64
                                             ----   ----   ----   ----    ----
    Total hotel sales......................   208    216    197    212     833
Operating Costs and Expenses
  Rooms....................................    34     40     32     30     136
  Food and beverage........................    46     48     44     50     188
  Other....................................    58     50     54     55     217
  Management fees..........................     9     13      9     13      44
  Lease expense............................    57     59     56     61     233
                                             ----   ----   ----   ----    ----
    Total operating expenses...............   204    210    195    209     818
                                             ----   ----   ----   ----    ----
Operating Profit...........................     4      6      2      3      15
Corporate and Interest Expenses............    (1)    (1)   --      (1)     (3)
                                             ----   ----   ----   ----    ----
  Income before taxes......................     3      5      2      2      12
  Income taxes.............................    (1)    (3)    (1)    (1)     (6)
                                             ----   ----   ----   ----    ----
    Net Income.............................  $  2   $  2   $  1   $  1    $  6
                                             ====   ====   ====   ====    ====



                                     F-100


                              HOST MARRIOTT, L.P.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                                  (Unaudited)



                                            Thirty-six Weeks Ended September 8,
                                                            2000
                                            ------------------------------------
                                            Pool 1 Pool 2 Pool 3 Pool 4 Combined
                                            ------ ------ ------ ------ --------
                                                         
Hotel Sales
  Rooms....................................  $428   $469   $409   $433   $1,739
  Food and beverage........................   188    219    189    235      831
  Other....................................    44     46     59     60      209
                                             ----   ----   ----   ----   ------
    Total hotel sales......................   660    734    657    728    2,779
Operating Costs and Expenses
  Rooms....................................   102    116     96     96      410
  Food and beverage........................   145    165    140    167      617
  Other....................................   173    167    166    170      676
  Management fees..........................    32     50     32     52      166
  Lease expense............................   200    224    214    237      875
                                             ----   ----   ----   ----   ------
    Total operating expenses...............   652    722    648    722    2,744
                                             ----   ----   ----   ----   ------
Operating Profit...........................     8     12      9      6       35
Corporate and Interest Expenses............    (1)    (1)    (1)    (1)      (4)
                                             ----   ----   ----   ----   ------
  Income before taxes......................     7     11      8      5       31
  Income taxes.............................    (3)    (5)    (3)    (2)     (13)
                                             ----   ----   ----   ----   ------
    Net Income.............................  $  4   $  6   $  5   $  3   $   18
                                             ====   ====   ====   ====   ======

                                            Thirty-six Weeks Ended September 10,
                                                            1999
                                            ------------------------------------
                                            Pool 1 Pool 2 Pool 3 Pool 4 Combined
                                            ------ ------ ------ ------ --------
                                                         
Hotel Sales
  Rooms....................................  $408   $436   $394   $401   $1,639
  Food and beverage........................   184    196    183    220      783
  Other....................................    46     44     54     51      195
                                             ----   ----   ----   ----   ------
    Total hotel sales......................   638    676    631    672    2,617
Operating Costs and Expenses
  Rooms....................................    98    108     95     88      389
  Food and beverage........................   143    150    135    154      582
  Other....................................   168    157    161    158      644
  Management fees..........................    29     43     30     46      148
  Lease expense............................   190    206    202    218      816
                                             ----   ----   ----   ----   ------
    Total operating expenses...............   628    664    623    664    2,579
                                             ----   ----   ----   ----   ------
Operating Profit...........................    10     12      8      8       38
Corporate and Interest Expenses............    (2)    (2)    (1)    (2)      (7)
                                             ----   ----   ----   ----   ------
  Income before taxes......................     8     10      7      6       31
  Income taxes.............................    (3)    (5)    (3)    (2)     (13)
                                             ----   ----   ----   ----   ------
    Net Income.............................  $  5   $  5   $  4   $  4   $   18
                                             ====   ====   ====   ====   ======



                                     F-101


                              HOST MARRIOTT, L.P.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                                  (Unaudited)



                                                  As of September 8, 2000
                                            ------------------------------------
                                            Pool 1 Pool 2 Pool 3 Pool 4 Combined
                                            ------ ------ ------ ------ --------
                                                         
Assets.....................................  $37    $34    $40    $37     $148
Liabilities................................   30     27     34     34      125
Equity.....................................    7      7      6      3       23

                                                    As December 31, 1999
                                            ------------------------------------
                                            Pool 1 Pool 2 Pool 3 Pool 4 Combined
                                            ------ ------ ------ ------ --------
                                                         
Assets.....................................  $39    $37    $41    $38     $155
Liabilities................................   36     36     40     38      150
Equity.....................................    3      1      1    --         5


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. Certain of the Guarantor Subsidiaries
are not wholly-owned subsidiaries of the Company. In these cases, however, the
outside ownership percentage is less than 1%. Separate financial information of
those non-wholly-owned Guarantor Subsidiaries are not presented, as the Company
believes they are not material to investors. The non-guarantor subsidiaries
(the "Non-Guarantor Subsidiaries") own the following full-service hotels: the
Albany Marriott; Atlanta Marriott Marquis; 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 September 8, 2000 and December 31, 1999, and results
of operations for the twelve weeks and thirty-six weeks ended September 8, 2000
and September 10, 1999, respectively, and cash flows for the thirty-six weeks
ended September 8, 2000 and September 10, 1999 of the parent, Guarantor
Subsidiaries and the Non-Guarantor Subsidiaries.

                                     F-102


                              HOST MARRIOTT, L.P.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                                  (Unaudited)


          Supplemental Condensed Combined Consolidating Balance Sheets
                                 (in millions)

                               September 8, 2000



                                                  Non
                                  Guarantor    Guarantor
                          Parent Subsidiaries Subsidiaries Eliminations Consolidated
                          ------ ------------ ------------ ------------ ------------
                                                         
Property and equipment,
 net....................  $1,217    $3,791       $2,093      $   --        $7,101
Notes and other
 receivables............     393       208           23         (452)         172
Rent receivable.........      16        28           28          --            72
Investments in
 affiliate..............   1,646       --           --        (1,547)          99
Other assets............      11       232          207          (55)         395
Cash and cash
 equivalents............     275        43           25          --           343
                          ------    ------       ------      -------       ------
  Total assets..........  $3,558    $4,302       $2,376      $(2,054)      $8,182
                          ======    ======       ======      =======       ======
Debt....................  $1,198    $2,974       $1,148      $  (219)      $5,101
Convertible debt
 obligations to Host
 Marriott...............     492       --           --           --           492
Deferred income taxes...       9        32            7          --            48
Deferred rent...........      78       193           95          --           366
Other liabilities.......     257       373          178         (288)         520
                          ------    ------       ------      -------       ------
  Total liabilities.....   2,034     3,572        1,428         (507)       6,527
Minority interests......       2       131          --           --           133
Limited partner interest
 of third parties at
 redemption value.......     694       --           --           --           694
Owner's capital.........     828       599          948       (1,547)         828
                          ------    ------       ------      -------       ------
  Total liabilities and
   owner's capital......  $3,558    $4,302       $2,376      $(2,054)      $8,182
                          ======    ======       ======      =======       ======

                               December 31, 1999


                                                  Non
                                  Guarantor    Guarantor
                          Parent Subsidiaries Subsidiaries Eliminations Consolidated
                          ------ ------------ ------------ ------------ ------------
                                                         
Property and equipment,
 net....................  $1,221    $3,755       $2,132      $   --        $7,108
Notes and other
 receivables............     421       212           22         (480)         175
Rent receivable.........      10        26           36          --            72
Investments in
 affiliate..............   1,794       --           --        (1,745)          49
Other assets............     173       225          175          (58)         515
Cash and cash
 equivalents............     199        58           20          --           277
                          ------    ------       ------      -------       ------
  Total assets..........  $3,818    $4,276       $2,385      $(2,283)      $8,196
                          ======    ======       ======      =======       ======
Debt....................  $1,139    $3,007       $1,168      $  (245)      $5,069
Convertible debt
 obligation to Host
 Marriott...............     514       --           --           --           514
Deferred income taxes...      10        32            7          --            49
Other liabilities.......     297       375          195         (293)         574
                          ------    ------       ------      -------       ------
  Total liabilities.....   1,960     3,414        1,370         (538)       6,206
Minority interests......       4       132          --           --           136
Limited partner interest
 of third parties at
 redemption value.......     533       --           --           --           533
Owner's capital.........   1,321       730        1,015       (1,745)       1,321
                          ------    ------       ------      -------       ------
  Total liabilities and
   owner's capital......  $3,818    $4,276       $2,385      $(2,283)      $8,196
                          ======    ======       ======      =======       ======


                                     F-103


                              HOST MARRIOTT, L.P.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                                  (Unaudited)


            Supplemental Condensed Combined Statements of Operations
                                 (in millions)

                      Twelve Weeks Ended September 8, 2000



                                                  Non
                                  Guarantor    Guarantor
                          Parent Subsidiaries Subsidiaries Eliminations Consolidated
                          ------ ------------ ------------ ------------ ------------
                                                         
REVENUES................   $ 42      $122         $73          $ 2          $239
Depreciation............    (17)      (39)        (19)         --            (75)
Property-level
 expenses...............    (17)      (23)        (26)         --            (66)
Minority interest.......    --         (1)        --           --             (1)
Interest expense........    (29)      (66)        (23)          11          (107)
Corporate expenses......     (1)       (4)         (2)         --             (7)
Other expenses..........      5        (3)         (2)         --            --
                           ----      ----         ---          ---          ----
(Loss) income before
 income taxes...........    (17)      (14)          1           13           (17)
(Provisions for) benefit
 from income taxes......     (4)      --          --           --             (4)
                           ----      ----         ---          ---          ----
(Loss) income before
 extraordinary item.....    (21)      (14)          1           13           (21)
Extraordinary loss......    --        --          --           --            --
                           ----      ----         ---          ---          ----
NET INCOME (LOSS).......   $(21)     $(14)        $ 1          $13          $(21)
                           ====      ====         ===          ===          ====

                     Twelve Weeks Ended September 10, 1999


                                                  Non
                                  Guarantor    Guarantor
                          Parent Subsidiaries Subsidiaries Eliminations Consolidated
                          ------ ------------ ------------ ------------ ------------
                                                         
REVENUES................   $ 29      $ 98         $64          $12          $203
Depreciation............    (14)      (35)        (19)         --            (68)
Property-level
 expenses...............    (12)      (24)        (26)         --            (62)
Minority interest.......     (5)        3         --           --             (2)
Interest expense........    (34)      (57)        (23)           6          (108)
Corporate expenses......     (5)       (2)          1          --             (6)
Other expenses..........      2        (1)         (1)         --            --
                           ----      ----         ---          ---          ----
(Loss) income before
 income taxes and
 extraordinary item.....    (39)      (18)         (4)          18           (43)
Provision for income
 tax....................     (1)      --          --           --             (1)
                           ----      ----         ---          ---          ----
(Loss) income before
 extraordinary item.....    (40)      (18)         (4)          18           (44)
Extraordinary gain......    --          1           3          --              4
                           ----      ----         ---          ---          ----
NET INCOME (LOSS).......   $(40)     $(17)        $(1)         $18          $(40)
                           ====      ====         ===          ===          ====


                                     F-104


                              HOST MARRIOTT, L.P.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                                  (Unaudited)


            Supplemental Condensed Combined Statements of Operations
                                 (in millions)

                    Thirty-six Weeks Ended September 8, 2000



                                                  Non
                                  Guarantor    Guarantor
                         Parent  Subsidiaries Subsidiaries Eliminations Consolidated
                         ------  ------------ ------------ ------------ ------------
                                                         
REVENUES................ $  37      $ 310         $208         $ 68        $ 623
Depreciation............   (51)      (115)         (58)         --          (224)
Property-level
 expenses...............   (41)       (69)         (81)         --          (191)
Minority interest.......    (3)        (8)         --           --           (11)
Interest expense........   (91)      (188)         (69)          33         (315)
Corporate expenses......    (2)       (16)          (9)         --           (27)
Other expenses..........    (2)        (5)          (2)         --            (9)
                         -----      -----         ----         ----        -----
(Loss) income before
 income taxes and
 extraordinary items....  (153)       (91)         (11)         101         (154)
(Provision for) benefit
 from income taxes......    (8)         1          --           --            (7)
                         -----      -----         ----         ----        -----
(Loss) income before
 extraordinary item.....  (161)       (90)         (11)         101         (161)
Extraordinary gain......     3        --           --           --             3
                         -----      -----         ----         ----        -----
NET INCOME (LOSS)....... $(158)     $ (90)        $(11)        $101        $(158)
                         =====      =====         ====         ====        =====

                   Thirty-six Weeks Ended September 10, 1999


                                                  Non
                                  Guarantor    Guarantor
                         Parent  Subsidiaries Subsidiaries Eliminations Consolidated
                         ------  ------------ ------------ ------------ ------------
                                                         
REVENUES................ $  60      $ 297         $195         $ 46        $ 598
Depreciation............   (44)      (105)         (54)         --          (203)
Property-level
 expenses...............   (34)       (69)         (79)         --          (182)
Minority interest.......    (7)        (6)         --           --           (13)
Interest expense........  (102)      (172)         (68)          17         (325)
Corporate expenses......    (4)       (11)          (6)         --           (21)
Other expenses..........    (3)        (2)          (1)         --            (6)
                         -----      -----         ----         ----        -----
(Loss) income before
 income taxes and
 extraordinary item.....  (134)       (68)         (13)          63         (152)
Provision for income
 taxes..................    (4)         1          --           --            (3)
                         -----      -----         ----         ----        -----
(Loss) income before
 extraordinary item.....  (138)       (67)         (13)          63         (155)
Extraordinary gain......   --           1           16          --            17
                         -----      -----         ----         ----        -----
NET INCOME (LOSS)....... $(138)     $ (66)        $  3         $ 63        $(138)
                         =====      =====         ====         ====        =====


                                     F-105


                              HOST MARRIOTT, L.P.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                                  (Unaudited)

            Supplemental Condensed Combined Statements of Cash Flows
                                 (in millions)

                    Thirty-six Weeks Ended September 8, 2000



                                                          Non
                                          Guarantor    Guarantor
                                 Parent  Subsidiaries Subsidiaries Consolidated
                                 ------  ------------ ------------ ------------
                                                       
OPERATING ACTIVITIES
Cash from operations...........  $ 146      $ 178         $115        $ 439
                                 -----      -----         ----        -----
INVESTING ACTIVITIES
Cash received from sales of
 assets........................    --         --           --           --
Acquisitions...................    (40)       --           --           (40)
Capital expenditures and other
 investments...................    (63)      (168)         (40)        (271)
Other..........................      4        --           --             4
                                 -----      -----         ----        -----
Cash used in investing
 activities....................    (99)      (168)         (40)        (307)
                                 -----      -----         ----        -----
FINANCING ACTIVITIES
Issuances of debt..............    207          2           83          292
Repayment of debt..............   (167)        (9)         (96)        (272)
Issuances of common units......      3        --           --             3
Distributions..................   (194)       --           --          (194)
Redemption or repurchase of OP
 Units.........................    (47)       --           --           (47)
Repurchase of Convertible
 Preferred Securities..........    (15)       --           --           (15)
Other..........................     (9)        22           (1)          12
Transfers to/from Parent.......     96        (40)         (56)         --
                                 -----      -----         ----        -----
Cash used in financing
 activities....................   (126)       (25)         (70)        (221)
                                 -----      -----         ----        -----
INCREASE (DECREASE) IN CASH AND
 CASH EQUIVALENTS..............  $ (79)     $ (15)        $  5        $ (89)
                                 =====      =====         ====        =====


                                     F-106


                              HOST MARRIOTT, L.P.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                                  (Unaudited)


     Supplemental Condensed Combined Statements of Cash Flows--(Continued)
                                 (in millions)

                   Thirty-six Weeks Ended September 10, 1999



                                                          Non
                                          Guarantor    Guarantor
                                 Parent  Subsidiaries Subsidiaries Consolidated
                                 ------  ------------ ------------ ------------
                                                       
OPERATING ACTIVITIES
Cash from operations...........  $  11      $ 153        $  92       $   256
                                 -----      -----        -----       -------
INVESTING ACTIVITIES
Cash received from sales of
 assets........................      1         48          --             49
Capital expenditures and other
 investments...................    (58)      (173)         (30)         (261)
Acquisitions...................    --         (12)          (5)          (17)
Other..........................    (47)       --           --            (47)
                                 -----      -----        -----       -------
Cash used in investing
 activities....................   (104)      (137)         (35)         (276)
                                 -----      -----        -----       -------
FINANCING ACTIVITIES
Repayment of debt..............   (111)      (333)        (857)       (1,301)
Issuances of debt..............    290         35          957         1,282
Distributions..................   (195)       --           --           (195)
Issuances of common units......      2        --           --              2
Issuance of Class A Preferred
 Units.........................    100        --           --            100
Cost of extinguishment of
 debt..........................    --         --            (2)           (2)
Transfers to/from Parent.......   (192)       339         (147)          --
Other..........................    (12)       --           --            (12)
                                 -----      -----        -----       -------
Cash used in financing
 activities....................   (118)        41          (49)         (126)
                                 -----      -----        -----       -------
INCREASE (DECREASE) IN CASH AND
 CASH EQUIVALENTS..............  $(211)     $  57        $   8       $  (146)
                                 =====      =====        =====       =======


12. 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 have executed a definitive settlement
agreement to resolve the Texas Multi-Partnership Lawsuit and the Partnership
Lawsuits. The proposed settlement would involve a resolution of claims against
all defendants in all seven partnerships, except with respect to those partners
who have elected to opt out of the settlement. The holders of fewer than three
units in a single partnership have

                                     F-107


                              HOST MARRIOTT, L.P.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                                  (Unaudited)

made such an election, however. The proposed settlement would include an
acquisition of the limited partner interests in two partnerships by an
unconsolidated joint venture between a non-controlled subsidiary of the Company
and a subsidiary of Marriott International for approximately $372 million plus
interest and legal fees, of which the Company will pay approximately $91
million. The Company's share of funds required to resolve the litigation with
all seven partnerships, including the acquisitions, is expected to be
approximately $124 million. Of this amount, the Company funded the settlement
escrow for $31 million in cash on September 28, 2000, in settlement of
litigation with the plaintiffs in four of the partnerships. As part of the
settlement, the Company also expects to contribute to the joint venture its
existing interests in the partnerships. All conditions have been removed and
judicial fairness determinations have been obtained with respect to five of the
seven partnerships and they have been severed by court order from the remaining
two settlements. Accordingly, the defendants have consummated the settlements
with respect to those partnerships by funding the settlement escrows. Various
consents remain conditions to consummation with respect to the other two
partnerships, and there can be no assurance that these settlements will occur.
In the event the Company does not successfully finalize these two settlements,
the two cases could go to trial. As a result of the proposed settlement, the
Company recorded a one-time, non-recurring, pre-tax charge of $40 million in
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. See "Item 1--Legal Proceedings" for further detail
regarding current litigation.

13. Subsequent Event

   On September 21, 2000, one of our non-controlled subsidiaries acquired for
$4.5 million a 4% preferred equity interest in STSN, a privately held company
that is a provider of in-room, high speed internet access to the lodging
industry, from an affiliate of First Media Corporation. Richard E. Marriott, a
director and officer of the Company, is also an officer, director and
controlling shareholder of First Media Corporation. The purchase price was
determined based on First Media's original investment in STSN in December 1999,
plus investment costs and accrued interest through September 2000.

                                     F-108


- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

   We have not authorized any dealer, salesperson or other person to give any
information or represent anything to you other than the information contained
in this prospectus. You must not rely on unauthorized information or
representations.

   This offering memorandum does not offer to sell or ask for offers to buy
any of the securities in any jurisdiction where it is unlawful, where the
person making the offer is not qualified to do so, or to any person who can
not legally be offered the securities.

   The information in this offering memorandum is current only as of the date
on its cover, and may change after that date. For any time after the cover
date of this offering memorandum, we do not represent that our affairs are the
same as described or that the information in this offering memorandum is
correct -- nor do we imply those things by delivering this offering memorandum
or selling securities to you.

                                ---------------

                               TABLE OF CONTENTS



                                                                            Page
                                                                            ----
                                                                         
Where You Can Find More Information........................................   i
Summary....................................................................   1
Risk Factors...............................................................   8
Forward-Looking Statements.................................................  19
Use of Proceeds............................................................  20
Capitalization.............................................................  20
Pro Forma Financial Information of Host Marriott, L.P......................  21
Selected Financial Data....................................................  29
Management's Discussion and Analysis of
 Financial Condition and Results of Operations.............................  31
Quantitative and Qualitative Disclosures About Market Risk.................  46
Business and Properties....................................................  47
Management.................................................................  69
Certain Relationships and Related Transactions.............................  80
The Exchange Offer.........................................................  86
Description of Notes.......................................................  93
Material Federal Tax Consequences of the Exchange.......................... 135
Plan of Distribution....................................................... 136
Legal Matters.............................................................. 137
Experts.................................................................... 137
Index to Financial Statements.............................................. F-1


- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

                      -----------------------------------

                                  PROSPECTUS

                      -----------------------------------

                              Host Marriott, L.P.

                               Offer to Exchange
                                     up to
                                 $250,000,000
                                      of
  9 1/4% Series   Senior Notes due 2007, which have been registered under the
                                Securities Act

                                   for up to
                                 $250,000,000
                                of outstanding
                     9 1/4% Series F Senior Notes Due 2007





                                       , 2000

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------


                                    PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20. Indemnification of Directors and Officers

   Host Marriott Corporation's Articles of Amendment and Restatement of
Articles of Incorporation (the "Articles of Incorporation") authorize it, to
the maximum extent permitted by Maryland law, to obligate itself to indemnify
and to pay or reimburse reasonable expenses in advance of final disposition of
a proceeding to: (i) any present of former director of officer or (ii) any
individual who, while a director of Host Marriott and at the request of Host
Marriott, serves or has served another corporation, real estate investment
trust, partnership, joint venture, trust, employee benefit plan or any other
enterprise from and against any claim or liability to which such person may
become subject or which such person may incur by reason of his or her status as
a present or former director of Host Marriott Corporation. Host Marriott
Corporation's Bylaws obligate it, to the maximum extent permitted by Maryland
law, to indemnify and to pay or reimburse reasonable expenses in advance of
final disposition of a proceeding to (a) any present or former director or
officer who is made a party to the proceeding by reason of his service in that
capacity or (b) any individual who, while a director of Host Marriott
Corporation and at the request of Host Marriott Corporation, serves or has
served another corporation, real state investment trust, partnership, joint
venture, trust, employee benefit plan or any other enterprise as a director,
trustee, officer or partner of such corporation, real estate investment trust
partnership, joint venture, trust, employee benefit plan or other enterprise
and who is made a party to the proceeding by reason of his service in that
capacity, against any claim or liability to which he may become subject by
reason of such status. Host Marriott's Articles of Incorporation and Bylaws
also permit Host Marriott to indemnify and advance expenses to any person who
served as a predecessor of Host Marriott in any of the capacities described
above any to any employee or agent of Host Marriott or a predecessor of Host
Marriott. Host Marriott's Bylaws require Host Marriott to indemnify a director
or officer who has been successful, on the merits or otherwise, in the defense
of any proceeding to which he is made a party by reason of his service in that
capacity.

   The Maryland General Corporation Law, as amended (the "MGCL"), permits a
Maryland corporation to indemnify and advance expenses to its directors,
officers, employees and agents, and permits a corporation to indemnify its
present and former directors and officers, among others, against judgments,
penalties, fines, settlements and reasonable expenses actually incurred by them
in connection with any proceeding to which they may be made a party by reason
of their service in those or other capacities unless it is established that (a)
the act or omission of the director or officer was material to the matter
giving rise to the proceeding and (i) was committed in bad faith or (ii) was
the result of active and deliberate dishonesty, (b) the director of officer
actually received an improper personal benefit in money, property, or services
or (c) in the case of any criminal proceeding, the director or officer had
reasonable cause to believe that the act or omission was unlawful. However,
under the MGCL, a Maryland corporation may not indemnify a director or officer
in a suit by or in the right of the corporation if such director or officer has
been adjudged to be liable to the corporation. In accordance with the MGCL,
Host Marriott's Bylaws require it, as a condition to advancing expenses, to
obtain (1) a written affirmation by the director or officer of his good faith
belief that he has met the standard of conduct necessary for indemnification by
Host Marriott as authorized by Host Marriott's Bylaws and (2) a written
statement by or on his behalf to repay the amount paid of reimbursed by Host
Marriott shall ultimately be determined that the standard of conduct was not
met.

   Host Marriott intends to enter into indemnification agreements with each of
its directors and officers. The indemnification agreements will require, among
other things, that Host Marriott indemnify its directors and officers to the
fullest extent permitted by law and advance to its directors and officers all
related expenses, subject to reimbursement if it is subsequently determined
that indemnification is not permitted.

   The Amended and Restated Agreement of Limited Partnership of Host Marriott,
L.P. (the "Partnership Agreement") also provides for indemnification of Host
Marriott and its officers and directors to the same extent that indemnification
is provided to officers and directors of Host Marriott in its Articles of
Incorporation,

                                      II-1


and limit liability of Host Marriott and its officers and directors to the
Operating Partnership and its respective partners to the same extent that the
liability of the officers and directors of Host Marriott to Host Marriott and
its stockholders is limited under Host Marriott's Articles of Incorporation.

   Insofar as indemnification for liabilities arising under the Securities Act
of 1933, may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, Host Marriott has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.

Item 21. Exhibits and Financial Statement Schedules

   (A) Exhibits



 Exhibit No. Description
 ----------- -----------
          
  2.1        Agreement and Plan by and among Host Marriott Corporation, HMC
             Merger Corporation and Host Marriott L.P. (incorporated by
             reference to Host Marriott Corporation Registration Statement No.
             333-64793).

  3.3        Bylaws of Host Marriott Corporation dated September 28, 1998
             (incorporated by reference to Host Marriott Corporation
             Registration Statement No. 333-64793).

  3.4        Articles of Amendment and Restatement of Articles of Incorporation
             of Host Marriott Corporation (incorporated by reference to Host
             Marriott Corporation Registration Statement No. 333-64793).

  4.1        Indenture by and among HMH Properties, Inc., as Issuer, and the
             Subsidiary Guarantors named therein, and Marine Midland Bank, as
             Trustee (incorporated by reference to Host Marriott Corporation
             Current Report on Form 8-K dated August 6, 1998).

  4.2        Sixth Supplemental Indenture, dated October 6, 2000, between Host
             Marriott, L.P., the Subsidiary Guarantors named therein and Marine
             Midland Bank, as Trustee.

  5.1        Opinion of Christopher G. Townsend as to the legality of the
             securities being registered.

  8.1        Opinion of Latham & Watkins regarding certain tax matters.

 10.1        Second Amended and Restated Agreement of Limited Partnership of
             Host Marriott, L.P., (incorporated by reference to Exhibit 3.1 of
             Host Marriott Corporation Registration Statement No. 333-55807).

 10.2        Indenture between Host Marriott L.P., as Issuer, and Marine
             Midland Bank, as Indenture Trustee, and Form of 6.56% Callable
             Note due December 15, 2005 (incorporated by reference to Exhibit
             4.1 of Host Marriott Corporation Registration Statement No. 333-
             55807).

 10.3        Amended and Restated Credit Agreement dated as of June 19, 1997
             and Amended and Restated as of August 5, 1998 among Host Marriott
             Corporation, Host Marriott Hospitality, Inc., HMH Properties,
             Inc., Host Marriott, L.P., HMC Capital Resources Corp., Various
             Banks, Wells Fargo Bank, National Association, The Bank of Nova
             Scotia and Credit Lyonnais New York Branch, as Co-Arrangers, and
             Bankers Trust Company as Arranger and Administrative Agent
             (incorporated by reference to Host Marriott Corporation Current
             Report on Form 8-K dated September 11, 1998).

 10.4        First Amendment and Waiver of Amended and Restated Credit
             Agreement dated as of June 19, 1997 and Amended and Restated as of
             August 5, 1998, among Host Marriott Corporation, Host Marriott
             Hospitality Inc., HMH Properties, Inc., Host Marriott, L.P., HMC
             Capital Resources Corp., Various Banks, Wells Fargo Bank, National
             Association, The Bank of Nova Scotia and Credit Lyonnais New York
             Branch, as Co-Arrangers and Bankers Trust Company as Arranger and
             Administrative Agent dated as of November 25, 1998 (incorporated
             by reference to Exhibit 10.4 of Host Marriott Corporation's Form
             10-K for the year ended December 31, 1998).



                                      II-2


   
 10.5  Second Amendment and Consent to Credit Agreement of Amended and Restated
       Credit Agreement dated as of June 19, 1997 and Amended and Restated as
       of August 5, 1998, among Host Marriott Corporation, Host Marriott
       Hospitality Inc., HMH Properties, Inc., Host Marriott, L.P., HMC Capital
       Resources Corp., Various Banks, Wells Fargo Bank, National Association,
       The Bank of Nova Scotia and Credit Lyonnais New York Branch, as Co-
       Arrangers and Bankers Trust Company as Arranger and Administrative Agent
       dated as of December 17, 1998 (incorporated by reference to Exhibit 10.5
       of Host Marriott Corporation's Form 10-K for the year ended December 31,
       1998).

 10.6  Third Amendment and Waiver to Credit Agreement of Amended and Restated
       Credit Agreement dated as of June 19, 1997 and Amended and Restated as
       of August 5, 1998, among Host Marriott Corporation, Host Marriott
       Hospitality Inc., HMH Properties, Inc., Host Marriott, L.P., HMC Capital
       Resources Corp., Various Banks, Wells Fargo Bank, National Association,
       The Bank of Nova Scotia and Credit Lyonnais New York Branch, as Co-
       Arrangers and Bankers Trust Company as Arranger and Administrative Agent
       dated as of March 15, 1999 (incorporated by reference to Exhibit 10.6 of
       Host Marriott Corporation's Form 10-K for the year ended December 31,
       1998).

 10.7  Host Marriott L.P. Executive Deferred Compensation Plan effective as of
       December 29, 1998 (formerly the Marriott Corporation Executive Deferred
       Compensation Plan) (incorporated by reference to Exhibit 10.7 of Host
       Marriott Corporation's Form 10-K for the year ended December 31, 1998).

 10.8  Host Marriott Corporation 1997 Comprehensive Incentive Stock Plan
       (incorporated by reference to Host Marriott Corporation's Proxy
       Statement filed April 3, 1997).

 10.9  Distribution Agreement dated as of September 15, 1993 between Marriott
       Corporation and Marriott International, Inc. (incorporated by reference
       from Host Marriott Corporation Current Report on Form 8-K dated October
       23, 1993).

 10.10 Amendment No. 1 to the Distribution Agreement dated December 29, 1995 by
       and among Host Marriott Corporation, Host Marriott Services Corporation
       and Marriott International, Inc., (incorporated by reference to Host
       Marriott Corporation Current Report on Form 8-K dated January 16, 1996).

 10.11 Amendment No. 2 to the Distribution Agreement dated June 21, 1997 by and
       among Host Marriott Corporation, Host Marriott Services Corporation and
       Marriott International, Inc. (incorporated by reference to Host Marriott
       Corporation Registration Statement No. 333-64793).

 10.12 First Amendment and Waiver of Amended and Restated Credit Agreement
       dated as of June 19, 1997 and Amended and Restated as of August 5, 1998,
       among Host Marriott Corporation, Host Marriott Hospitality Inc., HMH
       Properties, Inc., Host Marriott, L.P., HMC Capital Resources Corp.,
       Various Banks, Wells Fargo Bank, National Association, The Bank of Nova
       Scotia and Credit Lyonnais New York Branch, as Co-Arrangers and Bankers
       Trust Company as Arranger and Administrative Agent dated as of November
       25, 1998 (incorporated by reference to Exhibit 10.4 of Host Marriott
       Corporation's Form 10-K for the year ended December 31, 1998).

 10.13 Amendment No. 4 to the Distribution Agreement by and among Host Marriott
       Corporation and Marriott International Inc. (incorporated by reference
       to Host Marriott Corporation Registration Statement No. 333-64793).

 10.14 Amendment No. 5 to the Distribution Agreement dated December 18, 1998 by
       and among Host Marriott Corporation, Host Marriott Services Corporation
       and Marriott International Inc., (incorporated by reference to Exhibit
       10.14 of Host Marriott Corporation's Form 10-K for the year ended
       December 31, 1998).

 10.15 Distribution Agreement dated December 22, 1995 by and between Host
       Marriott Corporation and Host Marriott Services Corporation
       (incorporated by reference to Host Marriott Corporation Current Report
       on Form 8-K dated January 16, 1996).

 


                                      II-3


   
 10.16 Amendment to Distribution Agreement dated December 22, 1995 by and
       between Host Marriott Corporation and Host Marriott Services Corporation
       (incorporated by reference to Exhibit 10.16 of Host Marriott
       Corporation's Form 10-K for the year ended December 31, 1998).

 10.17 Tax Sharing Agreement dated as of October 5, 1993 by and between
       Marriott Corporation and Marriott International, Inc. (incorporated by
       reference to Host Marriott Corporation Current Report on Form 8-K dated
       October 23, 1993).

 10.18 License Agreement dated as December 29, 1998 by and among Host Marriott
       Corporation, Host Marriott, L.P., Marriott International, Inc., and
       Marriott Worldwide Corporation (incorporated by reference to Exhibit
       10.18 of Host Marriott Corporation's Form 10-K for the year ended
       December 31, 1998).

 10.19 Noncompetition Agreement between Host Marriott Corporation, Host
       Marriott, L.P., and Crestline Capital Corporation and other parties
       named therein (incorporated by reference to Exhibit 10.19 of Host
       Marriott Corporation's Form 10-K for the year ended December 31, 1998).

 10.20 Tax Administration Agreement dated as of October 8, 1993 by and between
       Marriott Corporation and Marriott International, Inc., (incorporated by
       reference to Host Marriott Corporation Current Report on Form 8-K dated
       October 23, 1993).

 10.21 Restated Noncompetition Agreement dated March, 1998 by and among Host
       Marriott Corporation, Marriott International, Inc., and Sodexho Marriott
       Services, Inc., (incorporated by reference to Host Marriott Corporation
       Registration Statement No. 333-64793).

 10.22 First Amendment to Restated Noncompetition Agreement by and among Host
       Marriott Corporation, Marriott International, Inc., Sodexho Marriott
       Services, Inc. (incorporated by reference to Host Marriott Corporation
       Registration Statement No. 333-64793).

 10.23 Host Marriott Lodging Management Agreement--Marriott Hotels, Resorts and
       Hotels dated September 25, 1993 by and between Marriott Corporation and
       Marriott International, Inc. (incorporated by reference to Host Marriott
       Corporation registration Statement No. 33-51707)

 10.24 Employee Benefits and Other Employment Matters Allocation Agreement
       dated as of December 29, 1995 by and between Host Marriott Corporation
       and Host Marriott Services Corporation (incorporated by reference to
       Host Marriott Corporation Current Report on Form 8-K dated January 16,
       1996).

 10.25 Tax Sharing Agreement dated as of December 29, 1995 by and between Host
       Marriott Corporation and Host Marriott Services Corporation
       (incorporated by reference to Host Marriott Corporation Current Report
       on Form 8-K dated January 16, 1996).

 10.26 Host Marriott, L.P. Retirement and Savings Plan and Trust (incorporated
       by reference to Exhibit 10.26 of Host Marriott Corporation's Form 10-K
       for the year ended December 31, 1998).

 10.27 Contribution Agreement dated as of April 16, 1998 among Host Marriott
       Corporation, Host Marriott, L.P. and the contributors named therein,
       together with Exhibit B (incorporated by reference to Exhibit 10.18 of
       Host Marriott Corporation Registration Statement No. 333-55807).

 10.28 Amendment No. 1 to Contribution Agreement dated May 8, 1998 among
       Marriott Corporation, Host Marriott, L.P. and the contributors named
       therein (incorporated by reference to Exhibit 10.19 of Host Marriott
       Corporation Registration Statement No. 333-55807).

 10.29 Amendment No. 2 to Contribution Agreement dated May 18, 1998 among Host
       Marriott Corporation, Host Marriott, L.P. and the contributors named
       therein (incorporated by reference to Exhibit 10.20 of Host Marriott
       Corporation Registration Statement No. 333-55807).

 10.30 Form of Lease Agreement (incorporated by reference to Host Marriott
       Corporation Registration Statement No. 333-64793).

 


                                      II-4


   
 10.31 Form of Management Agreement of Full-Service Hotels (incorporated by
       reference to Host Marriott Corporation Registration Statement No. 33-
       51707).

 10.32 Form of Owner's Agreement between Host Marriott Corporation, Marriott
       International and Crestline Capital Corporation (incorporated by
       reference to Crestline Capital Corporation Registration Statement No.
       333-64657).

 10.33 Employee Benefits and Other Employment Matters Allocation Agreement
       between Host Marriott Corporation, Host Marriott, L.P. and Crestline
       Capital Corporation (incorporated by reference to Host Marriott
       Corporation Registration Statement No. 333-64793).

 10.34 Amendment to the Employee Benefits and Other Employment Matters
       Allocation Agreement effective as of December 29, 1998 by and between
       Host Marriott Corporation, Marriott International, Sodexho Marriott
       Services, Inc., Crestline Capital Corporation and Host Marriott, L.P.
       (incorporated by reference to Exhibit 10.34 of Host Marriott
       Corporation's Form 10-K for the year ended December 31, 1998).

 10.35 Pool Guarantee Agreement between Host Marriott Corporation, the lessees
       referred to therein and Crestline Capital Corporation (incorporated by
       reference to Host Marriott Registration Statement No. 333-64793).

 10.36 Pooling and Security Agreement by and among Host Marriott Corporation
       and Crestline Capital Corporation (incorporated by reference to Host
       Marriott Corporation Registration Statement No.
       333-64793).

 10.37 Amended and Restated Communities Noncompetition Agreement (incorporated
       by reference to Host Marriott Corporation Registration Statement No.
       333-64793).

 10.38 Asset Management Agreement between Host Marriott, L.P., and Crestline
       Capital Corporation (incorporated by reference to Crestline Capital
       Corporation Registration Statement No. 333-64657).

 10.39 Registration Rights Agreement, dated as of October 6, 2000, by and among
       Host Marriott, L.P., the Guarantors named therein and the Purchasers
       named therein.

 10.40 Amended and Restated Credit Agreement dated as of June 19, 1997 and
       Amended and Restated as of August 5, 1998 and further Amended and
       Restated as of May 31, 2000 among Host Marriott Corporation, Host
       Marriott, L.P., Various Banks, and Bankers Trust Company, as
       Administrative Agent.

 10.41 First Amendment to the Amended and Restated Credit Agreement dated as of
       June 19, 1997 and Amended and Restated as of August 5, 1998 and further
       Amended and Restated as of May 31, 2000 among Host Marriott Corporation,
       Host Marriott, L.P., Various Banks, and Bankers Trust Company, as
       Administrative Agent, dated as of October 6, 2000.

 10.42 Acquisition and Exchange Agreement dated November 13, 2000 by Host
       Marriott, L.P. and Crestline Capital Corporation (incorporated by
       reference to Exhibit 99.2 of Host Marriott, L.P.'s Form 8-K/A filed
       December 14, 2000).
 12.1  Computation of Ratios of Earnings to Fixed Charges.

 21.1  List of Subsidiaries of Host Marriott, L.P. (incorporated by reference
       to Exhibit 21 of Host Marriott, L.P.'s Form 10-K for the year ended
       December 31, 1998).

 23.1  Consent of Christopher G. Townsend (included as part of Exhibit 5).

 23.2  Consent of Latham & Watkins (included as part of Exhibit 8).

 23.3  Consent of Arthur Andersen LLP.

 24.1  Power of Attorney (included on signature page).

 25.1  Statement of Eligibility and Qualification on Form T-1 of HSBC Bank USA,
       as trustee for the 9 1/4% Series G Senior Notes due 2007 of the
       Registrant.

 99.1  Form of Letter of Transmittal and related documents to be used in
       conjunction with the exchange offer.

 99.2  Form of Notice of Guaranteed Delivery to be used in conjunction with the
       exchange offer.

 
- --------
   (B) Financial Statement Schedules

                                                                          
Schedule III--Real Estate and Accumulated Depreciation...................... S-1



                                      II-5


Item 22. Undertakings

   A. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described under Item 20 above, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expense incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted against the registrant by such director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

   B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's Annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's Annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

   C. The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.

   D. The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.

   E. (1) The undersigned registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of
a prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145, the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.

   (2) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Securities Act of 1933, as amended,
and is used in connection with an offering of securities subject to Rule 415,
will be filed as a part of an amendment to the registration statement and will
not be used until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act of 1933, each such post-
effective amendment shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

   F. The undersigned registrant hereby undertakes:

   (1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

     (i) To include any prospectus required by section 10(a)(3) of the
  Securities Act of 1933;

                                      II-6


     (ii) To reflect in the prospectus any facts or events arising after the
  effective date of the registration statement (or the most recent post-
  effective amendment thereof) which, individually or in the aggregate,
  represent a fundamental change in the information in the registration
  statement. To reflect in the prospectus any facts or events arising after
  the effective date of the registration statement (or the most recent post-
  effective amendment thereof) which, individually or in the aggregate,
  represent a fundamental change in the information set forth in the
  registration statement. Notwithstanding the foregoing, any increase or
  decrease in volume of securities offered (if the total dollar value of
  securities offered would not exceed that which was registered) and any
  deviation from the low or high end of the estimated maximum offering range
  may be reflected in the form of prospectus filed with the Commission
  pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
  price represent no more than a 20% change in the maximum aggregate offering
  price set forth in the "Calculation of Registration Fee" table in the
  effective registration statement;

     (iii) To include any material information with respect to the plan of
  distribution not previously disclosed in the registration statement or any
  material change to such information in the registration statement;

   Provided, however, That paragraphs (a)(1)(i) and (a)(1)(ii) of this section
do not apply if the registration statement is on Form S-3 or Form S-8 or Form
F-3, and the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or furnished to
the Commission by the registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.

   (2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

   (3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.

                                      II-7


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland on this 15th day of December, 2000.

                                          HOST MARRIOTT, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                  /s/ Robert E. Parsons, Jr.
                                          By:
                                             ----------------------------------
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                               POWER OF ATTORNEY

   We, the undersigned directors and officers of Host Marriott Corporation, do
hereby constitute and appoint Christopher G. Townsend, our true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
to do any and all acts and things in our names and on our behalf in our
capacities as directors and officers and to execute any and all instruments for
us in the capacities indicated below, which said attorney and agent may deem
necessary or advisable to enable said corporation to comply with the Securities
Act of 1933 and any rules, regulations and agreements of the Securities and
Exchange Commission, in connection with this registration statement, or any
registration statement for this offering that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act of 1933, including
specifically, but without limitation, any and all amendments (including post-
effective amendments) hereto; and we hereby ratify and confirm all that said
attorney and agent shall do or cause to be done by virtue thereof.

   Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement on Form S-4 has been signed below by the following
persons in their capacities on the dates indicated.



              Signature                          Title                   Date
              ---------                          -----                   ----

                                                            
     /s/ Christopher J. Nassetta       President, Chief Executive  December 15, 2000
______________________________________  Officer and Director
       Christopher J. Nassetta          (Principal Executive
                                        Officer)

      /s/ Robert E. Parsons, Jr.       Executive Vice President    December 15, 2000
______________________________________  and Chief Financial
        Robert E. Parsons, Jr.          Officer (Principal
                                        Financial Officer)

        /s/ Donald D. Olinger          Senior Vice President and   December 15, 2000
______________________________________  Corporate Controller
          Donald D. Olinger             (Principal Accounting
                                        Officer)

       /s/ Richard E. Marriott         Chairman of the Board of    December 15, 2000
______________________________________  Directors
         Richard E. Marriott



                                      II-8


                                                            
        /s/ R. Theodore Ammon          Director                    December 15, 2000
______________________________________
          R. Theodore Ammon

         /s/ Robert M. Baylis          Director                    December 15, 2000
______________________________________
           Robert M. Baylis

        /s/ Terence C. Golden          Director                    December 15, 2000
______________________________________
          Terence C. Golden

        /s/ J.W. Marriott, Jr.         Director                    December 15, 2000
______________________________________
          J.W. Marriott, Jr.

       /s/ Ann Dore McLaughlin         Director                    December 15, 2000
______________________________________
         Ann Dore McLaughlin

        /s/ John G. Schreiber          Director                    December 15, 2000
______________________________________
          John G. Schreiber

      /s/ Harry L. Vincent, Jr.        Director                    December 15, 2000
______________________________________
        Harry L. Vincent, Jr.



                                      II-9


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMH Rivers, L.P

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-10


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMH Marina LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-11


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC SBM Two LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-12


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC Retirement Properties, L.P.

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-13


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMH Pentagon LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-14


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          Airport Hotels LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-15


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          Chesapeake Financial Services LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-16


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC Capital Resources LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-17


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          PRM LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-18


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          Host Park Ridge LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-19


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          Philadelphia Airport Hotel LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-20


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC Hartford LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-21


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMH Norfolk LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-22


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMH Norfolk, L.P.

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-23


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC Partnership Holdings LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-24


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC Suites LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-25


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC Suites Limited Partnership

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-26


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          Wellsford-Park Ridge Host Hotel
                                           Limited Partnership

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-27


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          City Center Interstate Partnership
                                           LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-28


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          Farrell's Ice Cream Parlor
                                           Restaurants LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-29


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC Burlingame LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-30


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC California Leasing LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-31


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC Capital LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-32


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC Grand LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-33


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC Mexpark LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-34


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC Polanco LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-35


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC NGL LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-36


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC OLS I L.P.

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-37


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC RTZ Loan I LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-38


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC RTZ II LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-39


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC Seattle LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-40


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC Swiss Holdings LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-41


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC Waterford LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-42


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMH Restaurants LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-43


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMH Rivers LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-44


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMH WTC LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-45


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMP Capital Ventures LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-46


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          Host La Jolla LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-47


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          City Center Hotel Limited
                                           Partnership

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-48


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          MFR of Illinois LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-49


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          MFR of Vermont LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-50


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          MFR of Wisconsin LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-51


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          PM Financial LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-52


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          PM Financial LP

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-53


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC Chicago LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-54


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC HPP LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-55


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC Desert LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-56


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC Hanover LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-57


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC Diversified LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-58


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC Properties I LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-59


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC Potomac LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-60


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC East Side II LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-61


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC Manhattan Beach LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-62


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          Chesapeake Hotel Limited Partnership

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-63


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMH General Partner Holdings LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer


                                     II-64


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC IHP Holdings LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer


                                     II-65


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC OP BN LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-66


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          S.D. Hotels LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-67


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC Gateway LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-68


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC Pacific Gateway LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-69


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC Market Street LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-70


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          New Market Street LP

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-71


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          Times Square LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-72


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          Times Square GP LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-73


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC Atlanta LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-74


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          Ivy Street LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-75


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC Properties II LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-76


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          Santa Clara HMC LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-77


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC BCR Holdings LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-78


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC Palm Desert LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-79


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC Georgia LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-80


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC SFO LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-81


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          Market Street Host LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-82


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC Property Leasing LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-83


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC Host Restaurants LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/  Robert E. Parsons, Jr.
                                          By:__________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer


                                     II-84


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          Durbin LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By:_________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer


                                     II-85


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC HT LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By:_________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer


                                     II-86


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC JWDC GP LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-87


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC JWDC LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-88


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC OLS I LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-89


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC OLS II L.P.

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-90


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          HMC Park Ridge LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-91


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          Host of Houston 1979

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-92


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          Host of Houston, Ltd.

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-93


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          Host of Boston, Ltd.

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-94


                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Bethesda, State of Maryland, on this 15th day of December, 2000.

                                          YBG Associates LLC

                                          By: Host Marriott, L.P.

                                          By: Host Marriott Corporation, as
                                              General Partner of Host
                                              Marriott, L.P.

                                                /s/ Robert E. Parsons, Jr.
                                          By: _________________________________
                                             Name: Robert E. Parsons, Jr.
                                             Title: Executive Vice President
                                                  and Chief Financial Officer

                                     II-95


                                                                    SCHEDULE III
                                                                     Page 1 of 3

                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

                    REAL ESTATE AND ACCUMULATED DEPRECIATION

                               December 31, 1999
                                 (in millions)



                                                            Gross Amount at
                            Initial Costs                  December 31, 1999
                          -----------------             ------------------------
                                            Subsequent                                           Date of
                               Buildings &     Costs         Buildings &         Accumulated  Completion of   Date   Depreciation
   Description      Debt  Land Improvements Capitalized Land Improvements Total  Depreciation Construction  Acquired     Life
- -----------------  ------ ---- ------------ ----------- ---- ------------ ------ ------------ ------------- -------- ------------
                                                                                    
Full-service
hotels:
 New York
 Marriott Marquis
 Hotel, New York,
 NY..............  $  269 $--     $  552       $ 45     $--     $  597    $  597    $(162)          1986        n/a         40
 Other full-
 service
 properties, each
 less than 5% of
 total...........  $2,040 $749    $5,510       $505     $687    $6,077    $6,764    $(677)       various    various         40
                   ------ ----    ------       ----     ----    ------    ------    -----
 Total full-
 service.........   2,309  749     6,062        550      687     6,674     7,361     (839)
 Other
 properties, each
 less than 5% of
 total...........     --    40        27        (54)     --         13        13      (14)       various        n/a    various
                   ------ ----    ------       ----     ----    ------    ------    -----
 Total...........  $2,309 $789    $6,089       $496     $687    $6,687    $7,374    $(853)
                   ====== ====    ======       ====     ====    ======    ======    =====        -------    -------    -------


                                      S-1


                                                                    SCHEDULE III
                                                                     Page 2 of 3

                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

                    REAL ESTATE AND ACCUMULATED DEPRECIATION

                               December 31, 1999
                                 (in millions)

Notes:

(A) The change in total cost of properties for the fiscal years ended December
    31, 1999 and 1998, and January 2, 1998 is as follows:

                                                                   
   Balance at January 3, 1997........................................... $3,856
   Additions:
     Acquisitions.......................................................  1,459
     Capital expenditures...............................................    117
     Transfers from construction-in-progress............................     30
   Deductions:
     Dispositions and other.............................................   (145)
                                                                         ------
   Balance at January 2, 1998...........................................  5,317
   Additions:
     Acquisitions.......................................................  2,849
     Capital Expenditures...............................................     46
     Transfers from construction-in-progress............................     14
   Deductions:
     Dispositions and other.............................................    (91)
     Transfers to Non-Controlled Subsidiary.............................   (139)
     Transfers to Spin-Off (Crestline Capital Corporation)..............   (643)
                                                                         ------
   Balance at December 31, 1998.........................................  7,353
   Additions:
     Acquisitions.......................................................    100
     Capital expenditures...............................................     69
     Transfers from construction-in-progress............................      7
     Other..............................................................     40
   Deductions:
     Dispositions and other.............................................   (195)
                                                                         ------
   Balance at December 31, 1999......................................... $7,374
                                                                         ======

   

                                      S-2


                                                                    SCHEDULE III
                                                                     Page 3 of 3

                      HOST MARRIOTT, L.P. AND SUBSIDIARIES

                    REAL ESTATE AND ACCUMULATED DEPRECIATION

                               December 31, 1999
                                 (in millions)

(B) The change in accumulated depreciation and amortization of real estate
    assets for the fiscal years ended December 31, 1998, January 2, 1998 and
    January 3, 1997 is as follows:

                                                                     
   Balance at January 3, 1997............................................. $411
   Depreciation and amortization..........................................  126
   Dispositions and other.................................................  (31)
                                                                           ----
   Balance at January 2, 1998.............................................  506
   Depreciation and amortization..........................................  132
   Dispositions and other.................................................  (13)
   Transfers to Non-Controlled Subsidiary.................................  (29)
   Transfers to Spin-Off (Crestline Capital Corporation)..................  (21)
                                                                           ----
   Balance at December 31, 1998...........................................  575
   Depreciation and amortization..........................................  243
   Dispositions...........................................................   (4)
   Other..................................................................   39
                                                                           ----
   Balance at December 31, 1999........................................... $853
                                                                           ====

   

(C) The aggregate cost of properties for Federal income tax purposes is
    approximately $5,221 million at December 31, 1999.

(D) The total cost of properties excludes construction-in-progress properties.

                                      S-3


                                 EXHIBIT INDEX



 Exhibit No. Description
 ----------- -----------
          
  2.1        Agreement and Plan by and among Host Marriott Corporation, HMC
             Merger Corporation and Host Marriott L.P. (incorporated by
             reference to Host Marriott Corporation Registration Statement No.
             333-64793).

  3.3        Bylaws of Host Marriott Corporation dated September 28, 1998
             (incorporated by reference to Host Marriott Corporation
             Registration Statement No. 333-64793).

  3.4        Articles of Amendment and Restatement of Articles of Incorporation
             of Host Marriott Corporation (incorporated by reference to Host
             Marriott Corporation Registration Statement No. 333-64793).

  4.1        Indenture by and among HMH Properties, Inc., as Issuer, and the
             Subsidiary Guarantors named therein, and Marine Midland Bank, as
             Trustee (incorporated by reference to Host Marriott Corporation
             Current Report on Form 8-K dated August 6, 1998).

  4.2        Sixth Supplemental Indenture, dated October 6, 2000, between Host
             Marriott, L.P., the Subsidiary Guarantors named therein and Marine
             Midland Bank, as Trustee.

  5.1        Opinion of Christopher G. Townsend as to the legality of the
             securities being registered.

  8.1        Opinion of Latham & Watkins regarding certain tax matters.

 10.1        Second Amended and Restated Agreement of Limited Partnership of
             Host Marriott, L.P., (incorporated by reference to Exhibit 3.1 of
             Host Marriott Corporation Registration Statement No. 333-55807).

 10.2        Indenture between Host Marriott L.P., as Issuer, and Marine
             Midland Bank, as Indenture Trustee, and Form of 6.56% Callable
             Note due December 15, 2005 (incorporated by reference to Exhibit
             4.1 of Host Marriott Corporation Registration Statement No. 333-
             55807).

 10.3        Amended and Restated Credit Agreement dated as of June 19, 1997
             and Amended and Restated as of August 5, 1998 among Host Marriott
             Corporation, Host Marriott Hospitality, Inc., HMH Properties,
             Inc., Host Marriott, L.P., HMC Capital Resources Corp., Various
             Banks, Wells Fargo Bank, National Association, The Bank of Nova
             Scotia and Credit Lyonnais New York Branch, as Co-Arrangers, and
             Bankers Trust Company as Arranger and Administrative Agent
             (incorporated by reference to Host Marriott Corporation Current
             Report on Form 8-K dated September 11, 1998).

 10.4        First Amendment and Waiver of Amended and Restated Credit
             Agreement dated as of June 19, 1997 and Amended and Restated as of
             August 5, 1998, among Host Marriott Corporation, Host Marriott
             Hospitality Inc., HMH Properties, Inc., Host Marriott, L.P., HMC
             Capital Resources Corp., Various Banks, Wells Fargo Bank, National
             Association, The Bank of Nova Scotia and Credit Lyonnais New York
             Branch, as Co-Arrangers and Bankers Trust Company as Arranger and
             Administrative Agent dated as of November 25, 1998 (incorporated
             by reference to Exhibit 10.4 of Host Marriott Corporation's Form
             10-K for the year ended December 31, 1998).

 10.5        Second Amendment and Consent to Credit Agreement of Amended and
             Restated Credit Agreement dated as of June 19, 1997 and Amended
             and Restated as of August 5, 1998, among Host Marriott
             Corporation, Host Marriott Hospitality Inc., HMH Properties, Inc.,
             Host Marriott, L.P., HMC Capital Resources Corp., Various Banks,
             Wells Fargo Bank, National Association, The Bank of Nova Scotia
             and Credit Lyonnais New York Branch, as Co-Arrangers and Bankers
             Trust Company as Arranger and Administrative Agent dated as of
             December 17, 1998 (incorporated by reference to Exhibit 10.5 of
             Host Marriott Corporation's Form 10-K for the year ended December
             31, 1998).



   
 10.6  Third Amendment and Waiver to Credit Agreement of Amended and Restated
       Credit Agreement dated as of June 19, 1997 and Amended and Restated as
       of August 5, 1998, among Host Marriott Corporation, Host Marriott
       Hospitality Inc., HMH Properties, Inc., Host Marriott, L.P., HMC Capital
       Resources Corp., Various Banks, Wells Fargo Bank, National Association,
       The Bank of Nova Scotia and Credit Lyonnais New York Branch, as Co-
       Arrangers and Bankers Trust Company as Arranger and Administrative Agent
       dated as of March 15, 1999 (incorporated by reference to Exhibit 10.6 of
       Host Marriott Corporation's Form 10-K for the year ended December 31,
       1998).

 10.7  Host Marriott L.P. Executive Deferred Compensation Plan effective as of
       December 29, 1998 (formerly the Marriott Corporation Executive Deferred
       Compensation Plan) (incorporated by reference to Exhibit 10.7 of Host
       Marriott Corporation's Form 10-K for the year ended December 31, 1998).

 10.8  Host Marriott Corporation 1997 Comprehensive Incentive Stock Plan
       (incorporated by reference to Host Marriott Corporation's Proxy
       Statement filed April 3, 1997).

 10.9  Distribution Agreement dated as of September 15, 1993 between Marriott
       Corporation and Marriott International, Inc. (incorporated by reference
       from Host Marriott Corporation Current Report on Form 8-K dated October
       23, 1993).

 10.10 Amendment No. 1 to the Distribution Agreement dated December 29, 1995 by
       and among Host Marriott Corporation, Host Marriott Services Corporation
       and Marriott International, Inc., (incorporated by reference to Host
       Marriott Corporation Current Report on Form 8-K dated January 16, 1996).

 10.11 Amendment No. 2 to the Distribution Agreement dated June 21, 1997 by and
       among Host Marriott Corporation, Host Marriott Services Corporation and
       Marriott International, Inc. (incorporated by reference to Host Marriott
       Corporation Registration Statement No. 333-64793).

 10.12 First Amendment and Waiver of Amended and Restated Credit Agreement
       dated as of June 19, 1997 and Amended and Restated as of August 5, 1998,
       among Host Marriott Corporation, Host Marriott Hospitality Inc., HMH
       Properties, Inc., Host Marriott, L.P., HMC Capital Resources Corp.,
       Various Banks, Wells Fargo Bank, National Association, The Bank of Nova
       Scotia and Credit Lyonnais New York Branch, as Co-Arrangers and Bankers
       Trust Company as Arranger and Administrative Agent dated as of November
       25, 1998 (incorporated by reference to Exhibit 10.4 of Host Marriott
       Corporation's Form 10-K for the year ended December 31, 1998).

 10.13 Amendment No. 4 to the Distribution Agreement by and among Host Marriott
       Corporation and Marriott International Inc. (incorporated by reference
       to Host Marriott Corporation Registration Statement No. 333-64793).

 10.14 Amendment No. 5 to the Distribution Agreement dated December 18, 1998 by
       and among Host Marriott Corporation, Host Marriott Services Corporation
       and Marriott International Inc., (incorporated by reference to Exhibit
       10.14 of Host Marriott Corporation's Form 10-K for the year ended
       December 31, 1998).

 10.15 Distribution Agreement dated December 22, 1995 by and between Host
       Marriott Corporation and Host Marriott Services Corporation
       (incorporated by reference to Host Marriott Corporation Current Report
       on Form 8-K dated January 16, 1996).

 10.16 Amendment to Distribution Agreement dated December 22, 1995 by and
       between Host Marriott Corporation and Host Marriott Services Corporation
       (incorporated by reference to Exhibit 10.16 of Host Marriott
       Corporation's Form 10-K for the year ended December 31, 1998).

 10.17 Tax Sharing Agreement dated as of October 5, 1993 by and between
       Marriott Corporation and Marriott International, Inc. (incorporated by
       reference to Host Marriott Corporation Current Report on Form 8-K dated
       October 23, 1993).

 


   
 10.18 License Agreement dated as December 29, 1998 by and among Host Marriott
       Corporation, Host Marriott, L.P., Marriott International, Inc., and
       Marriott Worldwide Corporation (incorporated by reference to Exhibit
       10.18 of Host Marriott Corporation's Form 10-K for the year ended
       December 31, 1998).

 10.19 Noncompetition Agreement between Host Marriott Corporation, Host
       Marriott, L.P., and Crestline Capital Corporation and other parties
       named therein (incorporated by reference to Exhibit 10.19 of Host
       Marriott Corporation's Form 10-K for the year ended December 31, 1998).

 10.20 Tax Administration Agreement dated as of October 8, 1993 by and between
       Marriott Corporation and Marriott International, Inc., (incorporated by
       reference to Host Marriott Corporation Current Report on Form 8-K dated
       October 23, 1993).

 10.21 Restated Noncompetition Agreement dated March, 1998 by and among Host
       Marriott Corporation, Marriott International, Inc., and Sodexho Marriott
       Services, Inc., (incorporated by reference to Host Marriott Corporation
       Registration Statement No. 333-64793).

 10.22 First Amendment to Restated Noncompetition Agreement by and among Host
       Marriott Corporation, Marriott International, Inc., Sodexho Marriott
       Services, Inc. (incorporated by reference to Host Marriott Corporation
       Registration Statement No. 333-64793).

 10.23 Host Marriott Lodging Management Agreement--Marriott Hotels, Resorts and
       Hotels dated September 25, 1993 by and between Marriott Corporation and
       Marriott International, Inc. (incorporated by reference to Host Marriott
       Corporation registration Statement No. 33-51707).

 10.24 Employee Benefits and Other Employment Matters Allocation Agreement
       dated as of December 29, 1995 by and between Host Marriott Corporation
       and Host Marriott Services Corporation (incorporated by reference to
       Host Marriott Corporation Current Report on Form 8-K dated January 16,
       1996).

 10.25 Tax Sharing Agreement dated as of December 29, 1995 by and between Host
       Marriott Corporation and Host Marriott Services Corporation
       (incorporated by reference to Host Marriott Corporation Current Report
       on Form 8-K dated January 16, 1996).

 10.26 Host Marriott, L.P. Retirement and Savings Plan and Trust (incorporated
       by reference to Exhibit 10.26 of Host Marriott Corporation's Form 10-K
       for the year ended December 31, 1998).

 10.27 Contribution Agreement dated as of April 16, 1998 among Host Marriott
       Corporation, Host Marriott, L.P. and the contributors named therein,
       together with Exhibit B (incorporated by reference to Exhibit 10.18 of
       Host Marriott Corporation Registration Statement No. 333-55807).

 10.28 Amendment No. 1 to Contribution Agreement dated May 8, 1998 among
       Marriott Corporation, Host Marriott, L.P. and the contributors named
       therein (incorporated by reference to Exhibit 10.19 of Host Marriott
       Corporation Registration Statement No. 333-55807).

 10.29 Amendment No. 2 to Contribution Agreement dated May 18, 1998 among Host
       Marriott Corporation, Host Marriott, L.P. and the contributors named
       therein (incorporated by reference to Exhibit 10.20 of Host Marriott
       Corporation Registration Statement No. 333-55807).

 10.30 Form of Lease Agreement (incorporated by reference to Host Marriott
       Corporation Registration Statement No. 333-64793).

 10.31 Form of Management Agreement of Full-Service Hotels (incorporated by
       reference to Host Marriott Corporation Registration Statement No. 33-
       51707).

 10.32 Form of Owner's Agreement between Host Marriott Corporation, Marriott
       International and Crestline Capital Corporation (incorporated by
       reference to Crestline Capital Corporation Registration Statement No.
       333-64657).

 


   
 10.33 Employee Benefits and Other Employment Matters Allocation Agreement
       between Host Marriott Corporation, Host Marriott, L.P. and Crestline
       Capital Corporation (incorporated by reference to Host Marriott
       Corporation Registration Statement No. 333-64793).

 10.34 Amendment to the Employee Benefits and Other Employment Matters
       Allocation Agreement effective as of December 29, 1998 by and between
       Host Marriott Corporation, Marriott International, Sodexho Marriott
       Services, Inc., Crestline Capital Corporation and Host Marriott, L.P.
       (incorporated by reference to Exhibit 10.34 of Host Marriott
       Corporation's Form 10-K for the year ended December 31, 1998).

 10.35 Pool Guarantee Agreement between Host Marriott Corporation, the lessees
       referred to therein and Crestline Capital Corporation (incorporated by
       reference to Host Marriott Registration Statement No. 333-64793).

 10.36 Pooling and Security Agreement by and among Host Marriott Corporation
       and Crestline Capital Corporation (incorporated by reference to Host
       Marriott Corporation Registration Statement No.
       333-64793).

 10.37 Amended and Restated Communities Noncompetition Agreement (incorporated
       by reference to Host Marriott Corporation Registration Statement No.
       333-64793).

 10.38 Asset Management Agreement between Host Marriott, L.P., and Crestline
       Capital Corporation (incorporated by reference to Crestline Capital
       Corporation Registration Statement No. 333-64657).

 10.39 Registration Rights Agreement, dated as of October 6, 2000, by and among
       Host Marriott, L.P., the Guarantors named therein and the Purchasers
       named therein.

 10.40 Amended and Restated Credit Agreement dated as of June 19, 1997 and
       Amended and Restated as of August 5, 1998 and further Amended and
       Restated as of May 31, 2000 among Host Marriott Corporation, Host
       Marriott, L.P., Various Banks, and Bankers Trust Company, as
       Administrative Agent.

 10.41 First Amendment to the Amended and Restated Credit Agreement dated as of
       June 19, 1997 and Amended and Restated as of August 5, 1998 and further
       Amended and Restated as of May 31, 2000 among Host Marriott Corporation,
       Host Marriott, L.P., Various Banks, and Bankers Trust Company, as
       Administrative Agent, dated as of October 6, 2000.

 10.42 Acquisition and Exchange Agreement dated November 13, 2000 by Host
       Marriott, L.P. and Crestline Capital Corporation (incorporated by
       reference to Exhibit 99.2 of Host Marriott, L.P.'s Form 8-K/A filed
       December 14, 2000).

 12.1  Computation of Ratios of Earnings to Fixed Charges.

 21.1  List of Subsidiaries of Host Marriott, L.P. (incorporated by reference
       to Exhibit 21 of Host Marriott, L.P.'s Form 10-K for the year ended
       December 31, 1998).

 23.1  Consent of Christopher G. Townsend (included as part of Exhibit 5).

 23.2  Consent of Latham & Watkins (included as part of Exhibit 8).

 23.3  Consent of Arthur Andersen LLP.

 24.1  Power of Attorney (included on signature page).

 25.1  Statement of Eligibility and Qualification on Form T-1 of HSBC Bank USA,
       as trustee for the 9 1/4% Series G Senior Notes due 2007 of the
       Registrant.

 99.1  Form of Letter of Transmittal and related documents to be used in
       conjunction with the exchange offer.

 99.2  Form of Notice of Guaranteed Delivery to be used in conjunction with the
       exchange offer.

 
- --------
   (B) Financial Statement Schedules

                                                                          
Schedule III--Real Estate and Accumulated Depreciation...................... S-1

EX-4.2

                                                                     EXHIBIT 4.2

                        SIXTH SUPPLEMENTAL INDENTURE TO
                        AMENDED AND RESTATED INDENTURE


     SIXTH SUPPLEMENTAL INDENTURE, dated as of October 6, 2000, among HOST
MARRIOTT, L.P., a Delaware limited partnership (the "Company"), the Subsidiary
Guarantors signatory to this Sixth Supplemental Indenture and HSBC BANK USA
(formerly MARINE MIDLAND BANK), as Trustee (the "Trustee") to the Amended and
Restated Indenture, dated as of August 5, 1998, as amended and supplemented
through the date of this Sixth Supplemental Indenture (the "Indenture").

                                   RECITALS

     WHEREAS, the Company, its Parents, certain of the Subsidiary Guarantors and
the Trustee executed and delivered the Amended and Restated Indenture, dated as
of August 5, 1998, amending and restating the form of Indenture previously filed
as Exhibit 4.1 to the Registration Statement (No. 333-50729) filed with the
Securities and Exchange Commission ("Commission") on Form S-3 by the Company,
its Parents and certain of the Subsidiary Guarantors;

     WHEREAS, the Company and the Subsidiary Guarantors desire to create two
series of Securities to be issued under the Indenture, as hereby supplemented,
to be known as (i) the 9 1/4% Series F Senior Notes due 2007 and Subsidiary
Guarantees thereof of the Subsidiary Guarantors (hereinafter, the "Series F
Notes") and (ii) the 9 1/4% Series G Senior Notes due 2007 and the Subsidiary
Guarantees thereof of the Subsidiary Guarantors to be exchanged for the Series F
Notes (hereinafter, the "Series G Notes");

     WHEREAS, Section 9.1(e) of the Indenture provides that the Company, the
Subsidiary Guarantors and the Trustee may amend or supplement the Indenture
without the written consent of the Holders of the outstanding Securities to
provide for the issuance of and establish the form and terms and conditions of
Securities of any Series as permitted by the Indenture;

     WHEREAS, Section 9.1(g) of the Indenture provides that the Company, the
Subsidiary Guarantors and the Trustee may amend or supplement the Indenture
without the written consent of the Holders of outstanding Securities to provide
for the addition of guarantors to Securities of any Series as permitted by the
Indenture;

     WHEREAS, all acts and things prescribed by the Indenture, by law and by the
Certificate of Incorporation and the Bylaws of the Company, the Subsidiary
Guarantors and the Trustee necessary to make this Sixth Supplemental Indenture a
valid instrument legally binding on the Company, the Subsidiary Guarantors and
the Trustee, in accordance with its terms, have been duly done and performed;
and


     WHEREAS, all conditions precedent to amend or supplement the Indenture have
been met;

     NOW, THEREFORE, to comply with the provisions of the Indenture, and in
consideration of the above premises, the Company, the Subsidiary Guarantors and
the Trustee covenant and agree as follows:

                                   ARTICLE 1

     Section 1.1   Nature of Supplemental Indenture.  This Sixth Supplemental
                   --------------------------------
Indenture supplements the Indenture and does and shall be deemed to form a part
of, and shall be construed in connection with and as part of, the Indenture for
any and all purposes.

     Section 1.2  Establishment of New Series.  Pursuant to Section 2.2 of the
                  ---------------------------
Indenture, there is hereby established the Series F Notes and the Series G Notes
(collectively, the "9 1/4% Notes") having the terms, in addition to those set
forth in the Indenture and this Sixth Supplemental Indenture, set forth in  the
form of 9 1/4% Note, attached to this Sixth Supplemental Indenture as Exhibit A,
                                                                      ---------
which is incorporated herein as a part of this Sixth Supplemental Indenture.

     Section 1.3  Redemption.  The Company may redeem the 9 1/4% Notes in whole
                  ----------
but not in part at any time at a Redemption Price equal to 100% of the principal
amount thereof plus the Make-Whole Premium, together with accrued and unpaid
interest thereon, if any, to the applicable Redemption Date.

     Notice of a redemption of the 9 1/4% Notes made pursuant to this Section
1.03 shall be given in the manner set forth in Section 3.3 of the Indenture;
provided, however, that any such notice need not set forth the Redemption Price
- --------  -------
but need only set forth the calculation thereof as described in the immediately
preceding paragraph of this Section 1.03.  The Redemption Price, calculated as
aforesaid, shall be set forth in an Officer's Certificate delivered by the
Company to the Trustee no later than one Business Day prior to the Redemption
Date.

     The 9 1/4% Notes will not have the benefit of any sinking fund.

                                   ARTICLE 2

     Section 1.4  The term "Subsidiary Guarantors" means, with respect to the 9
1/4% Notes, (A) the Subsidiary Guarantors listed in Section 2.03 below and (B)
any Future Subsidiary Guarantors that become Subsidiary Guarantors pursuant to
the terms

                                       2


of the Indenture, but excluding any Persons whose Guarantees have been released
pursuant to the terms of the Indenture. The provisions of Article 12 of the
Indenture will be applicable to the 9 1/4% Notes.

     Section 1.5  The second sentence of the definition of "Subsidiary
Guarantee" set forth in Section 1.1 of the Indenture shall read, for purposes of
the 9 1/4% Notes, as follows: "Each Subsidiary Guarantee with respect to the 9
1/4% Notes will be a senior obligation of the Subsidiary Guarantor and will be
full and unconditional regardless of the enforceability of the 9 1/4% Notes, the
Sixth Supplemental Indenture or the Indenture."

     Section 1.6  The following entities shall constitute the "Subsidiary
Guarantors" with respect to the 9 1/4% Notes, the Series A Notes, the Series B
Notes, the Series C Notes and the Series E Notes until such time as their
guarantees are released in accordance with the terms of the Indenture:

     (1)  Airport Hotels LLC;
     (2)  Host of Boston, Ltd.;
     (3)  Host of Houston, Ltd;
     (4)  Host of Houston 1979;
     (5)  Chesapeake Financial Services LLC;
     (6)  City Center Interstate Partnership LLC;
     (7)  HMC Retirement Properties, L.P.;
     (8)  HMH Marina LLC;
     (9)  Farrell's Ice Cream Parlour Restaurants LLC;
     (10) HMC Atlanta LLC;
     (11) HMC BCR Holdings LLC;
     (12) HMC Burlingame LLC;
     (13) HMC California Leasing LLC;
     (14) HMC Capital LLC;
     (15) HMC Capital Resources LLC;
     (16) HMC Park Ridge LLC;
     (17) HMC Park Ridge II LLC;
     (18) HMC Park Ridge LP;
     (19) HMC Partnership Holdings LLC;
     (20) Host Park Ridge LLC;
     (21) HMC Suites LLC;
     (22) HMC Suites Limited Partnership;
     (23) PRM LLC;
     (24) Wellsford-Park Ridge HMC Hotel Limited Partnership;
     (25) YBG Associates LLC;
     (26) HMC Chicago LLC;

                                       3


     (27) HMC Desert LLC;
     (28) HMC Palm Desert LLC;
     (29) MDSM Finance LLC;
     (30) HMC Diversified LLC;
     (31) HMC East Side II LLC;
     (32) HMC Gateway LLC;
     (33) HMC Grand LLC;
     (34) HMC Hanover LLC;
     (35) HMC Hartford LLC;
     (36) HMC Hotel Development LLC;
     (37) HMC HPP LLC;
     (38) HMC IHP Holding LLC;
     (39) HMC Manhattan Beach LLC;
     (40) HMC Market Street LLC;
     (41) New Market Street LP;
     (42) HMC Georgia LLC;
     (43) HMC Mexpark LLC;
     (44) HMC Polanco LLC;
     (45) HMC NGL LLC;
     (46) HMC OLS I L.P.;
     (47) HMC OP BN LLC;
     (48) HMC Pacific Gateway LLC;
     (49) HMC PLP LLC;
     (50) Chesapeake Hotel Limited Partnership;
     (51) HMC Potomac LLC;
     (52) HMC Properties I LLC;
     (53) HMC Properties II LLC;
     (54) HMC RTZ Loan I LLC;
     (55) HMC RTZ Loan Limited Partnership;
     (56) HMC RTZ II LLC;
     (57) HMC SBM Two LLC;
     (58) HMC Seattle LLC;
     (59) HMC SFO LLC;
     (60) HMC Swiss Holdings LLC;
     (61) HMC Waterford LLC;
     (62) HMH General Partner Holdings LLC;
     (63) HMH Norfolk LLC;
     (64) HMH Norfolk, L.P.;
     (65) HMH Pentagon LLC;
     (66) HMH Restaurants LLC;
     (67) HMH Rivers LLC;
     (68) HMH Rivers, L.P.;

                                       4


     (69)  HMH WTC LLC;
     (70)  HMP Capital Ventures LLC;
     (71)  HMP Financial Services LLC;
     (72)  Host La Jolla LLC;
     (73)  City Center Hotel Limited Partnership;
     (74)  Times Square LLC;
     (75)  Ivy Street LLC;
     (76)  Market Street Host LLC;
     (77)  MFR of Illinois LLC;
     (78)  MFR of Vermont LLC;
     (79)  MFR of Wisconsin LLC;
     (80)  Philadelphia Airport Hotel LLC;
     (81)  PM Financial LLC;
     (82)  PM Financial LP;
     (83)  HMC Property Leasing LLC;
     (84)  HMC Host Restaurants LLC;
     (85)  Santa Clara HMC LLC;
     (86)  S.D. Hotels LLC;
     (87)  Times Square GP LLC;
     (88)  Durbin LLC;
     (89)  Atlanta II Limited Partnership;
     (90)  Ivy Street Hotel Limited Partnership;
     (91)  Ivy Street MPF LLC;
     (92)  HMC Burlingame II LLC;
     (93)  Host DSM Limited Partnership;
     (94)  HMC Diversified American Hotels, L.P.;
     (95)  HMC East Side LLC;
     (96)  HMC Partnership Properties LLC;
     (97)  HMC HT LLC;
     (98)  HMC JWDC GP LLC;
     (99)  HMC JWDC LLC;
     (100) HMC OLS I LLC;
     (101) HMC OLS II L.P.;
     (102) Potomac Hotel Limited Partnership; and
     (103) HMC RTZ Loan II LLC.

     By execution of this Sixth Supplemental Indenture, each of the Subsidiary
Guarantors makes and confirms the guarantees set forth in Section 12.1 of the
Indenture and shall be deemed to have signed the notation of guarantee set forth
on the Securities as provided in Section 12.2 of the Indenture.

                                   ARTICLE 3

                                       5


     Section 1.7  Subject to the further provisions of this Article 3, the
covenants set forth in Article 4 of the Indenture shall be applicable to the 9
1/4% Notes.  By virtue of the occurrence of the REIT Conversion, Section 4.15 of
the Indenture is applicable, and Section 4.9 of the Indenture is inapplicable,
to the 9 1/4% Notes.

     Section 1.8  The provisions of Sections 4.8, 4.10, 4.11, 4.12 and 4.15 of
the Indenture shall be applicable to the 9 1/4% Notes only for so long as and
during any time that such 9 1/4% Notes are not rated Investment Grade.

                                   ARTICLE 4

     Section 1.9  The following definitions are hereby added to the Indenture
solely with respect to the 9 1/4% Notes:

          "Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depository, Euroclear and Clearstream that apply to such
transfer or exchange at the relevant time.

          "Certificated Note" means a certificated 9 1/4% Note registered in the
name of the Holder thereof and issued in accordance with Section 5.01 of this
Sixth Supplemental Indenture, in the form of Exhibit A to this Sixth
Supplemental Indenture except that such 9 1/4% Note shall not include the
information called for by footnotes 2, 5 and 8 thereof.

          "Clearstream" means Clearstream, Luxembourg societe anonyme, or its
successors.

          "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, or its successor, as operator of the Euroclear system.

          "Exchange Notes" means the Series G Notes, which will be issued in
exchange for Series F Notes pursuant to an Exchange Offer.

          "Exchange Offer" means the offer that is to be made by the Company and
the Subsidiary Guarantors in accordance with the terms of the Registration
Rights Agreement.

          "Global Note" means a 9 1/4% Note that includes the information
referred to in footnotes 2, 5 and 8 to the form of 9 1/4% Note, attached to this
Sixth Supplemental Indenture as Exhibit A, issued under the Indenture, that is
deposited

                                       6


with or on behalf of and registered in the name of the Depository or a nominee
of the Depository.

          "Global Note Legend" means the legend set forth in Section 5.01(g)(ii)
of this Sixth Supplemental Indenture, which is required to be placed on all
Global Notes issued under the Indenture.

          "Indirect Participant" means an entity that, with respect to DTC,
clears through or maintains a direct or indirect custodial relationship with a
Participant.

          "Initial Purchasers" means Deutsche Bank Securities Inc., Banc of
America Securities LLC, Bear, Stearns & Co. Inc., Donaldson, Lufkin & Jenrette
Securities Corporation, Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Morgan Stanley & Co. Incorporated, Credit Lyonnais
Securities (USA) Inc., Scotia Capital (USA) Inc. and SG Cowen Securities
Corporation.

          "Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who is not also a QIB.

          "Letter of Transmittal" means the letter of transmittal to be prepared
by the Company and sent to all Holders of the Series F Notes for use by such
Holders in connection with the Exchange Offer.

          "Make-Whole Premium" means, with respect to any 9 1/4% Note at any
Redemption Date, the excess, if any, of (a) the present value of the sum of the
principal amount and premium, if any, that would be payable on such 9 1/4% Note
on its maturity date and all remaining interest payments (not including any
portion of such payments of interest accrued as of the Redemption Date) to and
including such maturity date, discounted on a semi-annual bond equivalent basis
from such maturity date to the Redemption Date at a per annum interest rate
equal to the sum of the Treasury Yield (determined on the Business Day
immediately preceding such Redemption Date), plus 50 basis points, over (b) the
principal amount of the 9 1/4% Note being redeemed.

          "9 1/4% Notes" means, collectively, the Series F Notes and, when and
if issued as provided in the Registration Rights Agreement, the Exchange Notes.

          "Offering Memorandum"  means the Offering Memorandum of the Company
and the Subsidiary Guarantors dated September 29, 2000 with respect to the 9
1/4% Notes.

                                       7


          "Participant" means, with respect to the Depository, Euroclear or
Clearstream, a Person who has an account with the Depository, Euroclear or
Clearstream, respectively (and, with respect to The Depository Trust Company,
shall include Euroclear and Clearstream).

          "Private Placement Legend" means the legend set forth in Section
5.01(g)(i) of this Sixth Supplemental Indenture to be placed on all Series F
Notes issued under the Indenture except where otherwise permitted by the
provisions of the Indenture.

          "QIB" means a "qualified institutional buyer" as defined in Rule 144A.

          "Registration Rights Agreement" means the Registration Rights
Agreement, dated as of October 6, 2000, by and among the Company, the Subsidiary
Guarantors and the Initial Purchasers, as such agreement may be amended,
modified or supplemented from time to time.

          "Regulation S" means Regulation S promulgated under the Securities
Act, as it may be amended from time to time, and any successor provision
thereto.

          "Regulation S Global Note" means a Global Note issued in accordance
with Regulation S.

          "Regulation S Restricted Global Note" means a Regulation S Global Note
until the expiration of the Regulation S Restricted Period; such Regulation S
Global Note constitutes a Restricted Global Note.

          "Regulation S Restricted Period" means the 40-day period beginning on
the later of (i) the day that the Initial Purchasers advise the Company and the
Trustee in writing is the first day on which the 9 1/4% Notes were offered to
persons other than distributors (as defined in Regulation S) in reliance on
Regulation S and (ii) October 6, 2000.

          "Regulation S Unrestricted Global Note" means a Regulation S Global
Note following the expiration of the Regulation S Restricted Period; such
Regulation S Global Note constitutes an Unrestricted Global Note.

          "Restricted Certificated Note" means a Certificated Note that includes
the information called for in footnotes 6 and 7 (and not in footnotes 2, 5 and
8) to the form of 9 1/4% Note, attached to this Sixth Supplemental Indenture as
Exhibit A, issued under the Indenture.

                                       8


          "Restricted Global Note" means a Global Note that includes the
information called for in footnotes 2, 5, 6, 7 and 8 to the form of 9 1/4% Note,
attached to this Sixth Supplemental Indenture as Exhibit A, issued under the
Indenture; provided, that in no case shall an Exchange Note issued in accordance
with the Indenture and the terms of the Registration Rights Agreement be a
Restricted Global Note; provided, further, that any Regulation S Global Note
shall, following the completion of the Regulation S Restricted Period,
automatically become an Unrestricted Global Note for the purposes of this Sixth
Supplemental Indenture, regardless of the information appearing on such Global
Note.

          "Rule 144A" means Rule 144A promulgated under the Securities Act, as
it may be amended from time to time, and any successor provision thereto.

          "Rule 144A Global Note" means a Global Note issued in accordance with
Rule 144A.

          "Rule 144A Restricted Global Note" means a Restricted Global Note
issued in accordance with Rule 144A.

          "Shelf Registration Statement" shall have the meaning set forth in the
Registration Rights Agreement.

          "Transfer Restricted Notes" means Series F Notes that include the
information called for by footnotes 6 and 7 to the form of 9 1/4% Note, attached
to this Sixth Supplemental Indenture as Exhibit A, issued under the Indenture.

          "Treasury Yield" means the yield to maturity at the time of
computation of United States Treasury securities with a constant maturity (as
compiled by and published in the most recent Federal Reserve Statistical Release
H.15 (519) which has become publicly available at least two Business Days prior
to the date fixed for redemption (or, if such Statistical Release is no longer
published, any publicly available source of similar data)) most nearly equal to
the then remaining average life of the 9 1/4% Notes, provided that if the
average life of the notes is not equal to the constant maturity of a United
States Treasury security for which a weekly average yield is given, the Treasury
yield shall be obtained by linear interpolation (calculated to the nearest one-
twelfth of a year) from the weekly average yields of United States Treasury
securities for which such yields are given, except that if the average life of
the notes is less than one year, the weekly average yield on actually traded
United States Treasury securities adjusted to a constant maturity of one year
shall be used.

          "Unrestricted Certificated Notes" means one or more Certificated Notes
that do not include and are not required to include the information called for
by

                                       9


footnotes 6 and 7 to the form 9 1/4% Note, attached to this Sixth Supplemental
Indenture as Exhibit A, issued under the Indenture.

          "Unrestricted Global Note" means a permanent Global Note in the form
of Exhibit A attached to this Sixth Supplemental Indenture that includes the
information referred to in footnotes 2, 5 and 8 thereof, and that is deposited
with or on behalf of and registered in the name of the Depository.

                                   ARTICLE 5

     Section 1.10  For purposes of the 9 1/4% Notes, Section 2.7 of the
Indenture is hereby supplemented with, and where inconsistent replaced by, the
following provisions:

          (1)  Transfer and Exchange of Global Notes.  A Global Note may not be
transferred as a whole except by the Depository to a nominee of the Depository,
by a nominee of the Depository to the Depository or to another nominee of the
Depository, or by the Depository or any such nominee to a successor Depository
or a nominee of such successor Depository.  All Global Notes will be exchanged
by the Company for Certificated Notes if (i) the Company delivers to the Trustee
notice from the Depository (A) that it is unwilling or unable to continue to act
as Depository and a successor Depository is not appointed by the Company within
90 days after the date of such notice from the Depository or (B) that it is no
longer a clearing agency registered under the Exchange Act and a successor
Depository is not appointed by the Company within 90 days after the date of such
notice from the Depository, (ii) the Company, at its option, notifies the
Trustee in writing that it elects to cause the issuance of Certificated Notes or
(iii) upon request of the Trustee or Holders of a majority of the aggregate
principal amount of outstanding 9 1/4% Notes if there shall have occurred and be
continuing a Default or Event of Default with respect to the 9 1/4% Notes.  Upon
the occurrence of any of the preceding events in (i), (ii) or (iii) above, upon
surrender by the Depositary of the Global Note, Certificated Notes shall be
issued in such names as the Depository shall instruct the Trustee.  Global Notes
also may be exchanged or replaced, in whole or in part, as provided in Sections
2.8 and 2.11 of the Indenture.  A Global Note may not be exchanged for another 9
1/4% Note other than as provided in this Section 5.01(a); however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 5.01(b), (c) or (f) of this Sixth Supplemental Indenture.

          (2)  Transfer and Exchange of Beneficial Interests in the Global
Notes. The transfer and exchange of beneficial interests in the Global Notes
shall be effected through the Depository, in accordance with the provisions of
the Indenture and the Applicable Procedures. Beneficial interests in the
Restricted Global Notes

                                       10


shall be subject to restrictions on transfer comparable to those set forth
herein. Transfers of beneficial interests in the Global Notes also shall require
compliance with either subparagraph (i) or (ii) below, as applicable, as well as
one or more of the other following subparagraphs, as applicable:

               (1)  Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to Persons
who take delivery thereof in the form of a beneficial interest in the same
Restricted Global Note in accordance with the transfer restrictions set forth in
the Private Placement Legend. Beneficial interests in any Unrestricted Global
Note may be transferred to Persons who take delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note. No written orders or
instructions shall be required to be delivered to the Registrar to effect the
transfers described in this Section 5.01(b)(i).

               (2)  All Other Transfers and Exchanges of Beneficial Interests in
Global Notes. In connection with all transfers and exchanges of beneficial
interests that are not subject to Section 5.01(b)(i) above, the transferor of
such beneficial interest must deliver to the Registrar either (A) (1) an order
from a Participant or an Indirect Participant given to the Depository in
accordance with the Applicable Procedures directing the Depository to credit or
cause to be credited a beneficial interest in another Global Note in an amount
equal to the beneficial interest to be transferred or exchanged and (2)
instructions given in accordance with the Applicable Procedures containing
information regarding the Participant account to be credited with such increase
or (B) (1) an order from a Participant or an Indirect Participant given to the
Depository in accordance with the Applicable Procedures directing the Depository
to cause to be issued a Certificated Note in an amount equal to the beneficial
interest to be transferred or exchanged and (2) instructions given by the
Depository to the Registrar containing information regarding the Person in whose
name such Certificated Note shall be registered to effect the transfer or
exchange referred to in (B)(1) above. Upon consummation of an Exchange Offer by
the Company in accordance with Section 5.01(f) of this Sixth Supplemental
Indenture, the requirements of this Section 5.01(b)(ii) shall be deemed to have
been satisfied upon receipt by the Registrar of the instructions contained in
the Letter of Transmittal delivered by the Holder of such beneficial interests
in the Restricted Global Notes. Upon satisfaction of all of the requirements for
transfer or exchange of beneficial interests in Global Notes contained in the
Indenture and the 9 1/4% Notes, the Trustee shall adjust the principal amount of
the relevant Global Note(s) pursuant to Section 5.01(h) of this Sixth
Supplemental Indenture.

               (3)  Transfer of Beneficial Interests to Another Restricted
Global Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a beneficial
interest in another

                                       11


Restricted Global Note if the transfer complies with the requirements of Section
5.01(b)(ii) above and the Registrar receives a certificate in the form of
Exhibit B to this Sixth Supplemental Indenture, including the certifications in
item (1) or item (1A) thereof, as applicable.

               (4)  Transfer and Exchange of Beneficial Interests in a
Restricted Global Note for Beneficial Interests in an Unrestricted Global Note.
A beneficial interest in any Restricted Global Note may be exchanged by any
holder thereof for a beneficial interest in an Unrestricted Global Note or
transferred to a Person who takes delivery thereof in the form of a beneficial
interest in an Unrestricted Global Note if the exchange or transfer complies
with the requirements of Section 5.01(b)(ii) above and:

                    (1)  such exchange or transfer is effected pursuant to the
     Exchange Offer in accordance with the Registration Rights Agreement and
     Section 5.01(f) of this Sixth Supplemental Indenture, and the holder of the
     beneficial interest to be transferred, in the case of an exchange, or the
     transferee, in the case of a transfer, certifies in the applicable Letter
     of Transmittal that it is not (1) a Broker-Dealer, (2) a Person
     participating in the distribution of the Exchange Notes or (3) a Person who
     is an affiliate (as defined in Rule 144) of the Company or the Subsidiary
     Guarantors;

                    (2)  such transfer is effected pursuant to the Shelf
     Registration Statement in accordance with the Registration Rights
     Agreement;

                    (3)  such transfer is effected by a Broker-Dealer pursuant
     to the Exchange Offer Registration Statement in accordance with the
     Registration Rights Agreement;

                    (4)  such transfer occurs on or after October 6, 2002 and
     the Registrar receives the following: (1) if the holder of such beneficial
     interest in a Restricted Global Note proposes to exchange such beneficial
     interest for a beneficial interest in an Unrestricted Global Note, a
     certificate from such holder in the form of Exhibit C to this Sixth
     Supplemental Indenture, including the certifications in item (1)(a)
     thereof; or (2) if the holder of such beneficial interest in a Restricted
     Global Note proposes to transfer such beneficial interest to a Person who
     shall take delivery thereof in the form of a beneficial interest in an
     Unrestricted Global Note, a certificate from such holder in the form of
     Exhibit B to this Sixth Supplemental Indenture, including the
     certifications in item (3) thereof; and, in each such case set forth in
     this subparagraph (D), an Opinion of Counsel in form reasonably acceptable
     to the Registrar and the Company to the effect that such exchange or
     transfer is in compliance with the

                                       12


     Securities Act and that the restrictions on transfer contained herein and
     in the Private Placement Legend are no longer required in order to maintain
     compliance with the Securities Act; or

                    (5)  if the holder of a beneficial interest in a Restricted
     Global Note proposes to transfer such beneficial interest to a Person who
     shall take delivery thereof in the form of a beneficial interest in a
     Regulation S Unrestricted Global Note, such transfer occurs after the
     completion of the Regulation S Restricted Period and the Registrar receives
     a certificate from such holder in the form of Exhibit B to this Sixth
     Supplemental Indenture, including the certifications in item (3)(a1)
     thereof.

          If any such transfer is effected pursuant to subparagraph (A), (B) or
(D) above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of a Company Order in accordance with
Section 2.3 of the Indenture, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (A), (B) or (D) above.

               (5)  Transfer of Beneficial Interests in a Regulation S
Unrestricted Global Note for Beneficial Interests in a Restricted Global Note.
Until October 6, 2002, a beneficial interest in any Regulation S Unrestricted
Global Note may be transferred to a Person who takes delivery thereof in the
form of a beneficial interest in a Restricted Global Note if the transfer
complies with the requirements of Section 5.01(b)(ii) above and the Registrar
receives a certificate in the form of Exhibit B to this Sixth Supplemental
Indenture, including the certifications in item (1) or item (1)(A) thereof, as
applicable. Except for transfers described in the immediately preceding
sentence, beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to, Persons who take delivery thereof in the form
of a beneficial interest in a Restricted Global Note.

          (3)  Transfer or Exchange of Beneficial Interests for Certificated
Notes.

               (1)  Beneficial Interests in Restricted Global Notes to
Restricted Certificated Notes. If any holder of a beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest for a
Restricted Certificated Note or to transfer such beneficial interest to a Person
who takes delivery thereof in the form of a Restricted Certificated Note, then,
if the exchange or transfer complies with the requirements of Section 5.01(a)
above, upon receipt by the Registrar of the following documentation:

                                       13


                    (1)  if the holder of such beneficial interest in a
     Restricted Global Note proposes to exchange such beneficial interest for a
     Restricted Certificated Note, a certificate from such holder in the form of
     Exhibit C to this Sixth Supplemental Indenture, including the
     certifications in item (2)(a) thereof;

                    (2)  if such beneficial interest is being transferred to a
     QIB in accordance with Rule 144A under the Securities Act, a certificate to
     the effect set forth in Exhibit B to this Sixth Supplemental Indenture,
     including the certifications in item (1) thereof;

                    (3)  if such beneficial interest is being transferred
     pursuant to an exemption from the registration requirements of the
     Securities Act in accordance with Rule 144 under the Securities Act, a
     certificate to the effect set forth in Exhibit B to this Sixth Supplemental
     Indenture, including the certifications in item (2)(a) thereof;

                    (4)  if such beneficial interest is being transferred to an
     Institutional Accredited Investor in reliance on an exemption from the
     registration requirements of the Securities Act other than those listed in
     subparagraphs (B) and (C) above, a certificate to the effect set forth in
     Exhibit B to this Sixth Supplemental Indenture, including the
     certifications, certificates and Opinion of Counsel required by item (2)(d)
     thereof, if applicable;

                    (5)  if such beneficial interest is being transferred to the
     Company or any of its Subsidiaries, a certificate to the effect set forth
     in Exhibit B to this Sixth Supplemental Indenture, including the
     certifications in item (2)(b) thereof;

                    (6)  if such beneficial interest is being transferred
     pursuant to an effective registration statement under the Securities Act, a
     certificate to the effect set forth in Exhibit B to this Sixth Supplemental
     Indenture, including the certifications in item (2)(c) thereof; or

                    (7)  if such beneficial interest is being transferred
     pursuant to Regulation S under the Securities Act, a certificate to the
     effect set forth in Exhibit B to this Sixth Supplemental Indenture,
     including the certifications in item (1A) thereof,

the Trustee shall cause the aggregate principal amount of the applicable
Restricted Global Note to be reduced accordingly pursuant to Section 5.01(h) of
this Sixth Supplemental Indenture, and the Company shall execute and, upon
receipt of a

                                       14


Company Order pursuant to Section 2.3 of the Indenture, the Trustee shall
authenticate and deliver to the Person designated in the instructions a
Restricted Certificated Note in the appropriate principal amount. Any Restricted
Certificated Note issued in exchange for a beneficial interest in a Restricted
Global Note pursuant to this Section 5.01(c) shall be registered in such name or
names and in such authorized denomination or denominations as the holder of such
beneficial interest shall instruct the Registrar through instructions from the
Depository and the Participant or Indirect Participant. The Trustee shall
deliver such Restricted Certificated Notes to the Persons in whose names such
Series F Notes are so registered. Any Restricted Certificated Note issued in
exchange for a beneficial interest in a Restricted Global Note pursuant to this
Section 5.01(c)(i) shall bear the Private Placement Legend and shall be subject
to all restrictions on transfer contained therein.

                    (2)  Beneficial Interests in Restricted Global Notes to
Unrestricted Certificated Notes. A holder of a beneficial interest in a
Restricted Global Note may exchange such beneficial interest for an Unrestricted
Certificated Note or may transfer such beneficial interest to a Person who takes
delivery thereof in the form of an Unrestricted Certificated Note only if the
exchange or transfer complies with the requirements of Section 5.01(a) above
and:

                         (1)  such exchange or transfer is effected pursuant to
     the Exchange Offer in accordance with the Registration Rights Agreement and
     Section 5.01(f) of this Sixth Supplemental Indenture, and the holder of
     such beneficial interest, in the case of an exchange, or the transferee, in
     the case of a transfer, certifies in the applicable Letter of Transmittal
     that it is not (1) a Broker-Dealer, (2) a Person participating in the
     distribution of the Exchange Notes or (3) a Person who is an affiliate (as
     defined in Rule 144) of the Company or the Subsidiary Guarantors;

                         (2)  such transfer is effected pursuant to the Shelf
     Registration Statement in accordance with the Registration Rights
     Agreement;

                         (3)  such transfer is effected by a Broker-Dealer
     pursuant to the Exchange Offer Registration Statement in accordance with
     the Registration Rights Agreement;

                         (4)  such transfer occurs on or after October 6, 2002
     and the Registrar receives the following: (1) if the holder of such
     beneficial interest in a Restricted Global Note proposes to exchange such
     beneficial interest for a Certificated Note that does not bear the Private
     Placement Legend, a certificate from such holder in the form of Exhibit C
     to this Sixth Supplemental

                                       15


     Indenture, including the certifications in item (1)(b) thereof; or (2) if
     the holder of such beneficial interest in a Restricted Global Note proposes
     to transfer such beneficial interest to a Person who shall take delivery
     thereof in the form of a Certificated Note that does not bear the Private
     Placement Legend, a certificate from such holder in the form of Exhibit B
     to this Sixth Supplemental Indenture, including the certifications in item
     (3) thereof; and, in each such case set forth in this subparagraph (D), an
     Opinion of Counsel in form reasonably acceptable to the Registrar and the
     Company to the effect that such exchange or transfer is in compliance with
     the Securities Act and that the restrictions on transfer contained herein
     and in the Private Placement Legend are no longer required in order to
     maintain compliance with the Securities Act; or

                    (5)  if the holder of a beneficial interest in a Restricted
     Global Note proposes to transfer such beneficial interest to a Person who
     shall take delivery thereof in the form of a beneficial interest in an
     Unrestricted Certificated Note pursuant to Regulation S, such transfer
     occurs after the completion of the Regulation S Restricted Period and the
     Registrar receives a certificate from such holder in the form of Exhibit B
     to this Sixth Supplemental Indenture, including the certifications in item
     (3)(a1) thereof.

                    (3)  Beneficial Interests in Unrestricted Global Notes to
Unrestricted Certificated Notes. If any holder of a beneficial interest in an
Unrestricted Global Note proposes to exchange such beneficial interest for an
Unrestricted Certificated Note or to transfer such beneficial interest to a
Person who takes delivery thereof in the form of an Unrestricted Certificated
Note, then, if the exchange or transfer complies with the requirements of
Section 5.01(a) above and upon satisfaction of the conditions set forth in
Section 5.01(b)(ii) of this Sixth Supplemental Indenture, the Trustee shall
cause the aggregate principal amount of the applicable Unrestricted Global Note
to be reduced accordingly pursuant to Section 5.01(h) of this Sixth Supplemental
Indenture, and the Company shall execute and, upon receipt of a Company Order
pursuant to Section 2.3 of the Indenture, the Trustee shall authenticate and
deliver to the Person designated in the instructions an Unrestricted
Certificated Note in the appropriate principal amount. Any Unrestricted
Certificated Note issued in exchange for a beneficial interest pursuant to this
Section 5.01(c)(iii) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest shall instruct the Registrar through instructions from the Depository
and the Participant or Indirect Participant. The Trustee shall deliver such
Unrestricted Certificated Notes to the Persons in whose names such 9 1/4% Notes
are so registered. Any Unrestricted Certificated Note issued in exchange for a
beneficial interest pursuant to this Section 5.01(c)(iii) shall not bear the
Private Placement Legend.

                                       16


               (4)  Transfer and Exchange of Certificated Notes for Beneficial
Interests.


                    (1)  Restricted Certificated Notes or Unrestricted
Certificated Notes to Beneficial Interests in Restricted Global Notes. If any
Holder of a Restricted Certificated Note or Unrestricted Certificated Note
proposes to exchange such Series F Note for a beneficial interest in a
Restricted Global Note other than a Regulation S Restricted Global Note or to
transfer such Restricted Certificated Notes or Unrestricted Certificated Notes
to a Person who takes delivery thereof in the form of a beneficial interest in a
Restricted Global Note, then, upon receipt by the Registrar of the following
documentation:

                         (1)  if the Holder of such Restricted Certificated Note
     or Unrestricted Certificated Note proposes to exchange such Series F Note
     for a beneficial interest in a Restricted Global Note that is not a
     Regulation S Restricted Global Note, a certificate from such Holder in the
     form of Exhibit C to this Sixth Supplemental Indenture, including the
     certifications in item (2)(b) thereof;

                         (2)  if such Restricted Certificated Note or
     Unrestricted Certificated Note is being transferred to a QIB in accordance
     with Rule 144A under the Securities Act, a certificate to the effect set
     forth in Exhibit B to this Sixth Supplemental Indenture, including the
     certifications in item (1) thereof; or

                         (3)  if such Restricted Certificated Note or
     Unrestricted Certificated Note is being transferred to a person outside the
     United States in accordance with Regulation S under the Securities Act, a
     certificate to the effect set forth in Exhibit B to this Sixth Supplemental
     Indenture, including the certifications in item (1A) thereof,

the Trustee shall cancel the Restricted Certificated Note or Unrestricted
Certificated Note, and increase or cause to be increased the aggregate principal
amount of the appropriate Restricted Global Note.

                    (2)  Restricted Certificated Notes to Beneficial Interests
in Unrestricted Global Notes. A Holder of a Restricted Certificated Note may
exchange such 9 1/4% Note for a beneficial interest in an Unrestricted Global
Note or transfer such Restricted Certificated Note to a Person who takes
delivery thereof in the form of a beneficial interest in an Unrestricted Global
Note only if:

                                       17


                    (1)  such exchange or transfer is effected pursuant to the
     Exchange Offer in accordance with the Registration Rights Agreement and
     Section 5.01(f) of this Sixth Supplemental Indenture, and the Holder, in
     the case of an exchange, or the transferee, in the case of a transfer,
     certifies in the applicable Letter of Transmittal that it is not (1) a
     Broker-Dealer, (2) a Person participating in the distribution of the
     Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144)
     of the Company or the Subsidiary Guarantors;

                    (2)  such transfer is effected pursuant to the Shelf
     Registration Statement in accordance with the Registration Rights
     Agreement;

                    (3)  such transfer is effected by a Broker-Dealer pursuant
     to the Exchange Offer Registration Statement in accordance with the
     Registration Rights Agreement;

                    (4)  such transfer occurs on or after October 6, 2002 and
     the Registrar receives the following: (1) if the Holder of such Restricted
     Certificated Notes proposes to exchange such 9 1/4% Notes for a beneficial
     interest in the Unrestricted Global Note, a certificate from such Holder in
     the form of Exhibit C to this Sixth Supplemental Indenture, including the
     certifications in item (1)(c) thereof; or (2) if the Holder of such
     Restricted Certificated Notes proposes to transfer such Series F Notes to a
     Person who shall take delivery thereof in the form of a beneficial interest
     in the Unrestricted Global Note, a certificate from such Holder in the form
     of Exhibit B to this Sixth Supplemental Indenture, including the
     certifications in item (3) thereof; and, in each such case set forth in
     this subparagraph (D), an Opinion of Counsel in form reasonably acceptable
     to the Registrar and the Company to the effect that such exchange or
     transfer is in compliance with the Securities Act and that the restrictions
     on transfer contained herein and in the Private Placement Legend are no
     longer required in order to maintain compliance with the Securities Act; or

                    (5)  if the holder of a beneficial interest in a Restricted
     Certificated Note proposes to transfer such beneficial interest to a Person
     who shall take delivery thereof in the form of a beneficial interest in a
     Regulation S Unrestricted Global Note, such transfer occurs after the
     completion of the Regulation S Restricted Period and the Registrar receives
     a certificate from such holder in the form of Exhibit B to this Sixth
     Supplemental Indenture, including the certifications in item (3)(a1)
     thereof.

                                       18


Upon satisfaction of the conditions of any of the subparagraphs in this Section
5.01(d)(ii), the Trustee shall cancel the Restricted Certificated Notes so
transferred or exchanged and increase or cause to be increased the aggregate
principal amount of the appropriate Unrestricted Global Note.

                    (3)  Unrestricted Certificated Notes to Beneficial Interests
in Unrestricted Global Notes. A Holder of an Unrestricted Certificated Note may
exchange such 9 1/4% Note for a beneficial interest in an Unrestricted Global
Note or transfer such Certificated Notes to a Person who takes delivery thereof
in the form of a beneficial interest in an Unrestricted Global Note at any time.
Upon receipt of a request for such an exchange or registration of transfer, the
Trustee shall cancel the applicable Unrestricted Certificated Note and increase
or cause to be increased the aggregate principal amount of one of the
Unrestricted Global Notes. If any such exchange or registration of transfer from
a Certificated Note to a beneficial interest is effected pursuant to
subparagraphs (ii)(B), (ii)(D) or (iii) of this Section 5.01(d) at a time when
an Unrestricted Global Note has not yet been issued, the Company shall issue
and, upon receipt of a Company Order in accordance with Section 2.3 of the
Indenture, the Trustee shall authenticate one or more Unrestricted Global Notes
in an aggregate principal amount equal to the principal amount of Certificated
Notes so transferred.

               (5)  Transfer and Exchange of Certificated Notes for
Certificated Notes. Upon request by a Holder of Certificated Notes and such
Holder's compliance with the provisions of this Section 5.01(e), the Registrar
shall register the transfer or exchange of Certificated Notes. Prior to such
registration of transfer or exchange, the requesting Holder shall present or
surrender to the Registrar the Certificated Notes duly endorsed or accompanied
by a written instruction of transfer in form satisfactory to the Registrar duly
executed by such Holder or by its attorney, duly authorized in writing. In
addition, the requesting Holder shall provide any additional certifications,
documents and information, as applicable, required pursuant to the following
provisions of this Section 5.01(e).

                    (1)  Restricted Certificated Notes to Restricted
Certificated Notes. Any Restricted Certificated Note may be transferred to and
registered in the name of Persons who take delivery thereof in the form of a
Restricted Certificated Note if the Registrar receives the following:

                         (1)  if the transfer will be made pursuant to Rule 144A
     under the Securities Act, then the transferor must deliver a certificate in
     the form of Exhibit B to this Sixth Supplemental Indenture, including the
     certifications in item (1) thereof;

                                       19


                              (2)  if the transfer will be made pursuant to
     Regulation S under the Securities Act, then the transferor must deliver a
     certificate in the form of Exhibit B to this Sixth Supplemental Indenture,
     including the certifications in item (1A) thereof; and

                              (3)  if the transfer will be made pursuant to any
     other exemption from the registration requirements of the Securities Act,
     then the transferor must deliver a certificate in the form of Exhibit B to
     this Sixth Supplemental Indenture, including the certifications,
     certificates and Opinion of Counsel required by item (2) thereof, if
     applicable.

                         (2)  Restricted Certificated Notes to Unrestricted
Certificated Notes. Any Restricted Certificated Note may be exchanged by the
Holder thereof for an Unrestricted Certificated Note or transferred to a Person
or Persons who take delivery thereof in the form of an Unrestricted Certificated
Note if:

                              (1)  such exchange or transfer is effected
     pursuant to the Exchange Offer in accordance with the Registration Rights
     Agreement and Section 5.01(f) of this Sixth Supplemental Indenture, and the
     Holder, in the case of an exchange, or the transferee, in the case of a
     transfer, certifies in the applicable Letter of Transmittal that it is not
     (1) a Broker-Dealer, (2) a Person participating in the distribution of the
     Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144)
     of the Company;

                              (2)  any such transfer is effected pursuant to the
     Shelf Registration Statement in accordance with the Registration Rights
     Agreement;

                              (3)  any such transfer is effected by a Broker-
     Dealer pursuant to the Exchange Offer Registration Statement in accordance
     with the Registration Rights Agreement;

                              (4)  such transfer occurs on or after October 6,
     2002 and the Registrar receives the following: (1) if the Holder of such
     Restricted Certificated Notes proposes to exchange such 9 1/4% Notes for an
     Unrestricted Certificated Note, a certificate from such Holder in the form
     of Exhibit C to this Sixth Supplemental Indenture, including the
     certifications in item (1)(d) thereof; or (2) if the Holder of such
     Restricted Certificated Notes proposes to transfer such 9 1/4% Notes to a
     Person who shall take delivery thereof in the form of an Unrestricted
     Certificated Note, a certificate from such Holder in the form of Exhibit B
     to this Sixth Supplemental Indenture, including the certifications in item
     (3) thereof; and, in each such case set forth in this subparagraph (D), an
     Opinion of Counsel in form reasonably acceptable to the

                                       20


          Registrar and the Company to the effect that such exchange or transfer
          is in compliance with the Securities Act and that the restrictions on
          transfer contained herein and in the Private Placement Legend are no
          longer required in order to maintain compliance with the Securities
          Act;

                    (5) if the holder of a beneficial interest in a Restricted
          Certificated Note proposes to transfer such beneficial interest to a
          Person who shall take delivery thereof in the form of a beneficial
          interest in an Unrestricted Certificated Note pursuant to Regulation
          S, such transfer occurs after the completion of the Regulation S
          Restricted Period and the Registrar receives a certificate from such
          holder in the form of Exhibit B to this Sixth Supplemental Indenture,
          including the certifications in item (3)(a1) there of.

                    (3)  Unrestricted Certificated Notes to Unrestricted
     Certificated Notes. A Holder of Unrestricted Certificated Notes may
     transfer such 9 1/4% Notes to a Person who takes delivery thereof in the
     form of an Unrestricted Certificated Note. Upon receipt of a request to
     register such a transfer, the Registrar shall register the Unrestricted
     Certificated Notes pursuant to the instructions from the Holder thereof.

               (6)  Exchange Offer. Upon the occurrence of the Exchange Offer in
     accordance with the Registration Rights Agreement, the Company shall issue
     and, upon receipt of a Company Order in accordance with Section 2.3 of the
     Indenture and an Opinion of Counsel for the Company as to certain matters
     discussed in this Section 5.01(f), the Trustee shall authenticate (i) one
     or more Unrestricted Global Notes in an aggregate principal amount equal to
     the sum of (A) the principal amount of the beneficial interests in the
     Restricted Global Notes and Regulation S Global Notes tendered for
     acceptance by Persons who certify in the applicable Letters of Transmittal
     that (x) they are not Broker-Dealers, (y) they are not participating in a
     distribution of the Exchange Notes and (z) they are not affiliates (as
     defined in Rule 144) of the Company, and accepted for exchange in the
     Exchange Offer and (B) the principal amount of Certificated Notes exchanged
     or transferred for beneficial interests in Unrestricted Global Notes in
     connection with the Exchange Offer pursuant to Section 5.01(d)(ii) and (ii)
     Certificated Notes in an aggregate principal amount equal to the principal
     amount of the Restricted Certificated Notes accepted for exchange in the
     Exchange Offer (other than Certificated Notes described in clause (i)(B)
     immediately above). Concurrently with the issuance of such Series G Notes,
     the Trustee shall cause the aggregate principal amount of the applicable
     Restricted Global Notes and Regulation S Global Notes to be reduced
     accordingly, and the Company shall execute and, upon receipt of a Company
     Order pursuant to Section 2.3 of the Indenture, the Trustee shall
     authenticate and deliver to the Persons designated by the Holders of
     Certificated Notes so accepted Certificated Notes in the appropriate
     principal amount.

                                       21


          The Opinion of Counsel for the Company referenced above shall state
that:

          (1)  the Exchange Notes have been duly authorized and, when executed
and authenticated in accordance with the provisions of the Indenture and
delivered in exchange for Series F Notes in accordance with the Indenture and
the Exchange Offer, will be entitled to the benefits of the Indenture and will
be valid and binding obligations of the Company, enforceable in accordance with
their terms except as (x) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights generally,
(y) rights of acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability and (z) other customary
limitations and exceptions for opinions of such type; and

          (2)  when the Exchange Notes are executed and authenticated in
accordance with the provisions of the Indenture and delivered in exchange for
Series F Notes in accordance with the Indenture and the Exchange Offer, the
Guarantees of the Exchange Notes by the Subsidiary Guarantors will be entitled
to the benefits of the Indenture and will be valid and binding obligations of
the Subsidiary Guarantors, enforceable in accordance with their terms except as
(x) the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally, (y) rights of acceleration
and the availability of equitable remedies may be limited by equitable
principles of general applicability and (z) other customary limitations and
exceptions for opinions of such type.

          (7)  Legends.  The following legends shall appear on the face of all
     Global Notes and Certificated Notes issued under the Indenture unless
     specifically stated otherwise in the applicable provisions of the
     Indenture.

               (1)  Private Placement Legend.

                    (1)  Except as permitted by subparagraph (B) below, each
          Global Note and each Certificated Note (and all 9 1/4% Notes issued in
          exchange therefor or substitution thereof) shall bear the legend in
          substantially the following form:

THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT AS SET FORTH BELOW. BY
ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER:

                                       22


     (1)  AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT
(A) TO THE COMPANY OR ANY SUBSIDIARY GUARANTOR WHOLLY OWNED BY THE COMPANY OR
ANY OF THEIR RESPECTIVE WHOLLY OWNED SUBSIDIARIES, (B) TO A PERSON WHO IS A QIB
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (C) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (D) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT) THAT, PRIOR TO SUCH TRANSFER, FURNISHES
THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM
THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL
AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY THAT SUCH TRANSFER IS EXEMPT UNDER THE SECURITIES ACT, (E) OUTSIDE THE
UNITED STATES IN A TRANSACTION COMPLYING WITH THE PROVISIONS OF RULE 904 OF THE
SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY), OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION; AND

     (2)  AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN
INTEREST HEREIN IS TRANSFERRED A NOTICE AS TO THE ABOVE RESTRICTIONS.

                         (2)  Notwithstanding the foregoing, any Global Note or
     Certificated Note issued pursuant to subparagraphs (b)(iv), (c)(ii),
     (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section 5.01
     (and all 93% Notes issued in exchange therefor or substitution thereof)
     shall not bear the Private Placement Legend.

                    (2)  Global Note Legend. To the extent required by the
Depository, each Global Note shall bear a legend in substantially the following
     form:

     "THIS GLOBAL NOTE IS HELD BY THE DEPOSITORY (AS DEFINED IN THE INDENTURE
     GOVERNING THIS NOTE) OR ITS NOMINEE IN

                                       23


        CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT
        TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE
        TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO
        SECTION 5.01 OF THE SIXTH SUPPLEMENTAL INDENTURE, (II) THIS GLOBAL NOTE
        MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 5.01(a) OF
        THE SIXTH SUPPLEMENTAL INDENTURE, (III) THIS GLOBAL NOTE MAY BE
        DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.12 OF
        THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A
        SUCCESSOR DEPOSITORY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY."

          (8)  Cancellation and/or Adjustment of Global Notes. At such time as
     all beneficial interests in a particular Global Note have been exchanged
     for Certificated Notes or a particular Global Note has been redeemed,
     repurchased or cancelled in whole and not in part, each such Global Note
     shall be returned to or retained and cancelled by the Trustee in accordance
     with Section 2.12 of the Indenture. At any time prior to such cancellation,
     if any beneficial interest in a Global Note is exchanged for or transferred
     to a Person who will take delivery thereof in the form of a beneficial
     interest in another Global Note or for Certificated Notes, the principal
     amount of 9 1/4% Notes represented by such Global Note shall be reduced
     accordingly and an endorsement shall be made on such Global Note by the
     Trustee or by the Depository at the direction of the Trustee to reflect
     such reduction; and if the beneficial interest is being exchanged for or
     transferred to a Person who will take delivery thereof in the form of a
     beneficial interest in another Global Note, such other Global Note shall be
     increased accordingly and an endorsement shall be made on such Global Note
     by the Trustee or by the Depository at the direction of the Trustee to
     reflect such increase.

          (9)  General Provisions Relating to Transfers and Exchanges.

               (1)  To permit registrations of transfers and exchanges, the
     Company shall execute and the Trustee shall authenticate Global Notes and
     Certificated Notes upon receipt of a Company Order.

               (2)  No service charge shall be made to a holder of a beneficial
     interest in a Global Note or to a Holder of a Certificated Note for any
     registration of transfer or exchange, but the Company may require payment
     of a sum sufficient to cover any transfer tax or similar governmental

                                       24


charge payable in connection therewith (other than any such transfer taxes or
similar governmental charge payable upon exchange or transfer pursuant to
Sections 2.11, 3.6, 4.12 and 10.1 of the Indenture).

               (3)  The Registrar shall not be required to register the transfer
of or exchange any 9 1/4% Note selected for redemption in whole or in part,
except the unredeemed portion of any 9 1/4% Note being redeemed in part.

               (4)  All Global Notes and Certificated Notes issued upon any
registration of transfer or exchange of Global Notes or Certificated Notes shall
be the valid obligations of the Company, evidencing the same Indebtedness, and
entitled to the same benefits under the Indenture, as the Global Notes or
Certificated Notes surrendered upon such registration of transfer or exchange.

               (5)  Prior to due presentment for the registration of a transfer
of any 9 1/4% Note, the Trustee, any Agent and the Company may deem and treat
the Person in whose name any 9 1/4% Note is registered as the absolute owner of
such 9 1/4% Note for the purpose of receiving payment of principal of and
interest on such 9 1/4% Notes and for all other purposes, and none of the
Trustee, any Agent or the Company shall be affected by notice to the contrary.

               (6)  The Trustee shall authenticate Global Notes and Certificated
Notes in accordance with the provisions of Section 2.3 of the Indenture.

               (7)  All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 5.01 to
effect a registration of transfer or exchange may be submitted by facsimile.

          Notwithstanding anything herein to the contrary, as to any
certifications and certificates delivered to the Registrar pursuant to this
Section 5.01, the Registrar's duties shall be limited to confirming that any
such certifications and certificates delivered to it are substantially in the
form of Exhibits A, B, C and D attached to this Sixth Supplemental Indenture.
The Registrar shall not be responsible for confirming the truth or accuracy of
representations made in any such certifications or certificates.

                                   ARTICLE 6

     Section 1.11  Except as specifically modified herein, the Indenture is in
all respects ratified and confirmed and shall remain in full force and effect in
accordance with its terms.

                                       25


     Section 1.12  Except as otherwise expressly provided herein, no duties,
responsibilities or liabilities are assumed or shall be construed to be assumed
by the Trustee by reason of this Sixth Supplemental Indenture.  This Sixth
Supplemental Indenture is executed and accepted by the Trustee subject to all
the terms and conditions set forth in the Indenture with the same force and
effect as if those terms and conditions were repeated at length herein and made
applicable to the Trustee with respect to this Sixth Supplemental Indenture.

     Section 1.13  The Trustee shall not be responsible in any manner whatsoever
for or in respect of the recitals contained herein, all of which recitals are
made solely by the Company and the Subsidiary Guarantors.

     Section 1.14  THIS SIXTH SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING,
WITHOUT LIMITATION, SECTIONS 5-1401 AND  5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW  AND NEW YORK CIVIL PRACTICE LAWS AND RULES 327(B).  EACH OF THE
COMPANY AND THE SUBSIDIARY GUARANTORS HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THE INDENTURE AND THE SECURITIES, AND IRREVOCABLY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY,
JURISDICTION OF THE AFORESAID COURTS.  EACH OF THE COMPANY AND THE SUBSIDIARY
GUARANTORS IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO
UNDER APPLICABLE LAW, ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.  NOTHING HEREIN SHALL AFFECT
THE RIGHT OF THE TRUSTEE OR ANY SECURITYHOLDER TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST THE COMPANY AND THE SUBSIDIARY GUARANTORS IN ANY OTHER JURISDICTION.

     Section 1.15  The parties may sign any number of copies of this Sixth
Supplemental Indenture.  Each signed copy shall be an original, but all of such
executed copies together shall represent the same agreement.

                                       26


     Section 1.16  All capitalized terms used in this Sixth Supplemental
Indenture which are not otherwise defined herein, shall have the respective
meanings specified in the Indenture, unless the context otherwise requires.

     Section 1.17  The 9 1/4% Notes may be issued in whole or in part in the
form of one or more Global Securities, registered in the name of Cede & Co., as
nominee of The Depository Trust Company ("DTC").

                                       27


     IN WITNESS WHEREOF, the parties to this Sixth Supplemental Indenture have
caused this Sixth Supplemental Indenture to be duly executed, all as of the date
first written above.


              COMPANY
              -------

              HOST MARRIOTT, L.P.


              By:  _____________________________________

                   Name:  Christopher G. Townsend
                   Title:  Senior Vice President and General Counsel


              SUBSIDIARY GUARANTORS
              ---------------------


              AIRPORT HOTELS LLC,
              HOST OF BOSTON, LTD.,
              HOST OF HOUSTON, LTD,
              HOST OF HOUSTON 1979,
              CHESAPEAKE FINANCIAL SERVICES LLC,
              CITY CENTER INTERSTATE PARTNERSHIP LLC,
              HMC RETIREMENT PROPERTIES, L.P.,
                         BY: DURBIN LLC
              HMH MARINA LLC,
              FARRELL'S ICE CREAM PARLOUR RESTAURANTS LLC,
              HMC ATLANTA LLC,
              HMC BCR HOLDINGS LLC,
              HMC BURLINGAME LLC,
              HMC CALIFORNIA LEASING LLC,
              HMC CAPITAL LLC,
              HMC CAPITAL RESOURCES LLC,
              HMC PARK RIDGE LLC,
              HMC PARK RIDGE II LLC,
              HMC PARK RIDGE LP,
                         BY: HMC PARK RIDGE LLC
              HMC PARTNERSHIP HOLDINGS LLC,
              HOST PARK RIDGE LLC,
              HMC SUITES LLC,
              HMC SUITES LIMITED PARTNERSHIP,

                                       28


                         BY: HMC SUITES LLC
              PRM LLC,
              WELLSFORD-PARK RIDGE HMC HOTEL LIMITED PARTNERSHIP,
                  BY: HOST PARK RIDGE LLC
              YBG ASSOCIATES LLC,
              HMC CHICAGO LLC,
              HMC DESERT LLC,
              HMC PALM DESERT LLC,
              MDSM FINANCE LLC,
              HMC DIVERSIFIED LLC,
              HMC EAST SIDE II LLC,
              HMC GATEWAY LLC,
              HMC GRAND LLC,
              HMC HANOVER LLC,
              HMC HARTFORD LLC,
              HMC HOTEL DEVELOPMENT LLC,
              HMC HPP LLC,
              HMC IHP HOLDING LLC,
              HMC MANHATTAN BEACH LLC,
              HMC MARKET STREET LLC,
              NEW MARKET STREET LP,
                  BY: HMC MARKET STREET LLC
              HMC GEORGIA LLC,
              HMC MEXPARK LLC,
              HMC POLANCO LLC,
              HMC NGL LLC,
              HMC OLS I L.P.,
                  BY: HMC OLS I LLC
              HMC OP BN LLC,
              HMC PACIFIC GATEWAY LLC,
              HMC PLP LLC,
              CHESAPEAKE HOTEL LIMITED PARTNERSHIP,
                  BY: HMC PLP LLC
              HMC POTOMAC LLC,
              HMC PROPERTIES I LLC,
              HMC PROPERTIES II LLC,
              HMC RTZ LOAN I LLC,
              HMC RTZ LOAN LIMITED PARTNERSHIP,
                  BY: HMC RTZ LOAN I LLC
              HMC RTZ II LLC,
              HMC SBM TWO LLC,
              HMC SEATTLE LLC,
              HMC SFO LLC,
              HMC SWISS HOLDINGS LLC,

                                       29


              HMC WATERFORD LLC,
              HMH GENERAL PARTNER HOLDINGS LLC,
              HMH NORFOLK LLC,
              HMH NORFOLK, L.P.,
                  BY: HMH NORFOLK LLC
              HMH PENTAGON LLC,
              HMH RESTAURANTS LLC,
              HMH RIVERS LLC,
              HMH RIVERS, L.P.,
                  BY: HMH RIVERS LLC
              HMH WTC LLC,
              HMP CAPITAL VENTURES LLC,
              HMP FINANCIAL SERVICES LLC,
              HOST LA JOLLA LLC,
              CITY CENTER HOTEL LIMITED PARTNERSHIP,
                  BY: HOST LA JOLLA LLC
              TIMES SQUARE LLC,
              IVY STREET LLC,
              MARKET STREET HOST LLC,
              MFR OF ILLINOIS LLC,
              MFR OF VERMONT LLC,
              MFR OF WISCONSIN LLC,
              PHILADELPHIA AIRPORT HOTEL LLC,
              PM FINANCIAL LLC,
              PM FINANCIAL LP,
                  BY: PM FINANCIAL LLC
              HMC PROPERTY LEASING LLC,
              HMC HOST RESTAURANTS LLC,
              SANTA CLARA HMC LLC,
              S.D. HOTELS LLC,
              TIMES SQUARE GP LLC,
              DURBIN LLC,
              ATLANTA II LIMITED PARTNERSHIP,
                  BY: HMC ATLANTA LLC
              IVY STREET HOTEL LIMITED PARTNERSHIP,
                  BY: ATLANTA II LIMITED PARTNERSHIP
                         BY: HMC ATLANTA LLC
              IVY STREET MPF LLC,
              HMC BURLINGAME II LLC,
              HOST DSM LIMITED PARTNERSHIP,
                  BY: HMC DESERT LLC
              HMC DIVERSIFIED AMERICAN HOTELS, L.P.,
                  BY: HMC DIVERSIFIED LLC
              HMC EAST SIDE LLC,

                                       30


              HMC PARTNERSHIP PROPERTIES LLC,
              HMC HT LLC,
              HMC JWDC GP LLC,
              HMC JWDC LLC,
              HMC OLS I LLC,
              HMC OLS II L.P.,
                  BY: HMC OLS I LLC
              POTOMAC HOTEL LIMITED PARTNERSHIP,
                  BY: HMC POTOMAC LLC
              HMC RTZ LOAN II LLC,


              By: _____________________________________
                  Name:  Christopher G. Townsend
                  Title:  Senior Vice President and General Counsel


              TRUSTEE
              -------


              HSBC BANK USA,
              as Trustee


              By: _____________________________________

                  Name:
                  Title:


                                                                       EXHIBIT A

             FORM OF 9 1/4%[SERIES F] [SERIES G]/1/ SENIOR NOTE

          Unless and until it is exchanged in whole or in part for 9 1/4% Notes
in definitive form, this Security may not be transferred except as a whole by
the Depository to a nominee of the Depository or by a nominee of the Depository
to the Depository or another nominee of the Depository or by the Depository or
any such nominee to a successor Depository or a nominee of such successor
Depository. Unless this certificate is presented by an authorized representative
of The Depository Trust Company (55 Water Street, New York, New York) ("DTC"),
to the Company or its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or such other
name as requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein./2/


                             HOST MARRIOTT, L.P.

             9 1/4% [SERIES F] [SERIES G]/3/ SENIOR NOTE DUE 2007


                                                     CUSIP No.

No.                                                        $

          Host Marriott, L.P., a Delaware limited partnership (hereinafter
called the "Company," which term includes any successors under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
__________, or registered assigns, the principal sum of $____________, on
October 1, 2007. This Security is one of the 9 1/4% [Series F] [Series G] Senior
Notes due 2007 referred to in such Indenture (hereinafter referred to for
purposes of this 9 1/4% Senior Note collectively as the "9 1/4% Securities").

          Interest Payment Dates:   April 1 and October 1

          Record Dates:             March 15 and September 15

_______________________
/1/ Series F should be replaced with Series G in the Exchange Notes.

/2/ To be used only if the Security is issued as a Global Note.

/3/ Series F should be replaced with Series G in the Exchange Notes.

                                      A-1


Reference is made to the further provisions of this Security on the reverse
side, which will, for all purposes, have the same effect as if set forth at this
place.
          IN WITNESS WHEREOF, the Company has caused this Instrument to be duly
executed.


Dated:


                              HOST MARRIOTT, L.P.,
                              a Delaware limited partnership



                              By:_______________________________
                                 Name:
                                 Title:



Attest:__________________________
       Name:
       Title:

                                      A-2


                FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION

          This is one of the 9 1/4% Securities of the Series designated therein
referred to in the within-mentioned Indenture.

                                     HSBC BANK USA,
                                     as Trustee



                                     By:______________________________
                                            Authorized Signatory


                              HOST MARRIOTT, L.P.


             9 1/4% [Series F] [Series G]/4/ Senior Note due 2007

THIS GLOBAL NOTE IS HELD BY THE DEPOSITORY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 5.01 OF THE SIXTH SUPPLEMENTAL INDENTURE, (II) THIS GLOBAL
NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 5.01(a) OF
THE SIXTH SUPPLEMENTAL INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE
TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.12 OF THE INDENTURE AND (IV) THIS
GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITORY WITH THE PRIOR WRITTEN
CONSENT OF THE COMPANY./5/

THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT AS SET FORTH BELOW. BY
ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER:

     (1)  AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT
(A) TO THE COMPANY OR ANY SUBSIDIARY GUARANTOR WHOLLY OWNED BY THE COMPANY OR
ANY OF THEIR RESPECTIVE WHOLLY OWNED SUBSIDIARIES, (B) TO A PERSON WHO IS A QIB
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (C) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (D) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT) THAT, PRIOR TO SUCH TRANSFER, FURNISHES
THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF WHICH
________________________
/4/ Series F should be replaced with Series G in the Exchange Notes.

/5/ To be included only on Global Notes deposited with DTC as Depository.

                                      A-4


CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS EXEMPT UNDER THE SECURITIES ACT,
(E) OUTSIDE THE UNITED STATES IN A TRANSACTION COMPLYING WITH THE PROVISIONS OF
RULE 904 UNDER THE SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION
OF COUNSEL ACCEPTABLE TO THE COMPANY), OR (G) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION; AND

     (2)  AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN
INTEREST HEREIN IS TRANSFERRED A NOTICE AS TO THE ABOVE RESTRICTIONS./6/

1.   Interest.
     --------

          Host Marriott, L.P., a Delaware limited partnership (hereinafter
called the "Company," which term includes any successors under the Indenture
hereinafter referred to), promises to pay interest on the principal amount of
this Security at the rate of 9 1/4% per annum from October 6, 2000 until
maturity. To the extent it is lawful, the Company promises to pay interest on
any interest payment due but unpaid on such principal amount at a rate of 9 1/4%
per annum compounded semi-annually.

          The Company will pay interest semi-annually on April 1 and October 1
of each year (each, an "Interest Payment Date"), commencing April 1, 2001.
Interest on the 9 1/4% Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid on the 9 1/4%
Securities, from the date of the original issuance. Interest will be computed on
the basis of a 360-day year consisting of twelve 30-day months.

2.   Method of Payment.
     -----------------

     The Company shall pay interest on the 9 1/4% Securities (except defaulted
interest) to the Persons who are the registered Holders at the close of business
on the Record Date immediately preceding the Interest Payment Date. Holders must
surrender 9 1/4% Securities to a Paying Agent to collect principal payments.
Principal of, premium, if any, and interest on the 9 1/4% Securities will be
payable in United States Dollars at the office or agency of the Company
maintained for such purpose, in the
________________________
/6/ To be included only on Transfer Restricted Notes.

                                      A-5


Borough of Manhattan, The City of New York or at the option of the Company,
payment of interest may be made by check mailed to the Holders of the 9 1/4%
Securities at the addresses set forth upon the registry books of the Company;
provided, however, Holders of Global Securities will be entitled to receive
interest payments (other than at maturity) by wire transfer of immediately
available funds, if appropriate wire transfer instructions have been received in
writing by the Trustee not fewer than 15 days prior to the applicable Interest
Payment Date. Such wire instructions, upon receipt by the Trustee, shall remain
in effect until revoked by such Holder. No service charge will be made for any
registration of transfer or exchange of 9 1/4% Securities, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.

3.   Paying Agent and Registrar.
     --------------------------

          Initially, HSBC Bank USA will act as Paying Agent and Registrar.  The
Company may change any Paying Agent, Registrar or co-Registrar without notice to
the Holders.  The Company or any of its Subsidiaries may, subject to certain
exceptions, act as Paying Agent, Registrar or co-Registrar.

4.   Indenture.
     ---------

          The Company issued the 9 1/4% Securities and the Subsidiary Guarantors
issued their Guarantees under an Amended and Restated Indenture, dated as of
August 5, 1998, as supplemented (the "Indenture"), between the Company, its
Parents, the Subsidiary Guarantors and the Trustee. Capitalized terms herein are
used as defined in the Indenture unless otherwise defined herein. The 9 1/4%
Securities are limited in aggregate principal amount to $250,000,000. The terms
of the 9 1/4% Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939, as in
effect on the date of the Indenture. The 9 1/4% Securities are subject to all
such terms, and Holders of 9 1/4% Securities are referred to the Indenture and
said Act for a statement of them. The 9 1/4% Securities are senior, general
obligations of the Company, secured initially by a pledge of Capital Stock of
certain Subsidiaries of the Company, which pledge is shared equally and ratably
with the Credit Facility, the Existing Senior Notes, the Series A Notes, the
Series B Notes, the Series C Notes, the Series E Notes and certain future
Indebtedness of the Company ranking pari passu with the 9 1/4% Securities. Each
Holder of this Security, by accepting the same, (a) agrees to and shall be bound
by the provisions of the Indenture, (b) authorizes and directs the Trustee on
his behalf to take such action as may be provided in the Indenture and (c)
appoints the Trustee his attorney-in-fact for such purpose.

5.   Redemption.
     ----------

          The Company may redeem the 9 1/4% Securities in whole but not in part
at any time at a Redemption Price equal to 100% of the principal amount thereof
plus the Make-Whole Premium, together with accrued and unpaid interest thereon,
if any, to the applicable Redemption Date. Notice of a redemption of the 9 1/4%
Securities

                                      A-6


made pursuant to this paragraph 5 shall be given in the manner set forth in
Section 3.3 of the Indenture; provided, however, that any such notice need not
                              --------  -------
set forth the Redemption Price but need only set forth the calculation thereof
as described in the immediately preceding paragraph of this paragraph 5. The
Redemption Price, calculated as aforesaid, shall be set forth in an Officer's
Certificate delivered by the Company to the Trustee no later than one Business
Day prior to the Redemption Date. The 9 1/4% Securities will not have the
benefit of a sinking fund.

6.   Denominations; Transfer; Exchange.
     ---------------------------------

          The 9 1/4% Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder may register
the transfer of, or exchange 9 1/4% Securities in accordance with, the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not register
the transfer of or exchange any 9 1/4% Securities (a) selected for redemption
except the unredeemed portion of any Security being redeemed in part or (b) for
a period beginning 15 Business Days before the mailing of a notice of an offer
to repurchase or redemption and ending at the close of business on the day of
such mailing.

7.   Persons Deemed Owners.
     ---------------------

          The registered Holder of a Security may be treated as the owner of it
for all purposes.

8.   Unclaimed Money.
     ---------------

          If money for the payment of principal or interest remains unclaimed
for two years, the Trustee and the Paying Agent(s) will pay the money back to
the Company at its written request.  After that, all liability of the Trustee
and such Paying Agent(s) with respect to such money shall cease.

9.   Discharge Prior to Redemption or Maturity.
     -----------------------------------------

          Except as set forth in the Indenture, if the Company irrevocably
deposits with the Trustee, in trust, for the benefit of the Holders, U.S. legal
tender, U.S. Government Obligations or a combination thereof, in such amounts as
will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium, if any, and
interest on such 9 1/4% Securities on the stated date for payment thereof or on
the redemption date of such principal or installment of principal of, premium,
if any, or interest on such 9 1/4% Securities, the Company will be discharged
from certain provisions of the Indenture and the 9 1/4% Securities (including
the restrictive covenants described in paragraph 11 below, but excluding its
obligation to pay the principal of, premium, if any, and interest on the 9 1/4%
Securities). Upon satisfaction of certain additional conditions set forth in

                                      A-7


the Indenture, the Company may elect to have its obligations and the obligations
of the Subsidiary Guarantors discharged with respect to outstanding 9 1/4%
Securities.

10.  Amendment; Supplement; Waiver.
     -----------------------------

     The Company, the Subsidiary Guarantors and the Trustee may enter into a
supplemental indenture for certain limited purposes without the consent of the
Holders. Subject to certain exceptions, the Indenture or the 9 1/4% Securities
may be amended or supplemented with the written consent of the Holders of not
less than a majority in aggregate principal amount of the 9 1/4% Securities then
outstanding (except that any amendments or supplements to the provisions
relating to security interests or with respect to the Guarantees of the
Subsidiary Guarantors shall require the consent of the holders of not less than
66 2/3% of the aggregate principal amount of the 9 1/4% Securities then
outstanding), and any existing Default or Event of Default or compliance with
any provision may be waived with the consent of the Holders of a majority in
aggregate principal amount of the 9 1/4% Securities then outstanding. Without
notice to or consent of any Holder, the parties thereto may under certain
circumstances amend or supplement the Indenture or the 9 1/4% Securities to,
among other things, cure any ambiguity, defect or inconsistency, or make any
other change that does not adversely affect the rights of any Holder of a
Security.

11.  Restrictive Covenants.
     ---------------------

          The Indenture imposes certain limitations on the ability of the
Company, the Subsidiary Guarantors and any of their respective Restricted
Subsidiaries to, among other things, incur additional Indebtedness and issue
Disqualified Stock, pay dividends or make certain other Restricted Payments,
enter into certain transactions with Affiliates, incur Liens, sell assets and
subsidiary stock, merge or consolidate with any other Person or transfer (by
lease, assignment or otherwise) substantially all of the properties and assets
of the Company.  The limitations are subject to a number of important
qualifications and exceptions and certain restrictive covenants will cease to be
applicable under certain circumstances.  The Company must periodically report to
the Trustee on compliance with such limitations.

12.  Repurchase at Option of Holder.
     ------------------------------

          (a) If there is a Change of Control Triggering Event, the Company
shall be required to offer irrevocably to purchase on the Change of Control
Purchase Date all outstanding 9 1/4% Securities at a purchase price equal to
101% of the principal amount thereof, plus (subject to the right of Holders of
record on a Record Date that is on or prior to such Change of Control Purchase
Date to receive interest due on the Interest Payment Date to which such Record
Date relates) accrued and unpaid interest, if any, to the Change of Control
Purchase Date. Holders of 9 1/4% Securities will receive a Change of Control
Offer from the Company prior to any related Change of Control Purchase Date and
may elect to have such 9 1/4% Securities purchased by completing the form
entitled "Option of Holder to Elect Purchase" appearing below.

                                      A-8


          (b)  The Indenture imposes certain limitations on the ability of the
Company, the Subsidiary Guarantors or any of their respective Restricted
Subsidiaries to sell assets and subsidiary stock. In the event the Net Cash
Proceeds from a permitted Asset Sale exceed certain amounts, as specified in the
Indenture, the Company will be required either to reinvest the proceeds of such
Asset Sale in a Related Business or other permitted investments, repay certain
Indebtedness or to make an offer to purchase each Holder's 9 1/4% Securities at
100% of the principal amount thereof, plus accrued interest, if any, to the
purchase date. The limitations and the Company's obligations with respect to the
use of proceeds from an Asset Sale are subject to a number of important
qualifications and exceptions and will cease to be applicable under certain
circumstances.

13.  Notation of Guarantee.
     ---------------------

          As set forth more fully in the Indenture, the Persons constituting
Subsidiary Guarantors from time to time, in accordance with the provisions of
the Indenture, irrevocably and unconditionally and jointly and severally
guarantee, in accordance with Section 12.1 of the Indenture, to the Holders and
to the Trustee and its successors and assigns, that (i) the principal of and
interest on the 9 1/4% Securities will be paid, whether at the Stated Maturity
or Interest Payment Dates, by acceleration, call for redemption or otherwise,
and all other obligations of the Company to the Holders or the Trustee under the
Indenture or this Security will be promptly paid in full or performed, all in
accordance with the terms of the Indenture and this Security, and (ii) in the
case of any extension of payment or renewal of this Security or any of such
other obligations, they will be paid in full when due or performed in accordance
with the terms of such extension or renewal, whether at the Stated Maturity, as
so extended, by acceleration or otherwise. Such Guarantees shall cease to apply,
and shall be null and void, with respect to any such guarantor who, pursuant to
Article 12 of the Indenture, is released from its Guarantees, or whose
Guarantees otherwise cease to be applicable pursuant to the terms of the
Indenture.

14.  Successor
     ---------

          When a successor assumes all the obligations of its predecessor under
the 9 1/4% Securities and the Indenture, the predecessor will be released from
those obligations.

15.  Defaults and Remedies.
     ---------------------

     If an Event of Default with respect to the 9 1/4% Securities occurs and is
continuing (other than an Event of Default relating to bankruptcy, insolvency or
reorganization of the Company), then either the Trustee or the Holders of 25% in
aggregate principal amount of the 9 1/4% Securities then outstanding may declare
all 9 1/4% Securities to be due and payable immediately in the manner and with
the effect provided in the Indenture. Holders of 9 1/4% Securities may not
enforce the Indenture

                                      A-9


or the 9 1/4% Securities, except as provided in the Indenture. The Trustee may
require indemnity satisfactory to it before it enforces the Indenture or the
9 1/4% Securities. Subject to certain limitations, Holders of a majority in
principal amount of the then outstanding 9 1/4% Securities may direct the
Trustee in its exercise of any trust or power with respect to such 9 1/4%
Securities. The Trustee may withhold from Holders of 9 1/4% Securities notice of
any continuing Default or Event of Default (except a Default in payment of
principal or interest) if it determines that withholding notice is in their
interest.

16.  Trustee and Agent Dealings with Company.
     ---------------------------------------

          The Trustee and each Agent under the Indenture, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or any Subsidiary Guarantor or any of their
Subsidiaries or any of their respective Affiliates, and may otherwise deal with
such Persons as if it were not the Trustee or such agent.

17.  No Recourse Against Others.
     --------------------------

          No recourse for the payment of the principal of, premium, if any, or
interest on the 9 1/4% Securities or for any claim based thereon or otherwise in
respect thereof, and no recourse under or upon any obligation, covenant or
agreement of the Company or the Subsidiary Guarantors in the Indenture, or in
the 9 1/4% Securities or because of the creation of any Indebtedness represented
thereby, shall be had against any incorporator, partner, stockholder, officer,
director, employee or controlling Person of the Company or the Subsidiary
Guarantors or of any successor Person thereof, except as an obligor or guarantor
of the 9 1/4% Securities pursuant to the Indenture. Each Holder, by accepting
the 9 1/4% Securities, waives and releases all such liability.

18.  Authentication.
     --------------

          This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this
Security.

19.  Abbreviations and Defined Terms.
     -------------------------------

          Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).

20.  CUSIP Numbers.
     -------------

                                     A-10


          Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will cause CUSIP numbers to be
printed on the 9 1/4% Securities as a convenience to the Holders of the 9 1/4%
Securities. No representation is made as to the accuracy of such numbers as
printed on the 9 1/4% Securities and reliance may be placed only on the other
identification numbers printed hereon.

21.  Additional Rights of Holders of Transfer Restricted Notes./7/
     ---------------------------------------------------------

     In addition to the rights provided to Holders of 9 1/4% Securities under
the Indenture, Holders of Transfer Restricted Notes shall have all the rights
set forth in the Registration Rights Agreement dated as of the date of the Sixth
Supplemental Indenture, among the Company, the Subsidiary Guarantors and the
Initial Purchasers.

22.  Governing Law.
     -------------

          THE INDENTURE AND THE 9 1/4% SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING,
WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW AND NEW YORK CIVIL PRACTICE LAWS AND RULES 327(B).




_________________________

/7/ To be included only on Transfer Restricted Notes.

                                     A-11


                             [FORM OF ASSIGNMENT]

          I or we assign this Security to

________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

(Print or type name, address and zip code of assignee)


          Please insert Social Security or other identifying number of assignee

________________________


and irrevocably appoint __________ agent to transfer this Security on the books
of the Company. The agent may substitute another to act for him.



Dated:  _______________ Signed:



                       (Sign exactly as name appears on
                       the other side of this Security)

                             Signature Guarantee**

_________________________

**
   NOTICE: The Signature must be guaranteed by an Institution which is a member
   of one of the following recognized signature Guarantee Programs: (i) The
   Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock
   Exchange Medallion Program (MNSP); (iii) The Stock Exchange Medallion Program
   (SEMP); or (iv) in such other guarantee program acceptable to the Trustee.

                                     A-12


                      OPTION OF HOLDER TO ELECT PURCHASE

          If you want to elect to have this Security purchased by the Company
pursuant to Section 4.12 or Article 10 of the Indenture, check the appropriate
box:

[_]  Section 4.12
[_]  Article 10.

          If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.12 or Article 10 of the Indenture, as the case
may be, state the amount you want to be purchased: $__________.



Date: ________________    Signature:
(Sign exactly as your name appears
on the other side of this Security)

                            Signature Guarantee***







_____________________

***  NOTICE: The Signature must be guaranteed by an Institution which is a
     member of one of the following recognized signature Guarantee Programs: (i)
     The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York
     Stock Exchange Medallion Program (MNSP); (iii) The Stock Exchange Medallion
     Program (SEMP); or (iv) in such other guarantee program acceptable to the
     Trustee.

                                     A-13


                 SCHEDULE OF EXCHANGES OF CERTIFICATED NOTES/8/

               The following exchanges of a part of this Global Security for
     Certificated Securities have been made:



                            Amount of decrease in    Amount of increase in    Principal Amount of this     Signature of authorized
     Date of Exchange          Principal Amount       Principal Amount of    Global Note following such     officer of Trustee or
                             of this Global Note       this Global Note        decrease (or increase)           Note Custodian
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                               



____________________________

/8/ This should be included only if the Security is issued in global form.

                                     A-14


                                   EXHIBIT B
                        FORM OF CERTIFICATE OF TRANSFER

Host Marriott, L.P.
10400 Fernwood Road
Bethesda, Maryland 20817
Attention: [       ]

HSBC Bank USA
140 Broadway, 12/th/ Floor
New York, New York 10005-1180
Attention: Corporate Trust Department

          Re: 9 1/4% Series F Senior Notes due 2007

Dear Sirs:

          Reference is hereby made to the Amended and Restated Indenture, dated
as of August 5, 1998 (the "Base Indenture"), among HMH Properties, Inc., its
Parents and the Subsidiary Guarantors named therein (collectively, the
"Subsidiary Guarantors") and HSBC Bank USA (formerly Marine Midland Bank), as
trustee (the "Trustee"), and the Sixth Supplemental Indenture to the Base
Indenture, dated as of October 6, 2000 (the "Sixth Supplemental Indenture" and,
together with the Base Indenture, the "Indenture"), among Host Marriott, L.P.,
as issuer (the "Company"), the Subsidiary Guarantors and the Trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture. ______________, (the "Transferor") owns and proposes to
transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in
the principal amount of $___________ in such Note[s] or interests (the
"Transfer"), to __________ (the "Transferee"), as further specified in Annex A
hereto. In connection with the Transfer, the Transferor hereby certifies that:

[CHECK ALL THAT APPLY]

[1.]      Check if Transferee will take delivery of a beneficial interest in a
Rule 144A Restricted Global Note or a Certificated Note Pursuant to Rule 144A.
The Transfer is being effected pursuant to and in accordance with Rule 144A
under the United States Securities Act of 1933, as amended (the "Securities
Act"), and, accordingly, the Transferor hereby further certifies that the
beneficial interest or Certificated Note is being transferred to a Person that
the Transferor reasonably believed and believes is purchasing the beneficial
interest or Certificated Note for its own account, or for one or more accounts
with respect to which such Person exercises sole investment discretion, and such
Person and each such account is a "qualified institutional buyer" within the
meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and
such Transfer is in compliance with any applicable blue sky securities laws of
any State of the United States and the restrictions set forth in the Private
Placement Legend. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Certificated
Note will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Global Note and/or the Certificated
Note and in the Indenture and the Securities Act.

[1A.]     Check if Transferee will take delivery of a beneficial interest in a
Regulation S Restricted Global Note or a Certificated Note Pursuant to
Regulation S. The Transfer is being effected pursuant to and in accordance with
Regulation S under the United States Securities Act, and, accordingly, the
Transferor hereby further certifies that
          (a)  the offer of the beneficial interest or Certificated Note being
     transferred was not made to a person in the United States;

                                      B-1


          (b)  either:

               (i)  at the time the buy order was originated, the Transferee was
          outside the United States or the Transferor and any person acting on
          its behalf reasonably believed that the Transferee was outside the
          United States; or

               (ii) the transaction was executed in, on or through the
          facilities of a designated offshore securities market and neither the
          Transferor nor any person acting on its behalf knows that the
          transaction was prearranged with a buyer in the United States;

          (c)  no directed selling efforts have been made in contravention of
     the requirements of Rule 903(b) or 904(b) of Regulation S, as applicable;
     and

          (d)  the transaction is not part of a plan or scheme to evade the
     registration requirements of the Securities Act.

and such Transfer is in compliance with any applicable blue sky securities laws
of any State of the United States and the restrictions set forth in the Private
Placement Legend. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Certificated
Note will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Global Note and/or the Certificated
Note and in the Indenture and the Securities Act.

[2.]      Check and complete if Transferee will take delivery of a beneficial
interest in a Restricted Certificated Note pursuant to any provision of the
Securities Act other than Rule 144A or Regulation S. The Transfer is being
effected in compliance with the transfer restrictions applicable to beneficial
interests in Restricted Global Notes and Restricted Certificated Notes and
pursuant to and in accordance with the Securities Act and any applicable blue
sky securities laws of any State of the United States, and accordingly the
Transferor hereby further certifies that (check one):

[_]  (a)       Such Transfer is being effected pursuant to and in accordance
     with Rule 144 under the Securities Act; or

[_]  (b)       Such Transfer is being effected to the Company or a subsidiary
     thereof; or

[_]  (c)       Such Transfer is being effected pursuant to an effective
     registration statement under the Securities Act and in compliance with the
     prospectus delivery requirements of the Securities Act; or

[_]  (d)       such Transfer is being effected to an Institutional Accredited
     Investor and pursuant to an exemption from the registration requirements of
     the Securities Act other than Rule 144A, or Rule 144, and the Transferor
     hereby further certifies that it has not engaged in any general
     solicitation within the meaning of Regulation D under the Securities Act
     and the Transfer complies with the transfer restrictions applicable to
     beneficial interests in a Restricted Global Note or Restricted Certificated
     Notes (including those set forth in the Private Placement Legend) and the
     requirements of the exemption claimed, which certification is supported by
     (1) a certificate executed by the Transferee in a form of Exhibit D to the
     Sixth Supplemental Indenture and (2) if such Transfer is in respect of a
     principal amount of Series F Notes at the time of transfer of less than
     $250,000, an Opinion of Counsel provided by the Transferor or the
     Transferee (a copy of which the Transferor has attached to this
     certification and provided to the Company, which has confirmed its
     acceptability), to the effect that such Transfer is in compliance with the
     Securities Act. Upon consummation of the proposed

                                      B-2


     transfer in accordance with the terms of the Indenture, the Certificated
     Note will be subject to the restrictions on transfer enumerated in the
     Private Placement Legend printed on the Certificated Notes and in the
     Indenture and the Securities Act.

[3.]      Check if Transferee will take delivery of a beneficial interest in an
Unrestricted Global Note or of an Unrestricted Certificated Note.

[_]  (a)       Check if Transfer is Pursuant to Rule 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any State of the United States
and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Certificated
Note will no longer be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Restricted Global Notes, on Restricted
Certificated Notes and in the Indenture and the Securities Act.

[_]  (a1)      Check if Transfer is Pursuant to Regulation S. (i) The Transfer
is being effected pursuant to and in accordance with Regulation S under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any State of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act.

     The Transferor hereby further certifies that

          (a)  the offer of the beneficial interest or Certificated Note being
     transferred was not made to a person in the United States;

          (b)  either:

               (i)  at the time the buy order was originated, the Transferee was
          outside the United States or the Transferor and any person acting on
          its behalf reasonably believed that the Transferee was outside the
          United States; or

               (ii) the transaction was executed in, on or through the
          facilities of a designated offshore securities market and neither the
          Transferor nor any person acting on its behalf knows that the
          transaction was prearranged with a buyer in the United States;

          (c)  no directed selling efforts have been made in contravention of
     the requirements of Rule 903(b) or 904(b) of Regulation S, as applicable;
     and

          (d)  the transaction is not part of a plan or scheme to evade the
     registration requirements of the Securities Act.

Upon consummation of the proposed Transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Certificated Note will no
longer be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Global Notes, on Restricted
Certificated Notes and in the Indenture and the Securities Act.

[_]  (b)       Check if Transfer is Pursuant to Other Exemption. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144 or
Regulation S and in compliance with the transfer restrictions

                                      B-3


contained in the Indenture and any applicable blue sky securities laws of any
State of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Certificated Note will not be subject to the restrictions
on transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes or Restricted Certificated Notes and in the Indenture.


                                      B-4


This certificate and the statements contained herein are made for your benefit
and the benefit of the Company.

_______________________________             Dated: ____________________________
[Insert Name of Transferor]


By: ____________________________
   Name:
   Title:

                                      B-5


                      ANNEX A TO CERTIFICATE OF TRANSFER

1.       The Transferor owns and proposes to transfer the following:

[CHECK ONE OF (a) OR (b)]

[_]      (a)   a beneficial interest in a Restricted Global Note
               (CUSIP[________]), or

[_]      (b)   a Restricted Certificated Note.

2.       After the Transfer the Transferee will hold:

[CHECK ONE]

[_]      (a)               a beneficial interest in a/an:

[_]               (i)            Restricted Global Note (CUSIP[________]), or

[_]               (ii)           Unrestricted Global Note (CUSIP_________); or


[_]      (b)               a Restricted Certificated Note; or

[_]      (c)               an Unrestricted Certificated Note,

in accordance with the terms of the Indenture.

                                       B-6


                                   EXHIBIT C
                        FORM OF CERTIFICATE OF EXCHANGE


Host Marriott, L.P.
10400 Fernwood Road
Bethesda, Maryland  20817
Attention:  [              ]

HSBC Bank USA
140 Broadway, 12th Floor
New York, New York  10005-1180
Attention:  Corporate Trust Department

         Re:  9 1/4% Series F Senior Notes due 2007

Dear Sirs:

         Reference is hereby made to the Amended and Restated Indenture, dated
as of August 5, 1998 (the "Base Indenture"), among HMH Properties, Inc., its
Parents and the Subsidiary Guarantors named therein (collectively, the
"Subsidiary Guarantors") and HSBC Bank USA (formerly Marine Midland Bank), as
trustee (the "Trustee"), and the Sixth Supplemental Indenture to the Base
Indenture, dated as of October 6, 2000 (the "Sixth Supplemental Indenture" and,
together with the Base Indenture, the "Indenture"), among Host Marriott, L.P.,
as issuer (the "Company"), the Subsidiary Guarantors and the Trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.

                  ____________, (the "Owner") owns and proposes to exchange the
Note[s] or interest in such Note[s] specified herein, in the principal amount of
$____________ in such Note[s] or interests (the "Exchange"). In connection with
the Exchange, the Owner hereby certifies that:

                  1.     Exchange of Restricted Certificated Notes or Beneficial
Interests in a Restricted Global Note for Unrestricted Certificated Notes or
Beneficial Interests in an Unrestricted Global Note


[_]                          (a)          Check if Exchange is from beneficial
interest in a Restricted Global Note to beneficial interest in an Unrestricted
Global Note. In connection with the Exchange of the Owner's beneficial interest
in a Restricted Global Note for a beneficial interest in an Unrestricted Global
Note in an equal principal amount, the Owner hereby certifies (i) the beneficial
interest is being acquired for the Owner's own account without transfer, (ii)
such Exchange has been effected in compliance with the transfer restrictions
applicable to the Global Notes and pursuant to and in accordance with the United
States Securities Act of 1933, as amended (the "Securities Act"), (iii) the
restrictions on transfer contained in the Indenture and the Private Placement
Legend are not required in order to maintain compliance with the Securities Act
and (iv) the beneficial interest in an Unrestricted Global Note is being
acquired in compliance with any applicable blue sky securities laws of any State
of the United States.

                                      C-1


[_]                           (b)       Check if Exchange is from beneficial
interest in a Restricted Global Note to Unrestricted Certificated Note. In
connection with the Exchange of the Owner's beneficial interest in a Restricted
Global Note for an Unrestricted Certificated Note, the Owner hereby certifies
(i) the Certificated Note is being acquired for the Owner's own account without
transfer, (ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to the Restricted Global Notes and pursuant to and in
accordance with the Securities Act, (iii) the restrictions on transfer contained
in the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the Certificated Note is
being acquired in compliance with any applicable blue sky securities laws of any
State of the United States.

[_]                           (c)       Check if Exchange is from Restricted
Certificated Note to beneficial interest in an Unrestricted Global Note. In
connection with the Owner's Exchange of a Restricted Certificated Note for a
beneficial interest in an Unrestricted Global Note, the Owner hereby certifies
(i) the beneficial interest is being acquired for the Owner's own account
without transfer, (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to Restricted Certificated Notes and pursuant
to and in accordance with the Securities Act, (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest is being acquired in compliance with any applicable blue sky securities
laws of any State of the United States.

[_]                           (d)       Check if Exchange is from Restricted
Certificated Note to Unrestricted Certificated Note. In connection with the
Owner's Exchange of a Restricted Certificated Note for an Unrestricted
Certificated Note, the Owner hereby certifies (i) the Unrestricted Certificated
Note is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Certificated Notes and pursuant to and in accordance
with the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the Unrestricted Certificated Note
is being acquired in compliance with any applicable blue sky securities laws of
any State of the United States.

          2.   Exchange of Certificated Notes or Beneficial Interests in
Restricted Global Notes for Restricted Certificated Notes or Beneficial
Interests in Restricted Global Notes

[_]                           (a)       Check if Exchange is from beneficial
interest in a Restricted Global Note to Restricted Certificated Note. In
connection with the Exchange of the Owner's beneficial interest in a Restricted
Global Note for a Restricted Certificated Note with an equal principal amount,
the Owner hereby certifies that the Restricted Certificated Note is being
acquired for the Owner's own account without transfer. Upon consummation of the
proposed Exchange in accordance with the terms of the Indenture, the Restricted
Certificated Note issued will continue to be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Certificated Note and in the Indenture and the Securities Act.

[_]                           (b)       Check if Exchange is from Restricted
Certificated Note or Unrestricted Certificated Note to beneficial interest in a
Restricted Global Note. In connection with the Exchange of the Owner's
Restricted Certificated Note for a beneficial interest in the Restricted Global
Note with an equal principal amount, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account without
transfer and (ii) such Exchange has been

                                      C-2


effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, and in compliance with any applicable blue sky securities laws of any State
of the United States. Upon consummation of the proposed Exchange in accordance
with the terms of the Indenture, the beneficial interest issued will be subject
to the restrictions on transfer enumerated in the Private Placement Legend
printed on the relevant Restricted Global Note and in the Indenture and the
Securities Act.

This certificate and the statements contained herein are made for your benefit
and the benefit of the Company.

__________________________
[Insert Name of Owner]



By:_______________________
  Name:
  Title:


Dated:________________

                                       C-3


                                   EXHIBIT D
                      FORM OF CERTIFICATE FROM ACQUIRING
                       INSTITUTIONAL ACCREDITED INVESTOR

Host Marriott, L.P.
10400 Fernwood Road
Bethesda, Maryland  20817
Attention:  [              ]

HSBC Bank USA
140 Broadway, 12th Floor
New York, New York  10005-1180
Attention:  Corporate Trust Department

         Re:  9 1/4% Series F Senior Notes due 2007

Dear Sirs:

         Reference is hereby made to the Amended and Restated Indenture, dated
as of August 5, 1998 (the "Base Indenture"), among HMH Properties, Inc., its
Parents and the Subsidiary Guarantors named therein (collectively, the
"Subsidiary Guarantors") and HSBC Bank USA (formerly Marine Midland Bank), as
trustee (the "Trustee"), and the Sixth Supplemental Indenture to the Base
Indenture, dated as of October 6, 2000 (the "Sixth Supplemental Indenture" and,
together with the Base Indenture, the "Indenture"), among Host Marriott, L.P.,
as issuer (the "Company"), the Subsidiary Guarantors and the Trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.

                  In connection with our proposed purchase of $____________
aggregate principal amount of: (a) a beneficial interest in a Global Note, or
(b) a Certificated Note, we confirm that:

                  1.     We understand that any subsequent transfer of the
Securities or any interest therein is subject to certain restrictions and
conditions set forth in the Indenture and the undersigned agrees to be bound by,
and not to resell, pledge or otherwise transfer the Securities or any interest
therein except in compliance with, such restrictions and conditions and the
United States Securities Act of 1933, as amended (the "Securities Act").

432100.06-New York S7A

                                       D-2

                  2.     We understand that the offer and sale of the Securities
have not been registered under the Securities Act, and that the Securities and
any interest therein may not be offered or sold except as permitted in the
following sentence. We agree, on our own behalf and on behalf of any accounts
for which we are acting as hereinafter stated, that if we should sell the
Securities or any interest therein, we will do so only (a) to the Company or any
Subsidiary Guarantor or any of their respective wholly owned subsidiaries, (b)
to a person who is a QIB purchasing for its own account or for the account of a
QIB in a transaction meeting the requirements of Rule 144A, (c) in a transaction
meeting the requirements of a Rule 144 under the Securities Act, (d) to an
Institutional "Accredited Investor" (as defined in Rule 501 (a)(1), (2), (3) or
(7) of Regulation D under the Securities Act) that, prior to such transfer,
furnishes the trustee a signed letter containing certain representations and
agreements relating to the transfer of this Security (the form of which can be
obtained from the trustee) and, if such transfer

                                      D-1


is in respect of an aggregate principal amount of Notes less than $250,000, an
opinion of counsel acceptable to the Company that such transfer is in compliance
with the Securities Act, (e) outside the United States in a transaction
complying with the provisions of Rule 904 under the Securities Act, (f) in
accordance with another exemption from the registration requirements of the
Securities Act, (and based upon an opinion of counsel acceptable to the
Company), or (g) pursuant to an effective registration statement and, in each
case, in accordance with the applicable securities laws of any state of the
United States or any other applicable jurisdiction and in accordance with the
other provisions of the Private Placement Legend.

                  3.     We understand that, on any proposed resale of the
Securities or beneficial interest therein, we will be required to furnish to you
and the Company such certifications, legal opinions and other information as you
and the Company may reasonably require to confirm that the proposed sale
complies with the foregoing restrictions. We further understand that the
Securities purchased by us will bear a legend to the foregoing effect.

                  4.     We are an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) and have such knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of our investment in the
Securities, and we and any accounts for which we are acting are each able to
bear the economic risk of our or its investment.

                  5.     We are acquiring the Securities or beneficial interest
therein purchased by us for our own account or for one or more accounts (each of
which is an institutional "accredited investor") as to each of which we exercise
sole investment discretion.

                  You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.

_____________________________________         Dated: __________________, ____
[Insert Name of Accredited Investor]



By:_______________________________
Name:
Title:

EX-5.1

                                                                     Exhibit 5.1


                                  [LETTERHEAD]

                                                               December 15, 2000

Host Marriott, L.P.
10400 Fernwood Road
Bethesda, Maryland 20817

     Re:  9 1/4% Series G Senior Notes due 2007 of Host Marriott, L.P.
          ------------------------------------------------------------

Ladies and Gentlemen:

     In connection with the issuance of $250,000,000 aggregate principal amount
of 9 1/4% Series G Senior Notes due 2007 (the "Series G senior notes") by Host
Marriott, L.P., a Delaware limited partnership (the "Company"), and guarantees
thereof ("Guarantees" and together with the Series G senior notes, the
"Securities") by certain subsidiaries of the Company (the "Subsidiary
Guarantors") to be registered under the Securities Act of 1933, as amended, on a
registration statement on Form S-4 filed with the Securities and Exchange
Commission (the "Commission") on December 15, 2000 (the "Registration
Statement") relating to the offer by the Company to exchange its outstanding 9
1/4% Series F Senior Notes due 2007 for Series G senior notes, you have
requested my opinion with respect to the matters set forth below.

     In my capacity as general counsel of Host Marriott Corporation, the general
partner of the Company, I am familiar with the proceedings taken by the Company
in connection with the authorization, issuance and sale of the Series G senior
notes. In addition, I have made such legal and factual examinations and
inquiries, including an examination of originals or copies certified or
otherwise identified to my satisfaction of such documents, corporate records and
instruments, as I have deemed necessary or appropriate for purposes of this
opinion.

     In my examination, I have assumed the genuiness of all signatures, the
authenticity of all documents submitted to me as originals, and the conformity
to authentic original documents of all documents submitted to me as copies.

     I am opining herein as to the effect on the subject transaction only of the
General Corporation Law of the State of Delaware, I express no opinion with
respect to the applicability thereto, or the effect thereon, of the laws of any
other jurisdiction or, in the case of Delaware, any other laws, or as to any
matters of municipal law or the laws of any local agencies within any state.

     Subject to the foregoing and other matters set forth herein, it is my
opinion that as of the date hereof, the Series G senior notes have been duly
authorized by all necessary action of the Company, and when executed,
authenticated and delivered by or on behalf of the Company against exchange
therefor in accordance with the terms of the indenture, will constitute legally
valid and binding obligations of the Company, enforceable against the Company in
accordance with their terms.


     Subject to the foregoing and other matters set forth herein, it is my
opinion that as of the date hereof, the Guarantees have been duly authorized by
all necessary action of the applicable Subsidiary Guarantors, and when the
Series G senior notes are executed, authenticated and delivered by or on behalf
of the Company, will constitute legally valid and binding obligations of the
applicable Subsidiary Guarantors, enforceable against the applicable Subsidiary
Guarantors in accordance with their terms.

     The opinions rendered above relating to the enforceability of the
Securities are subject to the following exceptions, limitations and
qualifications: (i) the effect of bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to or
affecting the rights and remedies of creditors; (ii) the effect of general
principles of equity, whether enforcement is considered in a proceeding in
equity of law, and the discretion of the court before which any proceeding
therefor may be brought; (iii) I express no opinion concerning the
enforceability of the waiver of rights or defenses contained in the indenture.

     To the extent that the obligations of the Company and/or the Subsidiary
Guarantors under the Indenture may be dependent upon such matters, I assume for
purposes of this opinion that the Trustee is duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization; that
the Trustee is duly qualified to engage in the activities contemplated by the
Indenture; that the Indenture has been duly authorized, executed and delivered
by the Trustee and constitutes the legally valid, binding and enforceable
obligation of the Trustee enforceable against the Trustee in accordance with its
terms; that the Trustee is in compliance, generally and with respect to acting
as a trustee under the Indenture, with all applicable laws and regulations; and
that the Trustee has the requisite organizational and legal power and authority
to perform its obligations under the Indenture.

     I consent to your filing this opinion as an exhibit to the Registration
Statement and to the reference to me contained under the heading "Legal
Matters."

                                                      Very truly yours,

                                                      Christopher G. Townsend
                                                      Senior Vice President and
                                                      General Counsel

EX-8.1

                                                                     Exhibit 8.1


                       [LETTERHEAD OF LATHAM & WATKINS]


                                December 15, 2000





Host Marriott, L.P.
10400 Fernwood Road
Bethesda, Maryland 20817

     Re:  Federal Income Tax Consequences
          -------------------------------

Ladies and Gentlemen:

     You have requested our opinion concerning the material federal income tax
consequences of the exchange of 9 1/4% Series G senior notes due 2007 of Host
Marriott, L.P. (the "Partnership") which have been registered under the
Securities Act of 1933, as amended, for outstanding 9 1/4% Series F senior notes
due 2007 of the Partnership, in connection with the Registration Statement on
Form S-4 filed herewith (the "Registration Statement").

     The facts, as we understand them, and upon which with your permission we
rely in rendering the opinion expressed herein, are set forth in the
Registration Statement. Based on such facts, it is our opinion that the
statements in the Registration Statement set forth under the caption "Material
Federal Income Tax Consequences of the Exchange," to the extent such statements
constitute matters of law summaries of legal matters or legal conclusions, are
the material federal income tax consequences of the exchange of the Series F
senior notes for Series G senior notes. No opinion is expressed as to any matter
not discussed therein.

     This opinion is rendered to you as of the date of this letter, and we
undertake no obligation to update this opinion subsequent to the date hereof.
This opinion is based on various statutory provisions, regulations promulgated
thereunder and interpretations thereof by the Internal Revenue Service and the
courts having jurisdiction over such matters all of which are subject to change
either prospectively or retroactively. Also, any variation or difference in the
facts from those set forth in the Registration Statement may affect the
conclusions stated herein.


LATHAM & WATKINS

     Host Marriott, L.P.
     December _, 2000
     Page 2

     This opinion is rendered to you for use in connection with the Registration
Statement. We consent to your filing this opinion as an exhibit to the
Registration Statement, and to the reference to our firm under the headings
"Material Federal Income Tax Consequences of the Exchange" and "Legal Matters."


                                                          Very truly yours,

                                                          LATHAM & WATKINS

EX-10.39

                                                                   Exhibit 10.39
- --------------------------------------------------------------------------------

                         REGISTRATION RIGHTS AGREEMENT

                          Dated as of October 6, 2000

                                 by and among

                             HOST MARRIOTT, L.P.,

                                  as Issuer,

                          the Guarantors named herein

                                      and

                        DEUTSCHE BANK SECURITIES INC.,

                        BANC OF AMERICA SECURITIES LLC,

                           BEAR, STEARNS & CO. INC.,

             DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION,

                             GOLDMAN, SACHS & CO.,

              MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

                      MORGAN STANLEY & CO. INCORPORATED,

                    CREDIT LYONNAIS SECURITIES (USA) INC.,

                          SCOTIA CAPITAL (USA) INC.,

                                      and

                        SG COWEN SECURITIES CORPORATION


                                 as Purchasers


- --------------------------------------------------------------------------------


                         REGISTRATION RIGHTS AGREEMENT


          THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of October 6, 2000, among HOST MARRIOTT, L.P., a Delaware
limited partnership (the "Issuer"), the Guarantor parties hereto and DEUTSCHE
BANK SECURITIES INC., BANC OF AMERICA SECURITIES LLC, BEAR, STEARNS & CO. INC.,
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION, GOLDMAN, SACHS & CO.,
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, MORGAN STANLEY & CO.
INCORPORATED, CREDIT LYONNAIS SECURITIES (USA) INC., SCOTIA CAPITAL (USA) INC.
and SG COWEN SECURITIES CORPORATION (collectively, the "Purchasers").

          This Agreement is made pursuant to the Purchase Agreement, dated
September 29, 2000, among the Issuer, the Guarantor parties thereto and the
Purchasers (the "Purchase Agreement"), which provides for the sale by the Issuer
and the Guarantors to the Purchasers of $250,000,000 aggregate principal amount
of 93% Series F Senior Notes due 2007 of the Issuer and the guarantees thereof
by the Guarantors (collectively, the "Securities"). In order to induce the
Purchasers to enter into the Purchase Agreement, the Issuer and the Guarantors
named herein have agreed to provide to the Purchasers and their respective
direct and indirect transferees, among other things, the registration rights for
the Securities set forth in this Agreement. The execution of this Agreement is a
condition to the closing of the transactions contemplated by the Purchase
Agreement.

          The parties hereby agree as follows:

1.   Definitions
     -----------

          As used in this Agreement, the following terms shall have the
following meanings (and, unless otherwise indicated, capitalized terms used
herein without definition shall have the meanings ascribed to them by the
Purchase Agreement):

          Advice: See Section 5.
          ------

          Applicable Period: See Section 2.
          -----------------

                                       1


          Closing Date: The Closing Date as defined in the Purchase Agreement.
          ------------

          Effectiveness Period: See Section 3.
          --------------------

          Effectiveness Target Date: The 180th day following the Closing Date.
          -------------------------

          Event Date: See Section 4.
          ----------

          Exchange Act: The Securities Exchange Act of 1934, as amended, and the
          ------------
rules and regulations of the SEC promulgated thereunder.

          Exchange Offer: See Section 2.
          --------------

          Exchange Registration Statement: See Section 2.
          -------------------------------

          Exchange Securities: See Section 2.
          -------------------

          Filing Date: The 90th day after the Closing Date.
          -----------

          Guarantors: Subsidiary Guarantors, as defined in the Indenture.
          ----------

          Holder: Any holder of Transfer Restricted Securities.
          ------

          Indenture: The Indenture, dated as of August 5, 1998, among Host
          ---------
Marriott, L.P. (formerly known as HMH Properties, Inc.), Host Marriott
Corporation, the Guarantor parties thereto and Marine Midland Bank (now HSBC
Bank USA), as trustee, as supplemented and amended, pursuant to which the
Securities are being issued, as amended or supplemented from time to time in
accordance with the terms thereof.

          Issuer: See the introductory paragraph of this Agreement.
          ------

          Liquidated Damages: See Section 4.
          ------------------

          Participating Broker-Dealer: See Section 2.
          ---------------------------

          Person: An individual, trustee, corporation, partnership, joint stock
          ------
company, trust, unincorporated association, union, business association, firm or
other legal entity.

                                       2


          Prospectus: The prospectus included in any Registration Statement
          ----------
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act) as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Exchange Securities and/or the Transfer Restricted Securities (as
applicable) covered by such Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.

          Purchasers: See the introductory paragraph to this Agreement.
          ----------

          Registration Default: See Section 4.
          --------------------

          Registration Statement: Any registration statement of the Issuer and
          ----------------------
the Guarantors, including, but not limited to, the Exchange Registration
Statement, that covers any of the Transfer Restricted Securities pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such registration statement, including post-effective amendments,
all exhibits, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.

          Rule 144A: Rule 144 promulgated pursuant to the Securities Act, as
          ---------
currently in effect, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC.

          Rule 144A: Rule 144A promulgated pursuant to the Securities Act, as
          ---------
currently in effect, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC.

          Rule 415: Rule 415 promulgated pursuant to the Securities Act, as such
          --------
rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.

          SEC: The Securities and Exchange Commission.
          ---

          Securities: See the introductory paragraphs to this Agreement.
          ----------

                                       3


          Securities Act: The Securities Act of 1933, as amended, and the rules
          --------------
and regulations of the SEC promulgated thereunder.

          Shelf Notice: See Section 2.
          ------------

          Shelf Registration: See Section 3.
          ------------------

          TIA: The Trust Indenture Act of 1939, as amended.
          ---

          Transfer Restricted Securities: The Securities upon original issuance
          ------------------------------
thereof and at all times subsequent thereto, until in the case of any such
Securities (i) a Registration Statement covering such Securities has been
declared effective by the SEC and such Securities have been disposed of in
accordance with such effective Registration Statement, (ii) such Securities have
been transferred in compliance with Rule 144 under the Securities Act (or any
successor provision thereto), or are transferable pursuant to paragraph (k) of
such Rule 144 (or any successor provision thereto), (iii) such Securities have
otherwise been transferred and a new Security not subject to transfer
restrictions under the Securities Act has been delivered by or on behalf of the
Company in accordance with the terms of the Indenture, or (iv) such Securities
cease to be outstanding.

          Trustee: The trustee under the Indenture and, if existent, the trustee
          -------
under any indenture governing the Exchange Securities.

          Underwritten registration or underwritten offering: A registration in
          --------------------------------------------------
which securities of the Issuer or a Guarantor are sold to an underwriter for
reoffering to the public.

2.  Exchange Offer
    --------------

          (a) The Issuer and the Guarantors agree to use their reasonable best
efforts to file with the SEC as soon as practicable after the Closing Date, but
in no event later than the Filing Date, an offer to exchange (the "Exchange
Offer") any and all of the Transfer Restricted Securities for a like aggregate
principal amount of debt securities of the Issuer and the Guarantors which are
substantially identical to the Securities, except that the identity of the
Guarantors may be different from those Subsidiary Guarantors that initially
guaranteed the Securities pursuant to the Indenture so long as the Securities
are at all times guaranteed in compliance with the Indenture

                                       4


(the "Exchange Securities") (and which are entitled to the benefits of the
Indenture or a trust indenture which is identical to the Indenture (other than
such changes to the Indenture or any such identical trust indenture as are
necessary to comply with any requirements of the SEC to effect or maintain the
qualification thereof under the TIA) and which, in either case, has been
qualified under the TIA), except that the Exchange Securities shall have been
registered pursuant to an effective Registration Statement in compliance with
the Securities Act. The Exchange Offer will be registered pursuant to the
Securities Act on the appropriate form (the "Exchange Registration Statement")
and will comply with all applicable tender offer rules and regulations
promulgated pursuant to the Exchange Act and shall be duly registered or
qualified pursuant to all applicable state securities or Blue Sky laws. The
Exchange Offer shall not be subject to any condition, other than that the
Exchange Offer does not violate any applicable law or interpretation of the
Staff of the SEC. No securities shall be included in the Registration Statement
covering the Exchange Offer other than the Transfer Restricted Securities and
the Exchange Securities. The Issuer and the Guarantors agree to use their
reasonable best efforts to (x) cause the Exchange Registration Statement to
become effective pursuant to the Securities Act on or before the Effectiveness
Target Date; (y) keep the Exchange Offer open for not less than 20 business days
(or such longer period required by applicable law) after the date that the
notice of the Exchange Offer referred to below is mailed to Holders; and (z)
consummate the Exchange Offer within 210 days after the Closing Date. Each
Holder who participates in the Exchange Offer will be required to represent that
any Exchange Securities received by it will be acquired in the ordinary course
of its business, that at the time of the consummation of the Exchange Offer such
Holder will have no arrangement or understanding with any person to participate
in the distribution of the Exchange Securities, and that such Holder is not an
affiliate of the Issuer within the meaning of Rule 405 of the Securities Act (or
that if it is such an affiliate, it will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent
applicable). Each Holder that is not a Participating Broker-Dealer will be
required to represent that it is not engaged in, and does not intend to engage
in, the distribution of the Exchange Securities. Each Holder that is a
Participating Broker-Dealer will be required to acknowledge that it will deliver
a prospectus as required by law in connection with any resale of such Exchange
Securities. Upon consummation of the Exchange Offer in accordance with this
Agreement, the Issuer and the Guarantors shall have no further obligation to
register Transfer Restricted Securities pursuant to Section 3 of this Agreement.

          (b) The Issuer and the Guarantors shall include within the Prospectus
contained in the Exchange Registration Statement a section entitled "Plan

                                       5


of Distribution," reasonably acceptable to the Purchasers, which shall contain a
summary statement of the positions taken or policies made by the Staff of the
SEC with respect to the potential "underwriter" status of any broker-dealer that
is the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of
Exchange Securities received by such broker-dealer in the Exchange Offer (a
"Participating Broker-Dealer"). Such "Plan of Distribution" section shall also
allow the use of the Prospectus by all persons subject to the prospectus
delivery requirements of the Securities Act, including all Participating Broker-
Dealers, and include a statement describing the means by which Participating
Broker-Dealers may resell the Exchange Securities.

          The Issuer and the Guarantors shall use their reasonable best efforts
to keep the Exchange Registration Statement effective and to amend and
supplement the Prospectus contained therein, in order to permit such Prospectus
to be lawfully delivered by all persons subject to the prospectus delivery
requirements of the Securities Act for such period of time as such persons must
comply with such requirements in order to resell the Exchange Securities;
provided that such period shall not exceed 180 days after consummation of the
- --------
Exchange Offer (or such longer period if extended pursuant to the last paragraph
of Section 5) (the "Applicable Period").

          In connection with the Exchange Offer, the Issuer shall:

          (a) mail as promptly as practicable to each Holder a copy of the
     prospectus forming part of the Exchange Offer Registration Statement,
     together with an appropriate letter of transmittal and related documents;

          (b) utilize the services of a Depositary for the Exchange Offer with
     an address in the Borough of Manhattan, The City of New York; and

          (c) permit Holders to withdraw tendered Securities at any time prior
     to the close of business, New York time, on the last business day on which
     the Exchange Offer shall remain open.

          As soon as practicable after the close of the Exchange Offer, the
Issuer and the Guarantors shall:

          (i) accept for exchange all Securities properly tendered and not
     validly withdrawn pursuant to the Exchange Offer;

                                       6


          (ii)  deliver to the Trustee for cancellation all Securities so
     accepted for exchange; and

          (iii) cause the Trustee to authenticate and deliver promptly to each
     Holder of Securities, Exchange Securities equal in principal amount to the
     Securities of such Holder so accepted for exchange.

          (c)   If (1) prior to the consummation of the Exchange Offer,
applicable interpretations of the Staff of the SEC do not permit the Issuer and
the Guarantors to effect the Exchange Offer as contemplated herein, or (2) the
Exchange Offer is commenced and not consummated within 210 days of the Closing
Date for any reason, then the Issuer shall promptly deliver to the Holders and
the Trustee written notice thereof (the "Shelf Notice") and the Issuer and the
Guarantors shall file a Registration Statement pursuant to Section 3. Following
the delivery of a Shelf Notice to the Holders of Transfer Restricted Securities,
the Issuer and the Guarantors shall not have any further obligation to conduct
the Exchange Offer pursuant to this Section 2, provided that the Issuers and the
                                               --------
Guarantors shall have the right, nonetheless, to proceed to consummate the
Exchange Offer notwithstanding their obligations pursuant to this Section 2(c)
(and, upon such consummation, their obligation to consummate a Shelf
Registration shall terminate).

3.  Shelf Registration
    ------------------

          If a Shelf Notice is delivered as contemplated by Section 2(c), then:

          (a) Shelf Registration. The Issuer and the Guarantors shall use their
              ------------------
reasonable best efforts to prepare and file with the SEC, as promptly as
practicable following the delivery of the Shelf Notice, a Registration Statement
for an offering to be made on a continuous basis pursuant to Rule 415 covering
all of the Transfer Restricted Securities (the "Shelf Registration"). The Shelf
Registration shall be on Form S-1 or another appropriate form permitting
registration of such Transfer Restricted Securities for resale by the Holders in
the manner or manners reasonably designated by them (including, without
limitation, one or more underwritten offerings). The Issuer and the Guarantors
shall not permit any securities other than the Transfer Restricted Securities to
be included in the Shelf Registration. The Issuer and the Guarantors shall use
their reasonable best efforts, as described in Section 5(b), to cause the Shelf
Registration to be declared effective pursuant to the Securities Act as promptly
as practicable following the filing thereof and to keep the Shelf

                                       7


Registration continuously effective under the Securities Act until the date
which is 24 months from the Closing Date, or such shorter period ending when
either (1) all Transfer Restricted Securities covered by the Shelf Registration
have been sold in the manner set forth and as contemplated in the Shelf
Registration or (2) there ceases to be outstanding any Transfer Restricted
Securities (the "Effectiveness Period").

          (b)   Supplements and Amendments. The Issuer and the Guarantors shall
                --------------------------
use their reasonable best efforts to keep the Shelf Registration Statement
continuously effective by supplementing and amending the Shelf Registration if
required by the rules, regulations or instructions applicable to the
registration form used for such Shelf Registration, if required by the
Securities Act, or if reasonably requested by the holders of a majority in
aggregate principal amount of the Transfer Restricted Securities covered by such
Registration Statement or by any underwriter of such Transfer Restricted
Securities.

4.   Liquidated Damages
     ------------------

          (a)   The Issuer, the Guarantors and the Purchasers agree that the
Holders of Transfer Restricted Securities will suffer damages if the Issuer or
the Guarantors fail to fulfill their obligations pursuant to Section 2 or
Section 3 hereof and that it would not be possible to ascertain the extent of
such damages. Accordingly, in the event of such failure by Issuer or the
Guarantors to fulfill such obligations, the Issuer and the Guarantors hereby
agree to pay liquidated damages ("Liquidated Damages") to each Holder of
Transfer Restricted Securities under the circumstances and to the extent set
forth below:

          (i)   if neither the Exchange Registration Statement nor the Shelf
     Registration has been filed with the SEC on or prior to the Filing Date; or

          (ii)  if neither the Exchange Registration Statement nor the Shelf
     Registration is declared effective by the SEC on or prior to the
     Effectiveness Target Date; or

          (iii) if an Exchange Registration Statement is declared effective by
     the SEC, on or prior to 210 days after the Closing Date, the Issuer and the
     Guarantors have not exchanged Exchange Securities for all Securities
     validly tendered in accordance with the terms of the Exchange Offer; or

                                       8


          (iv) the Shelf Registration has been declared effective by the SEC and
     such Shelf Registration ceases to be effective or usable at any time during
     the Effectiveness Period, without being succeeded on the same day
     immediately by a post-effective amendment to such Registration Statement
     that cures such failure and that is itself immediately declared effective
     on the same day;

(any of the foregoing, a "Registration Default") then, with respect to the first
90-day period following such Event Date (as defined below), the Issuer and the
Guarantors shall pay to each Holder of Transfer Restricted Securities Liquidated
Damages in an amount equal to $.05 per week per $1,000 principal amount of
Transfer Restricted Securities held by such Holder for each week or portion
thereof that the Registration Default continues. The amount of such Liquidated
Damages will increase by an additional $.05 per week per $1,000 principal amount
of Transfer Restricted Securities with respect to each subsequent 90-day period
until all Registration Defaults have been cured; provided, however, that
                                                 --------  -------
Liquidated Damages shall not at any time exceed $.30 per week per $1,000
principal amount of Transfer Restricted Securities. Following the cure of all
Registration Defaults relating to any Transfer Restricted Securities, the
accrual of Liquidated Damages with respect to such Transfer Restricted
Securities will cease. A Registration Default under clause (i) above shall be
cured on the date that either the Exchange Registration Statement or the Shelf
Registration is filed with the SEC; a Registration Default under clause (ii)
above shall be cured on the date that either the Exchange Registration Statement
or the Shelf Registration is declared effective by the SEC; a Registration
Default under clause (iii) above shall be cured on the earlier of the date (A)
the Exchange Offer is consummated or (B) the Issuer delivers a Shelf Notice to
the Holders of Restricted Securities; and a Registration Default under clause
(iv) above shall be cured on the earlier of (A) the date the Shelf Registration
is declared effective or (B) the Effectiveness Period expires.

          (b)  The Issuer shall notify the Trustee within one business day after
each and every date on which a Registration Default occurs (an "Event Date").
Liquidated Damages shall be paid by the Issuer and the Guarantors to the Holders
by wire transfer of immediately available funds to the accounts specified by
them or by mailing checks to their registered addresses if no such accounts have
been specified on or before the semi-annual interest payment date provided in
the Indenture (whether or not any interest is then payable on the Securities).
Each obligation to pay Liquidated Damages shall be deemed to commence accruing
on the applicable Event Date and to cease accruing when all Registration
Defaults have been cured. In no event shall the Issuer pay Liquidated Damages in
excess of the applicable maximum

                                       9


weekly amount set forth above, regardless of whether one or multiple
Registration Defaults exist.

          (c) Notwithstanding anything to the contrary in this Section 4,
neither the issuance by the Issuer of a notice (i) of the type set forth in
Section 5(c)(vii) declaring the Shelf Registration to be unusable during the
pendency of the Material Activity (as defined in Section 5(c)(viii)) nor (ii) of
the type set forth in Section 5(c)(ii), 5(c)(iii), 5(c)(iv), 5(c)(v) and
5(c)(vi), shall be deemed to be a Registration Default and no Liquidated Damages
shall be payable or accrue with respect thereto; provided, that in the event the
aggregate number of days in any consecutive twelve-month period for which all
notices referenced above are issued and effective exceeds 30 days, then
Liquidated Damages shall be payable in accordance with Sections 4(a) and 4(b)
above for the number of such days in excess of 30 days in the aggregate.

5.  Registration Procedures
    -----------------------

          In connection with the registration of any Exchange Securities or
Transfer Restricted Securities pursuant to Sections 2 or 3 hereof, the Issuer
and the Guarantors shall effect such registration to permit the sale of such
Exchange Securities or Transfer Restricted Securities (as applicable) in
accordance with the intended method or methods of disposition thereof, and
pursuant thereto the Issuer and the Guarantors shall:

          (a) Prepare and file with the SEC, a Registration Statement or
Registration Statements as prescribed by Section 2 or 3, and to use their
reasonable best efforts to cause such Registration Statement to become effective
and remain effective as provided herein; provided that, if (1) such filing is
                                         --------
pursuant to Section 3, or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Securities during the Applicable Period, before filing any Registration
Statement or Prospectus or any amendments or supplements thereto, the Issuer
shall, if requested, furnish to and afford the Holders of the Transfer
Restricted Securities and each such Participating Broker-Dealer, as the case may
be, covered by such Registration Statement, their counsel and the managing
underwriters, if any, a reasonable opportunity to review copies of all such
documents (including copies of any documents to be incorporated by reference
therein and all exhibits thereto) proposed to be filed (at least 3 business days
prior to such filing, or such later date as is reasonable under the
circumstances). The Issuer and the Guarantors shall not file any Registration
Statement or Prospectus or any amendments

                                       10


or supplements thereto in respect of which the Holders, pursuant to this
Agreement, must be afforded an opportunity to review prior to the filing of such
document, if the Holders of a majority in aggregate principal amount of the
Transfer Restricted Securities covered by such Registration Statement, or such
Participating Broker-Dealer, as the case may be, their counsel, or the managing
underwriters, if any, shall reasonably object.

          (b) Prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration or Exchange Registration Statement, as the
case may be, as may be necessary to keep such Registration Statement
continuously effective for the Effectiveness Period or the Applicable Period, as
the case may be, or such shorter period as will terminate when all Transfer
Restricted Securities covered by such Registration Statement have been sold;
cause the related Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 (or any
similar provisions then in force) under the Securities Act; and comply with the
provisions of the Securities Act, the Exchange Act and the rules and regulations
of the SEC promulgated thereunder applicable to it with respect to the
disposition of all securities covered by such Registration Statement as so
amended or in such Prospectus as so supplemented and with respect to the
subsequent resale of any securities being sold by a Participating Broker-Dealer
covered by any such Prospectus; the Issuer and the Guarantors shall be deemed
not to have used their reasonable best efforts to keep a Registration Statement
effective during the Applicable Period if they voluntarily take any action that
would result in selling Holders of the Transfer Restricted Securities covered
thereby or Participating Broker-Dealers seeking to sell Exchange Securities not
being able to sell such Transfer Restricted Securities or such Exchange
Securities during that period, unless (i) such action is required by applicable
law, or (ii) such action is taken by them in good faith and for valid business
reasons (not including avoidance of their obligations hereunder), including the
acquisition or divestiture of assets.

          (c) If (1) a Shelf Registration is filed pursuant to Section 3, or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, notify the selling Holders of Transfer Restricted Securities,
or each known Participating Broker-Dealer, as the case may be, their counsel and
the managing underwriters, if any, promptly and confirm such notice in writing,
(i) when a Prospectus or any Prospectus supplement or post-effective amendment
has been filed, and, with respect to a Registration Statement or any post-
effective amendment, when the same has become

                                       11


effective (including in such notice a written statement that any Holder may,
upon request, obtain, without charge, one conformed copy of such Registration
Statement or post-effective amendment including financial statements and
schedules, documents incorporated or deemed to be incorporated by reference and
exhibits), (ii) of the issuance by the SEC of any stop order suspending the
effectiveness of a Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus or the initiation of any
proceedings for that purpose, (iii) if at any time when a prospectus is required
by the Securities Act to be delivered in connection with sales of the Transfer
Restricted Securities the representations and warranties of the Issuer or any
Guarantor contained in any agreement (including any underwriting agreement)
contemplated by Section 5(l) below cease to be true and correct, (iv) of the
receipt by the Issuer or any Guarantor of any notification with respect to the
suspension of the qualification or exemption from qualification of a
Registration Statement or any of the Transfer Restricted Securities or the
Exchange Securities to be sold by any Participating Broker-Dealer for offer or
sale in any jurisdiction, or the initiation of any proceeding for such purpose,
(v) of the happening of any event or any information becoming known that makes
any statement made in such Registration Statement or related Prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes in such
Registration Statement, Prospectus or documents so that, in the case of the
Registration Statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in the case of
the Prospectus, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, (vi) of the Issuer's and the Guarantors' reasonable
determination that a post-effective amendment to a Registration Statement would
be appropriate and (vii) if (A) the Issuer is engaged in or proposes to engage
in discussions or negotiations with respect to, or has proposed or taken a
substantial step to commence, or there is otherwise pending, any material
merger, acquisition, tender offer, financing or other transaction (any such
negotiation, step, event or state of facts being herein called a "Material
Activity"), (B) such Material Activity would, in the reasonable opinion of
counsel of the Issuer, require disclosure in a prospectus to be delivered in
connection with the sale of the Transfer Restricted Securities to be sold in
compliance with law, and (C) such disclosure would, in the reasonable judgment
of the Issuer, be adverse to its interests; provided, that the Issuer shall have
no obligation to include in any notice contemplated in (vii) above any reference
to or description of the facts upon which the Issuer is delivering such notice.

                                       12


          (d) If (1) a Shelf Registration is filed pursuant to Section 3, or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, use its best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Transfer Restricted Securities
or the Exchange Securities (as applicable) to be sold by any Participating
Broker-Dealer, for sale in any jurisdiction, and, if any such order is issued,
to use their reasonable best efforts to obtain the withdrawal of any such order
at the earliest possible moment.

          (e) If a Shelf Registration is filed pursuant to Section 3 and if
requested by the managing underwriters, if any, or the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities being sold in
connection with an underwritten offering, (i) promptly incorporate in a
prospectus supplement or post-effective amendment such information as the
managing underwriters, if any, or such Holders or counsel reasonably request to
be included therein, (ii) make all required filings of such prospectus
supplement or such post-effective amendment as soon as practicable after the
Issuer has received notification of the matters to be incorporated in such
prospectus supplement or post-effective amendment, and (iii) supplement or make
amendments to such Registration Statement with such information as the managing
underwriter, if any, or such Holders or counsel reasonably request to be
included therein.

          (f) If (1) a Shelf Registration is filed pursuant to Section 3, or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, furnish to each selling Holder of Transfer Restricted
Securities and to each such Participating Broker-Dealer who so requests and to
counsel and each managing underwriter, if any, without charge, one conformed
copy of the Registration Statement or Registration Statements and each post-
effective amendment thereto, including financial statements and schedules, and,
if requested, all documents incorporated or deemed to be incorporated therein by
reference and all exhibits.

          (g) If (1) a Shelf Registration is filed pursuant to Section 3, or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant to
Section

                                       13


2 is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Securities during the Applicable
Period, deliver to each selling Holder of Transfer Restricted Securities, or
each such Participating Broker-Dealer, as the case may be, their counsel, and
the underwriters, if any, without charge, as many copies of the Prospectus or
Prospectuses (including each form of preliminary prospectus) and each amendment
or supplement thereto and any documents incorporated by reference therein as
such Persons may reasonably request; and, subject to the last paragraph of this
Section 5, the Issuer and the Guarantors hereby consent to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders of Transfer Restricted Securities or each such Participating Broker-
Dealer, as the case may be, and the underwriters or agents, if any, and dealers
(if any), in connection with the offering and sale of the Transfer Restricted
Securities covered by or the sale by Participating Broker-Dealers of the
Exchange Securities pursuant to such Prospectus and any amendment or supplement
thereto.

          (h) Prior to any public offering of Transfer Restricted Securities or
any delivery of a Prospectus contained in the Exchange Registration Statement by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, to use its reasonable best efforts to register or qualify,
and to cooperate with the selling Holders of Transfer Restricted Securities or
each such Participating Broker-Dealer, as the case may be, the underwriters, if
any, and their respective counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Transfer Restricted Securities for offer and sale under the securities or Blue
Sky laws of such jurisdictions as any selling Holder, Participating Broker-
Dealer, or the managing underwriters reasonably request in writing, provided
                                                                    --------
that where Exchange Securities held by Participating Broker-Dealers or Transfer
Restricted Securities are offered other than through an underwritten offering,
the Issuer and the Guarantors agree to cause their counsel to perform Blue Sky
investigations and file registrations and qualifications required to be filed
pursuant to this Section 5(h); keep each such registration or qualification (or
exemption therefrom) effective during the period such Registration Statement is
required to be kept effective and do any and all other acts or things reasonably
necessary or advisable to enable the disposition in such jurisdictions of the
Exchange Securities held by Participating Broker-Dealers or the Transfer
Restricted Securities covered by the applicable Registration Statement; provided
                                                                        --------
that the Issuer and the Guarantors shall not be required to (A) qualify
generally to do business in any jurisdiction where they are not then so
qualified, (B) take any action that would subject them to general service of
process in any such jurisdiction where they are not then so

                                       14


subject or (C) subject themselves to taxation in excess of a nominal dollar
amount in any such jurisdiction.

          (i) If a Shelf Registration is filed pursuant to Section 3, cooperate
with the selling Holders of Transfer Restricted Securities and the managing
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Transfer Restricted Securities to be sold, which
certificates shall not bear any restrictive legends and shall be in a form
eligible for deposit with The Depository Trust Company, and enable such Transfer
Restricted Securities to be in such denominations and registered in such names
as the managing underwriters, if any, or Holders may reasonably request.

          (j) If (1) a Shelf Registration is filed pursuant to Section 3, or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, upon the occurrence of any event contemplated by paragraph
5(c) (v) or 5(c) (vi) above, as promptly as practicable prepare and (subject to
Section 5(a) above) file with the SEC, at the expense of the Issuer and the
Guarantors, a supplement or post-effective amendment to the Registration
Statement or a supplement to the related Prospectus or any document incorporated
or deemed to be incorporated therein by reference, or file any other required
document so that, as thereafter delivered to the purchasers of the Transfer
Restricted Securities being sold thereunder or to the purchasers of the Exchange
Securities to whom such Prospectus will be delivered by a Participating Broker-
Dealer, any such Prospectus will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.

          (k) Prior to the effective date of the first Registration Statement
relating to the Transfer Restricted Securities, (i) provide the Trustee with
certificates for the Transfer Restricted Securities in a form eligible for
deposit with The Depository Trust Company and (ii) provide a CUSIP number for
the Transfer Restricted Securities.

          (l) In connection with an underwritten offering of Transfer Restricted
Securities pursuant to a Shelf Registration, enter into an underwriting
agreement as is customary in underwritten offerings and take all such other
actions as are reasonably requested by the managing underwriters in order to
expedite or

                                       15


facilitate the registration or the disposition of such Transfer Restricted
Securities, and in such connection, (i) make such representations and warranties
to the underwriters, with respect to the business of the Issuer, the Guarantors
and their subsidiaries and the Registration Statement, Prospectus and documents,
if any, incorporated or deemed to be incorporated by reference therein, in each
case, as are customarily made by issuers to underwriters in underwritten
offerings, and confirm the same if and when requested; (ii) obtain opinions of
counsel to the Issuer and Guarantors and updates thereof in form and substance
reasonably satisfactory to the managing underwriters, addressed to the
underwriters covering the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably requested by
underwriters; (iii) obtain "cold comfort" letters and updates thereof in form
and substance reasonably satisfactory to the managing underwriters from the
independent certified public accountants of the Issuer and the Guarantors (and,
if necessary, any other independent certified public accountants of any
subsidiary of the Issuer or the Guarantors or of any business acquired by any of
them for which financial statements and financial data are, or are required to
be, included in the Registration Statement), addressed to each of the
underwriters, such letters to be in customary form and covering matters of the
type customarily covered in "cold comfort" letters in connection with
underwritten offerings and such other matters as are reasonably requested by
underwriters as permitted by Statement on Auditing Standards No. 72; and (iv) if
an underwriting agreement is entered into, the same shall contain
indemnification provisions and procedures no less favorable than those set forth
in Section 7 hereof (or such other provisions and procedures acceptable to
Holders of a majority in aggregate principal amount of Transfer Restricted
Securities covered by such Registration Statement and the managing underwriters
or agents) with respect to all parties to be indemnified pursuant to said
Section. The above shall be done at each closing under such underwriting
agreement, or as and to the extent required thereunder.

          (m) If (1) a Shelf Registration is filed pursuant to Section 3, or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, make available for inspection by any selling Holder of such
Transfer Restricted Securities being sold, or each such Participating Broker-
Dealer, as the case may be, any underwriter participating in any such
disposition of Transfer Restricted Securities, if any, and any attorney,
accountant or other agent retained by any such selling Holder or each such
Participating Broker-Dealer, as the case may be, or underwriter (collectively,
the "Inspectors"), at the offices where normally kept, during reasonable

                                       16


business hours, all financial and other records, pertinent corporate documents
and properties of the Issuer, the Guarantors and their subsidiaries
(collectively, the "Records") as shall be reasonably necessary to enable them to
exercise any applicable due diligence responsibilities, and cause the officers,
directors and employees of the Issuer, the Guarantors and their subsidiaries to
supply all information in each case reasonably requested by any such Inspector
in connection with such Registration Statement. Records which the Issuer
determines, in good faith, to be confidential and any Records which it notifies
the Inspectors are confidential shall not be disclosed by the Inspectors, unless
(i) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in such Registration Statement, (ii) the release of
such Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction or (iii) the information in such Records has been made
generally available to the public.

          (n) Provide an indenture trustee for the Transfer Restricted
Securities or the Exchange Securities, as the case may be, and cause the
Indenture to be qualified under the TIA not later than the effective date of the
Exchange Offer or the first Registration Statement relating to the Transfer
Restricted Securities; and in connection therewith, cooperate with the trustee
under any such indenture and the holders of the Transfer Restricted Securities,
to effect such changes to such indenture as may be required for such indenture
to be so qualified in accordance with the terms of the TIA; and execute, and use
its best efforts to cause such trustee to execute, all documents as may be
required to effect such changes, and all other forms and documents required to
be filed with the SEC to enable such indenture to be so qualified in a timely
manner.

          (o) Comply with all applicable rules and regulations of the SEC and,
as soon as reasonably practicable, make generally available to its
securityholders consolidated earnings statements of the Issuer (including a
condensed consolidating footnote if required under SEC rules) (which need not be
certified by an independent public accountant) that satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder.

          (p) If an Exchange Offer is to be consummated, upon delivery of the
Transfer Restricted Securities by Holders to the Issuer (or to such other Person
as directed by the Issuer) in exchange for the Exchange Securities, the Issuer
and the Guarantors shall mark, or cause to be marked, on such Transfer
Restricted Securities that such Transfer Restricted Securities are being
cancelled in exchange for the

                                       17


Exchange Securities; in no event shall such Transfer Restricted Securities be
marked as paid or otherwise satisfied.

          (q) Cooperate with each seller of Transfer Restricted Securities
covered by any Registration Statement and each underwriter, if any,
participating in the disposition of such Transfer Restricted Securities and
their respective counsel in connection with any filings required to be made with
the National Association of Securities Dealers, Inc. (the "NASD").

          (r) Use their best efforts to take all other steps necessary to effect
the registration of the Transfer Restricted Securities covered by a Registration
Statement contemplated hereby.

          (s) Use their best efforts to cause the Transfer Restricted Securities
or the Exchange Securities, as applicable, covered by an effective registration
statement required by Section 2 or Section 3 hereof to be rated with the
appropriate rating agencies, if so requested by the Holders of a majority in
aggregate principal amount of Transfer Restricted Securities relating to such
registration statement or the managing underwriters in connection therewith, if
any.

          The Issuer may require each seller of Transfer Restricted Securities
or Participating Broker-Dealer as to which any registration is being effected to
furnish to the Issuer such information regarding such seller or Participating
Broker-Dealer and the distribution of such Transfer Restricted Securities or
Exchange Securities to be sold by such Participating Broker-Dealer, as the case
may be, as the Issuer may, from time to time, reasonably request. The Issuer may
exclude from such registration the Transfer Restricted Securities of any seller
or Participating Broker-Dealer who fails to furnish such information within a
reasonable time after receiving such request.

          Each Holder of Transfer Restricted Securities and each Participating
Broker-Dealer agrees by acquisition of such Transfer Restricted Securities or
Exchange Securities to be sold by such Participating Broker-Dealer, as the case
may be, that, upon receipt of any notice from the Issuer of the happening of any
event of the kind described in Section 5(c) (ii), 5(c) (iv), 5(c) (v), 5 (c)
(vi) or 5(c)(vii), such Holder will forthwith discontinue disposition of such
Transfer Restricted Securities covered by such Registration Statement or
Prospectus or Exchange Securities to be sold by such Participating Broker-
Dealer, as the case may be, until such holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 5(j), or until it is
advised in writing (the "Advice") by the Issuer that the use

                                       18


of the applicable Prospectus may be resumed, and has received copies of any
amendments or supplements thereto; provided, that in the case of an event of the
kind described in Section 5(c)(vii), the Issuer may only cause such
discontinuing of dispositions for any number of periods not to exceed 30 days in
the aggregate in any consecutive 12-month period.

6   Registration Expenses
    ---------------------

          (a) All fees and expenses incident to the performance of or compliance
with this Agreement by the Issuer shall be borne by the Issuer and the
Guarantors, whether or not the Exchange Offer or a Shelf Registration is filed
or becomes effective, including, without limitation, (i) all registration and
filing fees (including, without limitation, (A) fees with respect to filings
required to be made with the NASD in connection with an underwritten offering
and (B) fees and expenses of compliance with state securities or Blue Sky laws
(including, without limitation, reasonable fees and disbursements of counsel in
connection with Blue Sky qualifications of the Transfer Restricted Securities or
Exchange Securities and determination of the eligibility of the Transfer
Restricted Securities or Exchange Securities for investment under the laws of
such jurisdictions (x) where the Holders of Transfer Restricted Securities are
located, in the case of the Exchange Securities, or (y) as provided in Section
5(h), in the case of Transfer Restricted Securities or Exchange Securities to be
sold by a Participating Broker-Dealer during the Applicable Period)), (ii)
printing expenses (including, without limitation, expenses of printing
certificates for Transfer Restricted Securities or Exchange Securities in a form
eligible for deposit with The Depository Trust Company and of printing
prospectuses if the printing of prospectuses is requested by the managing
underwriters, if any, or, in respect of Transfer Restricted Securities or
Exchange Securities to be sold by any Participating Broker-Dealer during the
Applicable Period, by the Holders of a majority in aggregate principal amount of
the Transfer Restricted Securities included in any Registration Statement or of
such Exchange Securities, as the case may be), (iii) messenger, telephone and
delivery expenses, (iv) fees and disbursements of counsel for the Issuer and the
Guarantors, (v) fees and disbursements of all independent certified public
accountants referred to in Section 5(1) (iii) (including, without limitation,
the expenses of any special audit and "cold comfort" letters required by or
incident to such performance), (vi) the fees and expenses of any "qualified
independent underwriter" or other independent appraiser participating in an
offering pursuant to Section 3 of Schedule E to the By-laws of the NASD, (vii)
rating agency fees, (viii) Securities Act liability insurance, if the Issuer and
the Guarantors desire such insurance, (ix) fees and expenses of all other
Persons retained by the Issuer and the Guarantors, (x) internal

                                       19


expenses of the Issuer and the Guarantors (including, without limitation, all
salaries and expenses of officers and employees of the Issuer and the Guarantors
performing legal or accounting duties), (xi) the expense of any audit, (xii) the
fees and expenses incurred in connection with the listing of the securities to
be registered on any securities exchange and (xiii) the expenses relating to
printing, word processing and distributing all Registration Statements,
underwriting agreements, securities sales agreements, and indentures. Nothing
contained in this Section 6 shall create an obligation on the part of the Issuer
or any Guarantor to pay or reimburse any Holder for any underwriting commission
or discount attributable to any such Holder's Transfer Restricted Securities
included in an underwritten offering pursuant to a Registration Statement filed
in accordance with the terms of this Agreement, or to guarantee such Holder any
profit or proceeds from the sale of such Securities.

          (b)  In connection with any Shelf Registration hereunder, the Issuer
and the Guarantors shall reimburse the Holders of the Transfer Restricted
Securities being registered in such registration for the reasonable fees and
disbursements of not more than one counsel (in addition to appropriate local
counsel) chosen by the Holders of a majority in aggregate principal amount of
the Transfer Restricted Securities to be included in such Registration Statement
and other reasonable out-of-pocket expenses of the Holders of Transfer
Restricted Securities reasonably incurred in connection with the registration of
the Transfer Restricted Securities.

7    Indemnification
     ---------------

          The Issuer and the Guarantors agree to indemnify and hold harmless (i)
each of the Purchasers, each Holder of Transfer Restricted Securities, each
Holder of Exchange Securities, each Participating Broker-Dealer, (ii) each
person, if any, who controls (within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act) any such Person (any of the persons referred to
in this clause (ii) being hereinafter referred to as a "controlling person"),
and (iii) the respective officers, directors, partners, employees,
representatives and agents of any of such Person or any controlling person (any
person referred to in clause (i), (ii) or (iii) may hereinafter be referred to
as an "Indemnified Person") to the fullest extent lawful, from and against any
and all losses, claims, damages, liabilities, judgments, actions and expenses
(including without limitation, and as incurred, reimbursement of all reasonable
costs of investigating, preparing, pursuing or defending any claim or action, or
any investigation or proceeding by any governmental agency or body, commenced or
threatened, including the reasonable fees and expenses of counsel to any
Indemnified Person) directly or indirectly caused by, related to, based upon,

                                       20


arising out of or in connection with any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or
Prospectus (as amended or supplemented if the Issuer shall have furnished any
amendments or supplements thereto) or any preliminary prospectus, or caused by,
arising out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except insofar as such losses, claims, damages or liabilities are
caused by (i) any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with information relating to
any Indemnified Person furnished to the Issuer or any underwriter in writing by
such Indemnified Person expressly for use therein, or (ii) any untrue statement
contained in or omission from a preliminary prospectus if a copy of the
Prospectus (as then amended or supplemented, if the Issuer shall have furnished
to or on behalf of the Holder participating in the distribution relating to the
relevant Registration Statement any amendments or supplements thereto) was not
sent or given by or on behalf of such Holder to the person asserting any such
losses, liabilities, claims, damages or expenses who purchased Securities, if
such is required by law at or prior to the written confirmation of the sale of
such Securities to such person and the untrue statement contained in or omission
from such preliminary prospectus was corrected in the Prospectus (or the
Prospectus as amended or supplemented). The Issuer and the Guarantors shall
notify the Holders promptly of the institution, threat or assertion of any
claim, proceeding (including any governmental investigation) or litigation of
which it or they shall have become aware in connection with the matters
addressed by this Agreement which involves the Issuer, any Guarantor or an
Indemnified Person.

          In connection with any Registration Statement in which an Indemnified
Person is participating, such Indemnified Person agrees, severally and not
jointly, to indemnify and hold harmless the Issuer, each Guarantor and their
directors and officers and each person who controls the Issuer and the
Guarantors within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act to the same extent as the foregoing indemnity from the
Issuer and the Guarantors to each Indemnified Person, but only with reference to
information relating to such Indemnified Person furnished to the Issuer in
writing by such Indemnified Person expressly for use in any Registration
Statement or Prospectus, any amendment or supplement thereto, or any preliminary
prospectus. The liability of any Indemnified Person pursuant to this paragraph
shall in no event exceed the net proceeds received by such Indemnified Person
from sales of Transfer Restricted Securities giving rise to such obligations.

                                       21


          If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "indemnified party") shall promptly
notify the person against whom such indemnity may be sought (the "indemnifying
person") in writing, and the indemnifying person, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying person may reasonably designate in such proceeding and shall pay
the reasonable fees and expenses actually incurred by such counsel related to
such proceeding. In any such proceeding, any indemnified party shall have the
right to retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such indemnified party, unless (i) the indemnifying person
and the indemnified party shall have mutually agreed in writing to the contrary,
(ii) the indemnifying person failed promptly to assume the defense and employ
counsel reasonably satisfactory to the indemnified party or (iii) the named
parties to any such action (including any impleaded parties) include both such
indemnified party and the indemnifying person, or any affiliate of the
indemnifying person and such indemnified party shall have been reasonably
advised by counsel that either (x) there may be one or more legal defenses
available to it which are different from or additional to those available to the
indemnifying person or such affiliate of the indemnifying person or (y) a
conflict may exist between such indemnified party and the indemnifying person or
such affiliate of the indemnifying person (in which case the indemnifying person
shall not have the right to assume the defense of such action on behalf of such
indemnified party), it being understood, however, that the indemnifying person
shall not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all such indemnified parties, which firm shall be designated in writing by
indemnified parties who sold a majority in interest of Transfer Restricted
Securities sold by all such indemnified parties and any such separate firm for
the Issuer and the Guarantors, their directors, their officers and such control
persons of the Issuer and the Guarantors shall be designated in writing by the
Issuer. The indemnifying person shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
person agrees to indemnify any indemnified party from and against any loss or
liability by reason of such settlement or judgment. No indemnifying person
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party

                                       22


and indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such proceeding.

          If the indemnification provided for in the first and second paragraphs
of this Section 7 is unavailable to an indemnified party in respect of any
losses, claims, damages, liabilities, or expenses referred to therein (other
than by reason of the exceptions provided therein), then each indemnifying
person under such paragraphs, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages, liabilities, or expenses (i)
in such proportion as is appropriate to reflect the relative fault of the
indemnified party on the one hand and the indemnifying person(s) on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities, or expenses or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the indemnifying person(s) and the
indemnified party, as well as any other relevant equitable considerations. The
relative fault of the Issuer and the Guarantors on the one hand and any
Indemnified Persons on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Issuer and the Guarantors or by such Indemnified
Persons and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.

          The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
                                                           --- ----
(even if such indemnified parties were treated as one entity for such purpose)
or by any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph.  The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses actually incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall an
Indemnified Person be required to contribute any amount in excess of the amount
by which proceeds received by such Indemnified Person from sales of Transfer
Restricted Securities exceeds the amount of any damages that such Indemnified
Person

                                       23


has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.

          The indemnity and contribution agreements contained in this Section 7
will be in addition to any liability which the indemnifying persons may
otherwise have to the indemnified parties referred to above. The Indemnified
Persons' obligations to contribute pursuant to Section 7 are several in
proportion to the respective principal amount of Securities sold by each of the
Indemnified Persons hereunder and not joint.

8    Rules 144 and 144A
     ------------------

          The Issuer and the Guarantors covenant that they will file the reports
required to be filed by them pursuant to the Securities Act and the Exchange Act
and the rules and regulations adopted by the SEC thereunder in a timely manner
and, if at any time the Issuer and the Guarantors are not required to file such
reports, they will, upon the request of any Holder of Transfer Restricted
Securities, make available information required by Rules 144 and 144A under the
Securities Act in order to permit sales pursuant to Rule 144 and Rule 144A. The
Issuer and the Guarantors further covenant that they will take such further
action as any Holder of Transfer Restricted Securities may reasonably request,
all to the extent required from time to time to enable such Holder to sell
Transfer Restricted Securities without registration under the Securities Act
within the limitation of the exemptions provided by (a) Rule 144 and Rule 144A
under the Act, as such Rules may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the SEC.

9    Underwritten Registrations
     --------------------------

          (a)  If any of the Transfer Restricted Securities covered by any Shelf
Registration are to be sold in an underwritten offering, the investment banker
or investment bankers and manager or managers that will manage the offering will
be selected by the Holders of a majority in aggregate principal amount of such
Transfer Restricted Securities included in such offering and reasonably
acceptable to the Issuer.

          No Holder of Transfer Restricted Securities may participate in any
underwritten registration hereunder, unless such Holder (a) agrees to sell such

                                       24


Holder's Transfer Restricted Securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.

          (b)  Each Holder of Transfer Restricted Securities agrees, if
requested (pursuant to a timely written notice) by the managing underwriters in
an underwritten offering or placement agent in a private offering of the
Company's or the Guarantors' debt securities, not to effect any private sale or
distribution (including a sale pursuant to Rule 144(k) and Rule 144A, but
excluding nonpublic sales to any of its affiliates, officers, directors,
employees and controlling persons) of any of the Securities except pursuant to
an Exchange Offer, during the period beginning 10 days prior to, and ending 90
days after, the closing date of the underwritten offering.

          The foregoing provisions shall not apply to any holder of Transfer
Restricted Securities if such holder is prevented by applicable statute or
regulation from entering into any such agreement.

          The Issuer and the Guarantors agree without the written consent of the
managing underwriters in an underwritten offering of Transfer Restricted
Securities covered by a Registration Statement filed pursuant to Section 3
hereof, not to effect any public or private sale or distribution of its
respective debt securities, including a sale pursuant to Regulation D or Rule
144A under the Securities Act, during the period beginning 10 days prior to, and
ending 90 days after, the closing date of each underwritten offering made
pursuant to such Registration Statement (provided, however, that such period
                                         --------  -------
shall be extended by the number of days from and including the date of the
giving of any notice pursuant to Section 5(c) (v) or (c) (vi) hereof to and
including the date when each seller of Transfer Restricted Securities covered by
such Registration Statement shall have received the copies of the supplemented
or amended Prospectus contemplated by Section 5(j) hereof).

10   Miscellaneous
     -------------

          (a)  Remedies.  In the event of a breach by the Issuer of any of its
               --------
obligations under this Agreement, each Holder of Transfer Restricted Securities,
in addition to being entitled to exercise all rights provided herein, in the
Indenture or, in the case of the Purchasers, in the Purchase Agreement, or
granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this

                                       25


Agreement. The Issuer and the Guarantors agree that monetary damages would not
be adequate compensation for any loss incurred by reason of a breach by them of
any of the provisions of this Agreement and hereby further agree that, in the
event of any action for specific performance in respect of such breach, they
shall waive the defense that a remedy at law would be adequate.

          (b)  No Inconsistent Agreements.  The Issuer and the Guarantors have
               --------------------------
not, as of the date hereof, and they shall not, after the date of this
Agreement, enter into any agreement with respect to any of their respective
securities that is inconsistent with the rights granted to the Holders of
Transfer Restricted Securities in this Agreement or otherwise conflicts with the
provisions hereof.  The Issuer and the Guarantors have not entered, and will not
enter, into any agreement with respect to any of their respective securities
which will grant to any Person piggy-back registration rights with respect to a
Registration Statement.

          (c)  Amendments and Waivers.  The provisions of this Agreement,
               ----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Issuer has obtained the written consent of Holders
of at least a majority of the then outstanding aggregate principal amount of
Transfer Restricted Securities.  Notwithstanding the foregoing, a waiver or
consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders of Transfer Restricted Securities
whose securities are being sold pursuant to a Registration Statement and that
does not directly or indirectly affect, impair, limit or compromise the rights
of other Holders of Transfer Restricted Securities may be given by Holders of at
least a majority in aggregate principal amount of the Transfer Restricted
Securities being sold by such Holders pursuant to such Registration Statement;

provided that the provisions of this sentence may not be amended, modified or
- --------
supplemented except in accordance with the provisions of the immediately
preceding sentence.

          (d)  Notices.  All notices and other communications (including without
               -------
limitation any notices or other communications to the Trustee) provided for or
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, next-day air courier or telecopier:

          (i)  if to a Holder of Transfer Restricted Securities, at the most
     current address given by the Trustee to the Issuer; and

                                       26


          (ii) if to the Issuer or the Guarantors, 10400 Fernwood Road,
     Bethesda, Maryland 20817, Attention: Christopher G. Townsend, Senior Vice
     President and General Counsel.

          All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed; one business day after
being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if telecopied.

          Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
Indenture at the address specified in such Indenture.

          (e)  Successors and Assigns.  This Agreement shall inure to the
               ----------------------
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities. The Issuer and
the Guarantors agree that the Holders of the Securities shall be third party
creditor beneficiaries to the agreements made hereunder by the Purchasers and
the Issuer, the Guarantors and each Holder shall have the right to enforce such
agreements directly to the extent it deems such enforcement necessary or
advisable to protect its rights hereunder.

          (f)  Counterparts.  This Agreement may be executed in any number of
               ------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

          (g)  Headings.  The headings in this Agreement are for convenience of
               --------
reference only and shall not limit or otherwise affect the meaning hereof.

          (h)  Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
               -------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW.  EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT.

                                       27


          (i)  Severability.  If any term, provision, covenant or restriction of
               ------------
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction.  It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

          (j)  Entire Agreement.  This Agreement, together with the Purchase
               ----------------
Agreement, is intended by the parties as a final expression of their agreement,
and is intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and therein.

          (k)  Securities Held by the Issuer, the Guarantors, or Its Affiliates.
               ----------------------------------------------------------------
Whenever the consent or approval of Holders of a specified percentage of
Transfer Restricted Securities is required hereunder, Transfer Restricted
Securities held by the Issuer, the Guarantors, or their affiliates (as such term
is defined in Rule 405 under the Securities Act) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.


          (l)  Guarantor Information.  The Issuer and the Guarantors shall
               ---------------------
prepare and furnish in any Exchange Registration Statement, Shelf Registration
or other document such information, including historical and pro forma financial
information, concerning each Guarantor as may be required by applicable
securities laws, accounting guidelines, or rules and regulations of applicable
securities regulatory authorities, including the SEC, in order to have any
Registration Statement to be filed pursuant to this Agreement filed, declared
and kept effective as contemplated by this Agreement.  Each of the Issuer and
each Guarantor agrees that the preparing and furnishing of such information
within the time periods contemplated in this Agreement constitute "reasonable
efforts" on such person's part for all purposes of this Agreement.

          IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.

                                       28


          ISSUER
          ------

          HOST MARRIOTT, L.P.


          By:______________________________
             Name:  Christopher G. Townsend
             Title:  Senior Vice President and General Counsel


          GUARANTORS
          ----------

          AIRPORT HOTELS LLC,
          HOST OF BOSTON, LTD.,
          HOST OF HOUSTON, LTD,
          HOST OF HOUSTON 1979,
          CHESAPEAKE FINANCIAL SERVICES LLC,
          CITY CENTER INTERSTATE PARTNERSHIP LLC,
          HMC RETIREMENT PROPERTIES, L.P.,
               BY: DURBIN LLC
          HMH MARINA LLC,
          FARRELL'S ICE CREAM PARLOUR RESTAURANTS LLC,
          HMC ATLANTA LLC,
          HMC BCR HOLDINGS LLC,
          HMC BURLINGAME LLC,
          HMC CALIFORNIA LEASING LLC,
          HMC CAPITAL LLC,
          HMC CAPITAL RESOURCES LLC,
          HMC PARK RIDGE LLC,
          HMC PARK RIDGE II LLC,
          HMC PARK RIDGE LP,
               BY: HMC PARK RIDGE LLC
          HMC PARTNERSHIP HOLDINGS LLC,
          HOST PARK RIDGE LLC,
          HMC SUITES LLC,
          HMC SUITES LIMITED PARTNERSHIP,
               BY: HMC SUITES LLC
          PRM LLC,


          WELLSFORD-PARK RIDGE HMC HOTEL LIMITED PARTNERSHIP,
               BY: HOST PARK RIDGE LLC
          YBG ASSOCIATES LLC,
          HMC CHICAGO LLC,
          HMC DESERT LLC,
          HMC PALM DESERT LLC,
          MDSM FINANCE LLC,
          HMC DIVERSIFIED LLC,
          HMC EAST SIDE II LLC,
          HMC GATEWAY LLC,
          HMC GRAND LLC,
          HMC HANOVER LLC,
          HMC HARTFORD LLC,
          HMC HOTEL DEVELOPMENT LLC,
          HMC HPP LLC,
          HMC IHP HOLDING LLC,
          HMC MANHATTAN BEACH LLC,
          HMC MARKET STREET LLC,
          NEW MARKET STREET LP,
               BY: HMC MARKET STREET LLC
          HMC GEORGIA LLC,
          HMC MEXPARK LLC,
          HMC POLANCO LLC,
          HMC NGL LLC,
          HMC OLS I L.P.,
               BY: HMC OLS I LLC
          HMC OP BN LLC,
          HMC PACIFIC GATEWAY LLC,
          HMC PLP LLC,
          CHESAPEAKE HOTEL LIMITED PARTNERSHIP,
               BY: HMC PLP LLC
          HMC POTOMAC LLC,
          HMC PROPERTIES I LLC,
          HMC PROPERTIES II LLC,
          HMC RTZ LOAN I LLC,
          HMC RTZ LOAN LIMITED PARTNERSHIP,
               BY: HMC RTZ LOAN I LLC
          HMC RTZ II LLC,
          HMC SBM TWO LLC,


          HMC SEATTLE LLC,
          HMC SFO LLC,
          HMC SWISS HOLDINGS LLC,
          HMC WATERFORD LLC,
          HMH GENERAL PARTNER HOLDINGS LLC,
          HMH NORFOLK LLC,
          HMH NORFOLK, L.P.,
               BY: HMH NORFOLK LLC
          HMH PENTAGON LLC,
          HMH RESTAURANTS LLC,
          HMH RIVERS LLC,
          HMH RIVERS, L.P.,
               BY: HMH RIVERS LLC
          HMH WTC LLC,
          HMP CAPITAL VENTURES LLC,
          HMP FINANCIAL SERVICES LLC,
          HOST LA JOLLA LLC,
          CITY CENTER HOTEL LIMITED PARTNERSHIP,
               BY: HOST LA JOLLA LLC
          TIMES SQUARE LLC,
          IVY STREET LLC,
          MARKET STREET HOST LLC,
          MFR OF ILLINOIS LLC,
          MFR OF VERMONT LLC,
          MFR OF WISCONSIN LLC,
          PHILADELPHIA AIRPORT HOTEL LLC,
          PM FINANCIAL LLC,
          PM FINANCIAL LP,
               BY: PM FINANCIAL LLC
          HMC PROPERTY LEASING LLC,
          HMC HOST RESTAURANTS LLC,
          SANTA CLARA HMC LLC,
          S.D. HOTELS LLC,
          TIMES SQUARE GP LLC,
          DURBIN LLC,
          ATLANTA II LIMITED PARTNERSHIP,
               BY: HMC ATLANTA LLC
          IVY STREET HOTEL LIMITED PARTNERSHIP,
               BY: ATLANTA II LIMITED PARTNERSHIP
                   BY: HMC ATLANTA LLC


          IVY STREET MPF LLC,
          HMC BURLINGAME II LLC,
          HOST DSM LIMITED PARTNERSHIP,
               BY: HMC DESERT LLC
          HMC DIVERSIFIED AMERICAN HOTELS, L.P.,
               BY: HMC DIVERSIFIED LLC
          HMC EAST SIDE LLC,
          HMC PARTNERSHIP PROPERTIES LLC,
          HMC HT LLC,
          HMC JWDC GP LLC,
          HMC JWDC LLC,
          HMC OLS I LLC,
          HMC OLS II L.P.,
               BY: HMC OLS I LLC
          POTOMAC HOTEL LIMITED PARTNERSHIP,
               BY: HMC POTOMAC LLC
          HMC RTZ LOAN II LLC,

          By:______________________________
             Name:  Christopher G. Townsend
             Title:  Senior Vice President and General Counsel


The foregoing Registration Rights
Agreement is hereby confirmed and
accepted as of the date first above written.

DEUTSCHE BANK SECURITIES INC.
BANC OF AMERICA SECURITIES LLC
BEAR, STEARNS & CO. INC.
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
MORGAN STANLEY & CO. INCORPORATED
CREDIT LYONNAIS SECURITIES (USA) INC.
SCOTIA CAPITAL (USA) INC.
SG COWEN SECURITIES CORPORATION


BY:  DEUTSCHE BANK SECURITIES INC.

     By: _________________________
         Name: Paul M. Whyte
         Title:   Director

EX-10.40

                                                                   Exhibit 10.40

                                           [Conformed Copy with Exhibits G and F
                                                          Conformed as Executed]

================================================================================

                     AMENDED AND RESTATED CREDIT AGREEMENT

                                     among

                           HOST MARRIOTT CORPORATION,

                              HOST MARRIOTT, L.P.,

                                 VARIOUS BANKS,

                                      and

                             BANKERS TRUST COMPANY,
                            as Administrative Agent

                       ----------------------------------

                           Dated as of June 19, 1997

                                      and

                   Amended and Restated as of August 5, 1998
                                  and further
                    Amended and Restated as of May 31, 2000

================================================================================

                         DEUTSCHE BANK SECURITIES INC.,
                        as ARRANGER AND SOLE BOOKRUNNER,

                        CREDIT LYONNAIS NEW YORK BRANCH,
                            as SYNDICATION AGENT and
                                  a CO-AGENT,

                            THE BANK OF NOVA SCOTIA,
                             as DOCUMENTATION AGENT
                                      and
                                   a CO-AGENT,

                                      and

                             BANK OF AMERICA, N.A.,
                      SOCIETE GENERALE, SOUTHWEST AGENCY,
                          and WELLS FARGO BANK, N.A.,
                           as SENIOR MANAGING AGENTS


                                TABLE OF CONTENTS
                                -----------------

                                                                            Page
                                                                            ----


SECTION 1.  Amount and Terms of Credit.........................................1

         1.01  The Commitments.................................................1
         1.02  Minimum Amount of Each Borrowing................................2
         1.03  Notice of Borrowing.............................................2
         1.04  Disbursement of Funds...........................................2
         1.05  Notes...........................................................3
         1.06  Conversions.....................................................4
         1.07  Pro Rata Borrowings.............................................5
         1.08  Interest........................................................5
         1.09  Interest Periods................................................6
         1.10  Increased Costs, Illegality, etc................................7
         1.11  Compensation....................................................9
         1.12  Change of Lending Office........................................9
         1.13  Replacement of Banks............................................9
         1.14  Additional Revolving Loan Commitments..........................10

SECTION 2.  Fees; Reductions of Commitment....................................12

         2.01  Fees...........................................................12
         2.02  Voluntary Termination of Unutilized Commitments................12
         2.03  Mandatory Termination of Commitments...........................13

SECTION 3.  Prepayments; Payments; Taxes......................................13

         3.01  Voluntary Prepayments..........................................13
         3.02  Mandatory Repayments and Commitment Reductions.................14
         3.03  Method and Place of Payment....................................17
         3.04  Net Payments; Taxes............................................17

SECTION 4.  Conditions Precedent to Loans.....................................19

         4.01  Execution of Agreement; Notes..................................19
         4.02  Fees, etc......................................................19
         4.03  Opinions of Counsel............................................19
         4.04  Organizational Documents; Proceedings; etc.....................19
         4.05  Pledge and Security Agreement..................................20
         4.06  Subsidiaries Guaranty..........................................21
         4.07  Adverse Change, etc............................................21
         4.08  Litigation.....................................................21
         4.09  Original Credit Agreement......................................21
         4.10  Solvency Certificate; Insurance Certificates...................21
         4.11  Financial Statements; Projections..............................22
         4.12  No Default; Representations and Warranties.....................22

                                      (i)


                                                                            Page
                                                                            ----

SECTION 5.  Conditions Precedent to All Loans.................................22

         5.01  Effective Date.................................................22
         5.02  No Default; Representations and Warranties.....................22
         5.03  Notice of Borrowing............................................23

SECTION 6.  Representations and Warranties....................................23

         6.01  Status.........................................................23
         6.02  Power and Authority............................................23
         6.03  No Violation...................................................24
         6.04  Governmental Approvals.........................................24
         6.05  Financial Statements; Financial Condition; Undisclosed
               Liabilities; Projections; etc..................................24
         6.06  Litigation.....................................................25
         6.07  True and Complete Disclosure...................................25
         6.08  Use of Proceeds; Margin Regulations............................25
         6.09  Tax Returns and Payments.......................................26
         6.10  Compliance with ERISA..........................................26
         6.11  The Pledge and Security Agreement; Equity Pledges..............27
         6.12  Properties.....................................................28
         6.13  Subsidiaries...................................................28
         6.14  Compliance with Statutes, etc..................................28
         6.15  Investment Company Act.........................................28
         6.16  Public Utility Holding Company Act.............................28
         6.17  Environmental Matters..........................................29
         6.18  Labor Relations................................................29
         6.19  Intellectual Property..........................................29
         6.20  Indebtedness...................................................30
         6.21  Management Agreements, Franchise Agreements, Operating
               Leases, Ground Leases..........................................30
         6.22  Status as REIT.................................................30
         6.23  Facility Managers; Approved Lessees............................30

SECTION 7.  Affirmative Covenants.............................................31

         7.01  Information Covenants..........................................31
         7.02  Books, Records and Inspections; Annual Meetings................34
         7.03  Maintenance of Property and Insurance..........................34
         7.04  Corporate Franchises...........................................38
         7.05  Compliance with Statutes, etc..................................38
         7.06  Compliance with Environmental Laws.............................39
         7.07  ERISA..........................................................39
         7.08  End of Fiscal Years; Fiscal Quarters...........................40
         7.09  Performance of Obligations.....................................40
         7.10  Payment of Taxes...............................................41
         7.11  Certain Subsidiaries...........................................41
         7.12  Management Agreements; Operating Leases........................41

                                      (ii)


                                                                            Page
                                                                            ----

         7.13  REIT Requirements..............................................42
         7.14  Contributions..................................................42
         7.15  Foreign Subsidiaries Security..................................42
         7.16  Additional Subsidiary Guarantors; Release of Subsidiary
               Guarantors and Collateral......................................43
         7.17  Capital Expenditures...........................................44
         7.18  Certain Inventory, Fixed Asset Supplies and Working
               Capital Receivables............................................44

SECTION 8.  Negative Covenants................................................45

         8.01  Liens..........................................................45
         8.02  Consolidation, Merger, Purchase or Sale of Assets, etc.........48
         8.03  Dividends......................................................52
         8.04  Indebtedness...................................................53
         8.05  Advances, Investments and Loans................................55
         8.06  Transactions with Affiliates...................................57
         8.07  Capital Expenditures...........................................57
         8.08  Minimum Consolidated Interest Coverage Ratio; Minimum
               Unsecured Interest Coverage Ratio..............................58
         8.09  Minimum Fixed Charge Coverage Ratio............................58
         8.10  Tangible Net Worth.............................................58
         8.11  Maximum Leverage Ratio.........................................58
         8.12  Unencumbered EBITDA Ratio......................................58
         8.13  Limitation on Payments of Certain Indebtedness;
               Modifications of Certain Indebtedness; Modifications
               of Certificate of Incorporation, By-Laws and Certain
               Agreements; etc................................................58
         8.14  Limitation on Certain Restrictions on Subsidiaries.............59
         8.15  Limitation on Issuance of Capital Stock........................60
         8.16  Business.......................................................61
         8.17  Limitation on Creation of Subsidiaries.........................61
         8.18  The Courtyard Settlement.......................................62

SECTION 9.  Events of Default.................................................62

         9.01  Payments.......................................................62
         9.02  Representations, etc...........................................62
         9.03  Covenants......................................................62
         9.04  Default Under Other Agreements.................................63
         9.05  Bankruptcy, etc................................................63
         9.06  ERISA..........................................................63
         9.07  Pledge and Security Agreement..................................64
         9.08  Subsidiaries Guaranty..........................................64
         9.09  Judgments......................................................64
         9.10  Management Agreements..........................................65
         9.11  Operating Leases...............................................65
         9.12  Change of Control..............................................65
         9.13  Trademark Permission...........................................65
         9.14  REIT Status....................................................65

                                     (iii)


                                                                            Page
                                                                            ----

          9.15  General Partner Status........................................65
          9.16  Certain FF&E..................................................65

SECTION 10.  Definitions and Accounting Terms.................................66

         10.01  Defined Terms.................................................66

SECTION 11.  The Administrative Agent.........................................97

         11.01  Appointment...................................................97
         11.02  Nature of Duties..............................................97
         11.03  Lack of Reliance on the Administrative Agent..................98
         11.04  Certain Rights of the Administrative Agent....................98
         11.05  Reliance......................................................98
         11.06  Indemnification...............................................98
         11.07  The Administrative Agent in its Individual Capacity...........99
         11.08  Holders.......................................................99
         11.09  Resignation by the Administrative Agent; Removal of
                the Administrative Agent......................................99

SECTION 12.  Miscellaneous...................................................100

         12.01  Payment of Expenses, etc.....................................100
         12.02  Right of Setoff..............................................101
         12.03  Notices......................................................101
         12.04  Benefit of Agreement.........................................102
         12.05  No Waiver; Remedies Cumulative...............................103
         12.06  Payments Pro Rata............................................104
         12.07  Calculations; Computations...................................104
         12.08  GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE;
                WAIVER OF JURY TRIAL.........................................105
         12.09  Counterparts.................................................106
         12.10  Effectiveness................................................106
         12.11  Headings Descriptive.........................................106
         12.12  Amendment or Waiver; etc.....................................107
         12.13  Survival.....................................................108
         12.14  Domicile of Loans............................................108
         12.15  Confidentiality..............................................108
         12.16  Register.....................................................109
         12.17  Commercial Loan Transactions.................................109
         12.18  Limitations on Recourse......................................110

                                      (iv)


SCHEDULE I      Commitments
SCHEDULE II     Bank Addresses
SCHEDULE III    Pledge of Equity Interests
SCHEDULE IV     Subsidiaries
SCHEDULE V      Existing Indebtedness
SCHEDULE VI     Certain Section 7.11(b) Exceptions
SCHEDULE VII    Existing Liens
SCHEDULE VIII   Certain Assets and Liabilities of Holdings
SCHEDULE IX     Certain Existing General Partnership Interests
SCHEDULE X      Courtyard Settlement Terms

EXHIBIT A       Notice of Borrowing
EXHIBIT B-1     Form of Term Note
EXHIBIT B-2     Form of Revolving Note
EXHIBIT C       Section 3.04(b)(ii) Certificate
EXHIBIT D-1     Opinion of Christopher Townsend, Esq., General Counsel
EXHIBIT D-2     Opinion of Hogan & Hartson L.L.P.
EXHIBIT E       Officers' Certificate
EXHIBIT F       Amended and Restated Pledge and Security Agreement
EXHIBIT G       Amended and Restated Subsidiaries Guaranty
EXHIBIT H       Officer's Solvency Certificate
EXHIBIT I       Assignment and Assumption Agreement
EXHIBIT J       Additional Revolving Loan Commitment Agreement
EXHIBIT K       Subordination Provisions


                                      (v)


     AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June 19, 1997, and
amended and restated as of August 5, 1998, and further amended and restated as
of May 31, 2000, among HOST MARRIOTT CORPORATION, a Maryland corporation
("Holdings"), HOST MARRIOTT, L.P., a Delaware limited partnership (the
"Borrower"), the Banks party hereto from time to time, and BANKERS TRUST
COMPANY, as Administrative Agent (all capitalized terms used herein and defined
in Section 10 are used herein as therein defined).

                                   WITNESSETH:
                                   ----------

     WHEREAS, Holdings, the Borrower, the lenders party thereto on (and
immediately before giving effect to) the Effective Date and the Administrative
Agent are parties to a Credit Agreement, dated as of June 19, 1997 and amended
and restated as August 5, 1998 (as the same has been further amended, modified
or supplemented to, but not including, the Effective Date, the "Original Credit
Agreement"); and

     WHEREAS, the parties hereto wish to amend and restate the Original Credit
Agreement in its entirety in the form of this Agreement;

     NOW, THEREFORE, the parties hereto agree that, from and after the Effective
Date, the Original Credit Agreement shall be and hereby is amended and restated
in its entirety as follows:

     SECTION 1. Amount and Terms of Credit.
                --------------------------

     1.01 The Commitments. (a) Subject to and upon the terms and conditions set
          ---------------
forth herein, each Bank with a Term Loan Commitment severally agrees to make, on
the Effective Date, a term loan or term loans (each, a "Term Loan" and,
collectively, the "Term Loans") to the Borrower, which Term Loans (i) shall, at
the option of the Borrower, be incurred and maintained as, and/or converted
into, Base Rate Loans or Eurodollar Loans, provided that, except as otherwise
                                           --------
specifically provided in Section 1.10(b), all Term Loans comprising the same
Borrowing shall at all times be of the same Type, and (ii) shall not exceed for
any such Bank, in aggregate principal amount, that amount which equals the Term
Loan Commitment of such Bank on the Effective Date (before giving effect to the
termination thereof on such date pursuant to Section 2.03(b)). Once repaid, Term
Loans incurred hereunder may not be reborrowed.

     (b) Subject to and upon the terms and conditions set forth herein, each
Bank with a Revolving Loan Commitment severally agrees to make, at any time and
from time to time on and after the Effective Date and prior to the Maturity
Date, a revolving loan or revolving loans (each, a "Revolving Loan" and,
collectively, the "Revolving Loans") to the Borrower, which Revolving Loans (i)
shall, at the option of the Borrower, be incurred and maintained as, and/or
converted into, Base Rate Loans or Eurodollar Loans, provided that, except as
                                                     --------
otherwise specifically provided in Section 1.10(b), all Revolving Loans
comprising the same Borrowing shall at all times be of the same Type, (ii) may
be repaid and reborrowed at any time in accordance with the provisions hereof,
and (iii) shall not exceed for any such Bank at any time


outstanding that aggregate principal amount which equals the Revolving Loan
Commitment of such Bank at such time.

     1.02 Minimum Amount of Each Borrowing. The aggregate principal amount of
          --------------------------------
each Borrowing of Loans under a respective Tranche shall not be less than the
Minimum Borrowing Amount applicable to such Tranche. More than one Borrowing
may occur on the same date, but at no time shall there be outstanding more than
ten Borrowings of Eurodollar Loans.

     1.03 Notice of Borrowing. (a) Whenever the Borrower desires to incur a
          -------------------
Borrowing of Loans hereunder, the Borrower shall give the Administrative Agent
at the Notice Office at least one Business Day's prior written notice (or
telephonic notice promptly confirmed in writing) of each Base Rate Loan to be
incurred hereunder and at least three Business Days' prior written notice (or
telephonic notice promptly confirmed in writing) of each Eurodollar Loan to be
incurred hereunder, provided that any such notice shall be deemed to have been
                    --------
given on a certain day only if given before 11:00 A.M. (New York time) on such
day. Each such written notice or written confirmation of telephonic notice
(each, a "Notice of Borrowing"), except as otherwise expressly provided in
Section 1.10, shall be irrevocable and shall be given by the Borrower in the
form of Exhibit A, appropriately completed to specify (i) the aggregate
principal amount of the Loans to be incurred pursuant to such Borrowing, (ii)
the date of such Borrowing (which shall be a Business Day), (iii) the specific
uses to be made of the proceeds of the Loans, (iv) whether the Loans being
incurred pursuant to such Borrowing shall constitute Term Loans or Revolving
Loans, and (v) whether the Loans being incurred pursuant to such Borrowing are
to be initially maintained as Base Rate Loans or, to the extent permitted
hereunder, Eurodollar Loans and, if Eurodollar Loans, the initial Interest
Period to be applicable thereto. The Administrative Agent shall promptly give
each Bank which is required to make Loans specified in the respective Notice of
Borrowing facsimile or other written notice (i) of such proposed Borrowing, (ii)
of such Bank's proportionate share thereof and (iii) of the other matters
required by the immediately preceding sentence to be specified in the Notice of
Borrowing. Notwithstanding anything to the contrary contained in this
Agreement, unless the Administrative Agent otherwise agrees, no more than four
Notices of Borrowing may be given in any 30 consecutive day period.

     (b) Without in any way limiting the obligation of the Borrower to confirm
in writing any telephonic notice of any Borrowing of Loans, the Administrative
Agent may act without liability upon the basis of telephonic notice of such
Borrowing believed by the Administrative Agent in good faith to be from an
Authorized Officer of the Borrower prior to receipt of written confirmation. In
each such case, the Borrower hereby waives the right to dispute the
Administrative Agent's record of the terms of such telephonic notice of such
Borrowing.

     1.04 Disbursement of Funds. No later than 1:00 P.M. (New York time) on the
          ---------------------
date specified in each Notice of Borrowing, each Bank with a Commitment for the
respective Tranche of Loans and which has received the notice referred to in the
next to last sentence of Section 1.03(a) will disburse its pro rata portion of
                                                           --- ----
each Borrowing requested to be made on such date. All such amounts shall be
disbursed in Dollars and in immediately available funds at the Payment Office,
and the Administrative Agent will promptly disburse to the Borrower at the
Payment Office, in Dollars and in immediately available funds, the aggregate of
the amounts so

                                      -2-


made available by the Banks. Unless the Administrative Agent shall have been
notified by any Bank prior to the time of Borrowing that such Bank does not
intend to disburse to the Administrative Agent such Bank's portion of any
Borrowing to be made on such date, the Administrative Agent may assume that
such Bank has disbursed such amount to the Administrative Agent on such date of
Borrowing and the Administrative Agent may, in reliance upon such assumption,
disburse to the Borrower a corresponding amount. If such corresponding amount
is not in fact disbursed to the Administrative Agent by such Bank, the
Administrative Agent shall be entitled to recover such corresponding amount on
demand from such Bank. If such Bank does not pay such corresponding amount
forthwith upon the Administrative Agent's demand therefor, the Administrative
Agent shall promptly notify the Borrower and, to the extent such corresponding
amount has previously been disbursed to the Borrower, the Borrower shall, within
one Business Day after such notice, pay such corresponding amount to the
Administrative Agent. The Administrative Agent shall also be entitled to recover
on demand from such Bank or the Borrower, as the case may be, interest on such
corresponding amount in respect of each day from the date such corresponding
amount was made available by the Administrative Agent to the Borrower until the
date such corresponding amount is recovered by the Administrative Agent, at a
rate per annum equal to (i) if recovered from such Bank, the overnight Federal
Funds Rate for the first three days and the interest rate applicable to Loans of
the respective Tranche maintained as Base Rate Loans for each day thereafter,
and (ii) if recovered from the Borrower, the rate of interest applicable to the
respective Borrowing, as determined pursuant to Section 1.08. Nothing in this
Section 1.04 shall be deemed to relieve any Bank from its obligation to make
Loans hereunder or to prejudice any rights which the Borrower may have against
any Bank as a result of any failure by such Bank to make Loans hereunder.

     1.05 Notes. (a) The Borrower's obligation to pay the principal of, and
          -----
interest on, the Loans made by each Bank to the Borrower shall be evidenced in
the Register maintained by the Administrative Agent pursuant to Section 12.16
and, subject to the provisions of clause (e) of this Section 1.05, also shall be
evidenced (i) if Term Loans, by a promissory note duly executed and delivered
by the Borrower substantially in the form of Exhibit B-1 with blanks
appropriately completed in conformity herewith (each, a "Term Note" and,
collectively, the "Term Notes"), and (ii) if Revolving Loans, by a promissory
note duly executed and delivered by the Borrower substantially in the form of
Exhibit B-2, with blanks appropriately completed in conformity herewith (each, a
"Revolving Note" and, collectively, the "Revolving Notes").

     (b) The Term Note issued to each Bank with a Term Loan Commitment or with
outstanding Term Loans shall (i) be executed by the Borrower, (ii) be payable
to the order of such Bank or its registered assigns and be dated the Effective
Date (or, in the case of Term Notes issued to an Eligible Transferee pursuant to
an Assignment and Assumption Agreement after the Effective Date, be dated the
date of the issuance thereof), (iii) be in a stated principal amount equal to
the Term Loans made by such Bank on the Effective Date (or, in the event such
Bank has entered into an Assignment and Assumption Agreement after the Effective
Date, the amount of the Term Loans set forth for such Bank therein) and be
payable in the principal amount of the Term Loans evidenced thereby, (iv) mature
on the Maturity Date, (v) bear interest as provided in the appropriate clause of
Section 1.08 in respect of the Base Rate Loans and Eurodollar Loans, as the case
may be, evidenced thereby, (vi) be subject to voluntary prepayment as provided
in Section 3.01, and mandatory repayment as provided in Section 3.02, and (vii)
be entitled to the benefits of this Agreement and the other Credit Documents.

                                      -3-


     (c) The Revolving Note issued by the Borrower to each Bank with a
Revolving Loan Commitment or outstanding Revolving Loans shall (i) be executed
by the Borrower, (ii) be payable to the order of such Bank or its registered
assigns and be dated the Effective Date (or, if issued to an Eligible Transferee
pursuant to an Assignment and Assumption Agreement after the Effective Date, be
dated the date of the issuance thereof), (iii) be in a stated principal amount
equal to the Revolving Loan Commitment of such Bank (or, if issued after the
termination of such Revolving Loan Commitment, be in a stated principal amount
equal to the outstanding Revolving Loans, if any, of such Bank at such time)
and be payable in the principal amount of the outstanding Revolving Loans
evidenced thereby, (iv) mature on the Maturity Date, (v) bear interest as
provided in the appropriate clause of Section 1.08 in respect of the Base Rate
Loans and Eurodollar Loans, as the case may be, evidenced thereby, (vi) be
subject to voluntary prepayment as provided in Section 3.01, and mandatory
repayment as provided in Section 3.02, and (vii) be entitled to the benefits of
this Agreement and the other Credit Documents.

     (d) Each Bank will note on its internal records the amount of each Loan
made by it and each payment in respect thereof and will prior to any transfer of
any of its Notes properly endorse on the reverse side thereof the outstanding
principal amount of Loans evidenced thereby. Failure to make any such notation
(or any error in such notation) shall not affect the Borrower's obligations to
the holder from time to time of each Note in respect of such Loans.

     (e) Notwithstanding anything to the contrary contained above or elsewhere
in this Agreement, Term Notes and Revolving Notes shall only be delivered to
Banks with Loans or Commitments of the respective Tranches which at any time
specifically request the delivery of such Notes. No failure of any Bank to
request or obtain a Note evidencing its Loans of any Tranche shall affect or in
any manner impair the obligations of the Borrower to pay the Loans (and all
related Obligations) which would otherwise be evidenced thereby in accordance
with the requirements of this Agreement, and shall not in any way affect the
security or guaranties therefor provided pursuant to the various Credit
Documents. Any Bank which does not have a Note evidencing its outstanding Loans
shall in no event be required to make the notations otherwise described in
preceding clause (d). At any time when any Bank requests the delivery of a Note
to evidence its Loans of any Tranche, the Borrower shall promptly execute and
deliver to the respective Bank the requested Note or Notes in the appropriate
amount or amounts to evidence such Loans.

     1.06 Conversions. The Borrower shall have the option to convert, on any
          -----------
Business Day occurring after the Effective Date, all or a portion equal to at
least the applicable Minimum Borrowing Amount of the outstanding principal
amount of Loans made pursuant to one or more Borrowings of one or more Types of
Loans under a single Tranche into a Borrowing or Borrowings of another Type of
Loan under such Tranche, provided that, (i) except as otherwise provided in
                         --------
Section 1.10(b), Eurodollar Loans may be converted into Base Rate Loans only on
the last day of an Interest Period applicable to the Loans being converted and
no partial conversion of a Borrowing of Eurodollar Loans shall reduce the
outstanding principal amount of such Eurodollar Loans made pursuant to a single
Borrowing to less than the Minimum Borrowing Amount applicable thereto, (ii)
unless the Required Banks otherwise agree, Base Rate Loans may only be converted
into Eurodollar Loans if no Default or Event of Default is in existence on the
date of the conversion, and (iii) no conversion pursuant to this Section 1.06
shall result in a greater number of Borrowings of Eurodollar Loans than is
permitted under Section

                                      -4-


1.02. Each such conversion shall be effected by the Borrower by giving the
Administrative Agent at the Notice Office prior to 11:00 A.M. (New York time) at
least three Business Days' prior written notice (or one Business Day's prior
written notice in the case of a conversion of Eurodollar Loans into Base Rate
Loans) (each a "Notice of Conversion") specifying the Loans to be so converted,
the Borrowing(s) pursuant to which such Loans were made and, if to be converted
into Eurodollar Loans, the Interest Period to be initially applicable thereto.
The Administrative Agent shall give each Bank prompt notice of any such proposed
conversion affecting any of its Loans.

     1.07 Pro Rata Borrowings. All Borrowings of Term Loans shall be incurred
          -------------------
from the Banks pro rata on the basis of their Term Loan Commitments. All
               --- ----
Borrowings of Revolving Loans shall be incurred from the Banks pro rata on the
                                                               --- ----
basis of their Revolving Loan Commitments. It is understood that no Bank shall
be responsible for any default by any other Bank of its obligation to make Loans
hereunder and that each Bank shall be obligated to make the Loans provided to be
made by it hereunder, regardless of the failure of any other Bank to make its
Loans hereunder.

     1.08 Interest. (a) The Borrower agrees to pay interest in respect of the
          --------
unpaid principal amount of each Base Rate Loan from the date of Borrowing
thereof until the earlier of (i) the maturity (whether by acceleration or
otherwise) of such Base Rate Loan and (ii) the conversion of such Base Rate
Loan to a Eurodollar Loan pursuant to Section 1.06, at a rate per annum which
shall be equal to the sum of the Applicable Margin plus the Base Rate each as in
effect from time to time.

     (b) The Borrower agrees to pay interest in respect of the unpaid principal
amount of each Eurodollar Loan from the date of Borrowing thereof until the
earlier of (i) the maturity (whether by acceleration or otherwise) of such
Eurodollar Loan and (ii) the conversion of such Eurodollar Loan to a Base Rate
Loan pursuant to Section 1.06, 1.09 or 1.10, as applicable, at a rate per annum
which shall, during each Interest Period applicable thereto, be equal to the sum
of the Applicable Margin as in effect from time to time during such Interest
Period plus the Eurodollar Rate for such Interest Period.

     (c) Overdue principal and, to the extent permitted by law, overdue interest
in respect of each Loan and any other overdue amount payable hereunder shall, in
each case, bear interest at a rate per annum equal to the greater of (x) 2% per
annum in excess of the rate otherwise applicable to Base Rate Loans from time
to time and (y) the rate which is 2% in excess of the rate then borne by such
Loans (without giving effect to any increase in the rate borne by such Loans as
a result of the operation of this clause (c)), in each case with such interest
to be payable on demand.

     (d) Accrued (and theretofore unpaid) interest shall be payable in respect
of each Loan, (i) monthly in arrears on the last Business Day of each calendar
month and (ii) on the date of any repayment or prepayment thereof (on the amount
repaid or prepaid), at maturity (whether by acceleration or otherwise) and,
after such maturity, on demand, provided, that in the case of Base Rate Loans,
                                --------
interest shall not be payable pursuant to the preceding clause (ii) at the time
of any repayment or prepayment thereof (but shall otherwise be payable as
provided in the preceding clause (i)) unless the respective repayment or
prepayment is made in conjunction with

                                      -5-


the repayment or prepayment (or required repayment or prepayment) in full of all
Loans of the respective Tranche.

     (e) Upon each Interest Determination Date, the Administrative Agent shall
determine the respective Eurodollar Rate for the respective Interest Period or
Interest Periods to be applicable to the respective Eurodollar Loans and shall
promptly notify the Borrower and the Banks thereof. Each such determination
shall, absent manifest error, be final and conclusive and binding on all parties
hereto.

     1.09 Interest Periods. At the time the Borrower gives any Notice of
          ----------------
Borrowing or Notice of Conversion in respect of the making of, or conversion
into, any Eurodollar Loan (in the case of the initial Interest Period applicable
thereto) or prior to 11:00 A.M. (New York time) on the third Business Day prior
to the expiration of an Interest Period applicable to such Eurodollar Loan (in
the case of any subsequent Interest Period), the Borrower shall have the right
to elect, by giving the Administrative Agent notice thereof, the interest period
(each an "Interest Period") applicable to such Eurodollar Loan, which Interest
Period shall, at the option of the Borrower, be a one, two, three or six-month
period, provided that:
        --------

          (i)   all Eurodollar Loans comprising a Borrowing shall at all times
     have the same Interest Period;

          (ii)  the initial Interest Period for any Eurodollar Loan shall
     commence on the date of Borrowing of such Eurodollar Loan (including the
     date of any conversion thereto from a Base Rate Loan) and each Interest
     Period occurring thereafter in respect of such Eurodollar Loan shall
     commence on the day on which the next preceding Interest Period applicable
     thereto expires;

          (iii) if any Interest Period relating to a Eurodollar Loan begins on a
     day for which there is no numerically corresponding day in the calendar
     month at the end of such Interest Period, such Interest Period shall end on
     the last Business Day of such calendar month;

          (iv)  if any Interest Period would otherwise expire on a day which is
     not a Business Day, such Interest Period shall expire on the next
     succeeding Business Day; provided, however, that if any Interest Period for
                              --------  -------
     a Eurodollar Loan would otherwise expire on a day which is not a Business
     Day but is a day of the month after which no further Business Day occurs in
     such month, such Interest Period shall expire on the next preceding
     Business Day;

          (v) unless the Required Banks otherwise agree, no Interest Period may
     be selected at any time when a Default or an Event of Default is then in
     existence; and

          (vi) no Interest Period in respect of any Borrowing of Eurodollar
     Loans shall be selected which extends beyond the Maturity Date.

     If upon the expiration of any Interest Period applicable to a Borrowing of
Eurodollar Loans, the Borrower has failed to elect, or is not permitted to
elect, a new Interest Period to be applicable to such Eurodollar Loans as
provided above, the Borrower shall be

                                      -6-


deemed to have elected to convert such Eurodollar Loans into Base Rate Loans
effective as of the expiration date of such current Interest Period.

     1.10 Increased Costs, Illegality, etc. (a) In the event that any Bank shall
          ---------------------------------
have determined (which determination shall, absent manifest error, be final and
conclusive and binding upon all parties hereto but, with respect to clause (i)
below, may be made only by the Administrative Agent):

          (i)   on any Interest Determination Date that, by reason of any
     changes arising after the Effective Date affecting the interbank Eurodollar
     market, adequate and fair means do not exist for ascertaining the
     applicable interest rate on the basis provided for in the definition of
     Eurodollar Rate; or

          (ii)  at any time, that such Bank shall incur increased costs or
     reductions in the amounts received or receivable hereunder with respect to
     any Eurodollar Loan because of (x) any change since the Effective Date in
     any applicable law or governmental rule, regulation, order, guideline or
     request (whether or not having the force of law) or in the interpretation
     or administration thereof and including the introduction of any new law or
     governmental rule, regulation, order, guideline or request, such as, for
     example, but not limited to: (A) a change in the basis of taxation of
     payment to any Bank of the principal of or interest on such Eurodollar Loan
     or any other amounts payable hereunder (except for changes in the rate of
     tax on, or determined by reference to, the net income or net profits of
     such Bank, or any franchise tax based on the net income or net profits of a
     Bank, in either case pursuant to the laws of the jurisdiction in which such
     Bank is organized or in which such Bank's principal office or applicable
     lending office is located or any subdivision thereof or therein), or (B)
     a change in official reserve requirements, but, in all events, excluding
     reserves required under Regulation D to the extent included in the
     computation of the Eurodollar Rate and/or (y) other circumstances since
     the Effective Date affecting such Bank or the interbank Eurodollar market
     or the position of such Bank in such market; or

          (iii) at any time, that the making or continuance of any Eurodollar
     Loan has been made (x) unlawful by any law or governmental rule, regulation
     or order, (y) impossible by compliance by any Bank in good faith with any
     governmental request (whether or not having force of law) or (z)
     impracticable as a result of a contingency occurring after the Effective
     Date which materially and adversely affects the interbank Eurodollar
     market;

then, and in any such event, such Bank (or the Administrative Agent, in the case
of clause (i) above) shall promptly give notice (by telephone confirmed in
writing) to the Borrower and, except in the case of clause (i) above, to the
Administrative Agent of such determination (which notice the Administrative
Agent shall promptly transmit to each of the other Banks). Thereafter (x) in the
case of clause (i) above, Eurodollar Loans shall no longer be available until
such time as the Administrative Agent notifies the Borrower and the Banks that
the circumstances giving rise to such notice by the Administrative Agent no
longer exist, and any Notice of Borrowing, Notice of Conversion or notice given
under Section 1.09 delivered by the Borrower with respect to Eurodollar Loans
which have not yet been incurred (including by way of conversion) shall be
deemed rescinded by the Borrower, (y) in the case of clause (ii) above, the
Borrower shall pay to

                                      -7-


such Bank, upon written demand therefor, such additional amounts (in the form of
an increased rate of, or a different method of calculating, interest or
otherwise as such Bank in its sole discretion shall determine) as shall be
required to compensate such Bank for such increased costs or reductions in
amounts received or receivable hereunder (a written notice as to the additional
amounts owed to such Bank, showing the basis for the calculation thereof,
submitted to the Borrower by such Bank in good faith shall, absent manifest
error, be final and conclusive and binding on all the parties hereto) and (z) in
the case of clause (iii) above, the Borrower shall take one of the actions
specified in Section 1.10(b) as promptly as possible and, in any event, within
the time period required by law. Each of the Administrative Agent and each Bank
agrees that if it gives notice to the Borrower of any of the events described in
clause (i) or (iii) above, it shall promptly notify the Borrower and, in the
case of any such Bank, the Administrative Agent, if such event ceases to exist.
If any such event described in clause (iii) above ceases to exist as to a Bank,
the obligations of such Bank to make Eurodollar Loans and to convert Base Rate
Loans into Eurodollar Loans on the terms and conditions contained herein shall
be reinstated. In addition, if the Administrative Agent gives notice to the
Borrower that the events described in clause (i) above cease to exist, then the
obligations of the Banks to make Eurodollar Loans and to convert Base Rate
Loans into Eurodollar Loans on the terms and conditions contained herein (but
subject to clause (iii) above) also shall be reinstated.

     (b) At any time that any Eurodollar Loan is affected by the circumstances
described in Section 1.10(a)(ii) or (iii), the Borrower may (and in the case of
a Eurodollar Loan affected by the circumstances described in Section
1.10(a)(iii) the Borrower shall) either (x) if the affected Eurodollar Loan is
then being made initially or pursuant to a conversion, cancel the respective
Borrowing by giving the Administrative Agent telephonic notice (confirmed in
writing) on the same date that the Borrower was notified by the affected Bank or
the Administrative Agent pursuant to Section 1.10(a)(ii) or (iii) or (y) if the
affected Eurodollar Loan is then outstanding, upon at least three Business Days'
written notice to the Administrative Agent, require the affected Bank to convert
such Eurodollar Loan into a Base Rate Loan, provided that, if more than one Bank
is affected at any time, then all affected Banks must be treated the same
pursuant to this Section 1.10(b).

     (c) If at any time any Bank determines that, after the Effective Date, the
introduction of or any change in any applicable law or governmental rule,
regulation, order, guideline, directive or request (whether or not having the
force of law and including, without limitation, those announced or published
prior to the Effective Date) concerning capital adequacy, or any change in
interpretation or administration thereof by any governmental authority, central
bank or comparable agency, will have the effect of increasing the amount of
capital required or expected to be maintained by such Bank or any corporation
controlling such Bank based on the existence of such Bank's Commitments
hereunder or its obligations hereunder, then the Borrower shall pay to such
Bank, upon its written demand therefor, such additional amounts as shall be
required to compensate such Bank or such other corporation for the increased
cost to such Bank or such other corporation or the reduction in the rate of
return to such Bank or such other corporation as a result of such increase of
capital. In determining such additional amounts, each Bank will act reasonably
and in good faith and will use averaging and attribution methods which are
reasonable, provided that such Bank's reasonable good faith determination of
            --------
compensation owing under this Section 1.10(c) shall, absent manifest error, be
final and conclusive and binding on all the parties hereto. Each Bank, upon
determining that any

                                      -8-


additional amounts will be payable pursuant to this Section 1.10(c), will give
prompt written notice thereof to the Borrower, which notice shall show the basis
for calculation of such additional amounts. In addition, each such Bank, upon
determining that the circumstances giving rise to the payment of additional
amounts pursuant to this Section 1.10(c) cease to exist, will give prompt
written notice thereof to the Borrower.

     1.11 Compensation. The Borrower shall compensate each Bank, upon its
          ------------
written request (which request shall set forth the basis for requesting such
compensation), for all reasonable losses, expenses and liabilities (including,
without limitation, any loss, expense or liability incurred by reason of the
liquidation or reemployment of deposits or other funds required by such Bank to
fund its Eurodollar Loans but excluding any loss of anticipated profit) which
such Bank may sustain: (i) if for any reason (other than a default by such Bank
or the Administrative Agent) a Borrowing or continuation of, or conversion from
or into, Eurodollar Loans does not occur on a date specified therefor in a
Notice of Borrowing, in a Notice of Conversion or in a notice delivered under
Section 1.09 (whether or not withdrawn by the Borrower or deemed withdrawn
pursuant to Section 1.10(a)); (ii) if any repayment (including any repayment
made pursuant to Section 3.01 or 3.02 or as a result of an acceleration of the
Loans pursuant to Section 9) or conversion of any Eurodollar Loans occurs on a
date which is not the last day of an Interest Period with respect thereto; (iii)
if any prepayment of any Eurodollar Loans is not made on any date specified in a
notice of prepayment given by the Borrower; or (iv) as a consequence of (x) any
other default by the Borrower to repay the Loans when required by the terms of
this Agreement or any Note held by such Bank or (y) any election made pursuant
to Section 1.10(b).

     1.12 Change of Lending Office. Each Bank agrees that on the occurrence of
          ------------------------
any event giving rise to the operation of Section 1.10(a)(ii) or (iii), Section
1.10(c) or Section 3.04 with respect to such Bank, it will, if requested by the
Borrower, use reasonable efforts (subject to overall policy considerations of
such Bank) to designate another lending office for any Loans affected by such
event, provided that such designation is made on such terms that such Bank and
       --------
its lending office suffer no economic, legal or regulatory disadvantage, with
the object of avoiding the consequence of the event giving rise to the operation
of such Section. Nothing in this Section 1.12 shall affect or postpone any of
the obligations of the Borrower or the right of any Bank provided in Sections
1.10 and 3.04.

     1.13 Replacement of Banks. (a) (x) If any Bank (i) becomes a Defaulting
          --------------------
Bank or (ii) refuses to consent to certain proposed changes, waivers, discharges
or terminations with respect to this Agreement which have been approved by the
Required Banks as (and to the extent) provided in Section 12.12(b), or (y) upon
the occurrence of any event giving rise to the operation of Section 1.10(a)(ii)
or (iii), Section 1.10(c) or Section 3.04 with respect to any Bank which results
in such Bank charging to the Borrower increased costs in excess of those being
generally charged by the other Banks, the Borrower shall have the right, in
accordance with the requirements of Section 12.04(b), if no Default or Event of
Default will exist immediately after giving effect to such replacement, to
replace such Bank (the "Replaced Bank") with one or more other Eligible
Transferees reasonably acceptable to the Administrative Agent, none of whom
shall constitute a Defaulting Bank at the time of such replacement
(collectively, the "Replacement Bank"), provided that (i) at the time of any
replacement pursuant to this Section 1.13, the Replaced Bank and the Replacement
Bank shall enter into one or more Assignment and Assumption Agreements pursuant
to Section 12.04(b) (and with all fees payable pursuant to said

                                      -9-


Section 12.04(b) to be paid by the Replacement Bank) pursuant to which the
Replacement Bank shall acquire all of the Commitments and all of the outstanding
Loans of the Replaced Bank and, in connection therewith, shall pay to the
Replaced Bank in respect thereof an amount equal to the sum of (1) an amount
equal to the principal of, and all accrued interest on, all outstanding Loans of
the Replaced Bank at such time and (2) an amount equal to all accrued, but
theretofore unpaid, Fees owing to the Replaced Bank pursuant to Section 2.01 and
(ii) all obligations of the Borrower owing to the Replaced Bank (other than
those specifically described in clause (i) above of this proviso in respect of
which the assignment purchase price has been, or is concurrently being, paid)
shall be paid in full to such Replaced Bank concurrently with such replacement.

     (b) Upon the execution of the respective Assignment and Assumption
Agreements, the recordation thereof in the Register by the Administrative Agent,
the payment of amounts referred to in clauses (i) and (ii) of the proviso of
Section 1.13(a) and, if so requested by the Replacement Bank, delivery to the
Replacement Bank of the appropriate Note or Notes executed by the Borrower, the
Replacement Bank shall become a Bank hereunder and the Replaced Bank shall cease
to constitute a Bank hereunder, except with respect to indemnification
provisions under this Agreement for periods when such Bank was a "Bank" under
this Agreement (including, without limitation, Sections 1.10, 1.11, 3.04, 12.01
and 12.06), which shall survive as to such Replaced Bank. Upon the Replaced Bank
ceasing to be a Bank hereunder, such Replaced Bank agrees to promptly return to
the Borrower any Note or Notes theretofore delivered to such Replaced Bank
pursuant to this Agreement marked "canceled", or if such Replaced Bank has lost
or cannot find any such Note or Notes, such Replaced Bank will execute and
deliver to the Borrower a customary lost note and indemnity agreement in form
and substance reasonably satisfactory to the Borrower.

     1.14 Additional Revolving Loan Commitments. (a) So long as no Default or
          -------------------------------------
Event of Default then exists or would result therefrom, the Borrower shall have
the right at any time and from time to time on or prior to April 30, 2003 and
upon at least 15 Business Days prior written notice to the Administrative Agent
(which shall promptly notify each of the Banks), to request on up to five
occasions that one or more Banks (and/or one or more other Persons which will
become Banks as provided below) provide Additional Revolving Loan Commitments
and, subject to the applicable terms and conditions contained in this Agreement,
make Revolving Loans pursuant thereto, it being understood and agreed, however,
that (i) no Bank shall be obligated to provide an Additional Revolving Loan
Commitment as a result of any such request by the Borrower, (ii) until such
time, if any, as such Bank has agreed in its sole discretion to provide an
Additional Revolving Loan Commitment and executed and delivered to the
Administrative Agent an Additional Revolving Loan Commitment Agreement in
respect thereof as provided in Section 1.14(b) and such Additional Revolving
Loan Commitment Agreement has become effective, such Bank shall not be obligated
to fund any Revolving Loans in excess of its Revolving Loan Commitment as in
effect prior to giving effect to such Additional Revolving Loan Commitments
provided pursuant to this Section 1.14, (iii) any Bank (or, in the circumstances
contemplated by clause (vii) below, any other Person which will qualify as an
Eligible Transferee) may so provide an Additional Revolving Loan Commitment
without the consent of any other Bank but with the prior consent of the
Administrative Agent (which consent shall not be unreasonably withheld), (iv)
each provision of Additional Revolving Loan Commitments on a given date pursuant
to this Section 1.14 shall be in a minimum aggregate amount (for all Banks
(including, in the circumstances contemplated by clause (vii) below,

                                      -10-


Eligible Transferees who will become Banks)) of at least $25,000,000 and in
integral multiples of $1,000,000 in excess thereof, (v) the aggregate amount of
all Additional Revolving Loan Commitments permitted to be provided pursuant to
this Section 1.14 shall not exceed $225,000,000, (vi) the fees payable to any
Bank (including, in the circumstances contemplated by clause (vii) below, any
Eligible Transferee who will become a Bank) providing an Additional Revolving
Loan Commitment shall be as set forth in the relevant Additional Revolving Loan
Commitment Agreement, (vii) if, after the Borrower has requested the then
existing Banks (other than Defaulting Banks) to provide Additional Revolving
Loan Commitments pursuant to this Section 1.14 on the terms to be applicable
thereto, the Borrower has not received Additional Revolving Loan Commitments in
an aggregate amount equal to that amount of the Additional Revolving Loan
Commitments which the Borrower desires to obtain pursuant to such request (as
set forth in the notice provided by the Borrower to the Administrative Agent as
provided above), then the Borrower may request Additional Revolving Loan
Commitments from Persons which would qualify as Eligible Transferees hereunder
in an aggregate amount equal to such deficiency on terms which are no more
favorable to such Eligible Transferee in any respect than the terms offered to
the Banks, provided that any such Additional Revolving Loan Commitments provided
           --------
by any such Eligible Transferee which is not already a Bank shall be in a
minimum amount (for such Eligible Transferee) of at least $10,000,000, and
(viii) all actions taken by the Borrower pursuant to this Section 1.14(a) shall
be done in coordination with the Administrative Agent.

     (b) At the time of any provision of Additional Revolving Loan Commitments
pursuant to this Section 1.14, (i) the Borrower, the Administrative Agent and
each Bank or other Eligible Transferee (each, an "Additional Revolving Loan
Bank") which agrees to provide an Additional Revolving Loan Commitment shall
execute and deliver to the Administrative Agent an Additional Revolving Loan
Commitment Agreement substantially in the form of Exhibit J (appropriately
completed), subject to such modifications in form and substance reasonably
satisfactory to the Administrative Agent as may be necessary or appropriate
(with the effectiveness of such Additional Revolving Loan Bank's Additional
Revolving Loan Commitment to occur upon delivery of such Additional Revolving
Loan Commitment Agreement to the Administrative Agent, the payment of any fees
required in connection therewith and the satisfaction of the other conditions
in this Section 1.14(b) to the reasonable satisfaction of the Administrative
Agent), (ii) the Borrower shall, in coordination with the Administrative Agent,
repay outstanding Revolving Loans of certain of the Banks, and incur additional
Revolving Loans from certain other Banks, in each case so that all of the Banks
participate in each outstanding Borrowing of Revolving Loans pro rata on the
                                                             --- ----
basis of their respective Revolving Loan Commitments (after giving effect to any
increase in the Total Revolving Loan Commitment pursuant to this Section 1.14)
and with the Borrower being obligated to pay to the respective Banks the costs
of the type referred to in Section 1.11 in connection with any such repayment
and/or Borrowing and (iii) the Borrower shall deliver to the Administrative
Agent an opinion, in form and substance reasonably satisfactory to the
Administrative Agent, from counsel to the Borrower reasonably satisfactory to
the Administrative Agent and dated such date, covering such matters similar to
those set forth in the opinions of counsel delivered to the Administrative Agent
on the Effective Date pursuant to Section 4.03 and such other matters as the
Administrative Agent may reasonably request. The Administrative Agent shall
promptly notify each Bank as to the occurrence of each Additional Revolving Loan
Commitment Date, and (x) on each such date, the Total Revolving Loan Commitment
under, and for all purposes of, this Agreement shall be increased by the
aggregate

                                      -11-


amount of such Additional Revolving Loan Commitments, and (y) on each such date
Schedule I shall be deemed modified to reflect the revised Revolving Loan
Commitments of the affected Banks.

     SECTION 2. Fees; Reductions of Commitment.
                ------------------------------

     2.01 Fees. (a) The Borrower agrees to pay to the Administrative Agent for
          ----
distribution to each Non-Defaulting Bank with a Revolving Loan Commitment a
commitment commission (the "Commitment Commission") for the period from the
Effective Date to but not including the Maturity Date (or until such earlier
date as the Total Revolving Loan Commitment shall have been terminated),
computed at a rate per annum equal to the Applicable Commitment Commission
Percentage on the daily average Unutilized Revolving Loan Commitment of such
Non-Defaulting Bank. Accrued Commitment Commission shall be due and payable
quarterly in arrears on each Quarterly Payment Date and on the Maturity Date or
such earlier date upon which the Total Revolving Loan Commitment shall have been
terminated.

     (b)  The Borrower agrees to pay to the Administrative Agent, for its own
account, such other fees as have been agreed to in writing by the Borrower with
the Administrative Agent.

     2.02 Voluntary Termination of Unutilized Commitments. (a) Upon at least two
          -----------------------------------------------
Business Days' prior written notice to the Administrative Agent at the Notice
Office (which notice the Administrative Agent shall promptly transmit to each of
the Banks), the Borrower shall have the right, at any time or from time to time,
without premium or penalty, to terminate or partially reduce the Total
Unutilized Revolving Loan Commitment, in a minimum amount of $5,000,000 in the
case of partial reductions; provided that each such reduction shall apply
proportionately to permanently reduce the Revolving Loan Commitment of each
Bank.

     (b)  In the event of certain refusals by a Bank to consent to certain
proposed changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Banks as (and to the extent)
provided in Section 12.12(b), the Borrower may, upon five Business Days' written
notice to the Administrative Agent at the Notice Office (which notice the
Administrative Agent shall promptly transmit to each of the Banks), terminate
the entire Revolving Loan Commitment of such Bank so long as all Loans, together
with accrued and unpaid interest, Fees and all other amounts owing to such Bank
are repaid con-currently with the effectiveness of such termination pursuant to
Section 3.01(b) (at which time Schedule I shall be deemed modified to reflect
such changed amounts), and at such time, such Bank shall no longer constitute a
"Bank" for purposes of this Agreement, except with respect to indemnifications
under this Agreement for periods when such Bank was a "Bank" under this
Agreement (including, without limitation, Sections 1.10, 1.11, 3.04, 12.01 and
12.06), which shall survive as to such repaid Bank.

     2.03 Mandatory Termination of Commitments. (a) The Total Commitment (and
          ------------------------------------
the Term Loan Commitment and the Revolving Loan Commitment of each Bank) shall
terminate in its entirety on June 30, 2000, unless the Effective Date shall have
occurred on or prior to such date.

                                      -12-


     (b) In addition to any other mandatory commitment reductions pursuant to
this Section 2.03, the Total Term Loan Commitment (and the Term Loan Commitment
of each Bank) shall terminate in its entirety on the Effective Date (after
giving effect to the incurrence of the Term Loans on such date).

     (c) In addition to any other mandatory commitment reductions pursuant to
this Section 2.03, the Total Revolving Loan Commitment (and the Revolving Loan
Commitment of each Bank) shall terminate in its entirety on the Maturity Date.

     (d) In addition to any other mandatory commitment reductions pursuant to
this Section 2.03, the Total Revolving Loan Commitment (and the Revolving Loan
Commitment of each Bank) shall terminate in its entirety on the date on which a
Change of Control shall occur.

     (e) In addition to any other mandatory commitment reductions pursuant to
this Section 2.03, the Total Revolving Loan Commitment shall be permanently
reduced from time to time to the extent required by Section 3.02. Each reduction
to the Total Revolving Loan Commitment pursuant to this Section 2.03(e) shall be
applied proportionately to permanently reduce the Revolving Loan Commitment of
each Bank.

     SECTION 3. Prepayments; Payments; Taxes.
                ----------------------------

     3.01 Voluntary Prepayments. (a) The Borrower shall have the right to prepay
          ---------------------
the Loans, without premium or penalty, in whole or in part at any time and from
time to time on the following terms and conditions: (i) the Borrower shall give
the Administrative Agent prior to 12:00 Noon (New York time) at the Notice
Office (x) at least one Business Day's prior written notice (or telephonic
notice promptly confirmed in writing) of the Borrower's intent to prepay Base
Rate Loans and (y) at least three Business Days' prior written notice (or
telephonic notice promptly confirmed in writing) of the Borrower's intent to
prepay Eurodollar Loans, whether Term Loans or Revolving Loans shall be prepaid,
the amount of such prepayment and the Types of Loans to be prepaid and, in the
case of Eurodollar Loans, the specific Borrowing or Borrowings pursuant to
which such Eurodollar Loans were made, which notice the Administrative Agent
shall promptly transmit to each of the Banks; (ii) each prepayment of Loans made
pursuant to this Section 3.01(a) shall be in an aggregate principal amount of at
least $5,000,000, provided that if any partial prepayment of Eurodollar Loans
                  --------
made pursuant to any Borrowing shall reduce the outstanding Eurodollar Loans
made pursuant to such Borrowing to an amount less than the Minimum Borrowing
Amount applicable thereto, then such Borrowing may not be continued as a
Borrowing of Eurodollar Loans and any election of an Interest Period with
respect thereto given by the Borrower shall have no force or effect, but instead
such Borrowing shall be converted automatically to a Borrowing of Base Rate
Loans; (iii) each prepayment made pursuant to this Section 3.01(a) in respect of
any Loans made pursuant to a Borrowing shall be applied pro rata among such
                                                        --- ----
Loans, provided that at the Borrower's election in connection with any
       --------
prepayment of Revolving Loans pursuant to this Section 3.01(a), such prepayment
shall not, so long as no Default or Event of Default then exists, be applied to
any Revolving Loans of a Defaulting Bank; and (iv) at the time of any prepayment
of Eurodollar Loans pursuant to this Section 3.01(a) on any date other than the
last day of the Interest Period applicable thereto, the Borrower shall pay the
amounts required pursuant to Section 1.11.

                                      -13-


     (b) In the event of certain refusals by a Bank to consent to certain
proposed changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Banks as (and to the extent)
provided in Section 12.12(b), the Borrower may, upon five Business Days' prior
written notice to the Administrative Agent at the Notice Office (which notice
the Administrative Agent shall promptly transmit to each of the Banks), repay
all Loans, together with accrued and unpaid interest, Fees and all other amounts
owing to such Bank under this Agreement (including under Section 1.11) in
accordance with said Section 12.12(b) so long as (A) in the case of the
repayment of any Revolving Loans of any Bank pursuant to this Section 3.01(b),
the Revolving Loan Commitment of such Bank is terminated concurrently with such
repayment pursuant to Section 2.02(b) (at which time Schedule I shall be deemed
modified to reflect the changed Revolving Loan Commitments) and (B) the consents
required by Section 12.12(b) in connection with the repayment pursuant to this
Section 3.01(b) have been obtained.

     3.02 Mandatory Repayments and Commitment Reductions. (a) On any day on
          ----------------------------------------------
which the aggregate outstanding principal amount of Revolving Loans exceeds the
Total Revolving Loan Commitment then in effect, the Borrower shall prepay on
such day principal of Revolving Loans in an amount equal to such excess.

     (b) In addition to any other mandatory repayments or commitment reductions
pursuant to this Section 3.02, within five Business Days after each date on or
after the Effective Date upon which Holdings or any of its Subsidiaries receives
any cash proceeds from any incurrence by Holdings or any of its Subsidiaries of
Secured Indebtedness and/or Subsidiary Indebtedness, an amount equal to 100% of
the Net Debt Proceeds from such Secured Indebtedness and Subsidiary Indebtedness
shall be applied within such five Business Day period as a mandatory repayment
and/or commitment reduction in accordance with the requirements of Section
3.02(e); provided, however, the provisions of this Section 3.02(b) shall not
         --------  -------
apply to either (x) the first $200,000,000 in the aggregate of Secured
Indebtedness and Subsidiary Indebtedness incurred on or after the Effective Date
or (y) the refinancing of any Secured Indebtedness and/or Subsidiary
Indebtedness existing on the Effective Date (without giving effect to any
increases thereof after the Effective Date) or the refinancing of any Acquired
Indebtedness (without giving effect to any increases thereof after the
assumption thereof), in either case with new Secured Indebtedness and/or
Subsidiary Indebtedness up to the aggregate principal amount of the existing
Secured Indebtedness (including Acquired Indebtedness) and/or Subsidiary
Indebtedness outstanding at the time of such refinancing plus the amount of any
costs, fees (including prepayment penalties, but excluding interest) and
expenses associated with any refinancing of Secured Indebtedness or Subsidiary
Indebtedness existing on the Effective Date.

     (c) In addition to any other mandatory repayments or commitment reductions
pursuant to this Section 3.02, in the event that the aggregate Net Sale
Proceeds received by Holdings or any of its Subsidiaries from one or more Asset
Sales occurring on or after June 1, 1999 in any period of 12 consecutive months
exceed 1% of Total Assets (determined as of the date closest to the commencement
of such 12-month period for which a consolidated balance sheet of the Borrower
and its Subsidiaries has been filed with the SEC or delivered to the Banks
pursuant to Section 7.01), an amount equal to 100% of the Net Sale Proceeds from
all Asset Sales effected during such 12 month period shall be applied at such
time as a mandatory repayment and/or commitment reduction in accordance with the
requirements of Section 3.02(e);

                                      -14-


provided, however, that the Net Sale Proceeds from any such Asset Sale shall not
- --------  -------
be required to be so applied on such date so long as no Specified Default or
Event of Default then exists and (i) such Net Sale Proceeds shall be used or
contractually committed to be used pursuant to a binding agreement (subject
only to reasonable, customary closing conditions) (A) to purchase fixed assets
and property (other than notes, bonds, obligations and securities) which in the
good faith reasonable judgment of the Board of Directors of the Borrower will
immediately constitute or be part of a business of the Borrower or such
Subsidiary (if it continues to be a Subsidiary of the Borrower) permitted under
Section 8.16(a), (B) to make Permitted Designated Investments of the type
described in clause (i) of the definition thereof and/or (C) to purchase at
least a controlling interest in the capital stock or other equity of a Person
engaged in a business permitted under Section 8.16(a) and pursuant to a
transaction otherwise permitted under this Agreement (provided that,
concurrently with a purchase described in this clause (C), such Person becomes a
Subsidiary of the Borrower), in each case within 364 days (or earlier to the
extent required to be so applied pursuant to the terms of any other outstanding
Indebtedness) following the date of such Asset Sale, it being understood,
however, that (I) if all or any portion of such Net Sale Proceeds are not so
- -------
used (or contractually committed to be used) within such 364 day period (or
earlier period, as the case may be) or (II) if all or any portion of such Net
Sale Proceeds is contractually committed to be used as provided above within the
364 day period (or earlier period, as the case may be) and is not actually used
within an additional 180 day period, such remaining portion (in either case)
shall be applied on the last day of the respective period as a mandatory
repayment and/or commitment reduction in accordance with the requirements of
Section 3.02(e); and provided further, that so long as no Specified Default or
                     -------- -------
Event of Default then exists, no mandatory repayment or commitment reduction
shall be required pursuant to this Section 3.02(c) until the date on which the
aggregate Net Sale Proceeds not so reinvested within the time periods specified
above equals or exceeds $25,000,000.

     (d) In addition to any other mandatory repayments or commitment reductions
pursuant to this Section 3.02, within 30 days following each date on or after
the Effective Date upon which Holdings or any of its Subsidiaries receives any
cash proceeds from any Casualty Event or Taking (other than a Casualty Event or
Taking in which the aggregate cash proceeds so received is less than
$1,000,000), an amount equal to 100% of the Net Insurance/Condemnation Proceeds
from such Casualty Event or Taking shall be applied as a mandatory repayment
and/or commitment reduction in accordance with the requirements of Section
3.02(e); provided, however, that so long as no Default or Event of Default then
         --------  -------
exists under Section 9.01 or 9.05, such Net Insurance/Condemnation Proceeds
shall not be required to be so applied on such date to the extent that such Net
Insurance/Condemnation Proceeds shall be used (or be contractually committed to
be used) to replace or restore any properties or assets in respect of which
such Net Insurance/Condemnation Proceeds were paid within 364 days (or earlier
to the extent required to be so applied pursuant to terms of any other
outstanding Indebtedness) following the date of such Casualty Event or Taking
and, provided further, that (I) if all or any portion of such Net
     -------- -------
Insurance/Condemnation Proceeds not required to be applied as a mandatory
repayment and/or commitment reduction pursuant to the preceding proviso are not
so used (or contractually committed to be used) within 364 days (or earlier to
the extent required to be so applied pursuant to terms of any other outstanding
Indebtedness) after the date of receipt of the Net Insurance/Condemnation
Proceeds from the respective Casualty Event or Taking, then, such remaining
portion not used shall be applied on the date which is 364 days (or earlier to
the extent required to be so applied pursuant to the terms of any other
outstanding Indebtedness) following the date


                                      -15-


of receipt of such Net Insurance/Condemnation Proceeds from the respective
Casualty Event or Taking in accordance with the requirements of Section 3.02(e),
and (II) if all or any portion of such Net Insurance/Condemnation Proceeds not
required to be applied as a mandatory repayment and/or commitment reduction
pursuant to the preceding proviso because such amount is contractually committed
to be used and subsequent to such date such contract is terminated or expires
without such portion being so used, then such remaining portion shall be applied
on the date of such termination or expiration in accordance with the
requirements of Section 3.02 (e).

     (e) Each amount required to be applied pursuant to Sections 3.02(b), (c)
and (d) in accordance with this Section 3.02(e) shall be applied to repay the
principal of outstanding Term Loans and/or to permanently reduce the Total
Revolving Loan Commitment allocated between such Tranches in a manner to be
determined by the Borrower upon written notice to the Administrative Agent
(which shall promptly notify each of the Banks); provided, however, if at the
                                                 --------  -------
time that any amount is required to be applied pursuant to this Section 3.02(e)
a Specified Default or an Event of Default then exists, such amount shall be
applied (i) first, to repay the principal of outstanding Term Loans, and (ii)
second, to the extent that such amount is in excess of the amount required to be
applied pursuant to preceding clause (i), to permanently reduce the Total
Revolving Loan Commitment and accompanied by a corresponding repayment of
principal of outstanding Revolving Loans (whether or not such repayment of
Revolving Loans would be required at such time by operation of Section 3.02(a)).

     (f) With respect to each repayment of Loans required by this Section 3.02,
the Borrower may designate the Types of Loans of the respective Tranche which
are required to be repaid and, in the case of Eurodollar Loans, the specific
Borrowing or Borrowings pursuant to which made, provided that: (i) repayments of
                                                --------
Eurodollar Loans pursuant to this Section 3.02 may only be made on the last day
of an Interest Period applicable thereto unless all Eurodollar Loans with
Interest Periods ending on such date of required repayment and all Base Rate
Loans have been paid in full; (ii) if any repayment of Eurodollar Loans made
pursuant to a single Borrowing shall reduce the outstanding Eurodollar Loans
made pursuant to such Borrowing to an amount less than the Minimum Borrowing
Amount applicable thereto, such Borrowing shall be converted at the end of the
then current Interest Period into a Borrowing of Base Rate Loans; and (iii) each
repayment of Loans made pursuant to the same Borrowing shall be applied pro rata
among such Loans. In the absence of a designation by the Borrower as described
in the preceding sentence, the Administrative Agent shall, subject to the above,
make such designation in its sole discretion.

     (g) Notwithstanding anything to the contrary contained in this Agreement,
the Borrower shall repay in full all outstanding Loans on the earlier of (i) the
Maturity Date and (ii) the date on which a Change of Control occurs.

     3.03 Method and Place of Payment. Except as otherwise specifically provided
          ---------------------------
herein, all payments under this Agreement or under any Note shall be made to the
Administrative Agent for the account of the Bank or Banks entitled thereto not
later than 12:00 Noon (New York time) on the date when due and shall be made in
Dollars in immediately available funds at the Payment Office. Whenever any
payment to be made hereunder or under any Note shall be stated to be due on a
day which is not a Business Day, the due date thereof shall be extended to the
next

                                      -16-


succeeding Business Day and, with respect to payments of principal, interest
shall be payable at the applicable rate during such extension.

     3.04 Net Payments; Taxes. (a) All payments made by the Borrower hereunder
          -------------------
or under any Note will be made without setoff, counterclaim or other defense.
Except as provided in Section 3.04(b), all such payments will be made free and
clear of, and without deduction or withholding for, any present or future
taxes, levies, imposts, duties, fees, assessments or other charges of whatever
nature now or hereafter imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein with respect to such
payments (but excluding, except as provided in the second succeeding sentence,
any tax imposed on or measured by the net income or net profits of a Bank, or
any franchise tax based on the net income or net profits of a Bank, in either
case pursuant to the laws of the jurisdiction in which such Bank is organized or
the jurisdiction in which the principal office or applicable lending office of
such Bank is located or any subdivision thereof or therein) and all interest,
penalties or similar liabilities with respect to such non-excluded taxes,
levies, imposts, duties, fees or other charges (all such non-excluded taxes,
levies, imposts, duties, fees, assessments or other charges being referred to
collectively as "Taxes"). If any Taxes are so levied or imposed, the Borrower
agrees to pay the full amount of such Taxes, and such additional amounts as may
be necessary so that every payment of all amounts due under this Agreement or
under any Note, after withholding or deduction for or on account of any Taxes,
will not be less than the amount provided for herein or in such Note. If any
amounts are payable in respect of Taxes pursuant to the preceding sentence, the
Borrower agrees to reimburse each Bank, upon the written request of such Bank,
for taxes imposed on or measured by the net income or net profits of such Bank,
or any franchise tax based on the net income or net profits of a Bank, in either
case pursuant to the laws of the jurisdiction in which such Bank is organized or
in which the principal office or applicable lending office of such Bank is
located or under the laws of any political subdivision or taxing authority of
any such jurisdiction in which such Bank is organized or in which the principal
office or applicable lending office of such Bank is located and for any
withholding of income or similar taxes imposed by the United States of America
as such Bank shall reasonably determine are payable by, or withheld from, such
Bank in respect of such amounts so paid to or on behalf of such Bank pursuant to
the preceding sentence and in respect of any amounts paid to or on behalf of
such Bank pursuant to this sentence. The Borrower will furnish to the
Administrative Agent within 45 days after the date the payment of any Taxes is
due pursuant to applicable law certified copies of tax receipts or other
documentation reasonably acceptable to the Administrative Agent, evidencing such
payment by the Borrower. The Borrower agrees to indemnify and hold harmless each
Bank, and reimburse such Bank upon its written request, for the amount of any
Taxes so levied or imposed and paid by such Bank.

     (b) Each Bank that is not a United States person (as such term is defined
in Section 7701(a)(30) of the Code) agrees to deliver to the Borrower and the
Administrative Agent on or prior to the Effective Date, or in the case of a Bank
that is an assignee or transferee of an interest under this Agreement pursuant
to Section 1.13 or 12.04 (unless the respective Bank was already a Bank
hereunder immediately prior to such assignment or transfer), on the date of such
assignment or transfer to such Bank, (i) two accurate and complete original
signed copies of Internal Revenue Service Form W-8ECI or Form W-8BEN (with
respect to a complete exemption under an income tax treaty) (or successor forms)
certifying to such Bank's entitlement as of such date to a complete exemption
from United States withholding tax with respect to

                                      -17-


payments to be made under this Agreement and under any Note, or (ii) if such
Bank is not a "bank" within the meaning of Section 881(c)(3)(A) of the Code and
cannot deliver either Internal Revenue Service Form W-8ECI or Form W-8BEN (with
respect to a complete exemption under an income tax treaty) pursuant to clause
(i) above, (x) a certificate substantially in the form of Exhibit C (any such
certificate, a "Section 3.04(b)(ii) Certificate") and (y) two accurate and
complete original signed copies of Internal Revenue Service Form W-8BEN (or
successor form) (with respect to the portfolio interest exemption) certifying to
such Bank's entitlement as of such date to a complete exemption from United
States withholding tax with respect to payments of interest to be made under
this Agreement and under any Note. In addition, each Bank agrees that from time
to time after the Effective Date, when a lapse in time or change in
circumstances renders the previous certification invalid or inaccurate in any
material respect, such Bank will promptly deliver to the Borrower and the
Administrative Agent two new accurate and complete original signed copies of
Internal Revenue Service Form W-8ECI, Form W-8BEN (with respect to the benefits
of an income tax treaty) or Form W-8BEN (with respect to the portfolio interest
exemption) and a Section 3.04(b)(ii) Certificate, as the case may be, and such
other forms as may be required in order to confirm or establish the entitlement
of such Bank to a continued exemption from or reduction in United States
withholding tax with respect to payments under this Agreement and any Note, or
it shall promptly notify the Borrower and the Administrative Agent of its
inability to deliver any such Form or Certificate, in which case such Bank shall
not be required to deliver any such Form or Certificate pursuant to this Section
3.04(b). Notwithstanding anything to the contrary contained in Section 3.04(a),
but subject to Section 12.04(b) and the immediately succeeding sentence, (x) the
Borrower shall be entitled, to the extent it is required to do so by law, to
deduct or withhold income or similar taxes imposed by the United States (or any
political subdivision or taxing authority thereof or therein) from interest,
Fees or other amounts payable hereunder for the account of any Bank which is not
a United States person (as such term is defined in Section 7701(a)(30) of the
Code) for U.S. Federal income tax purposes to the extent that such Bank has not
provided to the Borrower U.S. Internal Revenue Service Forms that establish a
complete exemption from such deduction or withholding and (y) the Borrower shall
not be obligated pursuant to any provision of Section 3.04(a) to gross-up
payments to be made to a Bank in respect of income or similar taxes imposed by
the United States if (I) such Bank has not provided to the Borrower the Internal
Revenue Service Forms required to be provided to the Borrower pursuant to this
Section 3.04(b) or (II) in the case of a payment, other than interest, to a Bank
described in clause (ii) above, to the extent that such Forms do not establish a
complete exemption from withholding of such taxes. Notwithstanding anything to
the contrary contained in the preceding sentence or elsewhere in this Section
3.04 and except as set forth in Section 12.04(b), the Borrower agrees to pay
additional amounts and to indemnify each Bank in the manner set forth in Section
3.04(a) (without regard to the identity of the jurisdiction requiring the
deduction or withholding) in respect of any Taxes deducted or withheld by it as
described in the immediately preceding sentence as a result of any changes that
are effective after the Effective Date in any applicable law, treaty,
governmental rule, regulation, guideline or order, or in the interpretation
thereof, relating to the deducting or withholding of such Taxes.

     SECTION 4. Conditions Precedent to Loans. The occurrence of the Effective
                -----------------------------
Date pursuant to Section 12.10, and the obligation of each Bank to make Loans
hereunder on the Effective Date is subject at the time of the occurrence of the
Effective Date to the satisfaction of the following conditions:

                                      -18-


          4.01 Execution of Agreement; Notes. On or prior to the Effective Date,
               -----------------------------
(i) this Agreement shall have been executed and delivered as provided in Section
12.10 and (ii) there shall have been delivered to the Administrative Agent for
the account of each of the Banks (subject to Section 1.05(e)) the appropriate
Term Note and/or Revolving Note executed by the Borrower, in each case in the
amount and maturity and with other terms as otherwise provided herein.

          4.02 Fees, etc. On the Effective Date, the Borrower shall have paid to
               ---------
the Administrative Agent, the Co-Agents and the Banks all costs, fees and
expenses (including, without limitation, reasonable legal fees and expenses of
the Administrative Agent) payable to the Administrative Agent, the Co-Agents and
the Banks to the extent then due.

          4.03 Opinions of Counsel. On the Effective Date, the Administrative
               -------------------
Agent shall have received (i) from Christopher Townsend, Esq., General Counsel
to Holdings, and counsel to the Borrower, an opinion addressed to the
Administrative Agent and each of the Banks and dated the Effective Date
covering the matters set forth in Exhibit D-1 and such other matters incident
to the transactions contemplated herein as the Administrative Agent may
reasonably request and (ii) from Hogan & Hartson L.L.P., special counsel to the
Credit Parties, an opinion addressed to the Administrative Agent and each of the
Banks and dated the Effective Date covering the matters set forth in Exhibit
D-2 and such other matters incident to the transactions contemplated herein as
the Administrative Agent may reasonably request.

          4.04 Organizational Documents; Proceedings; etc. (a) On the Effective
               ------------------------------------------
Date, the Administrative Agent shall have received a certificate, dated the
Effective Date, signed by the Secretary or an Assistant Secretary of each Credit
Party (or from the Secretary or an Assistant Secretary of the general partner of
each Credit Party that is a limited partnership), in the form of Exhibit E with
appropriate insertions, together with copies of the declaration of trust,
certificate of incorporation and by-laws or other organizational documents
(including partnership agreements and certificates of partnership and limited
liability company agreements and certificates of limited liability company) of
each such Credit Party and the resolutions of each Credit Party referred to in
such certificate (in each case, only to the extent that any such certificates,
organizational documents and/or resolutions have not previously been delivered
with respect to any Credit Party pursuant to the Original Credit Agreement), and
the foregoing shall be reasonably acceptable to the Administrative Agent.

          (b) All trust, corporate, partnership, limited liability company and
legal proceedings and all instruments and agreements in connection with the
transactions contemplated by this Agreement and the other documents in effect on
the Effective Date shall be reasonably satisfactory in form and substance to
the Administrative Agent and the Required Banks, and the Administrative Agent
shall have received all information and copies of all documents and papers,
including records of corporate and partnership proceedings, governmental
approvals, good standing certificates and bring-down telegrams, if any, which
the Administrative Agent may have reasonably requested in connection therewith,
such documents and papers where appropriate to be certified by proper corporate,
partnership or governmental authorities.

          (c) On the Effective Date, the Administrative Agent shall have
received a certificate, dated the Effective Date and signed by an Authorized
Officer of the Borrower,

                                      -19-


certifying that all of the applicable conditions set forth in Sections 4.07,
4.08, 4.09 and 4.12 have been satisfied as of the Effective Date (except to the
extent that any such conditions require a determination to be made by the
Administrative Agent and/or the Required Banks).

          4.05 Pledge and Security Agreement. On the Effective Date, each Credit
               -----------------------------
Party shall have duly authorized, executed and delivered an amended and restated
Pledge and Security Agreement in the form of Exhibit F (as modified,
supplemented or amended from time to time, the "Pledge and Security Agreement")
covering all of such Credit Party's present and future Pledge and Security
Agreement Collateral, together with (to the extent not theretofore delivered
pursuant to the Original Credit Agreement):

          (a) all of the certificated Pledged Securities, if any, referred to
     therein and then owned by such Credit Party, together with executed and
     undated stock powers in blank or such other instruments of transfer as may
     be reasonably requested by the Administrative Agent;

          (b) proper financing statements (Form UCC-1) fully executed for filing
     under the UCC or other appropriate filing offices of each jurisdiction as
     may be necessary or, in the reasonable opinion of the Collateral Agent,
     desirable to perfect the security interests purported to be created by the
     Pledge and Security Agreement;

          (c) certified copies of requests for information or copies (Form UCC-
     11), or equivalent reports, listing all effective financing statements that
     name such Credit Party as debtor and that are filed in the jurisdictions
     referred to in clause (b) above, together with copies of such other
     financing statements that name any such Credit Party as debtor (none of
     which shall cover the Pledge and Security Agreement Collateral except to
     the extent evidencing Permitted Liens or in respect of which the Collateral
     Agent shall have received termination statements (Form UCC-3 or such other
     termination statements as shall be required by local law) fully executed
     for filing);

          (d) evidence of the completion of (or the Administrative Agent shall
     be reasonably satisfied that arrangements are in place to complete) all
     other recordings and filings of, or with respect to, the Pledge and
     Security Agreement as may be necessary or, in the reasonable opinion of the
     Collateral Agent, desirable to perfect the security interests intended to
     be created by the Pledge and Security Agreement; and

          (e) evidence that all other actions necessary or, in the reasonable
     opinion of the Collateral Agent, desirable to perfect and protect the
     security interests purported to be created by the Pledge and Security
     Agreement have been taken (or the Administrative Agent shall be reasonably
     satisfied that arrangements are in place to perfect and protect such
     security interests).

          4.06 Subsidiaries Guaranty. On the Effective Date, each Subsidiary
               ---------------------
Guarantor (as listed on Part I of Schedule IV) shall have duly authorized,
executed and delivered an amended and restated Subsidiaries Guaranty in the form
of Exhibit G (as modified, amended or supplemented from time to time, the
"Subsidiaries Guaranty").

                                      -20-


          4.07 Adverse Change, etc. (a) Since December 31, 1999, nothing shall
               -------------------
have occurred (and neither the Administrative Agent nor the Banks shall have
become aware of any facts, conditions or other information not previously known)
which the Administrative Agent or the Required Banks shall determine has had, or
believe could reasonably be expected to have, a Material Adverse Effect.

          (b) On or prior to the Effective Date, all necessary governmental
(domestic and foreign) and material third party approvals and consents in
connection with the transactions contemplated by the Credit Documents to occur
on or prior to the Effective Date and otherwise referred to herein or therein
shall have been obtained and remain in effect, and all applicable waiting
periods shall have expired without any action being taken by any competent
authority which restrains, prevents or imposes materially adverse conditions
upon the transactions contemplated by such Credit Documents. Additionally, there
shall not exist any judgment, order, injunction or other restraint issued or
filed or a hearing seeking injunctive relief or other restraint pending or
notified prohibiting or imposing materially adverse conditions upon the
transactions contemplated by the Credit Documents to occur on or prior to the
Effective Date.

          4.08 Litigation. On the Effective Date, no litigation by any entity
               ----------
(private or governmental) shall be pending or threatened (i) with respect to any
Credit Document or the transactions contemplated thereby or (ii) which the
Administrative Agent or the Required Banks shall determine could reasonably be
expected to have a Material Adverse Effect.

          4.09 Original Credit Agreement. On the Effective Date, (i) all
               -------------------------
outstanding loans under the Original Credit Agreement shall be prepaid in full,
together with interest thereon and all other amounts owing pursuant to the
Original Credit Agreement (whether or not any such amounts are due on the
Effective Date pursuant to the terms thereof) and (ii) all outstanding
commitments under the Original Credit Agreement shall be terminated.

          4.10 Solvency Certificate; Insurance Certificates. On or prior to the
               --------------------------------------------
Effective Date, there shall have been delivered to the Administrative Agent:

          (a) a solvency certificate in the form of Exhibit H, addressed to the
     Administrative Agent and each of the Banks and dated the Effective Date
     from an Authorized Financial Officer of the Borrower providing the opinion
     of such Authorized Financial Officer as to the solvency of the Borrower and
     its Subsidiaries taken as a whole and the Borrower on a stand-alone basis;
     and

          (b) to the extent not theretofore delivered pursuant to the Original
     Credit Agreement, certificates of insurance complying with the requirements
     of Section 7.03 for the business and properties of Holdings and its
     Subsidiaries, in scope, form and substance reasonably satisfactory to the
     Administrative Agent.

          4.11 Financial Statements; Projections. On or prior to the Effective
               ---------------------------------
Date, the Administrative Agent shall have received the financial statements and
the Projections referred to in Section 6.05(a), all of which shall be in form
and substance reasonably satisfactory to the Administrative Agent and the
Required Banks.

                                      -21-


          4.12 No Default; Representations and Warranties. On the Effective
               ------------------------------------------
Date, (i) there shall exist no Default or Event of Default and (ii) all
representations and warranties contained herein and in the other Credit
Documents shall be true and correct in all material respects with the same
effect as though such representations and warranties had been made on the
Effective Date (it being understood and agreed that any representation or
warranty which by its terms is made as of a specified date shall be required to
be true and correct in all material respects only as of such specified date).

          The occurrence of the Effective Date shall constitute a representation
and warranty by each of Holdings and the Borrower to the Administrative Agent
and each of the Banks that all the conditions specified in this Section 4 exist
as of the Effective Date (except to the extent that any of the conditions
specified in this Section 4 are required to be satisfactory to or determined by
any Bank, the Required Banks, the Collateral Agent and/or the Administrative
Agent or otherwise expressly calls for a subjective determination to be made by
any Bank, the Required Banks, the Collateral Agent and/or the Administrative
Agent). All of the Notes, certificates, legal opinions and other documents and
papers referred to in this Section 4, unless otherwise specified, shall be
delivered to the Administrative Agent at the Notice Office for the benefit of
each of the Banks and shall be in form and substance reasonably satisfactory to
the Banks.

          SECTION 5. Conditions Precedent to All Loans. The obligation of each
                     ---------------------------------
Bank to make Loans (including any Loans made on the Effective Date) is subject,
at the time of each such Loan (except as hereinafter indicated), to the
satisfaction of the following conditions:

          5.01 Effective Date. The Effective Date shall have occurred.
               --------------

          5.02 No Default; Representations and Warranties. At the time of each
               ------------------------------------------
such Loan and also after giving effect thereto (i) there shall exist no Default
or Event of Default and (ii) all representations and warranties contained herein
and in the other Credit Documents shall be true and correct in all material
respects with the same effect as though such representations and warranties had
been made on the date of the making of such Loan (it being understood and agreed
that any representation or warranty which by its terms is made as of a specified
date shall be required to be true and correct in all material respects only as
of such specified date).

          5.03 Notice of Borrowing. Prior to the making of each Loan, the
               -------------------
Administrative Agent shall have received a Notice of Borrowing meeting the
requirements of Section 1.03(a).

          The acceptance of the proceeds of each Loan shall constitute a
representation and warranty by each of Holdings and the Borrower to the
Administrative Agent and each of the Banks that all the conditions specified in
this Section 5 and applicable to such Loan exist as of that time.

          SECTION 6. Representations and Warranties. In order to induce the
                     ------------------------------
Banks to enter into this Agreement and to make the Loans as provided herein,
each of Holdings and the Borrower makes (as to itself and each of its
Subsidiaries) the following representations, warranties and agreements, in each
case after giving effect to the Effective Date, all of which shall survive the
execution and delivery of this Agreement and the Notes and the making of the

                                      -22-


Loans, with the occurrence of the Effective Date and the incurrence of each Loan
on or after the Effective Date being deemed to constitute a representation and
warranty that the matters specified in this Section 6 are true and correct on
and as of the Effective Date and on the date of each such Loan (it being
understood and agreed that any representation or warranty which by its terms is
made as of a specified date shall be required to be true and correct in all
material respects only as of such specified date).

          6.01 Status. Each of Holdings and each of its Subsidiaries (i) is a
               ------
duly organized and validly existing real estate investment trust, corporation,
partnership or limited liability company, as the case may be, in good standing
(if applicable) under the laws of the jurisdiction of its organization, (ii) has
the trust, corporate, partnership or limited liability company power and
authority, as the case may be, to own or lease its property and assets and to
transact the business in which it is engaged and presently proposes to engage
and (iii) is duly qualified and is authorized to do business and is in good
standing in each jurisdiction where the conduct of its business requires such
qualifications except for failures to be so qualified which, either individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.

          6.02 Power and Authority. Each Credit Party has the trust, corporate,
               -------------------
partnership or limited liability company power and authority, as the case may
be, to execute, deliver and perform the terms and provisions of each of the
Credit Documents to which it is a party and has taken all necessary trust,
corporate, partnership or limited liability company action, as the case may be,
to authorize the execution, delivery and performance by it of each of such
Credit Documents. Each Credit Party has duly executed and delivered each of the
Credit Documents to which it is a party, and each of such Credit Documents
constitutes the legal, valid and binding obligation of such Credit Party
enforceable in accordance with its terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance (but only with respect to any guaranties or security
interests given by a Subsidiary Guarantor), reorganization or other similar laws
generally affecting creditors' rights and by equitable principles (regardless of
whether enforcement is sought in equity or at law).

          6.03 No Violation. Neither the execution, delivery or performance by
               ------------
any Credit Party of the Credit Documents to which it is a party, nor compliance
by it with the terms and provisions thereof, (i) will contravene any provision
of any applicable law, statute, rule or regulation or any applicable order,
writ, injunction or decree of any court or governmental instrumentality, (ii)
will conflict with or result in any breach of any of the terms, covenants,
conditions or provisions of, or constitute a default under, or result in the
creation or imposition of (or the obligation to create or impose) any Lien
(except pursuant to the Pledge and Security Agreement) upon any of the
properties or assets of Holdings or any of its Subsidiaries pursuant to the
terms of any indenture, mortgage, deed of trust, credit agreement or loan
agreement, or any other material agreement, contract or instrument, to which
Holdings or any of its Subsidiaries is a party or by which it or any of its
property or assets is bound or to which it may be subject or (iii) will violate
any provision of the declaration of trust, certificate of incorporation,
partnership agreement, certificate of partnership, limited liability company
agreement or by-laws, as the case may be, of Holdings or any of its
Subsidiaries.

                                      -23-


          6.04 Governmental Approvals. No order, consent, approval, license,
               ----------------------
authorization or validation of, or filing, recording or registration with
(except as have been obtained or made and which remain in full force and
effect), or exemption by, any governmental or public body or authority, or any
subdivision thereof, is required to authorize, or is required in connection
with, (i) the execution, delivery and performance of any Credit Document or (ii)
the legality, validity, binding effect or enforceability of any Credit Document.

          6.05 Financial Statements; Financial Condition; Undisclosed
               ------------------------------------------------------
Liabilities; Projections; etc. (a) The consolidated balance sheets of each of
- -----------------------------
Holdings and its Subsidiaries and the Borrower and its Subsidiaries for the
fiscal year ended December 31, 1999 and the fiscal quarter ended March 24, 2000,
and the related consolidated statements of income, cash flows and shareholders'
equity of such Persons for the fiscal year and fiscal quarter ended on such
dates, as the case may be, copies of which have been furnished to the Banks on
or prior to the Effective Date, present fairly in all material respects the
consolidated financial position of each of Holdings and its Subsidiaries and
the Borrower and its Subsidiaries at the date of such balance sheets and the
consolidated results of the operations of such Persons for the periods covered
thereby. All of the foregoing financial statements have been prepared in
accordance with generally accepted accounting principles consistently applied.
Since December 31, 1999, nothing has occurred that has had, or could reasonably
be expected to have, a Material Adverse Effect.

          (b) On and as of the Effective Date and on the date on which each Loan
is made, on a Pro Forma Basis after giving effect to all Indebtedness (including
              --- -----
the Loans) being incurred or assumed and Liens created by each Credit Party in
connection therewith, (x) the sum of the assets, at a fair valuation, of the
Borrower and its Subsidiaries (taken as a whole) and the Borrower (on a
stand-alone basis) will exceed their respective debts, (y) the Borrower and its
Subsidiaries (taken as a whole) and the Borrower (on a stand-alone basis) have
not incurred and do not intend to incur, and do not believe that they will
incur, debts beyond their ability to pay such debts as such debts mature and (z)
the Borrower and its Subsidiaries (taken as a whole) and the Borrower (on a
stand-alone basis) have sufficient capital with which to conduct its business.
For purposes of this Section 6.05(b) "debt" means any liability on a claim, and
"claim" means (i) right to payment whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured or (ii) right to an
equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured.

          (c) Except as fully disclosed in the financial statements delivered
pursuant to Section 6.05(a) or in the Schedules to this Agreement, there were as
of the Effective Date no liabilities or obligations with respect to Holdings or
any of its Subsidiaries (whether absolute, accrued, contingent or otherwise and
whether or not due) of a nature required to be set forth in a balance sheet or
footnote thereto prepared in accordance with generally accepted accounting
principles which, either individually or in the aggregate, would be material to
Holdings, Holdings and its Subsidiaries taken as a whole, the Borrower or the
Borrower and its Subsidiaries taken as a whole. As of the Effective Date,
neither Holdings nor the Borrower knows of any liability or obligation of itself
or any of its Subsidiaries of any such nature that is not fully disclosed in the
financial statements delivered pursuant to Section 6.05(a) or in the

                                      -24-


footnotes thereto which, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.

          (d) On and as of the Effective Date, the Projections previously
delivered to the Administrative Agent and the Banks have been prepared on a
basis consistent in all material respects with the financial statements referred
to in Section 6.05(a) (other than as set forth or presented in such
Projections), and there are no statements or conclusions in any of the
Projections which are based upon or include information known to Holdings or the
Borrower to be misleading in any material respect or which fail to take into
account known material information regarding the matters reported therein. On
the Effective Date, each of Holdings and the Borrower believes that the
Projections are reasonable and attainable.

          6.06 Litigation. There are no actions, suits or proceedings pending
               ----------
or, to the best knowledge of each of Holdings and the Borrower, threatened (i)
which purports to affect the legality, validity or enforceability of any Credit
Document or (ii) that could reasonably be expected to have a Material Adverse
Effect.

          6.07 True and Complete Disclosure. All factual information (taken as a
               ----------------------------
whole) furnished by or on behalf of Holdings or any of its Subsidiaries in
writing to the Administrative Agent or any Bank (including, without limitation,
all information contained in the Credit Documents) for purposes of or in
connection with this Agreement, the other Credit Documents or any of the other
transactions contemplated herein or therein is, and all other such factual
information (taken as a whole) hereafter furnished by or on behalf of Holdings
or any of its Subsidiaries in writing to the Administrative Agent or any Bank
will be, true and accurate in all material respects on the date as of which such
information is dated or certified and, to the best of each of Holdings' and the
Borrower's knowledge, not incomplete by omitting to state any fact necessary to
make such information (taken as a whole) not misleading in any material respect
at such time in light of the circumstances under which such information is or
was provided.

          6.08 Use of Proceeds; Margin Regulations. (a) The proceeds of all
               -----------------------------------
Loans shall be used by the Borrower and its Subsidiaries, subject to the other
restrictions set forth in this Agreement, for their working capital and general
corporate, partnership or limited liability company purposes.

          (b) No part of the proceeds of any Loan will be used to purchase or
carry any Margin Stock or to extend credit for the purpose of purchasing or
carrying any Margin Stock. Neither the making of any Loan nor the use of the
proceeds thereof will violate or be inconsistent with the provisions of
Regulation T, U or X of the Board of Governors of the Federal Reserve System.

          6.09 Tax Returns and Payments. Each of Holdings and each of its
               ------------------------
Subsidiaries has timely filed or caused to be timely filed, on the due dates
thereof or within applicable grace periods, with the appropriate taxing
authority, all Federal, state and other material returns, statements, forms and
reports for taxes (the "Returns") required to be filed by or with respect to the
income, properties or operations of Holdings and/or its Subsidiaries. The
Returns accurately reflect in all material respects all material liability for
taxes of Holdings and its Subsidiaries for the periods covered thereby except
for amounts for which adequate reserves have been

                                      -25-


established in accordance with generally accepted accounting principles. Each
of Holdings and each of its Subsidiaries has paid all material taxes payable by
them other than taxes which are not delinquent, and other than those contested
in good faith and for which adequate reserves have been established in
accordance with generally accepted accounting principles. There is no action,
suit, proceeding, investigation, audit, or claim now pending or, to the best
knowledge of each of Holdings and the Borrower, threatened by any authority
regarding any taxes relating to Holdings or any of its Subsidiaries which,
either individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect. As of the Effective Date, Holdings and each of its
Subsidiaries have properly accrued adequate reserves in accordance with
generally acceptable accounting principles for any amount of taxes in dispute
for a Return which is the subject of any waiver extending the statute of
limitations relating to the payment or collection of taxes of Holdings or any of
its Subsidiaries.

          6.10 Compliance with ERISA. (i) Each Plan that is a single employer
               ---------------------
plan as defined in Section 4001(a)(15) of ERISA (a "Single Employer Plan") is in
substantial compliance with ERISA and the Code; no Reportable Event has occurred
with respect to a Single Employer Plan; no Single Employer Plan is insolvent or
in reorganization; to the best knowledge of each of Holdings and the Borrower,
no Multiemployer Plan is insolvent or in reorganization; no Single Employer Plan
has an Unfunded Current Liability; no Single Employer Plan which is subject to
Section 412 of the Code or Section 302 of ERISA has an accumulated funding
deficiency, within the meaning of such Sections of the Code or ERISA, or has
applied for or received an extension of any amortization period within the
meaning of Section 412 of the Code or Section 303 or 304 of ERISA; all
contributions required to be made by Holdings or any of its Subsidiaries or any
ERISA Affiliate with respect to a Plan and a Foreign Pension Plan have been
timely made; neither Holdings nor any of its Subsidiaries nor any ERISA
Affiliate has incurred any material liability to or on account of a Plan
pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204
or 4212 of ERISA or Section 401(a)(29), 4971, 4975 or 4980 of the Code or
reasonably expects to incur any material liability (including any indirect,
contingent, or secondary liability) under any of the foregoing Sections with
respect to any Plan; no proceedings have been instituted to terminate or
appoint a trustee to administer any Single Employer Plan; to the best knowledge
of each of Holdings and the Borrower, no proceedings have been instituted to
terminate or appoint a trustee to administer any Multiemployer Plan; no
condition exists which presents a substantial risk to Holdings or any of its
Subsidiaries or any ERISA Affiliate of incurring a material liability to or on
account of a Single Employer Plan pursuant to the foregoing provisions of ERISA
and the Code; to the best knowledge of each of Holdings and the Borrower, no
condition exists which presents a substantial risk to Holdings or any of its
Subsidiaries or any ERISA Affiliate of incurring any material liability to or on
account of a Multiemployer Plan pursuant to the foregoing provisions of ERISA
and the Code; each of Holdings and the Borrower believes that the aggregate
liabilities of Holdings and its Subsidiaries and its ERISA Affiliates to all
Multiemployer Plans in the event of a withdrawal therefrom, as of the close of
the most recent fiscal year of each such Plan ended prior to the date of the
incurrence of any Loan, could not reasonably be expected to have a Material
Adverse Effect; each group health plan (as defined in Section 607(1) of ERISA or
Section 4980B(g)(2) of the Code) which covers or has covered employees or former
employees of Holdings or any of its Subsidiaries or any ERISA Affiliate has at
all times been operated in substantial compliance with the provisions of Part 6
of subtitle B of Title I of ERISA and Section 4980B of the Code; no lien imposed
under the Code or ERISA on the assets of Holdings or any of its Subsidiaries or
any ERISA Affiliate

                                      -26-


exists or, to the best knowledge of each of Holdings and the Borrower, is likely
to arise on account of any Plan; and Holdings and its Subsidiaries do not
maintain or contribute to (A) any employee welfare benefit plan (as defined in
Section 3(1) of ERISA) which provides benefits to retired employees or other
former employees (other than as required by Section 601 of ERISA) or (B) any
Plan, the obligations with respect to which could reasonably be expected to
have a Material Adverse Effect.

          (ii) Each Foreign Pension Plan has been maintained in substantial
compliance with its terms and with the requirements of any and all applicable
laws, statutes, rules, regulations and orders and has been maintained, where
required, in good standing with applicable regulatory authorities. Neither
Holdings nor or any of its Subsidiaries has incurred any obligation in
connection with the termination of or withdrawal from any Foreign Pension Plan.
The present value of the accrued benefit liabilities (whether or not vested)
under each Foreign Pension Plan, determined as of the end of Holdings' most
recently ended fiscal year on the basis of actuarial assumptions, each of which
is reasonable, does not exceed the current value of the assets of each Foreign
Pension Plan allocable to such benefit liabilities, in the aggregate, by a
material amount.

          6.11 The Pledge and Security Agreement; Equity Pledges. (a) The Pledge
               -------------------------------------------------
and Security Agreement creates (after all steps required under Articles 8 and 9
of the New York UCC have been taken) in favor of the Collateral Agent for the
benefit of the Secured Creditors a legal, valid and enforceable security
interest in all right, title and interest of each Credit Party in the Pledge and
Security Agreement Collateral described therein and owned by such Credit Party
on any date on which this representation and warranty is made or deemed made to
the extent that a security interest therein can be created pursuant to the UCC,
which security interest shall, (i) upon delivery to the Collateral Agent of any
certificates evidencing any Pledged Securities, (ii) upon the filing of
appropriate financing statements under the UCC in respect of any uncertificated
Pledged Securities that constitute a "general intangible" under the New York UCC
or (iii) upon the completion of such other actions as may be required under the
applicable provisions of the UCC (which delivery, filings and/or other actions
have been done and remain in full force and effect as to the Pledge and Security
Agreement Collateral owned by any Credit Party on any date on which this
representation and warranty is made or deemed made), constitute a fully
perfected first lien on, and security interest in, all right, title and interest
of such Credit Party in all of the Pledge and Security Agreement Collateral
described therein, subject to no security interests of any other Person.

          (b) Schedule III sets forth, as of the Effective Date, whether the
capital stock or other equity interests in each Subsidiary listed on Schedule IV
is pledged (as of the Effective Date) pursuant to the Pledge and Security
Agreement, and to the extent any such interest is not so pledged, Schedule III
indicates the reason therefor.

          6.12 Properties. Each of Holdings and each of its Subsidiaries has
               ----------
good and marketable title to all material properties owned by them, including
all material property reflected in the balance sheets referred to in Section
6.05(a) (except as sold or otherwise disposed of since the date of such balance
sheets, free and clear of all Liens, other than Permitted Liens).

                                      -27-


          6.13 Subsidiaries. (a) Holdings has no Subsidiaries other than (i) the
               ------------
Borrower and its Subsidiaries and (ii) Permitted REIT Subsidiaries. The
Borrower has no Subsidiaries other than (i) those Subsidiaries listed on
Schedule IV and (ii) new Subsidiaries created or acquired in compliance with
Section 8.17. Schedule IV correctly sets forth, as of the Effective Date, the
percentage ownership (direct or indirect) of Holdings and the Borrower in each
class of capital stock or other equity of each of their respective Subsidiaries
existing on the Effective Date and also identifies the direct owner thereof.

          (b) Part I of Schedule IV sets forth, as of the Effective Date, each
Subsidiary Guarantor as of such date. Part II of Schedule IV sets forth, as of
the Effective Date, each Subsidiary of the Borrower which is not a Subsidiary
Guarantor on the Effective Date, which Part II of Schedule IV also shall specify
the reason the respective Subsidiary is not required to be a Subsidiary
Guarantor.

          6.14 Compliance with Statutes, etc. Each of Holdings and each of its
               -----------------------------
Subsidiaries is in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property (including, without limitation, applicable statutes,
regulations, orders and restrictions relating to zoning compliance and
environmental standards and controls), except such noncompliances as could not,
either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

          6.15 Investment Company Act. Neither Holdings nor any of its
               ----------------------
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.

          6.16 Public Utility Holding Company Act. Neither Holdings nor any of
               ----------------------------------
its Subsidiaries is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company" within the meaning of the Public Utility Holding Company
Act of 1935, as amended.

          6.17 Environmental Matters. (a) To the best knowledge of each of
               ---------------------
Holdings and the Borrower, each of Holdings and each of its Subsidiaries has
complied with all applicable Environmental Laws and the requirements of any
permits issued under such Environmental Laws. To the best knowledge of each of
Holdings and the Borrower, there are no pending or threatened Environmental
Claims against Holdings or any of its Subsidiaries or any Real Property owned,
leased or operated by Holdings or any of its Subsidiaries. To the best knowledge
of each of Holdings and the Borrower, there are no facts, circumstances,
conditions or occurrences on any Real Property owned, leased or operated by
Holdings or any of its Subsidiaries or on any property adjoining or in the
vicinity of any such Real Property that could reasonably be expected (i) to form
the basis of an Environmental Claim against Holdings or any of its Subsidiaries
or any such Real Property or (ii) to cause any such Real Property to be subject
to any restrictions on the ownership, occupancy, use or transferability of such
Real Property by Holdings or any of its Subsidiaries under any applicable
Environmental Law.

          (b) To the best knowledge of each of Holdings and the Borrower,
Hazardous Materials have not at any time been generated, used, treated or stored
on, or transported to or

                                      -28-


from, or Released on or from, any Real Property owned, leased or operated by
Holdings or any of its Subsidiaries except in compliance with all applicable
Environmental Laws and reasonably required in connection with the operation,
use and maintenance of any such Real Property by Holdings or such Subsidiary's
business.

          (c) Notwithstanding anything to the contrary in this Section 6.17, the
representations made in this Section 6.17 shall only be untrue if the aggregate
effect of all failures and noncompliance of the types described above could
reasonably be expected to have a Material Adverse Effect.

          6.18 Labor Relations. Neither Holdings nor any of its Subsidiaries,
               ---------------
and to the best knowledge of each of Holdings and the Borrower, no Facility
Manager or Approved Lessee, is engaged in any unfair labor practice with respect
to any Hotel Property or other Real Property owned or leased by Holdings or any
of its Subsidiaries that could reasonably be expected to have a Material Adverse
Effect. To the best knowledge of each of Holdings and the Borrower, there is (i)
no unfair labor practice complaint pending or reasonably expected to arise
against Holdings any of its Subsidiaries, any Facility Manager or any Approved
Lessee before the National Labor Relations Board and no significant grievance or
significant arbitration proceeding arising out of or under any collective
bargaining agreement is so pending or reasonably expected to arise against
Holdings, any of its Subsidiaries, any Facility Manager or any Approved Lessee,
(ii) no strike, labor dispute, slowdown or stoppage is pending or reasonably
expected to arise against Holdings, any of its Subsidiaries, any Facility
Manager or any Approved Lessee and (iii) no union representation question exists
with respect to the employees of Holdings, any of its Subsidiaries, any Facility
Manager or any Approved Lessee, in each case with respect to the Hotel
Properties and/or other Real Properties owned or leased by Holdings or any of
its Subsidiaries, except (with respect to any matter specified in clause (i),
(ii) or (iii) above, either individually or in the aggregate) such as could not
reasonably be expected to have a Material Adverse Effect.

          6.19 Intellectual Property. Each of Holdings and each of its
               ---------------------
Subsidiaries owns or has the right to use all trademarks, permits, service
marks, trade names, licenses and franchises necessary for the conduct of its
respective businesses, except such as could not, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

          6.20 Indebtedness. Schedule V sets forth a true and complete list of
               ------------
all Indebtedness of Holdings and its Subsidiaries as of the Effective Date and
which is to remain outstanding after giving effect thereto (excluding the Loans,
the "Existing Indebtedness"), in each case showing the aggregate principal
amount thereof and the name of the respective borrower and any other entity
which directly or indirectly guaranteed such debt (it being understood that
Schedule V does not have to set forth immaterial items of Indebtedness that do
not otherwise constitute Indebtedness under clause (I) of the definition of
Consolidated Total Debt, although such items of immaterial Indebtedness will
still constitute Existing Indebtedness). On the Effective Date, Holdings is
current on all interest payments due on the QUIPs Debt.

          6.21 Management Agreements, Franchise Agreements, Operating Leases,
               --------------------------------------------------------------
Ground Leases. (a) Each Management Agreement, Franchise Agreement and Operating
- -------------
Lease with respect to any Hotel Property owned or leased by Holdings or any of
its Subsidiaries is in full

                                      -29-


force and effect in accordance with its terms and has not been terminated,
modified or amended without the consent of the Administrative Agent (other than
in accordance with its terms) and no party thereto has denied or disaffirmed any
of its material obligations thereunder or has defaulted in the due performance
or observance of any material term, covenant or agreement on its part to be
performed or observed pursuant thereto, in each case except to the extent that
(i) Holdings or its relevant Subsidiary is diligently attempting to replace any
such agreement that has been terminated and (ii) the result of any such
termination, amendment, denial, disaffirmation or default (as applicable) could
not, either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

          (b) Each ground lease with respect to any Hotel Property which is a
Leasehold is in full force and effect in accordance with its terms and no party
thereto has denied or disaffirmed any of its material obligations thereunder or
has defaulted in the due performance or observance of any material term,
covenant or agreement on its part to be performed or observed pursuant thereto.

          6.22 Status as REIT. Holdings is qualified as a real estate investment
               --------------
trust under the Code and its proposed methods of operation will enable it to
continue to be so qualified.

          6.23 Facility Managers; Approved Lessees. To the best knowledge of
               -----------------------------------
each of Holdings and the Borrower, each Facility Manager has full power and
authority and the legal right to manage and operate the properties it operates
and to conduct the business in which it is currently engaged with respect to any
Hotel Property owned or leased by Holdings or any of its Subsidiaries,
including, without limitation, to be a party to a Management Agreement. To the
best knowledge of each of Holdings and the Borrower, each Approved Lessee has
full power and authority and the legal right to lease, manage and operate the
properties it operates and to conduct the business in which it is currently
engaged with respect to any Hotel Property owned or leased by Holdings or any of
its Subsidiaries, including, without limitation, to be the lessee under an
Operating Lease and a party to a Management Agreement.

          SECTION 7. Affirmative Covenants. Each of Holdings and the Borrower
                     ---------------------
hereby covenants and agrees (as to itself and each of its Subsidiaries) that
from and after the Effective Date and until the Total Commitment has terminated
and the Loans and Notes, together with interest, Fees and all other Obligations
incurred hereunder and thereunder, are paid in full:

          7.01 Information Covenants. Holdings and/or the Borrower will furnish
               ---------------------
to the Administrative Agent and each of the Banks:

          (a) Quarterly Financial Statements and Reports. (A) Within 60 days
     after the close of each of the first three quarterly accounting periods in
     each fiscal year of Holdings and the Borrower (commencing with the
     quarterly accounting period ending closest to June 30, 2000), (i) a
     consolidated balance sheet of each of Holdings and its Subsidiaries and the
     Borrower and its Subsidiaries as at the end of such quarterly accounting
     period, (ii) the related consolidated statements of income for such
     quarterly accounting period and for the elapsed portion of the fiscal year
     ended with the last day of such quarterly accounting period and (iii) the
     related consolidated statements of cash flows for the elapsed portion of
     the fiscal year ended with the last day of such quarterly accounting

                                      -30-


     period, in each case setting forth comparative figures for the
     corresponding fiscal periods in the prior fiscal year, all of which shall
     be in reasonable detail and certified by an Authorized Financial Officer of
     Holdings or the Borrower, as the case may be, that, to the best of such
     officer's knowledge after due inquiry, they fairly present, in all material
     respects, the financial condition of each of Holdings and its Subsidiaries
     and the Borrower and its Subsidiaries as of the dates indicated and the
     results of their operations and changes in their cash flows for the periods
     indicated, subject to normal year-end audit adjustments, provided that, in
                                                              --------
     satisfying the requirements of this Section 7.01(a), if at the time the
     financial statements referenced herein are to be delivered, Holdings owns
     no capital stock of any Person other than the Borrower and has no other
     material assets or liabilities (other than pursuant to the Credit
     Documents), then only the consolidated financial statements of Holdings and
     its Subsidiaries need to be delivered pursuant to this Section 7.01(a) so
     long as any differences in the consolidated financial statements of
     Holdings and its Subsidiaries from those of the Borrower and its
     Subsidiaries are indicated by footnotes in the respective consolidated
     financial statements of Holdings and its Subsidiaries.

          (B) Within 60 days after the end of each quarterly accounting period
     in each fiscal year of Holdings, an operating statement in form and detail
     reasonably satisfactory to the Administrative Agent, for the elapsed
     portion of the fiscal year ended with the last day of such quarterly
     accounting period for all Hotel Properties then subject to Operating
     Leases.

          (b) Annual Financial Statements. Within 105 days after the close of
              ---------------------------
     each fiscal year of Holdings and the Borrower, the consolidated balance
     sheet of each of Holdings and its Subsidiaries and the Borrower and its
     Subsidiaries as of the end of such fiscal year and the related consolidated
     statements of income and shareholders' equity and of cash flows for such
     fiscal year setting forth comparative figures for the preceding fiscal year
     and certified by Arthur Andersen L.L.P. or such other independent certified
     public accountants of recognized national standing reasonably acceptable
     to the Administrative Agent, together with a report of such accounting firm
     stating that in the course of its regular audit of the financial statements
     of each of Holdings and its Subsidiaries and the Borrower and its
     Subsidiaries, which audit was conducted in accordance with generally
     accepted auditing standards, such accounting firm obtained no knowledge of
     any Default or Event of Default which has occurred and is continuing under
     any of Sections 8.07 through 8.12, inclusive, or, if in the opinion of such
     accounting firm such a Default or an Event of Default has occurred and is
     continuing, a statement as to the nature thereof, provided that, in
                                                       --------
     satisfying the requirements of this Section 7.01(b), if at the time the
     financial statements referenced herein are to be delivered, Holdings owns
     no capital stock of any Person other than the Borrower and has no other
     material assets or liabilities (other than pursuant to the Credit
     Documents), then only the consolidated financial statements of Holdings and
     its Subsidiaries need to be delivered pursuant to this Section 7.01(b) so
     long as any differences in the consolidated financial statements of
     Holdings and its Subsidiaries from those of the Borrower and its
     Subsidiaries are indicated by footnotes in the respective consolidated
     financial statements.

                                      -31-


          (c) Budgets. No later than 60 days after the first day of each fiscal
              -------
     year of Holdings, budgets in form reasonably satisfactory to the
     Administrative Agent (including, in any event, budgeted statements of cash
     flow and Capital Expenditures and budgeted debt and cash balances) for such
     fiscal year prepared in detail, with respect to Holdings and its
     Subsidiaries, accompanied by a statement of an Authorized Financial Officer
     of Holdings to the effect that, to the best of such officer's knowledge,
     the budget is a reasonable estimate of the period covered thereby.

          (d) Officer's Certificates. At the time of the delivery of the
              ----------------------
     financial statements provided for in Sections 7.01(a) and (b), a
     certificate of an Authorized Financial Officer of the Borrower to the
     effect that, to the best of such officer's knowledge, no Default or Event
     of Default has occurred and is continuing or, if any Default or Event of
     Default has occurred and is continuing, specifying the nature and extent
     thereof, which certificate shall (x) set forth (in reasonable detail) the
     calculations required to establish whether Holdings and its Subsidiaries
     were in compliance with the provisions of Sections 8.02(ix), 8.02(x),
     8.02(xi), 8.02(xiv), 8.02(xv), 8.02(xviii), 8.03, 8.04, 8.05 and 8.07
     through 8.12, inclusive, at the end of such fiscal quarter or year, as the
     case may be, and (y) set forth (in reasonable detail) the calculations and
     other determinations required to establish whether Holdings and its
     Subsidiaries were in compliance with the provisions of Sections 3.02(c) and
     (d) during, and for the 12 month period ending on the last day of, such
     quarterly accounting period or fiscal year, as the case may be.

          (e) Notice of Default or Litigation. Promptly, and in any event within
              -------------------------------
     three Business Days after the President, the Chief Executive Officer, any
     Vice President or any Authorized Financial Officer of any Credit Party
     obtains knowledge thereof, notice of (i) the occurrence of any event which
     constitutes a Default or an Event of Default and (ii) any litigation or
     governmental investigation or proceeding pending or threatened (x) against
     Holdings or any of its Subsidiaries which could reasonably be expected to
     have a Material Adverse Effect, (y) with respect to any material
     Indebtedness of Holdings or any of its Subsidiaries or (z) with respect to
     any Credit Document.

          (f) Management Letters. Promptly after any Credit Party's receipt
              ------------------
     thereof, a copy of any "management letter" received by any such Credit
     Party from its certified public accountants and management's responses, if
     any, thereto.

          (g) Other Reports and Filings. Promptly, and without duplication of
              -------------------------
     any documents or information delivered pursuant to another clause of this
     Section 7.01, copies of all financial information, proxy materials and
     other information and reports, if any, which Holdings or any of its
     Subsidiaries shall file with the Securities and Exchange Commission or any
     successor thereto (the "SEC") (it being understood, however, that with
     respect to any preliminary filings made with the SEC, Holdings need only
     deliver a certificate describing such filing) and copies of all notices and
     reports which Holdings or any of its Subsidiaries shall deliver to holders
     of the Senior Notes pursuant to the terms of the documentation governing
     such Indebtedness (or any trustee, agent or other representative therefor).

                                      -32-


          (h) Environmental Matters. Promptly upon, and in any event within ten
              ---------------------
     Business Days after the President, the Chief Executive Officer, any Vice
     President or any Authorized Financial Officer of any Credit Party,
     obtaining knowledge thereof, notice of one or more of the following
     environmental matters to the extent that any such environmental matters,
     either individually or in the aggregate, could reasonably be expected to
     have a Material Adverse Effect:

               (i) any pending or threatened Environmental Claim against
          Holdings or any of its Subsidiaries or any Real Property owned, leased
          or operated by Holdings or any of its Subsidiaries;

               (ii) any condition or occurrence on or arising from any Real
          Property owned, leased or operated by Holdings or any of its
          Subsidiaries that (a) results in non-compliance by Holdings or any of
          its Subsidiaries with any applicable Environmental Law or (b) could
          reasonably be expected to form the basis of an Environmental Claim
          against Holdings or any of its Subsidiaries or any such Real Property;

               (iii) any condition or occurrence on any Real Property owned,
          leased or operated by Holdings or any of its Subsidiaries that could
          reasonably be expected to cause such Real Property to be subject to
          any restrictions on the ownership, lease, occupancy, use or
          transferability by Holdings or any of its Subsidiaries of such Real
          Property under any Environmental Law; and

               (iv) the taking of any removal or remedial action in response to
          the actual or alleged presence of any Hazardous Material on any Real
          Property owned, leased or operated by Holdings or any of its
          Subsidiaries as required by any Environmental Law or any governmental
          or other administrative agency.

     All such notices shall describe in reasonable detail the nature of the
     claim, investigation, condition, occurrence or removal or remedial action
     and Holdings' or such Subsidiary's response or proposed response thereto.

          (i) Other Information. From time to time, such other information or
              -----------------
     documents (financial or otherwise) with respect to Holdings and/or any of
     its Subsidiaries as the Administrative Agent or any Bank (through the
     Administrative Agent) may reasonably request.

          7.02 Books, Records and Inspections; Annual Meetings. (a) Holdings
               -----------------------------------------------
will, and will cause each of its Subsidiaries to, keep proper books of record
and account in which full, true and correct entries in conformity with generally
accepted accounting principles and all requirements of law shall be made of all
dealings and transactions in relation to its business and activities. Holdings
will, and will cause each of its Subsidiaries to, permit officers and designated
representatives of the Administrative Agent or any Bank to visit and inspect,
upon reasonable advance notice, during regular business hours and under guidance
of officers of Holdings or such Subsidiary, any of the properties of Holdings
or any of its Subsidiaries, and to examine the books of account of Holdings and
any of its Subsidiaries and discuss the affairs,

                                      -33-


finances and accounts of Holdings and any of its Subsidiaries with, and be
advised as to the same by, its and their respective Presidents, Chief Executive
Officers, Vice Presidents, Authorized Financial Officers and independent
accountants, all at such reasonable times and intervals and to such reasonable
extent as the Administrative Agent or any Bank may reasonably request, provided
                                                                       --------
that any Bank's rights under this Section 7.02 may not be exercised more than
once in any fiscal quarter of Holdings.

          (b) Annual Meetings with Banks. At the request of the Administrative
              --------------------------
Agent or the Required Banks, Holdings and the Borrower shall, at least once
during each fiscal year of Holdings, hold a meeting (at a mutually agreeable
location and time) with all of the Banks at which meeting the financial results
of the previous fiscal year and the financial condition of Holdings and its
Subsidiaries and the budgets presented for the current fiscal year of Holdings
and its Subsidiaries shall be reviewed, with each Bank bearing its own travel,
lodging, food and other costs associated with attending any such meeting.

          7.03 Maintenance of Property and Insurance. (a) Holdings will, and
               -------------------------------------
will cause each of its Subsidiaries, Approved Lessees and Facility Managers (as
appropriate) to, (i) maintain all of their material property in good working
order and condition (ordinary wear and tear and damage by casualty excepted),
(ii) maintain with financially sound and reputable insurance companies or
qualified self-insurers, insurance on itself and its properties in commercially
reasonable amounts and, with respect to Hotel Properties, in accordance with
clause (b) of this Section 7.03, and with respect to other properties, against
such risks as are consistent for companies similarly situated and owning similar
properties, and (iii) furnish to the Administrative Agent and the Banks from
time to time, upon written request, certificates of insurance reasonably
acceptable to the Administrative Agent and required under this Agreement and the
other Credit Documents and such other information relating to such insurance as
the Administrative Agent or any Bank may reasonably request.

          (b) With respect to each Hotel Property, Holdings and its
Subsidiaries, as applicable, shall obtain and maintain, or cause to be
maintained, insurance providing at least the following coverages:

          (i) comprehensive all risk insurance on the Improvements on each Hotel
     Property and the Personal Property, including contingent liability from
     Operation of Building Laws, Demolition Costs and Increased Cost of
     Construction Endorsements, in each case (A) in an amount equal to 100% of
     the "Full Replacement Cost," which for purposes of this Agreement shall
     mean actual replacement value (exclusive of costs of excavations,
     foundations, underground utilities and footings) with a waiver of
     depreciation; (B) containing an agreed amount endorsement with respect to
     the Improvements owned or leased by Holdings or such Subsidiary and
     Personal Property or a waiver of all co-insurance provisions; (C) with
     deductibles in such amounts as may be carried by operators of similar
     facilities or as required by the insurance carrier; and (D) containing an
     "Ordinance or Law Coverage" or "Enforcement" endorsement if any of the
     Improvements or the use of the Hotel Property shall at any time constitute
     legal non-conforming structures or uses. The Full Replacement Cost shall be
     redetermined from time to time (but not more frequently than once in any
     twelve (12) calendar months) at the request of the Administrative Agent by
     an appraiser or contractor designated and paid

                                      -34-


     by Holdings or such Subsidiary and approved by the Administrative Agent, or
     by an engineer or appraiser in the regular employ of the insurer.
     Notwithstanding the foregoing, if such redetermination is based on an
     appraisal, the cost thereof shall be paid by Holdings or the related
     Subsidiary. After the first appraisal, additional appraisals may be based
     on construction cost indices customarily employed in the trade or as
     determined by the respective insurance carrier and shall be Holdings' or
     the related Subsidiary's expense. Such appraisals will not be required so
     long as the policy is written on a blanket full replacement cost basis with
     an agreed amount endorsement. No omission on the part of the Administrative
     Agent to request any such ascertainment shall relieve Holdings or any
     Subsidiary of any of its obligations under this Section 7.03(b)(i). In
     addition, Holdings and its Subsidiaries shall obtain (x) flood hazard
     insurance if any portion of the Improvements is currently or at any time in
     the future located in a federally designated "special flood hazard area"
     and (y) earthquake insurance in amounts and in form and substance
     reasonably satisfactory to the Administrative Agent (but in no event less
     than the "Probable Maximum Loss" determined by consultants reasonably
     satisfactory to the Administrative Agent) in the event the Hotel Property
     is located in an area with a high degree of seismic activity, or otherwise
     as required by the Administrative Agent, provided that the insurance
     pursuant to preceding clauses (x) and (y) shall be on terms consistent with
     the comprehensive all risk insurance policy required under this Section
     7.03(b)(i), except that the deductible on wind insurance if the Hotel
     Property is located in a coast line area, shall not be in excess of seven
     and one-half percent (7.5%) of the appraised value of the Hotel Property;

          (ii) commercial general liability insurance against claims for
     personal injury, bodily injury, death or property damage occurring upon, in
     or about the Hotel Property, including "Dram Shop" or other liquor
     liability coverage if alcoholic beverages are sold from or may be consumed
     at any such Hotel Properties, such insurance (A) to be on the so-called
     "occurrence" form with a combined single limit of not less than $1,000,000
     or such greater amount as may be generally required by institutional
     lenders for hotels or facilities comparable to the Hotel Property; (B) to
     continue at not less than the aforesaid limit until required to be changed
     by the Administrative Agent or the Required Banks in writing by reason of
     changed economic conditions making such protection inadequate; and (C) to
     cover at least the following hazards: (1) premises and operations; (2)
     products and completed operations on an "if any" basis; (3) independent
     contractors; and (4) blanket contractual liability for all written and
     oral contracts;

          (iii) business income and rent loss insurance (A) covering all risks
     required to be covered by the insurance provided for in Section 7.03(b)(i);
     (B) containing an extended period of indemnity endorsement which provides
     that from and after the physical loss to the Improvements on each Hotel
     Property and Personal Property has been repaired, the continued loss of
     income will be insured until such income either returns to the same level
     it was at prior to the loss, or the expiration of twelve (12) months from
     the original date of the loss, whichever first occurs, and notwithstanding
     that the policy may expire prior to the end of such period; and (C) in an
     amount equal to 100% of the projected house profits plus fixed expenses, to
     include interest on fixed indebtedness from the Hotel Property for a
     period of twelve (12) months, determined prior to the date hereof and at
     least once each year thereafter based on the greater of: (x) Holdings'
     reasonable

                                      -35-


     estimate of the house profits plus fixed expenses, to include interest on
     fixed indebtedness from the Hotel Property, which estimate shall be
     reasonably satisfactory to the Administrative Agent and (y) the house
     profits plus fixed expenses, to include interest on fixed indebtedness
     set forth in the financial statements delivered to the Banks in accordance
     with this Agreement;

          (iv) at all times during which structural construction, repairs or
     alterations are being made with respect to the Improvements on each Hotel
     Property (A) contractor's liability insurance covering claims not covered
     by or under the terms or provisions of the above mentioned commercial
     general liability insurance policy; and (B) the insurance provided for in
     Section 7.03(b)(i) written in a so-called builder's risk completed value
     form (1) on a non-reporting basis, (2) against all risks insured against
     pursuant to Section 7.03(b)(i), (3) including permission to occupy such
     Hotel Property, and (4) with an agreed amount endorsement or a waiver of
     co-insurance provisions;

          (v) workers' compensation, subject to the statutory limits of the
     jurisdiction (domestic or foreign) in which the respective Hotel Property
     is located, and employer's liability insurance (A) with a limit per
     accident and per disease per employee, and (B) in an amount for disease
     aggregate in respect of any work or operations on or about such Hotel
     Property, or in connection with such Hotel Property or its operation (if
     applicable), in each case reasonably required by the Administrative Agent;

          (vi) comprehensive boiler and machinery insurance, if applicable, in
     amounts as shall be reasonably required by the Administrative Agent on
     terms consistent with the comprehensive all risk insurance policy required
     under Section 7.03(b)(i);

          (vii) umbrella liability insurance in an amount not less than
     $100,000,000 per occurrence or such greater amount as may be generally
     required by institutional lenders for hotels comparable to the respective
     Hotel Properties on terms consistent with the commercial general liability
     insurance policy required under Section 7.03(b)(ii);

          (viii) motor vehicle liability coverage for all owned and non-owned
     vehicles, including rented and leased vehicles containing minimum limits
     per occurrence of $1,000,000 and an umbrella liability insurance of not
     less than $4,000,000;

          (ix) a blanket fidelity bond coverage insuring, among other things,
     against losses resulting from dishonest or fraudulent acts including losses
     from acts committed by (A) Holdings' or any of its Subsidiaries' personnel
     or (B) temporary contract employees or student interns;

          (x) such other insurance and in such amounts as are required pursuant
     to any franchise agreements or as the Administrative Agent from time to
     time may reasonably request against such other insurable hazards which are
     generally required by institutional lenders for hotels or senior living
     facilities comparable to the respective Hotel Properties or which are
     commonly insured against for property similar to the respective Hotel
     Properties located in or around the region in which the respective Hotel
     Properties are located;

                                      -36-


          (xi)   insurance against terrorist acts in amounts reasonably
     satisfactory to the Administrative Agent, which may be covered by a
     standard all-risk policy to the extent available on commercially reasonable
     terms; and

          (xii)  fiduciary liability insurance and directors and officers
     liability insurance in amounts and in form and substance reasonably
     satisfactory to the Administrative Agent.

          (c)    All insurance provided for in Section 7.03(b) hereof shall be
obtained under valid and enforceable policies (the "Policies"), and shall be
subject to the reasonable approval of the Administrative Agent as to insurance
companies, amounts, forms and deductibles. The Policies shall be issued by
financially sound and responsible insurance companies authorized to do business
in the jurisdiction (domestic or foreign) in which each Hotel Property is
located and approved by the Administrative Agent. Such insurance company must
have a general policy rating of A- or better and a financial class of VII or
better by A.M. Best Company, Inc., or another financial size rating reasonably
acceptable to the Administrative Agent considering market conditions (each such
insurer shall be referred to below as a "Qualified Insurer"). Not less than
thirty (30) days prior to the expiration dates of the Policies theretofore
furnished to the Administrative Agent pursuant to Section 7.03(b), accompanied
by evidence reasonably satisfactory to the Administrative Agent of payment of
the premiums due thereunder (the "Insurance Premiums"), shall be delivered by
Holdings and its Subsidiaries to the Administrative Agent; provided, however,
                                                          --------  -------
that in the case of renewal Policies, Holdings and its Subsidiaries may furnish
the Administrative Agent with certificates of insurance reasonably acceptable
to the Administrative Agent therefor to be followed by the original Policies
when issued.

          (d)    In the event Holdings or any of its Subsidiaries obtains
separate insurance or an umbrella or a blanket Policy, Holdings or such
Subsidiary shall notify the Administrative Agent of the same and shall cause
certified copies of certificates of insurance reasonably acceptable to the
Administrative Agent to be delivered as required in Section 7.03(b). Any blanket
insurance Policy shall be written on an occurrence basis for the coverages
required hereunder.

          (e)    All Policies of insurance provided for in Section 7.03(b) shall
contain clauses or endorsements to the effect that:

          (i)  the Policy shall not be materially changed (other than to
     increase the coverage provided thereby) or canceled without at least 30
     days' written notice to the Administrative Agent and any other party named
     therein as an additional insured and 10 days notice for non-payment of
     premium; and

          (ii) each Policy shall provide that the issuers thereof shall give
     written notice to the Administrative Agent if the Policy has not been
     renewed thirty (30) days prior to its expiration.

          (f)    Holdings will furnish to the Administrative Agent and to each
Bank, on or before thirty (30) days after the renewal of any Policy, a
certificate of insurance indicating the amounts of insurance maintained in
compliance herewith, of the risks covered by such insurance and of the insurance
company or companies which carry such insurance, and, if requested by

                                     -37-


Administrative Agent or the Required Banks, verification of the adequacy of such
insurance by an independent insurance broker or appraiser acceptable to the
Administrative Agent.

          7.04 Corporate Franchises. Holdings will, and will cause each of its
               --------------------
Subsidiaries to, do or cause to be done, all things necessary to preserve and
keep in full force and effect its existence and its material rights, franchises,
licenses and patents; provided, however, that nothing in this Section 7.04 shall
                      --------  -------
prevent (i) any of the transactions permitted in accordance with Section 8.02 or
(ii) the withdrawal by Holdings or any of its Subsidiaries of its qualification
as a foreign corporation, partnership or limited liability company, as the case
may be, in any jurisdiction where such withdrawal could not, either individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.

          7.05 Compliance with Statutes, etc. Holdings will, and will cause each
               -----------------------------
of its Subsidiaries and, to the extent it has the power or right to do so
(whether by contract or otherwise) each Approved Lessee and Facility Manager
to, comply with all applicable statutes, regulations and orders of, and all
applicable restrictions imposed by, all governmental bodies, domestic or
foreign, in respect of the conduct of its business and the ownership of its
property, including, without limitation, any requirements of any federal, state
or local department of health, except such noncompliances as could not, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Holdings will, and will cause each of its Subsidiaries and each
Approved Lessee and Facility Manager to, maintain in good standing all material
licenses, certifications, accreditations and other approvals applicable to it or
to any Hotel Property which it owns, leases, manages or operates.

          7.06 Compliance with Environmental Laws. (a) Holdings will comply, and
               ----------------------------------
will cause each of its Subsidiaries to comply, with all Environmental Laws
applicable to the ownership or use of its Real Property now or hereafter owned,
leased or operated by Holdings or any of its Subsidiaries, except such
noncompliances as could not, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, and will promptly pay
or cause to be paid all costs and expenses incurred in connection with such
compliance, and will keep or cause to be kept all such Real Property free and
clear of any Liens imposed pursuant to such Environmental Laws.

          (b)    At the written request of the Administrative Agent or the
Required Banks, which request shall specify in reasonable detail the basis
therefor, at any time and from time to time after (i) the Administrative Agent
receives notice under Section 7.01(h) of any event for which notice is required
to be delivered for any Real Property or (ii) Holdings or any of its
Subsidiaries are not in compliance with Section 7.06(a) with respect to any Real
Property, Holdings and the Borrower will provide, at their sole cost and
expense, an environmental site assessment report concerning any such Real
Property now or hereafter owned, leased or operated by Holdings or any of its
Subsidiaries, prepared by an environmental consulting firm reasonably approved
by the Administrative Agent, indicating the presence or absence of Hazardous
Materials and the potential cost of any removal or remedial action in connection
with any Hazardous Materials on such Real Property. If Holdings or the Borrower
fails to provide the same within 90 days after such request was made, the
Administrative Agent may order the same, and Holdings and the Borrower shall
grant and hereby grant, to the Administrative Agent and the Banks and their
agents access to such Real Property and specifically grants the Administrative

                                     -38-


Agent and the Banks an irrevocable non-exclusive license, subject to the rights
of tenants, to undertake such an assessment, all at the Borrower's expense.

          7.07 ERISA. Within 15 Business Days after Holdings, any Subsidiary of
               -----
Holdings or any ERISA Affiliate knows or has reason to know of the occurrence of
any of the following events to the extent that such events, either individually
or in the aggregate, could reasonably be expected to have a Material Adverse
Effect, Holdings will deliver to the Administrative Agent a certificate of an
Authorized Financial Officer of Holdings setting forth details as to such
occurrence and the action, if any, that Holdings, such Subsidiary or such ERISA
Affiliate is required or proposes to take, together with any notices required or
proposed to be given to or filed with or by Holdings, such Subsidiary, such
ERISA Affiliate, the PBGC, a Plan participant or the Plan administrator with
respect thereto: that a Reportable Event has occurred; that an accumulated
funding deficiency, within the meaning of Section 412 of the Code or Section 302
of ERISA, has been incurred or an application may reasonably be expected to be
or has been made to the Secretary of the Treasury for a waiver or modification
of the minimum funding standard (including any required installment payments) or
an extension of any amortization period under Section 412 of the Code or Section
303 or 304 of ERISA with respect to a Single Employer Plan; that any
contribution required to be made by Holdings, any Subsidiary of Holdings or any
ERISA Affiliate to a Plan or Foreign Pension Plan has not been timely made; that
a Plan has been or may reasonably be expected to be terminated, reorganized,
partitioned or declared insolvent under Title IV of ERISA; that a Plan has an
Unfunded Current Liability giving rise to a lien on the assets of Holdings, any
Subsidiary of Holdings or any ERISA Affiliate under ERISA or the Code; that
proceedings may reasonably be expected to be or have been instituted to
terminate or appoint a trustee to administer a Plan; that a proceeding has been
instituted against Holdings, any Subsidiary of Holdings or any ERISA Affiliate
pursuant to Section 515 of ERISA to collect a delinquent contribution to a Plan;
that Holdings, any Subsidiary of Holdings or any ERISA Affiliate will or may
reasonably be expected to incur or has incurred any liability (including any
indirect, contingent, or secondary liability) to or on account of the
termination of or withdrawal from a Plan under Section 4062, 4063, 4064, 4069,
4201, 4204 or 4212 of ERISA or with respect to a Plan under Section 401(a)(29),
4971, 4975 or 4980 of the Code or Section 409 or 502(i) or 502(l) of ERISA or
with respect to a group health plan (as defined in Section 607(1) of ERISA or
Section 4980B(g)(2) of the Code under Section 4980B of the Code; or that
Holdings or any Subsidiary of Holdings may incur any liability pursuant to any
employee welfare benefit plan (as defined in Section 3(1) of ERISA) that
provides benefits to retired employees or other former employees (other than as
required by Section 601 of ERISA) or any employee pension benefit plan (as
defined in Section 3(2) of ERISA). Holdings will deliver to the Administrative
Agent (with sufficient copies for each Bank) (i) a complete copy of the annual
report (Form 5500) of each Single Employer Plan (including, to the extent
required, the related financial and actuarial statements and opinions and other
supporting statements, certifications, schedules and information) required to
be filed by Holdings or any of its Subsidiaries with the Internal Revenue
Service and (ii) copies of any records, documents or other information that must
be furnished to the PBGC with respect to any Plan pursuant to Section 4010 of
ERISA. In addition to any certificates or notices delivered to the
Administrative Agent pursuant to the first sentence hereof, copies of annual
reports and any material notices received by Holdings, any Subsidiary of
Holdings or any ERISA Affiliate with respect to any Plan or Foreign Pension Plan
shall be delivered to the Administrative Agent (with sufficient copies for each
Bank) no later than 15 Business Days after the date such report has


                                     -39-


been filed with the Internal Revenue Service or such notice has been received by
Holdings, such Subsidiary or such ERISA Affiliate, as applicable.

          7.08 End of Fiscal Years; Fiscal Quarters. Holdings and the Borrower
               ------------------------------------
will cause (i) each of its, and each of its Subsidiaries', fiscal years to end
on the Friday closest to December 31 and (ii) each of its, and each of its
Subsidiaries', first three fiscal quarters to end on the last day of the 12th,
24th and 36th week, respectively, of each fiscal year and the fourth fiscal
quarter to end on the Friday closest to December 31, it being understood that
(x) if any Hotel Property owned or leased by a Subsidiary of Holdings is managed
or leased by an Approved Lessee or a Facility Manager other than Crestline, any
Wholly-Owned Subsidiary of Crestline, Marriott International or any Wholly-Owned
Subsidiary of Marriott International, Holdings and the Borrower shall cause such
Subsidiary's fiscal years and fiscal quarters to end on dates as close as
reasonably practicable to the dates set forth above in this Section 7.08 and (y)
Holdings and the Borrower may elect to change each of its and each of its
Subsidiaries fiscal quarters to end on March 31, June 30, September 30 and
December 31.

          7.09 Performance of Obligations. Holdings will, and will cause each of
               --------------------------
its Subsidiaries to, perform all of its obligations under the terms of each
ground lease, each Operating Lease and each mortgage, deed of trust, indenture,
loan agreement or credit agreement and each other material agreement, contract
or instrument by which it or any Real Property owned or leased by Holdings or
any of its Subsidiaries is bound, except such non-performances as could not,
either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Holdings will, and will cause each of its Subsidiaries
to, enforce the provisions of each Operating Lease so as to cause each Approved
Lessee to abide by the terms of, and enforce the obligations under, each
Management Agreement, each Franchise Agreement and each other material
agreement, contract or instrument to which such Approved Lessee is a party or by
which such Approved Lessee is bound and which affects the ownership, leasing,
management or operation of any Real Property owned or leased by Holdings or any
of its Subsidiaries, except such non-performances as could not, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

          7.10 Payment of Taxes. Holdings will, and will cause each of its
               ----------------
Subsidiaries to, pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits, or upon any
properties belonging to it, prior to the date on which any penalties attach
thereto, and all lawful claims for sums that have become due and payable which,
if unpaid, might become a lien or charge upon any properties of Holdings or any
such Subsidiary; provided that neither Holdings nor any such Subsidiary shall be
                 --------
required to pay any such tax, assessment, charge, levy or claim which is
immaterial or is being contested in good faith and by proper proceedings if it
has maintained adequate reserves with respect thereto in accordance with
generally accepted accounting principles.

          7.11 Certain Subsidiaries. (a) Holdings and the Borrower will ensure
               --------------------
that at all times either the Borrower or a Wholly-Owned Subsidiary of the
Borrower that is a Subsidiary Guarantor is (i) the sole general partner of any
Subsidiary Guarantor that is a partnership, or (ii) the sole managing member (or
has the sole right to designate members of the Board of Managers) of any
Subsidiary Guarantor that is a limited liability company.

                                     -40-


          (b)    Except as set forth on Schedule VI, Holdings and the Borrower
will ensure that at all times (i) either the Borrower or a Wholly-Owned
Subsidiary of the Borrower that is a Subsidiary Guarantor owns 100% of the
equity interests in each Look-Through Subsidiary (although Holdings or a
Permitted REIT Subsidiary may hold a de minimis interest in a Look-Through
                                     -- -------
Subsidiary) and (ii) the equity interests owned by the Borrower (directly or
indirectly) in each Subsidiary of the Borrower that is not a Look-Through
Subsidiary are owned by a Look-Through Subsidiary of the Borrower that is a
Subsidiary Guarantor.

          (c)    To the extent that an Approved Lessee of a Hotel Property that
is wholly-owned by the Borrower or a Wholly-Owned Subsidiary thereof is a
Taxable REIT Subsidiary, Holdings and the Borrower will ensure that such Taxable
REIT Subsidiary will be a Wholly-Owned Subsidiary of the Borrower.

          7.12 Management Agreements; Operating Leases. Unless the Required
               ---------------------------------------
Banks otherwise agree in writing, Holdings will take, and will cause each of its
Subsidiaries to take, all action necessary so that (i) each Hotel Property is at
all times man-aged by a Permitted Facility Manager pursuant to a Management
Agreement, and (ii) each Hotel Property that is leased is at all times leased to
an Approved Lessee pursuant to an Operating Lease; provided, however, that
                                                   --------  -------
Holdings and its Subsidiaries shall not be deemed to be in breach of the
covenants set forth in this Section 7.12 by virtue of a failure to so maintain a
Management Agreement or Operating Lease, so long as (x) Holdings or its relevant
Subsidiary is diligently pursuing engaging a replacement Permitted Facility
Manager or Approved Lessee pursuant to a Management Agreement or Operating
Lease, as applicable, and (y) the failure to have maintained such Management
Agreement or Operating Lease could not, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

          7.13 REIT Requirements. Holdings shall operate its business at all
               -----------------
times so as to satisfy all requirements necessary to qualify as a real estate
investment trust under Sections 856 through 860 of the Code. Holdings will
maintain adequate records so as to comply with all record-keeping requirements
relating to the qualification of Holdings as a real estate investment trust as
required by the Code and applicable regulations of the Department of the
Treasury promulgated thereunder and will properly prepare and timely file with
the IRS all returns and reports required thereby. Holdings will request from its
shareholders all shareholder information required by the Code and applicable
regulations of the Department of Treasury promulgated thereunder.

          7.14 Contributions. Holdings will contribute as an equity contribution
               -------------
to the capital of the Borrower within 15 days following its receipt thereof, any
cash proceeds received by Holdings from any asset sale, any incurrence of
Indebtedness, any Insurance Proceeds or Condemnation Proceeds, any sale or
issuance of its equity, any cash capital contributions received by Holdings or
any cash Dividends received from the Borrower or a Permitted REIT Subsidiary to
the extent not promptly used by Holdings to make a distribution to its
shareholders as permitted under Section 8.03, to pay its general corporate
overhead expenses and other liabilities or to make an Investment in a Permitted
REIT Subsidiary otherwise permitted under this Agreement.


                                     -41-


          7.15 Foreign Subsidiaries Security. If following a change in the
               -----------------------------
relevant sections of the Code or the regulations, rules, rulings, notices or
other official pronouncements issued or promulgated thereunder, counsel for
Holdings reasonably acceptable to the Administrative Agent does not within 30
days after a request from the Administrative Agent or the Required Banks deliver
evidence, in form and substance mutually satisfactory to the Administrative
Agent and Holdings, with respect to any Foreign Subsidiary that is not a
Look-Through Subsidiary which has not already had all of its stock pledged
pursuant to the Pledge and Security Agreement, that (i) a pledge of 66-2/3% or
more of the total combined voting power of all classes of capital stock of such
Foreign Subsidiary entitled to vote, and (ii) the entering into by such Foreign
Subsidiary of a guaranty in substantially the form of the Subsidiaries Guaranty,
in any such case could reasonably be expected to cause (I) the undistributed
earnings of such Foreign Subsidiary as deter-mined for Federal income tax
purposes to be treated as a deemed dividend to such Foreign Subsidiary's United
States parent for Federal income tax purposes or (II) other material adverse
Federal income tax consequences to the Credit Parties, then (in each case,
subject to any restrictions described in Section 7.16) in the case of a failure
to deliver the evidence described in clause (i) above, that portion of such
Foreign Subsidiary's outstanding capital stock not theretofore pledged pursuant
to (and to the extent required by) the Pledge and Security Agreement shall be
pledged to the Collateral Agent for the benefit of the Secured Creditors
pursuant to the Pledge and Security Agreement (or another pledge agreement in
substantially similar form, if needed), and in the case of a failure to deliver
the evidence described in clause (ii) above, such Foreign Subsidiary (to the
extent that same is a Wholly-Owned Subsidiary) shall execute and deliver (x) the
Subsidiaries Guaranty (or another guaranty in substantially similar form, if
needed), guaranteeing the Obligations of the Borrower under the Credit Documents
and under any Interest Rate Protection Agreement or Other Hedging Agreement and
(y) the Pledge and Security Agreement (or another pledge agreement in
substantially similar form, if needed) securing such Foreign Subsidiary's
obligations under the Subsidiaries Guaranty, in each case to the extent that the
entering into such Pledge and Security Agreement or Subsidiaries Guaranty is
permitted by the laws of the respective foreign jurisdiction and with all
documents delivered pursuant to this Section 7.15 to be in form and substance
reasonably satisfactory to the Administrative Agent.

          7.16 Additional Subsidiary Guarantors; Release of Subsidiary
               -------------------------------------------------------
Guarantors and Collateral. (a) (A) If at any time after the Effective Date, (x)
- -------------------------
Holdings or the Borrower (directly or indirectly) acquires, establishes or
creates any Wholly-Owned Subsidiary that is a Look-Through Subsidiary (or in the
circumstances contemplated by Section 7.15, any other Wholly-Owned Foreign
Subsidiary), other than a Permitted REIT Subsidiary, or (y) any Subsidiary of
Holdings or the Borrower guaranties the obligations of the Borrower under the
Senior Notes or under any other Indebted-ness of the Borrower, such Subsidiary
shall be required, within 30 days thereafter, to execute and deliver
counter-parts of the Subsidiaries Guaranty and, to the extent that such
Wholly-Owned Subsidiary is a Look-Through Subsidiary of the type described in
clause (i) of the definition thereof, the Pledge and Security Agreement, at
which time such Subsidiary shall become a Subsidiary Guarantor.

          (B)    Notwithstanding anything to the contrary contained above in
this Section 7.16(a) or anything else in this Agreement or in any other Credit
Document, (I) no Subsidiary of Holdings or the Borrower shall be required to
become a Subsidiary Guarantor (and thereby execute a counterpart of the
Subsidiaries Guaranty and/or the Pledge and Security Agreement)


                                     -42-


pursuant to clause (x) of Section 7.16(a)(A), (II) in the event that any
Subsidiary of Holdings or the Borrower is a Subsidiary Guarantor, such
Subsidiary may, except as otherwise provided in clause (y) of Section
7.16(a)(A), be released from its obligations under the Subsidiaries Guaranty
and/or the Pledge and Security Agreement upon notice by the Borrower to the
Administrative Agent (so long as such Subsidiary is simultaneously released from
all guaranties of Indebtedness of the Borrower), and (III) no capital stock or
other equity of a Subsidiary of Holdings or the Borrower shall be required to be
pledged under the Pledge and Security Agreement and, to the extent theretofore
pledged, may be released from the Pledge and Security Agreement upon notice by
the Borrower to the Collateral Agent, in each case under one or more of the
following circumstances:

          (i)    such Subsidiary's only assets consist of $5,000 or less in
     cash; or

          (ii)   such Subsidiary, or the direct or indirect parent company or
     general partner of such Subsidiary whose only significant asset (in each
     case) is the equity ownership of such Subsidiary (or the direct or indirect
     parent company of such Subsidiary), enters into (or is a party to) a
     material contract pursuant to a transaction otherwise permitted under this
     Agreement and the terms of which prohibit or restrict (x) such Subsidiary
     from executing a counterpart of the Subsidiaries Guaranty and/or the Pledge
     and Security Agreement or (y) the capital stock or other equity of such
     Subsidiary from being pledged under the Pledge and Security Agreement.

          (b)    (A) Each Wholly-Owned Subsidiary of Holdings or the Borrower
that is a Look-Through Subsidiary but is not a party to the Subsidiaries
Guaranty and the Pledge and Security Agreement (or has been released from its
obligations under the Subsidiaries Guaranty and/or the Pledge and Security
Agreement) because of the restrictions described in Part II of Schedule IV or
under the circumstances described in Section 7.16(a)(B) shall promptly (and in
any event within 30 days) following the termination of such restrictions (unless
new restrictions are imposed under a material contract entered into pursuant to
a transaction otherwise permitted under this Agreement) or acquiring assets
(including additional cash) in addition to at least $5,000 in cash execute and
deliver counterparts of the Subsidiaries Guaranty and, to the extent that such
Wholly-Owned Subsidiary is a Look-Through Subsidiary of the type described in
clause (i) of the definition thereof, the Pledge and Security Agreement.

          (B)    The capital stock or other equity of each Subsidiary of
Holdings or the Borrower that has not been pledged under the Pledge and Security
Agreement (or has been released from the Pledge and Security Agreement) because
of the restrictions described in Schedule III or under the circumstances
described in Section 7.16(a)(B) shall promptly (and in any event within 30 days)
following the termination of such restrictions (unless new restrictions are
imposed under a material contract entered into pursuant to a transaction
otherwise permitted under this Agreement) or such Subsidiary acquiring assets
(including additional cash) in addition to at least $5,000 in cash be pledged
pursuant to (and to the extent required by) the Pledge and Security Agreement.

          (c)    On or before the 60th day following the Effective Date,
Holdings and the Borrower will cause (i) each of the Wholly-Owned Subsidiaries
designated with a double asterisk on Part II of Schedule IV to execute and
deliver a counterpart of the Subsidiaries


                                     -43-


Guaranty (but not the Pledge and Security Agreement) to the extent that the
terms of any existing Indebtedness or other material contract of any such
Wholly-Owned Subsidiary do not otherwise prohibit such Wholly-Owned Subsidiary
from entering into the Subsidiaries Guaranty and (ii) each of the Wholly-Owned
Subsidiaries designated with a triple asterisk on Part II of Schedule IV to
execute and deliver a counterpart of the Subsidiaries Guaranty and the Pledge
and Security Agreement.

          (d)    Each Subsidiary required to take actions pursuant to the
preceding Sections 7.16(a), (b) and (c) shall execute and deliver, or cause to
be executed and delivered, all other relevant documentation of the type
described in Section 4 (including without limitation, opinions of counsel) as
such Subsidiary would have had to deliver if such Subsidiary were a Credit Party
on the Effective Date, with all actions to be taken pursuant to this Section
7.16 to be taken to the reasonable satisfaction of the Administrative Agent.

          7.17 Capital Expenditures. Holdings and its Subsidiaries shall, during
               --------------------
each fiscal year of Holdings and the Borrower, expend in respect of maintenance
Capital Expenditures at the Hotel Properties (or to the extent not spent, place
in a reserve) an amount equal to at least 4% of the combined total Gross
Revenues from the Hotel Properties for such fiscal year.

          7.18 Certain Inventory, Fixed Asset Supplies and Working Capital
               -----------------------------------------------------------
Receivables. Holdings will, and will cause each of its Subsidiaries to, ensure
- -----------
that each Operating Lease relating to a Hotel Property, pursuant to which all or
any portion of the inventory, fixed asset supplies and/or working capital
receivables have been sold to the related Approved Lessee as provided in Section
8.02(viii), provides to the Borrower or its Subsidiary owning the related Hotel
Property a right to repurchase all of the inventory, fixed asset supplies and/or
working capital receivables upon any termination or expiration of the related
Operating Lease related to such Hotel Property for a purchase price not greater
than the fair market value thereof. Holdings will, and will cause each of its
Subsidiaries to, exercise each such repurchase option upon the termination or
expiration of each such Operating Lease.

          SECTION 8. Negative Covenants. Each of Holdings and the Borrower
                     ------------------
hereby covenants and agrees (as to itself and each of its Subsidiaries) that
from and after the Effective Date and until the Total Commitment has terminated
and the Loans and Notes, together with interest, Fees and all other Obligations
incurred hereunder and thereunder, are paid in full:

          8.01 Liens. Holdings will not, and will not permit any of its
               -----
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets (real or personal, tangible or intangible) of
Holdings or any of its Subsidiaries, whether now owned or hereafter acquired, or
sell any such property or assets subject to an understanding or agreement,
contingent or otherwise, to repurchase such property or assets (including sales
of accounts receivable with recourse to Holdings or any of its Subsidiaries), or
assign any right to receive income (other than in connection with a sale
permitted under Section 8.02) or permit the filing of any financing statement
under the UCC or any other similar notice of Lien under any similar recording or
notice statute, provided that the provisions of this Section 8.01 shall not
                --------
prevent the creation, incurrence, assumption or existence of the following Liens
(collectively, "Permitted Liens"):


                                     -44-


          (i)    inchoate Liens (other than Liens created or imposed under
     ERISA) for taxes, assessments or governmental charges or levies not yet due
     and payable or Liens for taxes, assessments or governmental charges or
     levies being contested in good faith and by appropriate proceedings for
     which adequate reserves have been established in accordance with generally
     accepted accounting principles;

          (ii)   Liens in respect of property or assets of Holdings or any of
     its Subsidiaries imposed by law, which were incurred in the ordinary course
     of business and do not secure Indebtedness for borrowed money, such as
     carriers', warehousemen's, materialmen's and mechanics' liens and other
     similar Liens arising in the ordinary course of business, and (x) which do
     not in the aggregate materially detract from the value of Holdings' or such
     Subsidiary's property or assets or materially impair the use thereof in the
     operation of the business of Holdings or such Subsidiary or (y) which are
     being contested in good faith by appropriate proceedings and for which
     adequate reserves have been established, which proceedings have the effect
     of preventing the forfeiture or sale of the property or assets subject to
     any such Lien;

          (iii)  Liens in existence on the Effective Date which are listed, and
     the property subject thereto described, in Schedule VII, but only to the
     respective date, if any, set forth in such Schedule VII for the removal and
     termination of any such Liens, plus renewals, replacements, refinancings
     and extensions of such Liens to the extent permitted by Section 8.04(vi),
     provided that any such renewal, replacement, refinancing or extension does
     --------
     not encumber any additional assets or properties of Holdings or any of its
     Subsidiaries, although the Borrower may, in connection with the existing
     commercial mortgaged-backed securities transaction listed in Schedule V,
     substitute Hotel Properties to be subject to such transaction so long as
     (i) such substitution is part of a transaction that does not violate any
     provision of this Agreement and no Default or Event of Default then exists
     or would result therefrom and (ii) based on calculations made by Holdings
     or the Borrower on a Pro Forma Basis as if the respective substitution had
                          --- -----
     occurred on the first day of the respective Calculation Period, no Default
     or Event of Default will exist in respect of, or would have existed during
     the period beginning on the first day of the respective Calculation Period
     and ended on the Determination Date in respect of, the financial covenants
     contained in Section 8.08 through 8.12, inclusive;

          (iv)   Liens created pursuant to the Pledge and Security Agreement;

          (v)    leases or subleases granted to merchants, vendors, other
     providers of services and other Persons in the ordinary course of business
     and not materially interfering with the conduct of the business of Holdings
     or any of its Subsidiaries;

          (vi)   to the extent that the respective Secured Indebtedness is
     permitted to be incurred at such time pursuant to Section 8.04(vi), (A)
     Liens upon equipment or machinery subject to Capitalized Lease Obligations,
     provided that (x) such Liens only serve to secure the payment of
     --------
     Indebtedness arising under such Capitalized Lease Obligation and (y) the
     Lien encumbering the asset giving rise to such Capitalized Lease Obligation
     does not encumber any other asset of Holdings or any of its Subsidiaries
     and (B) Liens placed upon equipment or machinery used in the ordinary
     course of business of


                                     -45-


     Holdings or any of its Subsidiaries at the time of acquisition thereof by
     Holdings or any such Subsidiary or within 90 days thereafter to secure
     Indebtedness incurred to pay all or a portion of the purchase price
     thereof, provided, that the Lien encumbering the asset giving rise to the
              --------
     purchase money Indebtedness does not encumber any other asset of Holdings
     or any of its Subsidiaries;

          (vii)  to the extent that the respective Secured Indebtedness is
     permitted to be incurred at such time pursuant to Section 8.04(vi), Liens
     securing Permitted Non-Recourse Indebtedness of Specified Subsidiaries as
     and to the extent permitted by the definition of "Permitted Non-Recourse
     Indebtedness";

          (viii) easements, rights-of-way, restrictions (including zoning
     restrictions), encroachments and other similar charges or encumbrances,
     and minor title deficiencies, in each case not securing Indebtedness and
     not materially interfering with the conduct of the business of Holdings or
     any of its Subsidiaries;

          (ix)   Liens arising from precautionary UCC financing statement
     filings in respect of operating leases;

          (x)    statutory and common law landlords' liens under leases to which
     Holdings or any of its Subsidiaries is a party;

          (xi)   Liens (other than Liens created or imposed under ERISA)
     incurred or deposits made in the ordinary course of business in connection
     with workers' compensation, unemployment insurance and other types of
     social security, or to secure the performance of tenders, statutory
     obligations, surety bonds, bids, government contracts, performance and
     return-of-money bonds and other similar obligations incurred in the
     ordinary course of business (exclusive of obligations in respect of the
     payment for borrowed money);

          (xii)  Liens arising out of the existence of judgments, decrees or
     awards not constituting an Event of Default under Section 9.09, provided
                                                                     --------
     that the aggregate amount of any cash and the fair market value of all
     property pledged or deposited to secure all such judgments, decrees and
     awards shall not exceed $50,000,000 at any time outstanding;

          (xiii) Liens on property or assets acquired pursuant to an acquisition
     permitted under Section 8.02(x), (xiv) or (xv) or pursuant to an
     Investment made under Section 8.05(xii) or (xiii) (so long as, in the case
     of such clause (xiii), such Liens do not attach to any FF&E of a
     Non-Controlled Entity unless such Liens are part of an existing blanket
     Lien on all assets so acquired (in which case the FF&E may be contributed
     to a Non-Controlled Entity subject to such Lien)), or on property or assets
     of a Subsidiary of Holdings acquired pursuant to such an acquisition or
     pursuant to such an Investment, in each case in existence at the time such
     acquisition or Investment is consummated, provided that (i) any Acquired
     Indebtedness that is secured by such Liens is permitted to exist under
     Section 8.04(vi) and (ii) such Liens are not incurred in connection with or
     in contemplation or anticipation of such acquisition or Investment and do
     not attach to any other asset of Holdings or any of its Subsidiaries;


                                     -46-


          (xiv)  (w) Liens in favor of the Borrower or any Subsidiary Guarantor
     granted by any Subsidiary of the Borrower, (x) Liens in favor of any
     Wholly-Owned Subsidiary of the Borrower (other than a Specified Subsidiary)
     that is not a Subsidiary Guarantor granted by any other Wholly-Owned
     Subsidiary of the Borrower that is not a Subsidiary Guarantor, (y) Liens in
     favor of any non-Wholly-Owned Subsidiary of the Borrower that is an
     Approved Lessee under an Operating Lease granted by another
     non-Wholly-Owned Subsidiary of the Borrower to secure such latter
     non-Wholly-Owned Subsidiary's obligations under the respective Operating
     Lease, and (z) Liens on the assets of a Taxable REIT Subsidiary as an
     Approved Lessee under an Operating Lease securing Secured Indebtedness of
     the Specified Subsidiary that is the lessor of the Hotel Property for which
     such Operating Lease relates so long as such Secured Indebtedness is
     otherwise permitted under this Agreement; and

          (xv)   to the extent that the respective Secured Indebtedness is
     permitted to be incurred at such time pursuant to Section 8.04(vi), Liens
     in favor of a Facility Manager in connection with loans or advances made by
     such Facility Manager to renovate a Hotel Property managed by such Facility
     Manager.

Except for the Obligations, any obligations under an Interest Rate Protection
Agreement or Other Hedging Agreement entered into with a Bank (or any affiliate
thereof) and for the obligations under the existing Senior Notes, the only other
Indebtedness that may be secured by the Pledge and Security Agreement shall be
Specified Senior Indebtedness issued by the Borrower (and which may be
guaranteed by the Subsidiary Guarantors).

          8.02 Consolidation, Merger, Purchase or Sale of Assets, etc. Holdings
               ------------------------------------------------------
will not, and will not permit any of its Subsidiaries to, wind up, liquidate or
dissolve its affairs or enter into any transaction of merger or consolidation,
or convey, sell, lease or otherwise dispose of all or any part of its property
or assets, or enter into any sale-leaseback transactions, or purchase or
otherwise acquire (in one or a series of related transactions) any part of the
property or assets (other than purchases or other acquisitions of inventory,
materials and equipment in the ordinary course of business) of any Person (or
agree to do any of the foregoing at any future time), except that:

          (i)    Capital Expenditures (including payments in respect of
     Capitalized Lease Obligations) by the Borrower and its Subsidiaries shall
     be permitted to the extent not in violation of Sections 8.01(vi)(A) and
     8.07;

          (ii)   Holdings and its Subsidiaries may sell, exchange or otherwise
     dispose of equipment and materials in the ordinary course of business;

          (iii)  Holdings and its Subsidiaries may make sales or other
     dispositions of inventory in the ordinary course of business and consistent
     with past practice;

          (iv)   Holdings and its Subsidiaries may grant leases or sub-leases to
     merchants, vendors, other providers of services and other Persons in the
     ordinary course of business so long as such lease or sub-lease does not
     materially interfere with the conduct of the business of Holdings or any of
     its Subsidiaries;


                                     -47-


          (v)    the Borrower and its Subsidiaries may enter into Operating
     Leases with an Approved Lessee and the Non-Controlled Entities may enter
     into FF&E Leases with an Approved Lessee;

          (vi)   the Borrower and the Subsidiary Guarantors may sell or
     otherwise transfer property to one another;

          (vii)  Holdings and its Subsidiaries may sell, transfer or otherwise
     dispose of assets (other than the capital stock or other equity interests
     in the Borrower or in any Subsidiary Guarantor) with a fair market value
     (as determined in good faith by Holdings or such Subsidiary, as the case
     may be) not in excess of $10,000,000 in any transaction or series of
     related transactions;

          (viii) the Borrower and its Subsidiaries may sell inventory, fixed
     asset supplies and working capital receivables relating to a Hotel Property
     to the Approved Lessee under the Operating Lease relating to such Hotel
     Property for a purchase price equal to no less than the fair market value
     thereof (with a purchase price equal to the book value thereof being deemed
     to meet this standard) (and the consideration therefor shall be in the
     form of cash and/or a promissory note), so long as the Borrower or the
     related Subsidiary is granted a Lien upon such inventory, fixed asset
     supplies and working capital receivables pursuant to the related Operating
     Lease as security for the obligations of the Approved Lessee thereunder;

          (ix)   Holdings and its Subsidiaries may sell Hotel Properties and
     other assets (including the capital stock or other equity interests
     (including by way of merger) of the Person or Persons owning such Hotel
     Properties or other assets, but specifically excluding the capital stock of
     the Borrower) so long as (i) no Default or Event of Default then exists or
     would result therefrom, (ii) each such sale is at fair market value (as
     determined in good faith by Holdings or such Subsidiary, as the case may
     be), (iii) the consideration received by Holdings or such Subsidiary is
     either (a) at least 75% cash and/or Cash Equivalents and is received at the
     time of the consummation of such sale, and with the balance of such con-
     sideration to be in the form of promissory notes, real estate assets
     (including related FF&E) and/or equity interests of Persons owning real
     estate assets, or (b) a combination of cash, Cash Equivalents and/or
     Permitted Like-Kind Exchange Property so long as the aggregate fair market
     value of all assets sold in exchange for Permitted Like-Kind Exchange
     Properties shall not exceed $500,000,000 in any fiscal year of Holdings;
     provided, however, that an Asset Sale (A) to either a non-Wholly Owned
     --------  -------
     Subsidiary of the Borrower or to an Unconsolidated Entity in which the
     Borrower (directly or indirectly) owns an equity interest may be made for
     less than 75% cash and/or Cash Equivalents or (B) involving the sale of
     less than all of the stock or other equity interest of a Subsidiary
     Guarantor may be made (in either case) so long as the aggregate amount of
     all non-cash and/or non-Cash Equivalent consideration received in respect
     of all such Asset Sales (which are made for less than 75% cash and/or Cash
     Equivalents), when added to the aggregate amount of all non-cash Permitted
     Designated Investments made pursuant to Section 8.05(xii), does not exceed
     $300,000,000;


                                     -48-


          (x)    from and after January 1, 2001, the Crestline Exchanges shall
     be permitted so long as (i) no Specified Default or Event of Default then
     exists or would result therefrom, (ii) the Crestline Exchanges are at fair
     market value (as determined in good faith by the Borrower or the applicable
     Subsidiary, as the case may be), and (iii) based on calculations made by
     Holdings and/or the Borrower on a Pro Forma Basis after giving effect to
     each such Crestline Exchange (or all such Crestline Exchanges occurring
     contemporaneously) and as if such Crestline Exchange (and/or Crestline
     Exchanges, as the case may be) had occurred on the first day of the
     respective Calculation Period, no Default or Event of Default will exist in
     respect of, or would have existed during the Test Period last reported (or
     required to be reported pursuant to Section 7.01(a) or (b), as the case may
     be) prior to the date of the respective Crestline Exchange (and/or
     Crestline Exchanges, as the case may be) in respect of, the financial
     covenants contained in Sections 8.08 through 8.12, inclusive;

          (xi)   the Borrower and its Subsidiaries may sell the FF&E at a Hotel
     Property to a Non-Controlled Entity so long as (i) the Borrower shall have
     reasonably determined in good faith that each such sale is necessary in
     order to avoid the characterization for tax purposes of any portion of the
     rent payable under the related Operating Lease as rent not attributable to
     real property (allowing reasonable margins with respect to applicable
     limitations), (ii) such FF&E is leased by such Non-Controlled Entity to the
     Approved Lessee under the related Operating Lease pursuant to an FF&E
     lease containing market terms for similar FF&E and with provisions
     protecting the interests of the owner of the applicable Hotel Property in
     a form reasonably acceptable to the Administrative Agent, (iii) the related
     Approved Lessee shall have assigned its interest (as lessee) in such FF&E
     lease to the Borrower or its Subsidiary owning the related Hotel Property
     as security for such Approved Lessee's obligations under the Operating
     Lease and the Borrower or such Subsidiary (or any successor Approved Lessee
     of such Hotel Property) shall have the right to acquire the interests of
     the tenant under such FF&E lease (if it is then in effect) upon a
     termination of the related Operating Lease, (iv) the purchase price paid
     for such FF&E shall be equal to at least the fair market value of such FF&E
     (with a purchase price equal to the book value thereof being deemed to meet
     this standard) (and the consideration paid shall be in the form of cash
     and/or a promissory note), and (v) no more than $200,000,000 of such FF&E
     is sold in any fiscal year of the Borrower less the sum of (I) the
     aggregate amount of FF&E otherwise purchased by Non-Controlled Entities
     during such fiscal year from Persons other than the Borrower or a
     Subsidiary thereof for use at a Hotel Property of the Borrower or a
     Subsidiary thereof and (II) the aggregate amount of all Investments made
     pursuant to Section 8.05(xiii) during such fiscal year;

          (xii)  Investments may be made to the extent permitted by Section
     8.05;

          (xiii) Holdings and its Subsidiaries may lease (as lessee) real or
     personal property in the ordinary course of business (so long as any such
     lease does not create a Capitalized Lease Obligation unless permitted by
     Section 8.01(iii), (vi) or (xiii));

          (xiv)  the Borrower and its Wholly-Owned Subsidiaries may acquire
     Hotel Properties (or all of the capital stock or other equity interests of
     the Person or Persons owning such Hotel Properties (including by way of
     merger)) so long as (i) no Specified


                                     -49-


     Default or Event of Default then exists or would result therefrom, (ii)
     based on calculations made by Holdings and/or the Borrower on a Pro Forma
                                                                     --- -----
     Basis after giving effect to such acquisition and as if such acquisition
     had occurred on the first day of the respective Calculation Period, no
     Default or Event of Default will exist under, or would have existed during
     the Test Period last reported (or required to be reported pursuant to
     Section 7.01(a) or (b), as the case may be) prior to the date of the
     respective acquisition under, the financial covenants contained in Sections
     8.08 through 8.12, inclusive, and (iii) such Hotel Property is a Full
     Service Hotel, provided that (x) limited service Hotel Properties also may
     be acquired pursuant to this Section 8.02(xiv) so long as on a Pro Forma
     Basis the portion of Consolidated EBITDA attributed to such limited service
     Hotels, when added to the portion of Consolidated EBITDA attributed to all
     other limited service Hotels acquired pursuant to this Section 8.02(xiv)
     (excluding the limited service Hotels so acquired in which the Borrower
     (directly or indirectly) owns a general partnership interest on the
     Effective Date as set forth on Schedule IX), does not exceed 3.5% of the
     Consolidated EBITDA for the most recently ended Test Period, and (y)
     Qualified Full Service Hotel Properties may only be acquired pursuant to
     this Section 8.02(xiv) so long as on a Pro Forma Basis the portion of
     Consolidated EBITDA attributed to such Qualified Full Service Hotels, when
     added to the portion of Consolidated EBITDA attributed to all other
     Qualified Full Service Hotels acquired pursuant to this Section 8.02(xiv),
     does not exceed 5% of the Consolidated EBITDA for the most recently ended
     Test Period;

          (xv)   the Borrower and its Subsidiaries may acquire high quality real
     estate consistent with the quality of the Borrower's and its Subsidiaries'
     existing portfolio of Hotel Properties and may acquire other assets
     constituting Related Businesses (or all or a portion of the equity
     interests of a Person owning such real estate or Related Businesses
     (including (in either case) by way of merger)) so long as (i) no Specified
     Default or Event of Default then exists or would result therefrom, (ii)
     based on calculations made by Holdings and/or the Borrower on a Pro Forma
                                                                     --- -----
     Basis after giving effect to such acquisition and as if such acquisition
     had occurred on the first day of the respective Calculation Period, no
     Default or Event of Default will exist under, or would have existed during
     the Test Period last reported (or required to be reported pursuant to
     Section 7.01(a) or (b), as the case may be) prior to the date of the
     respective acquisition under, the financial covenants contained in
     Sections 8.08 through 8.12, inclusive, and (iii) the aggregate amount of
     all acquisitions made pursuant to this Section 8.02(xv), when added to the
     aggregate amount of all Investments made pursuant to Section 8.05(xii),
     does not exceed $1,500,000,000;

          (xvi)  in addition to mergers constituting an Asset Sale or an asset
     acquisition pursuant to Sections 8.02(ix), (xiv) and (xv), as applicable,
     any Subsidiary of the Borrower (other than a Specified Subsidiary that has
     out-standing Permitted Non-Recourse Indebtedness) may be merged with and
     into the Borrower or any Subsidiary Guarantor so long as (i) in the case of
     any merger involving the Borrower, the Borrower is the surviving Person,
     (ii) in the case of any merger involving a Subsidiary Guarantor, a
     Subsidiary Guarantor is the surviving Person, and (iii) in the case of any
     merger involving a non-Wholly-Owned Subsidiary, the only consideration paid
     to third parties in connection therewith is (I) cash, (II) the assumption
     of Indebtedness, (III) equity interests


                                     -50-


     in the surviving Person so long as such Person is not a Subsidiary
     Guarantor and/or (IV) equity in Holdings or OP Units, provided that, in the
     case of a merger described in preceding clause (iii), any such cash payment
     shall be treated as an Investment made (and shall reduce the aggregate
     amount of Investments permitted to be made) under Section 8.05(xii) and
     such cash payment may only be made to the extent that an Investment may be
     made at such time under such Section 8.05(xii);

          (xvii)  in addition to mergers constituting an Asset Sale or an asset
     acquisition pursuant to Sections 8.02(ix), (xiv) and (xv), as applicable,
     any Subsidiary of Holdings (other than the Borrower or a Specified
     Subsidiary that has outstanding Permitted Non-Recourse Indebtedness) that
     is not a Subsidiary Guarantor may be merged with and into any other
     Subsidiary of Holdings (other than the Borrower or a Specified Subsidiary
     that has outstanding Permitted Non-Recourse Indebtedness) that is not a
     Subsidiary Guarantor so long as in the case of any merger involving a
     non-Wholly-Owned Subsidiary of Holdings, the only consideration paid to
     third parties in connection therewith is (I) cash, (II) the assumption of
     Indebtedness, (III) equity interests in the surviving Person so long as
     such Person is not a Subsidiary Guarantor and/or (IV) equity in Holdings or
     OP Units, provided that, in the event that the surviving Person is not a
     Wholly-Owned Subsidiary of the Borrower, any such cash payment shall be
     treated as an Investment made (and shall reduce the aggregate amount of
     Investments permitted to be made) under Section 8.05(xii) and such cash
     payment may only be made to the extent that an Investment may be made at
     such time under such Section 8.05(xii); and

          (xviii)  Subsidiaries of the Borrower which are not Subsidiary
     Guarantors and otherwise have no material assets or material liabilities
     may be liquidated.

To the extent the Required Banks or all of the Banks, as the case may be, waive
the provisions of this Section 8.02 with respect to the sale of any Pledge and
Security Agreement Collateral, or any Pledge and Security Agreement Collateral
is sold or otherwise disposed of as permitted by this Section 8.02, such Pledge
and Security Agreement Collateral shall be sold or otherwise disposed of free
and clear of the Liens created by the Pledge and Security Agreement, and the
Administrative Agent and the Collateral Agent shall be authorized to take any
actions deemed appropriate in order to effect the foregoing.

          8.03    Dividends. Holdings will not, and will not permit any of its
                  ---------
Subsidiaries to, authorize, declare or pay any Dividends with respect to
Holdings or any of its Subsidiaries, except that:

          (i)     any Subsidiary of the Borrower may pay cash Dividends to the
     Borrower or to a Wholly-Owned Subsidiary of the Borrower;

          (ii)    any non-Wholly-Owned Subsidiary of the Borrower may pay cash
     Dividends to its shareholders, members or partners generally so long as the
     Borrower or its respective Subsidiary which owns the equity interest or
     interests in the Subsidiary paying such Dividends receives at least its
     proportionate share thereof (based upon its relative holdings of equity
     interests in the Subsidiary paying such Dividends and taking into


                                     -51-


     account the relative preferences, if any, of the various classes of equity
     interests in such Subsidiary);

          (iii)  Permitted REIT Subsidiaries which are Subsidiaries of Holdings
     (but not of the Borrower) may pay cash Dividends to Holdings or any such
     other Permitted REIT Subsidiary of Holdings;

          (iv)   so long as (x) no Specified Default or Event of Default then
     exists or would exist immediately after giving effect thereto and (y)
     Holdings qualifies, or has taken all actions necessary to qualify, as a
     "real estate investment trust" under the Code, during any fiscal year of
     Holdings, the Borrower may pay cash Dividends to Holdings and all other
     holders of OP Units generally when and to the extent necessary for Holdings
     to distribute, and Holdings may so distribute, cash Dividends to its
     shareholders generally in an aggregate amount not to exceed the greater of
     (A) 85% of the Adjusted Funds From Operations for such fiscal year and (B)
     the minimum amount necessary for Holdings to maintain its tax status as a
     real estate investment trust and to satisfy the distributions required to
     be made by Notice 88-19 under the Code (or Treasury regulations issued
     pursuant thereto) by reason of Holdings making the election provided for
     therein; provided, however, to the extent that the amount referred to in
              --------  -------
     preceding clause (A) is greater than the amount referred to in preceding
     clause (B) for any such fiscal year, then in lieu of paying the entire
     amount as a cash Dividend generally during such fiscal year, Holdings and
     the Borrower may use the amount not so paid (and required to be paid) as a
     general cash Dividend to repurchase capital stock of Holdings, OP Units of
     the Borrower and/or the QUIPs and/or redeem outstanding QUIPs Debt so long
     as (i) no Default or Event of Default then exists or would exist
     immediately after giving effect thereto, (ii) the aggregate amount of all
     such repurchases and redemptions during any fiscal year of Holdings does
     not exceed $150,000,000, (iii) the aggregate amount of all such repurchases
     and redemptions made after the Effective Date does not exceed $300,000,000
     and (iv) the Leverage Ratio at the time of any such repurchase and/or
     redemption (and immediately after giving effect thereto) does not exceed
     5.35:1.00;

          (v)    so long as no Default or Event of Default then exists or would
     result therefrom, cash Dividends may be paid on the QUIPs generally to the
     holders thereof;

          (vi)   so long as no Specified Default or Event of Default then exists
     or would result therefrom, the Borrower may pay cash Dividends to Holdings
     so long as the proceeds therefrom are promptly used by Holdings to pay (x)
     any Permitted Tax Payments at the time and to the extent actually due and
     payable (but without duplication of any tax payments permitted to be made
     pursuant to clause (iv) above to satisfy the distribution required to be
     made by Notice 88-19 under the Code (or Treasury regulations issued
     pursuant thereto)) and (y) any general corporate and other overhead
     expenses and liabilities incurred by it to the extent not otherwise
     prohibited by this Agreement;

          (vii)  so long as no Specified Default or Event of Default then exists
     or would result therefrom, the Borrower may pay cash Dividends to Holdings
     in an aggregate amount not to exceed $10,000,000 so long as (x) Holdings
     promptly thereafter uses such proceeds to make Investments in Permitted
     REIT Subsidiaries and (y) such Permitted REIT


                                     -52-


     Subsidiaries promptly thereafter use such proceeds to make Investments
     pursuant to Section 8.05(x); and

          (viii) the Borrower may pay cash Dividends to Holdings to enable
     Holdings to (and Holdings may and agrees that it shall promptly thereafter)
     repurchase shares of its capital stock and/or the QUIPs and/or redeem the
     QUIPs Debt, and the Borrower may repurchase OP Units, in each case so long
     as (i) no Default or Event of Default then exits or would result therefrom,
     (ii) the aggregate amount of all repurchases and redemptions made pursuant
     to this Section 8.03(viii) in any fiscal year of Holdings does not exceed
     an amount equal to the lesser of (A) 65% of the gross cash proceeds
     received by the Borrower and its Subsidiaries from Asset Sales effected
     during such fiscal year and (B) 100% of such gross cash proceeds from such
     Asset Sales minus the aggregate principal amount of all Indebtedness
     associated with (and required to be repaid with the proceeds from) the
     assets sold pursuant to such Asset Sales and (iii) the Leverage Ratio at
     the time of any such repurchase and/or redemption (and immediately after
     giving effect thereto) does not exceed 5.35:1.00 (although nothing in this
     Section 8.03(viii) shall relieve the Borrower from its obligations, under
     Section 3.02(c)).

          8.04 Indebtedness. Holdings will not, and will not permit any of its
               ------------
Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:

          (i)    Existing Indebtedness to the extent the same is listed on
     Schedule V;

          (ii)   accrued expenses and current trade accounts payable incurred in
     the ordinary course of business;

          (iii)  intercompany Indebtedness exclusively between or among the
     Borrower and its Subsidiaries, provided that (i) any intercompany
                                    --------
     Indebtedness owed by a Credit Party to a Subsidiary of the Borrower which
     is not a Credit Party shall be subject to the subordination provisions set
     forth on Exhibit K, whether or not such subordination provisions are
     attached to any note evidencing such intercompany Indebtedness, although
     the Borrower agrees to cause each such note or other document evidencing
     such intercompany Indebtedness to incorporate by reference (and be subject
     to) such subordination provisions, and (ii) any intercompany Indebtedness
     owed by a Subsidiary of the Borrower which is not a Credit Party to a
     Credit Party shall only be permitted to the extent provided in Section
     8.05(xii);

          (iv)   Indebtedness under Interest Rate Protection Agreements entered
     into with respect to other Indebtedness permitted under this Agreement;

          (v)    accrued and deferred management fees under any Management
     Agreement; and

          (vi)   additional Indebtedness of the Borrower and its Subsidiaries
     (including Indebtedness incurred under this Agreement and Acquired
     Indebtedness), in each case so long as (i) no Default or Event of Default
     then exists or would result therefrom, and (ii) based on calculations
     made by Holdings or the Borrower on a Pro Forma Basis as if the incurrence
                                           --- -----
     of such Indebtedness had occurred on the first day of the respective


                                     -53-


     Calculation Period relating to such incurrence, no Default or Event of
     Default will exist in respect of, or would have existed during the period
     beginning on the first day of the respective Calculation Period and ended
     on the Determination Date in respect of, the financial covenants contained
     in Sections 8.08 through 8.12, inclusive; provided that, subject to the
                                               --------
     foregoing restrictions, (x) the aggregate outstanding principal amount of
     all Subsidiary Indebtedness and Secured Indebtedness incurred under this
     Section 8.04(vi) shall not exceed $400,000,000 at any time (but determined
     without taking into account either (A) Acquired Indebtedness secured by a
     Lien permitted under Section 8.01(xiii) (without taking into account any
     increases thereto after the assumption thereof) or (B) the refinancing of
     Secured Indebtedness or Subsidiary Indebtedness existing on the Effective
     Date (without taking into account any increases thereto after the Effective
     Date) up to the aggregate outstanding principal amount thereof at the time
     of such refinancing plus the amount of any costs, fees (including
     prepayment penalties, but excluding interest) and expenses associated with
     any such refinancing), (y) all Secured Indebtedness incurred under this
     Section 8.04(vi) shall be in the form of Permitted Non-Recourse
     Indebtedness, secured management loans or advances from a Permitted
     Facility Manager in connection with a renovation project at a Hotel
     Property managed by such Facility Manager, Acquired Indebtedness,
     Capitalized Lease Obligations and/or purchase money Indebtedness in respect
     of equipment and materials, and (z) Secured Indebtedness in the form of
     Permitted Non-Recourse Indebtedness and Subsidiary Indebtedness only be
     incurred by Specified Subsidiaries.

Notwithstanding anything to the contrary contained in this Section 8.04 or
else-where in this Agreement, in no event shall any Non-Controlled Entity which
owns any FF&E at a Hotel Property owned or leased by Holdings or any of its
Subsidiaries incur any Indebtedness for borrowed money or enter into any
guaranties in respect thereof (other than in the form of an intercompany loan
from the Borrower or a Subsidiary Guarantor).

          8.05 Advances, Investments and Loans. Holdings will not, and will not
               -------------------------------
permit any of its Subsidiaries to, directly or indirectly, lend money or credit
or make advances to any Person, or purchase or acquire any stock, obligations or
securities of, or any other interest in, or make any capital contribution to,
any other Person, or purchase or own a futures contract or otherwise become
liable for the purchase or sale of currency or other commodities at a future
date in the nature of a futures contract, or hold any cash or Cash Equivalents
(each of the foregoing an "Investment" and, collectively, "Investments"), except
that the following shall be permitted:

          (i)    Holdings and its Subsidiaries may acquire and hold accounts
     receivables owing to any of them, if created or acquired in the ordinary
     course of business and payable or dischargeable in accordance with
     customary terms;

          (ii)   Holdings and its Subsidiaries may acquire and hold cash and
     Cash Equivalents, provided, to the extent that Holdings holds any cash or
     Cash Equivalents, Holdings shall comply with the requirements of Section
     7.14;

          (iii)  the Borrower and its Subsidiaries may enter into Interest Rate
     Protection Agreements to the extent permitted by Section 8.04(iv);


                                     -54-


          (iv)   (x) the Borrower and the Subsidiary Guarantors may make
     Investments in and to one another, (y) subject to Section 8.04(iii),
     Subsidiaries of the Borrower that are not Subsidiary Guarantors may make
     Investments in the Borrower and in the Subsidiary Guarantors, and (z)
     Subsidiaries of Holdings which are not Subsidiaries of the Borrower may
     make Investments in and to another;

          (v)    Holdings may make equity contributions to the Borrower;

          (vi)   Holdings and its Subsidiaries may hold the Investments held by
     them on the Effective Date, without giving effect to any additions thereto
     or replacements thereof, except to the extent permitted to be made pursuant
     to another clause in this Section 8.05;

          (vii)  Holdings and its Subsidiaries may make Investments as, and to
     the extent, permitted by Section 8.02;

          (viii) Holdings and its Subsidiaries may create Subsidiaries pursuant
     to Section 8.17 (although any Investments made in such Subsidiaries shall
     only be permitted if independently justified under another provision of
     this Section 8.05);

          (ix)   Holdings and its Subsidiaries may hold the stock or other
     equity interests in their respective Subsidiaries;

          (x)    Permitted REIT Subsidiaries may make Investments in (i) other
     Permitted REIT Subsidiaries, (ii) OP Units, (iii) de minimis interests in
     Subsidiaries of the Borrower and (iv) de minimis equity interests in
     Persons other than Subsidiaries of Holdings; provided, that (A) in the case
                                                  --------
     of preceding clause (iv), Investments in such Persons shall only be made
     for the purpose of effecting an acquisition by the Borrower or a Subsidiary
     thereof permitted under this Agreement and immediately following the
     consummation of such acquisition the applicable Permitted REIT Subsidiary
     shall not own any Investment other than those described in clauses (i),
     (ii) and (iii) of the definition of Permitted REIT Subsidiary and (B) the
     aggregate value of all Investments described in preceding clauses (iii) and
     (iv) at any time outstanding (measured by the book value thereof as of the
     date each such Investment is made) shall not exceed $10,000,000;

          (xi)   Holdings may make Investments in Permitted REIT Subsidiaries
     with cash Dividends received from the Borrower pursuant to Section
     8.03(vii), provided that immediately following any such Investment (and
     related transactions) the applicable Permitted REIT Subsidiary does not own
     any Investment other than those described in clauses (i), (ii) and (iii) of
     the definition of Permitted REIT Subsidiary;

          (xii)  the Borrower and its Subsidiaries may make Permitted Designated
     Investments so long as (i) no Default or Event of Default then exists or
     would result therefrom, (ii) the aggregate amount of all Investments made
     pursuant to this Section 8.05(xii), when added to the aggregate amount of
     all acquisitions made pursuant to Section 8.02(xv), shall not exceed
     $1,500,000,000 in the aggregate at any time outstanding (determined without
     regard to any write-downs or write-offs thereof), (iii) the aggregate
     amount of all Investments made pursuant to this Section 8.05(xii) with
     property other than cash, when added to the aggregate amount of all
     non-cash consideration received from Asset Sales


                                     -55-


     described in the proviso to Section 8.02(ix), shall not exceed
     $300,000,000, (iv) based on calculations made by Holdings or the Borrower
     on a Pro Forma Basis after giving effect to such Investment and as if such
          --- -----
     Investment had occurred on the first day of the respective Calculation
     Period, no Default or Event of Default will exist in respect of, or would
     have existed during the Test Period last reported (or required to be
     reported pursuant to Section 7.01(a) or (b), as the case may be) prior to
     the date of the respective Investment in respect of, the financial
     covenants contained in Sections 8.08 through 8.12, inclusive, and (v) no
     Permitted Designated Investments are made pursuant to this Section
     8.05(xii) to, in and/or for the benefit of any Non-Controlled Entity; and

          (xiii) the Borrower and its Subsidiaries may make Investments in
     Non-Controlled Entities, the assets of which principally consist of
     Non-Conforming Assets, so long as (i) no Default or Event of Default then
     exists or would result therefrom, (ii) the aggregate amount of all
     Investments made pursuant to this Section 8.05(xiii) does not exceed
     $200,000,000 in any fiscal year of the Borrower (it being understood that
     the amount of any FF&E invested pursuant to this Section 8.05(xiii) shall
     be contributed at the fair market value thereof) (with a price equal to the
     book value thereof being deemed to meet this standard)) less the sum of (I)
     the aggregate amount of FF&E otherwise purchased by Non-Controlled Entities
     during such fiscal year from Persons other than the Borrower or a
     Subsidiary thereof for use at a Hotel Property of the Borrower or a
     Subsidiary thereof and (II) the aggregate amount of all Asset Sales made
     pursuant to Section 8.02(xi) during such fiscal year, and (iii) based on
     calculations made by Holdings or the Borrower on a Pro Forma Basis after
     giving effect to such Investment and as if such Investment had occurred on
     the first day of the respective Calculation Period, no Default or Event of
     Default will exist in respect of, or would have existed during the Test
     Period last reported (or required to be reported pursuant to Section
     7.01(a) or (b), as the case may be) prior to the date of the respective
     Investment in respect of, the financial covenants contained in Sections
     8.08 through 8.12, inclusive.

          8.06 Transactions with Affiliates. Holdings will not, and will not
               ----------------------------
permit any of its Subsidiaries to, enter into any transaction or series of
related transactions with any Affiliate of Holdings or any of its Subsidiaries,
other than in the ordinary course of business and on terms and conditions
substantially as favorable to Holdings or such Subsidiary as would reasonably be
obtained by Holdings or such Subsidiary at that time in a comparable
arm's-length transaction with a Person other than an Affiliate, except that:

          (i)    Dividends may be paid to the extent provided in Section 8.03;

          (ii)   loans may be made and other transactions may be entered into by
     Holdings and its Subsidiaries to the extent permitted by Sections 8.02,
     8.04 and 8.05;

          (iii)  Permitted Sharing Arrangements and payments made pursuant
     thereto shall be permitted to the extent that such transactions are not
     otherwise prohibited or restricted pursuant to this Agreement;

                                     -56-


          (iv)  the Borrower and its Subsidiaries, on the one hand, and the
     Approved Lessees, on the other, may enter into, and perform the terms of,
     the Operating Leases and the FF&E Leases; and

          (v)   the payment of reasonable and customary fees and expenses to
     members of the Board of the Borrower who are not employees of the Borrower
     shall be permitted.

          8.07 Capital Expenditures. Holdings will not, and will not permit any
               --------------------
of its Subsidiaries to, make any Capital Expenditures, except:

          (i)   the Borrower and its Subsidiaries may make acquisitions of Hotel
     Properties and/or other assets in accordance with the requirements of
     Sections 8.02(xiv) and (xv) and may make Investments pursuant to Sections
     8.05(v), (vi), (vii), (xii) and (xiii), in each case to the extent that
     same constitute Capital Expenditures;

          (ii)  in addition to Capital Expenditures permitted by the preceding
     clause (i) and the following clauses (iii), (iv) and (v), the Borrower and
     its Subsidiaries may make maintenance Capital Expenditures with respect to
     their Hotel Properties and other high quality real estate (other than
     Capital Expenditures consisting of expansions and construction) so long as
     (x) the aggregate amount of all such Capital Expenditures in any fiscal
     year of the Borrower does not exceed an amount equal to 8% of the Gross
     Revenues from all such Hotel Properties and other high quality real estate
     for such fiscal year (or such higher amount as may be required pursuant to
     the respective Management Agreement) plus any amounts then being held on
     deposit for such Capital Expenditures for Hotel Properties or high quality
     real estate, as the case may be, to the extent deposited in a prior fiscal
     year, and (y) all such Capital Expenditures are made in accordance with the
     terms of the respective Management Agreement for such Hotel Properties or
     high quality real estate, as the case may be;

          (iii) in addition to Capital Expenditures permitted by the preceding
     clauses (i) and (ii) and the following clauses (iv) and (v), the Borrower
     and its Subsidiaries may make additional Capital Expenditures to the extent
     permitted by Section 3.02(d);

          (iv) in addition to Capital Expenditures permitted by the preceding
     clauses (i), (ii) and (iii) and the following clause (v), the Borrower and
     its Subsidiaries may make payments in respect of Capitalized Lease
     Obligations to the extent such Capitalized Lease Obligations are otherwise
     permitted under Section 8.04(i) or (vi); and

          (v) in addition to the Capital Expenditures permitted to be made
     pursuant to clauses (i), (ii), (iii) and (iv), the Borrower and its
     Subsidiaries may make additional Capital Expenditures (A) for the purpose
     of expanding or constructing Improvements with respect to Hotel Properties
     and for the purpose of constructing new Hotel Properties so long as the
     aggregate amount of all such Capital Expenditures does not exceed
     $200,000,000 in any fiscal year of the Borrower and (B) for the purpose of
     completing the expansion and/or construction of the Naples Spa and the
     Naples Golf Resort substantially in accordance with the current budget
     therefor.

                                      -57-


          8.08 Minimum Consolidated Interest Coverage Ratio; Minimum Unsecured
               ---------------------------------------------------------------
Interest Coverage Ratio. (a) Holdings and the Borrower will not permit the
- -----------------------
Consolidated Interest Coverage Ratio for any Test Period to be less than
2.15:1.00.

          (b) Holdings and the Borrower will not permit the Unsecured Interest
Coverage Ratio for any Test Period to be less than 1.80:1.00.

          8.09 Minimum Fixed Charge Coverage Ratio. Holdings and the Borrower
               -----------------------------------
will not permit the Consolidated Fixed Charge Coverage Ratio for any Test Period
to be less than 1.40:1.00.

          8.10 Tangible Net Worth. Holdings and the Borrower will not permit
               ------------------
Tangible Net Worth at any time to be less than Minimum Tangible Net Worth.

          8.11 Maximum Leverage Ratio. Holdings and the Borrower will not permit
               ----------------------
the Leverage Ratio at any time to be greater than 5.50:1.00.


          8.12 Unencumbered EBITDA Ratio. Holdings and the Borrower will not
               -------------------------
permit the Unencumbered EBITDA Ratio for any Test Period to be less than
0.40:1.00.

          8.13 Limitation on Payments of Certain Indebtedness; Modifications of
               -----------------------------------------------------------------
Certain Indebtedness; Modifications of Certificate of Incorporation, By-Laws and
- --------------------------------------------------------------------------------
Certain Agreements; etc. Holdings will not, and will not permit any of its
- -----------------------
Subsidiaries to, (i) make (or give any notice in respect of) any voluntary or
optional payment or prepayment on or redemption or acquisition for value of, or
any prepayment or redemption as a result of any asset sale, change of control or
similar event of, including, in each case without limitation, by way of
depositing with the trustee with respect thereto money or securities before due
for the purpose of paying when due, the Senior Notes, the QUIPs Debt or any
Limited Partner Notes, provided that (x) so long as no Default or Event of
Default then exists or would result therefrom, the Borrower may voluntarily
prepay Limited Partner Notes and may prepay such Limited Partner Notes from the
sale of any asset in respect of which such Limited Partner Note relates to the
extent that such prepayment is required by the terms of such Limited Partner
Note, and (y) so long as no Default or Event of Default then exists or would
result therefrom, Holdings may prepay or redeem the QUIPs Debt either (A) with
Net Equity Proceeds received after the Effective Date from any sale or issuance
of its equity and (B) to the extent permitted by Sections 8.03(iv) and (viii),
(ii) amend or modify, or permit the amendment or modification of, the QUIPs
Debt, the Limited Partner Notes or the Senior Notes or any agreement (including,
without limitation, any purchase agreement, indenture or loan agreement) related
thereto (other than any amendment or modification thereto which would not
violate or be inconsistent with any of the terms or provisions of this Agreement
and could not reasonably be expected to be adverse to the interests of the Banks
in any material respect), (iii) amend or modify, or permit the amendment or
modification of, any provision of any Management Agreement or Operating Lease
(other than any amendment or modification thereto which would not violate or be
inconsistent with any of the terms or provisions of this Agreement and the other
Credit Documents and could not reasonably be expected to be adverse to the
interests of the Banks in any material respect), or (iv) amend, modify or change
its designation of trust, certificate of incorporation (including, without
limitation, by the filing or modification of any certificate of designation),
by-laws, certificate of partnership, partnership

                                      -58-


agreement or any equivalent organizational document, or any agreement entered
into by it, with respect to its capital stock or other equity interests, or
enter into any new agreement with respect to its capital stock or other equity
interests, other than any amendments, modifications or changes pursuant to this
clause (iv) or any such new agreements in each case which are not adverse to the
interests of the Banks in any material respect. Notwithstanding anything to the
contrary contained in this Agreement, at any time that a Default or an Event of
Default exists, no payment of principal, interest or otherwise may be made on
the QUIPs Debt.

          8.14 Limitation on Certain Restrictions on Subsidiaries. Holdings will
               --------------------------------------------------
not, and will not permit any of its Subsidiaries to, directly or indirectly,
create or otherwise cause or suffer to exist or become effective any encumbrance
or restriction on the ability of any Subsidiary of the Borrower to (a) pay
dividends or make any other distributions on its capital stock or any other
interest or participation in its profits owned by the Borrower or any of its
Subsidiaries, or pay any Indebtedness owed to the Borrower or any Subsidiary of
the Borrower, (b) make loans or advances to the Borrower or any Subsidiary of
the Borrower or (c) transfer any of its properties or assets to the Borrower or
any Subsidiary of the Borrower, except in each case for such encumbrances or
restrictions existing under or by reason of (i) applicable law, (ii) this
Agreement and the other Credit Documents, (iii) the Senior Note Documents, (iv)
customary provisions restricting subletting or assignment of any lease governing
a leasehold interest of the Borrower or any Subsidiary of the Borrower, (v)
customary provisions restricting assignment of any licensing agreement entered
into by the Borrower or any Subsidiary of the Borrower in the ordinary course of
business, (vi) customary provisions restricting the transfer of assets subject
to Liens permitted under Section 8.01, (vii) restrictions contained in the terms
of any Indebtedness or any agreement pursuant to which such Indebtedness was
issued if (A) the encumbrance or restriction applies only in the event of a
payment default or a default with respect to a financial covenant contained in
such Indebtedness or agreement, (B) the encumbrance or restriction is not
materially more disadvantageous to the Banks than is customary in comparable
financings (as determined in good faith by the Borrower) and (C) the Borrower
determines in good faith that any such encumbrance or restriction will not
materially affect its ability to make principal, interest or other payments in
respect of the Obligations, (viii) restrictions assumed pursuant to the
acquisition by the Borrower or any Subsidiary of the Borrower of any Person or
of any property or assets, so long as such encumbrances or restrictions exist at
the time of such acquisition and are not incurred in contemplation thereof, and
such encumbrances or restrictions are not applicable to any Person or the
property or assets of any Person other than such Person or the property or
assets so acquired, (ix) restrictions under an agreement that has been entered
into for the sale or disposition of all or substantially all of the capital
stock of, or property and assets of, a Subsidiary of the Borrower, so long as
such encumbrances or restrictions apply solely to such Subsidiary, (x)
replacements of restrictions imposed pursuant to clause (viii) of this Section
8.14 in connection with and pursuant to a refinancing of the Indebtedness giving
rise to such restrictions to the extent such refinancing is permitted under this
Agreement and so long as such replacement restrictions are not more restrictive
than those being replaced and do not apply to any other Person or assets other
than those that would have been covered by the restrictions in the Indebtedness
so refinanced, and (xi) customary restrictions on the transfer of assets owned
by, or loans and advances made by, a non-Wholly Owned Subsidiary of the Borrower
to the extent such restrictions are set forth in the joint venture agreement,
partnership agreement or other organizational documents relating thereto.

                                      -59-


          8.15 Limitation on Issuance of Capital Stock. (a) Holdings will not
               ---------------------------------------
permit any of its Subsidiaries to issue any capital stock (including by way of
sales of treasury stock) or other equity interests or any options or warrants to
purchase, or securities convertible into, capital stock or other equity
interests, except (i) for OP Units issued by the Borrower to the extent that no
Event of Default under Section 9.12 then exists or will result therefrom, (ii)
for transfers and replacements of then outstanding shares of capital stock or
other equity interests, (iii) for stock splits, stock dividends and similar or
additional issuances which do not decrease the percentage ownership of Holdings
or any of its Subsidiaries in any class of the capital stock or other equity
interests of such Subsidiary, (iv) to qualify directors to the extent required
by applicable law, (v) for issuances by newly created or acquired Subsidiaries
in accordance with the terms of this Agreement and (vi) for additional issuances
by non-Wholly-Owned Subsidiaries which are limited partnerships as required
pursuant to the terms of their respective partnership agreements, (vii) for
issuances by Subsidiaries in connection with the transfer or sale of partial
equity interests in such Subsidiaries as otherwise permitted under Section 8.02,
and (viii) for the exchange of an outside partner's partnership interest in a
non-Wholly-Owned Subsidiary of the Borrower which is a limited partnership for a
percentage of a different class of partnership interest in such Subsidiary as a
result of amendments or recapitalizations of the partnership interests of a
non-Wholly-Owned Subsidiary in existence on the Effective Date and in a
transaction that does not violate any provision of this Agreement and would not
result in a Default or an Event of Default.

          (b) Holdings will not, and will not permit any of its Subsidiaries to,
issue any class of redeemable common stock or other redeemable common equity
interests or any class of preferred stock other than (i) redeemable common OP
Units issued by the Borrower which are redeemable into stock of Holdings or, at
the option of Holdings, into cash, (ii) Qualified Preferred Stock of Holdings
and OP Units of the Borrower that constitute preference shares or OP Units to
the extent such shares or OP Units may be issued under Section 8.15(a) and (iii)
interests in non-Wholly-Owned Subsidiaries that are redeemable, at the option of
the Borrower or a Subsidiary thereof, for cash, OP Units or stock of Holdings.

          8.16 Business. (a) Holdings will not, and will not permit any of its
               --------
Subsidiaries to, engage (directly or indirectly) in any business other than the
businesses in which the Borrower and its Subsidiaries are engaged on the
Effective Date and Related Businesses other than the ownership of the assets
listed on Schedule VIII.

          (b) Notwithstanding anything to the contrary contained in this
Agreement, Holdings (i) will not engage in any business activities, (ii) will
not have any significant assets other than (x) any or all of the assets listed
in Part I or Part II of Schedule VIII, (y) the ownership of the OP Units of the
Borrower and equity interests in Permitted REIT Subsidiaries (or interests in
Subsidiaries whose assets are OP Units, including, without limitation, those
Subsidiaries listed in Part I of Schedule VIII) and (z) de minimis equity
                                                        -- -------
interests in Subsidiaries of the Borrower, and (iii) will not have any
significant liabilities other than (x) those under this Agreement, (y)
pre-existing liabilities (including contingent liabilities) of Holdings at the
time that Holdings was converted into a real estate investment trust (which
liabilities have been assumed by the Borrower but which may still remain
liabilities of Holdings) and (z) liabilities relating to the assets set forth in
Part I or Part II of Schedule VIII, provided, however, that Holdings will not
                                    --------  -------
become liable in respect of any new Indebtedness for borrowed money with respect
to such

                                      -60-


assets other than in respect of any refinancing of Indebtedness existing on the
Effective Date and associated with such assets. Notwithstanding anything to the
contrary contained in this Agreement, Holdings will not (i) make any Capital
Expenditures, (ii) enter into any merger, consolidation or similar transaction,
(iii) incur (or permit to remain outstanding) any Indebtedness (other than (x)
in respect of outstanding QUIPs Debt, (y) as otherwise permitted by the
immediately preceding sentence and (z) liabilities of the Borrower for which
Holdings is liable solely by virtue of it being the general partner of the
Borrower (although any such liabilities in respect of Indebtedness for borrowed
money, Capitalized Lease Obligations, purchase money Indebtedness, letters of
credit and guarantees of any of the foregoing shall provide that such
liabilities are non-recourse to Holdings except under circumstances similar to
those contained in Section 12.18)), (iv) grant any Liens except under the Credit
Documents or (v) make any Investment except as otherwise permitted under the
first sentence of this clause (b).

          8.17 Limitation on Creation of Subsidiaries. (a) Except as otherwise
               --------------------------------------
specifically provided in following clauses (b) and (c), Holdings will not, and
will not permit any of its Subsidiaries to, establish, create or acquire after
the Effective Date any Subsidiary; provided that, (i) the Borrower and its
                                   --------
Wholly-Owned Subsidiaries shall be permitted to establish or create, and to the
extent permitted by this Agreement, acquire Wholly-Owned Subsidiaries so long as
the capital stock or other equity interests of such new Subsidiary that is owned
by any Credit Party is, unless otherwise provided in Section 7.16(a)(B), pledged
pursuant to, and to the extent required by, the Pledge and Security Agreement
(and so long as any actions required to be taken by the Pledge and Security
Agreement in connection therewith are in fact taken), (ii) such new Subsidiary
to the extent that same is a Look-Through Subsidiary, unless otherwise provided
in Section 7.16(a)(B), executes a counterpart of the Subsidiaries Guaranty and,
to the extent that such Wholly-Owned Subsidiary is a Look-Through Subsidiary of
the type described in clause (i) of the definition thereof, the Pledge and
Security Agreement and (iii) such new Subsidiary, to the extent requested by the
Administrative Agent or the Required Banks, takes all actions required pursuant
to Section 7.16. In addition, each such new Wholly-Owned Subsidiary shall
execute and deliver, or cause to be executed and delivered, all other relevant
documentation of the type described in Section 4 as such new Subsidiary would
have had to deliver if such new Subsidiary were a Credit Party on the Effective
Date. Without prejudice to the preceding provisions of this Section 8.17(a), the
Collateral Agent may require that the capital stock of a new Subsidiary (in the
case of a Foreign Subsidiary, subject to limitations on the percentage of voting
stock required to be pledged which are consistent with the limitations provided
in the Pledge and Security Agreement as originally in effect) be pledged
pursuant to an agreement in a form suitable for enforcement in the jurisdiction
in which the new Subsidiary is incorporated.

          (b) In addition to Subsidiaries created pursuant to preceding clause
(a) or the following clause (c), the Borrower and its Subsidiaries may establish
or acquire one or more Subsidiaries after the Effective Date as a result of
Investments expressly permitted to be made pursuant to Section 8.05; provided
                                                                     --------
that (x) all capital stock or other equity interests of each such Subsidiary
shall, unless otherwise provided in section 7.16(a)(B), be pledged by any Credit
Party which owns same to the extent required by the Pledge and Security
Agreement and (y) if any such Subsidiary is, or becomes, a Wholly-Owned
Subsidiary of the Borrower that is a Look-Through Subsidiary, such Subsidiary
shall at such time take all actions as would otherwise be required pursuant to
Section 8.17(a) in connection with the creation of a new Wholly-Owned
Subsidiary.

                                      -61-


          (c) Holdings and Permitted REIT Subsidiaries may establish, create or,
to the extent otherwise permitted under this Agreement, acquire Permitted REIT
Subsidiaries.

          8.18 The Courtyard Settlement. Notwithstanding anything to the
               ------------------------
contrary contained in Sections 8.01, 8.02, 8.04, 8.05 and 8.06, Holdings and its
Subsidiaries shall be permitted to consummate the transactions that constitute
the Courtyard Settlement as, and to the extent, described on Schedule X, and
such transactions shall not otherwise be counted for purposes of the dollar
limitations set forth in such Sections 8.01, 8.02, 8.04, 8.05 and/or 8.06.

          SECTION 9. Events of Default. Upon the occurrence of any of the
                     -----------------
following specified events (each, an "Event of Default"):

          9.01 Payments. The Borrower shall (i) default in the payment when due
               --------
of any principal of any Loan or any Note or (ii) default, and such default shall
continue unremedied for two or more Business Days, in the payment when due of
any interest on any Loan or Note, or any Fees or any other amounts owing
hereunder or under any other Credit Document; or

          9.02 Representations, etc. Any representation, warranty or statement
               --------------------
made or deemed made by any Credit Party herein or in any other Credit Document
or in any certificate delivered pursuant hereto or thereto shall prove to be
untrue in any material respect on the date as of which made or deemed made; or

          9.03 Covenants. Any Credit Party shall (i) default in the due
               ---------
performance or observance by it of any term, covenant or agreement contained in
Section 7.01(e)(i), 7.12, 7.14, 7.16 or 7.18 or Section 8 or (ii) default in the
due performance or observance by it of any other term, covenant or agreement
contained in this Agreement (other than as provided in Section 9.01) and such
default shall continue unremedied for a period of 30 days after written notice
to the Borrower by the Administrative Agent or the Required Banks; or

          9.04 Default Under Other Agreements. (i) Holdings or any of its
               ------------------------------
Subsidiaries shall (x) default in any payment of any Indebtedness (other than
the Obligations) beyond the period of grace, if any, provided in the instrument
or agreement under which such Indebtedness was created or (y) default in the
observance or performance of any agreement or condition relating to any
Indebtedness (other than the Obligations) or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
(or a trustee or agent on behalf of such holder or holders) to cause (determined
without regard to whether any notice is required), any such Indebtedness to
become due prior to its stated maturity, or (ii) any Indebtedness (other than
the Obligations) of Holdings or any of its Subsidiaries shall be declared to be
due and payable, or required to be prepaid other than by a regularly scheduled
required prepayment, prior to the stated maturity thereof, provided that it
shall not be a Default or an Event of Default under clauses (i) or (ii) of this
Section 9.04 unless the aggregate outstanding principal amount of all
Indebtedness as described in such clauses (i) and (ii) is at least $25,000,000;
or

          9.05 Bankruptcy, etc. Holdings or any of its Subsidiaries shall
               ---------------
commence a voluntary case concerning itself under Title 11 of the United States
Code entitled "Bankruptcy,"

                                      -62-


as now or hereafter in effect, or any successor thereto (the "Bankruptcy Code");
or an involuntary case is commenced against Holdings or any of its Subsidiaries
and the petition is not controverted within 10 days, or is not dismissed within
30 days, after commencement of the case; or a custodian (as defined in the
Bankruptcy Code) is appointed for, or takes charge of, all or substantially all
of the property of Holdings or any of its Subsidiaries or Holdings or any of its
Subsidiaries commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to Holdings or any of its Subsidiaries, or there is commenced
against Holdings or any of its Subsidiaries any such proceeding which remains
undismissed for a period of 30 days, or Holdings or any of its Subsidiaries is
adjudicated insolvent or bankrupt; or any order of relief or other order
approving any such case or proceeding is entered and is not vacated or stayed
within 30 days; or Holdings or any of its Subsidiaries suffers any appointment
of any custodian or the like for it or any substantial part of its property to
continue undischarged or unstayed for a period of 30 days; or Holdings or any of
its Subsidiaries makes a general assignment for the benefit of creditors; or any
partnership and/or corporate action is taken by Holdings or any of its
Subsidiaries for the purpose of effecting any of the foregoing (it being
understood that the provisions of this Section 9.05 shall not apply to any
Designated Immaterial Subsidiary); or

          9.06 ERISA. (a) Any Plan shall fail to satisfy the minimum funding
               -----
standard required for any plan year or part thereof under Section 412 of the
Code or Section 302 of ERISA or a waiver of such standard or extension of any
amortization period is sought or granted under Section 412 of the Code or
Section 303 or 304 of ERISA, a Reportable Event shall have occurred, a
contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan
subject to Title IV of ERISA shall be subject to the advance reporting
requirement of PBGC Regulation 4043.61 (without regard to subparagraph (b)(1)
thereof) and an event described in subsection .62, .63, .64., .65, .66, .67 or
 .68 or PBGC Regulation Section 4043 shall be reasonably expected to occur with
respect to such Plan within the following 30 days, any Plan shall have had or is
likely to have a trustee appointed to administer such Plan, any Plan is, shall
have been or is likely to be terminated or to be the subject of termination
proceedings under ERISA, any Plan shall have an Unfunded Current Liability, a
contribution required to be made by Holdings, any Subsidiary of Holdings or any
ERISA Affiliate to a Plan or a Foreign Pension Plan has not been timely made,
Holdings or any of its Subsidiaries or ERISA Affiliates has incurred or is
likely to incur a liability to or on account of a Plan under Section 409,
502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or
Section 401(a)(29), 4971, 4975 or 4980 of the Code or on account of a group
health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the
Code) under Section 4980B of the Code, or Holdings or any of its Subsidiaries or
ERISA Affiliates has incurred or is likely to incur liabilities pursuant to one
or more employee welfare benefit plans (as defined in Section 3(1) of ERISA)
that provide benefits to retired employees or other former employees (other than
as required by Section 601 of ERISA) or employee pension benefit plans (as
defined in Section 3(2) of ERISA) or Foreign Pension Plans; (b) there shall
result from any such event or events the imposition of a lien, the granting of a
security interest, or a liability or a material risk of incurring a liability;
and (c) such lien, security interest or liability, either individually and/or in
the aggregate, in the reasonable opinion of the Required Banks, will have a
Material Adverse Effect; or

                                      -63-


          9.07 Pledge and Security Agreement. At any time after the execution
               -----------------------------
and delivery thereof, the Pledge and Security Agreement shall cease to be in
full force and effect, or shall cease to give the Collateral Agent for the
benefit of the Secured Creditors the Liens, rights, powers and privileges
purported to be created thereby (including, without limitation, a perfected
security interest in, and Lien on, all of the Pledge and Security Agreement
Collateral), in favor of the Collateral Agent, superior to and prior to the
rights of all third Persons, and subject to no other Liens, or any Credit Party
shall default in the due performance or observance of any term, covenant or
agreement on its part to be performed or observed pursuant to the Pledge and
Security Agreement and such default shall continue beyond any grace period
specifically applicable thereto pursuant to the terms of the Pledge and Security
Agreement; or

          9.08 Subsidiaries Guaranty. The Subsidiaries Guaranty shall cease to
               ---------------------
be in full force or effect (other than in accordance with its terms) as to any
Subsidiary Guarantor, or any Subsidiary Guarantor or any Person acting by or on
behalf of such Subsidiary Guarantor shall deny or disaffirm such Subsidiary
Guarantor's obligations under the Subsidiaries Guaranty or any Subsidiary
Guarantor shall default in the due performance or observance of any term,
covenant or agreement on its part to be performed or observed pursuant to the
Subsidiaries Guaranty; or

          9.09 Judgments. One or more judgments or decrees shall be entered
               ---------
against Holdings or any of its Subsidiaries involving in the aggregate for
Holdings and its Subsidiaries a liability (not paid or not fully covered by a
reputable and solvent insurance company) and such judgments and decrees either
shall be final and non-appealable or shall not be vacated, discharged or stayed
or bonded pending appeal for any period of 30 consecutive days, and the
aggregate amount of all such judgments equals or exceeds $15,000,000; or

          9.10 Management Agreements. Any Management Agreement or any material
               ---------------------
provision thereof shall cease to be in full force and effect or any party
thereto shall deny or disaffirm its material obligations thereunder or shall
default in the due performance or observance of any material term, covenant or
agreement on its part to be performed or observed pursuant thereto after the
expiration of any applicable cure period, other than those failures, defaults or
modifications which could not, either individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect; or

          9.11 Operating Leases. Any Operating Lease or any material provision
               ----------------
thereof shall cease to be in full force and effect or otherwise be amended or
modified without the consent of the Administrative Agent or any party thereto
shall deny or disaffirm its material obligations thereunder or shall default in
the due performance or observance of any material term, covenant or agreement on
its part to be performed or observed pursuant thereto after the expiration of
any applicable cure period, other than those failures, defaults or modifications
which could not, either individually or in the aggregate, be reasonably expected
to have a Material Adverse Effect; or

          9.12 Change of Control. A Change of Control shall occur; or
               -----------------

          9.13 Trademark Permission. At any time Hotel Properties which account
               --------------------
for more than 15% of Consolidated EBITDA for the Test Period then most recently
ended shall be

                                      -64-


operated without the use of the "Marriott", "Renaissance", "Hyatt", "Swissotel",
"Four Seasons" or "Ritz-Carlton" or other nationally recognized luxury or
upscale chain name or trademark or shall not be permitted to use any such name
or trademark in any advertising incident thereto; or

          9.14 REIT Status. Holdings shall cease, for any reason, to be a real
               -----------
estate investment trust under Sections 856 through 860 of the Code; or

          9.15 General Partner Status. Holdings shall cease at any time to be
               ----------------------
the sole general partner of the Borrower; or

          9.16 Certain FF&E. Any Person, other than the Borrower or a Subsidiary
               -------------
thereof, shall have any consensual Lien on the FF&E owned by a Non-Controlled
Entity (other than Liens existing on the Effective Date or as otherwise
specifically provided in Section 8.01(vii), (xiii) or (xiv)(y));

then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent, upon the written request of
the Required Banks, shall by written notice to the Borrower, take any or all of
the following actions, without prejudice to the rights of the Administrative
Agent, any Bank or the holder of any Note to enforce its claims against any
Credit Party (provided, that, if an Event of Default specified in Section 9.05
              --------
shall occur with respect to the Borrower, the result which would occur upon the
giving of written notice by the Administrative Agent to the Borrower as
specified in clauses (i) and (ii) below shall occur automatically without the
giving of any such notice): (i) declare the Total Commitment terminated,
whereupon the Commitments of each Bank shall forthwith terminate immediately and
any Commitment Commission shall forthwith become due and payable without any
other notice of any kind; (ii) declare the principal of and any accrued interest
in respect of all Loans and the Notes and all other Obligations owing hereunder
and thereunder to be, whereupon the same shall become, forthwith due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by each Credit Party; and (iii) enforce, as Collateral Agent,
all of the Liens and security interests created pursuant to the Pledge and
Security Agreement.

          SECTION 10. Definitions and Accounting Terms.
                      --------------------------------

          10.01 Defined Terms. As used in this Agreement, the following terms
                -------------
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):

          "Acquired Indebtedness" shall mean Indebtedness of the Borrower or any
of its Subsidiaries acquired pursuant to an acquisition made under Section
8.02(x), (xiv) or (xv) or pursuant to an Investment made under Section 8.05(xii)
or (xiii) (or Indebtedness assumed at the time of any such acquisition or
Investment and secured by the asset so acquired), in each case so long as such
Indebtedness existed at the time of such acquisition or Investment and was not
incurred in connection with or in contemplation or anticipation of such
acquisition or Investment.

          "Additional Revolving Loan Bank" shall have the meaning provided in
Section 1.14(b).

                                      -65-


          "Additional Revolving Loan Commitment" shall mean, for each Additional
Revolving Loan Bank, any commitment to make Revolving Loans by such Bank
pursuant to Section 1.14, in such amount as agreed to by such Bank in the
respective Additional Revolving Loan Commitment Agreement; provided that on the
                                                           --------
Additional Revolving Loan Commitment Date upon which an Additional Revolving
Loan Commitment of any Additional Revolving Loan Bank becomes effective, such
Additional Revolving Loan Commitment of such Additional Revolving Loan Bank
shall be added to (and thereafter become a part of) the Revolving Loan
Commitment of such Additional Revolving Loan Bank for all purposes of this
Agreement as contemplated by Section 1.14.

          "Additional Revolving Loan Commitment Agreement" shall mean an
Additional Revolving Loan Commitment Agreement substantially in the form of
Exhibit J (appropriately completed).

          "Additional Revolving Loan Commitment Date" shall mean each date upon
which an Additional Revolving Loan Commitment under an Additional Revolving Loan
Commitment Agreement becomes effective as provided in Section 1.14(b).

          "Adjusted Funds From Operations" shall mean, for any period,
Consolidated Net Income for such period plus (a) the sum of the following
amounts for such period (without duplication) to the extent deducted in the
determination of Consolidated Net Income for such period: (i) depreciation
expense, (ii) amortization expense and other non-cash charges of Holdings and
its Subsidiaries with respect to their real estate assets for such period, (iii)
losses from Asset Sales, losses resulting from restructuring of Indebtedness and
other extraordinary losses, (iv) amortization of financing cost, and (v)
minority interest expense; less (b) the sum of the following amounts to the
extent included in the determination of Consolidated Net Income for such period:
(i) gains from Asset Sales, gains resulting from restructuring of Indebtedness
and other extraordinary gains, (ii) the applicable share of Consolidated Net
Income of Holdings' Unconsolidated Entities, and (iii) minority partner adjusted
funds from operations; plus (without duplication of any amounts referred to in
clause (a) above in this definition) (c) Holdings' pro rata share of Adjusted
Funds From Operations of Holdings' Unconsolidated Entities based upon Holdings'
percentage ownership interest in such Unconsolidated Entities.

          "Administrative Agent" shall mean BTCo, in its capacity as
Administrative Agent for the Banks hereunder, and shall include any successor to
the Administrative Agent appointed pursuant to Section 11.09.

          "Affiliate" shall mean, with respect to any Person, any other Person
(i) directly or indirectly controlling (including, but not limited to, all
directors, officers and general partners of such Person) controlled by, or under
direct or indirect common control with, such Person or (ii) that directly or
indirectly owns more than 10% of the total voting power normally entitled to
vote in the election of directors, managers or trustees, as applicable, in such
Person. A Person shall be deemed to control another Person if such Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of such other Person, whether through the ownership
of voting securities, by contract or otherwise, provided that the right to
designate a member of the board of directors or managers of a Person will not,
by itself, be

                                      -66-


deemed to constitute control. Notwithstanding the foregoing, neither Marriott
International nor any of its Subsidiaries shall be considered to be Affiliates
of Holdings or any of its Subsidiaries.

          "Agreement" shall mean this Credit Agreement, as modified,
supplemented, amended, restated, extended, renewed, refinanced or replaced from
time to time.

          "Applicable Commitment Commission Percentage" shall mean, with respect
to any quarterly period occurring between successive Quarterly Payment Dates
(or, if shorter, the period through the termination of the Total Revolving Loan
Commitment) during which the daily average outstanding principal amount of
Revolving Loans is (i) less than 26% of the Total Revolving Loan Commitment,
 .50%, (ii) greater than or equal to 26%, but less than 50%, of the Total
Revolving Loan Commitment, .45%, (iii) greater than or equal to 50%, but less
than 75%, of the Total Revolving Loan Commitment, .35%, and (iv) greater than or
equal to 75% of the Total Revolving Loan Commitment, .25%.

          "Applicable Margin" shall mean, from and after any Start Date to and
including the corresponding End Date, the respective percentage per annum set
forth below under the respective Type of Loan and opposite the respective Level
(i.e., Level I, Level II, Level III, Level IV, Level V or Level VI, as the case
may be) indicated to have been achieved on the applicable Test Date for such
Start Date (as shown on the respective officer's certificate delivered pursuant
to Section 7.01(d) or the first proviso below):



                                                                         Base            Eurodollar
                                   Leverage Ratio                      Rate Loans         Rate Loans
                                   --------------                      ----------        -----------
                                                                                   
     Level I             less than 3.50:1.00                             0.375%             1.375%
     Level II            greater than or equal to 3.50:1.00 but
                         less than 4.00:1.00                             0.500%             1.50%
     Level III           greater than or equal to 4.00:1.00 but
                         less than 4.50:1.00                             1.00%              2.00%
     Level IV            greater than or equal to 4.50:1.00 but
                         less than 5.00:1.00                             1.25%              2.25%
     Level V             greater than or equal to 5.00:1.00 but
                         less than 5.25:1.00                             1.50%              2.50%
     Level VI            greater than or equal to 5.25:1.00              1.875%             2.875%


; provided, however, that if the Borrower fails to deliver the financial
  --------  -------
statements required to be delivered pursuant to Section 7.01(a) or (b)
(accompanied by the officer's certificate required to be delivered pursuant to
Section 7.01(d) showing the applicable Leverage Ratio on the relevant Test Date)
on or prior to the respective date required by such Sections, then Level VI
pricing shall apply until such time, if any, as the financial statements
required as set forth above and the accompanying officer's certificate have been
delivered showing the pricing for the respective Margin Reduction Period is at a
level which is less than Level VI (it being understood that, in the case of any
late delivery of the financial statements and officer's certificate as so
required, any

                                      -67-


reduction in the Applicable Margin shall apply only from and after the date of
the delivery of the complying financial statements and officer's certificate);
provided further, that Level VI pricing shall apply at any time when any
- -------- -------
Specified Default or Event of Default is in existence. Notwithstanding anything
to the contrary contained in the immediately preceding sentence (other than the
second proviso thereof), Level IV pricing shall apply for the period from the
Effective Date to but not including the date which is the first Start Date after
the Effective Date.

          "Approved Lessee" shall mean (i) Crestline or a Subsidiary thereof, as
lessee under an Operating Lease, (ii) a Taxable REIT Subsidiary or (iii) another
lessee under an Operating Lease approved by the Administrative Agent and the
Required Banks (which approval shall not be unreasonably withheld).

          "Asset Sale" shall mean (i) any sale, transfer or other disposition by
Holdings or any of its Subsidiaries to any Person (including by-way-of
redemption by such Person) other than to the Borrower or a Wholly-Owned
Subsidiary of the Borrower of any asset (including, without limitation, any
capital stock or other securities of, or equity interest in, another Person)
other than sales or other dispositions of assets pursuant to Sections 8.02(ii),
(iii), (iv), (v), (vi), (vii) and (viii), or (ii) any "Asset Sale" under, and as
defined in, the Senior Note Indenture.

          "Assignment and Assumption Agreement" shall mean the Assignment and
Assumption Agreement substantially in the form of Exhibit I (appropriately
completed).

          "Authorized Financial Officer" of any Credit Party shall mean any of
the Chief Financial Officer, the Treasurer or the Chief Accounting Officer of
such Credit Party or any other officer of such Credit Party designated in
writing to the Administrative Agent by any of the foregoing officers of such
Credit Party as being authorized to act in such capacity so long as the other
officer is a financial person who works in such Credit Party's controller's or
accounting office.

          "Authorized Officer" of any Credit Party shall mean any of the Chief
Executive Officer, the President, the Chief Operating Officer, any Authorized
Financial Officer or any Vice-President of such Credit Party or any other
officer of such Credit Party which is designated in writing to the
Administrative Agent by any of the foregoing officers of such Credit Party as
being authorized to give notices under this Agreement.

          "Bank" shall mean each financial institution listed on Schedule I, as
well as any Person which becomes a "Bank" hereunder pursuant to Section 1.14(b)
or 12.04(b).

          "Bank Default" shall mean (i) the refusal (which has not been
retracted) or failure of a Bank to make available its portion of any Borrowing
in violation of this Agreement or (ii) a Bank having notified in writing the
Borrower and/or the Administrative Agent that it does not intend to comply with
its obligations under Section 1.01, including, without limitation, as a result
of any takeover of such Bank by any regulatory authority or agency.

          "Bankruptcy Code" shall have the meaning provided in Section 9.05.

          "Base Rate" shall mean, at any time, the higher of (i) the rate which
is 1/2 of 1% in excess of the Federal Funds Rate and (ii) the Prime Lending
Rate.

                                      -68-


          "Base Rate Loan" shall mean each Loan designated or deemed designated
as such by the Borrower at the time of the incurrence thereof or conversion
thereto.

          "Borrower" shall have the meaning provided in the first paragraph of
this Agreement.

          "Borrowing" shall mean the borrowing of one Type of Loan of a single
Tranche from Banks having Commitments of the respective Tranche on a given date
(or resulting from a conversion or conversions on such date) having in the case
of Eurodollar Loans the same Interest Period, provided that Base Rate Loans
                                              --------
incurred pursuant to Section 1.10(b) shall be considered part of the related
Borrowing of Eurodollar Loans.

          "BTCo" shall mean Bankers Trust Company in its individual capacity,
and any successor thereto by merger or otherwise.

          "Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day except Saturday, Sunday and any day which shall be
in New York City a legal holiday or a day on which banking institutions are
authorized or required by law or other government action to close and (ii) with
respect to all notices and determinations in connection with, and payments of
principal and interest on, Eurodollar Loans, any day which is a Business Day
described in clause (i) above and which is also a day for trading by and between
banks in the New York interbank Eurodollar market.

          "Calculation Period" shall mean the period of four consecutive fiscal
quarters last ended before the date of the respective event or incurrence which
requires calculations to be made on a Pro Forma Basis and for which financial
                                      --- -----
information of the kind referred to in Sections 7.01(a) and (b) is available.

          "Capital Expenditures" shall mean, with respect to any Person, without
duplication, all expenditures by such Person which should be capitalized in
accordance with generally accepted accounting principles, including all such
expenditures with respect to fixed or capital assets (including, without
limitation, expenditures for maintenance and repairs which should be capitalized
in accordance with generally accepted accounting principles) and, without
duplication, the amount of Capitalized Lease Obligations of such Person.

          "Capitalized Interest" shall mean interest that is capitalized and is
not counted as interest expense in accordance with GAAP.

          "Capitalized Lease Obligations" of any Person shall mean all rental
obligations of such Person which, under generally accepted accounting
principles, are or will be required to be capitalized on the books of such
Person, in each case taken at the amount thereof accounted for as indebtedness
in accordance with such principles.

          "Cash Equivalents" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
                         --------
States of America is pledged in support thereof) having maturities of not more
than one year from the date of acquisition, (ii) U.S. dollar denominated time
deposits, certificates of deposit and bankers acceptances of (x) any Bank or (y)

                                      -69-


any bank whose short-term commercial paper rating from S&P is at least A-2 or
the equivalent thereof or from Moody's is at least P-2 or the equivalent thereof
(any such bank or Bank, an "Approved Bank"), in each case with maturities of not
more than one year from the date of acquisition, (iii) commercial paper issued
by any Approved Bank or by the parent company of any Approved Bank and
commercial paper issued by, or guaranteed by, any industrial or financial
company with a short-term commercial paper rating of at least A-2 or the
equivalent thereof by S&P or at least P-2 or the equivalent thereof by Moody's,
or guaranteed by any industrial company with a long term unsecured debt rating
of at least A or A2, or the equivalent of each thereof, from S&P or Moody's, as
the case may be, and in each case maturing within one year after the date of
acquisition, (iv) marketable direct obligations issued by the District of
Columbia or any state of the United States of America or any political
subdivision of any such state or any public instrumentality thereof maturing
within one year from the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from either S&P or
Moody's and (v) investments in money market funds substantially all the assets
of which are comprised of securities of the types described in clauses (i)
through (iv) above.

          "Casualty Event" shall mean any theft, loss, physical destruction,
damage or similar event with respect to any Hotel Property or any other Real
Property owned or leased by Holdings or any of its Subsidiaries (or in each case
any portion thereof).

          "CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from time to
time, 42 U.S.CA. ss. 9601 et seq.
                          -- ---

          "Change of Control" shall mean (i) Holdings shall at any time cease to
own 100% of the general partnership interests of the Borrower, (ii) the direct
or indirect acquisition by any Person or a group (as such term is defined in
Section 13(d)(3) of the Exchange Act), other than Marriott Family Members, of
beneficial ownership (as such term is defined in Rule 13D-3 promulgated under
the Securities Exchange Act) of 40% or more of the outstanding shares of common
stock of Holdings, (iii) the Board of Directors of Holdings shall not consist of
a majority of Continuing Directors or (iv) any "change of control" or similar
event shall occur under any Qualified Preferred Stock, the Senior Notes or any
other Indebtedness (other than Permitted Non-Recourse Indebtedness) of Holdings
or the Borrower with an aggregate principal amount of $25,000,000 or more.

          "Claims" shall have the meaning provided in the definition of
"Environmental Claims."

          "Co-Agent" shall mean each of The Bank of Nova Scotia and Credit
Lyonnais New York Branch.

          "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated thereunder. Section references to
the Code are to the Code, as in effect on the Effective Date, and to any
subsequent provision of the Code, amendatory thereof, supplemental thereto or
substituted therefor.

                                      -70-


          "Collateral Agent" shall mean the Administrative Agent acting as
collateral agent for the Secured Creditors pursuant to the Pledge and Security
Agreement.

          "Commitment" shall mean any of the commitments of any Bank, i.e.,
                                                                      ---
whether the Term Loan Commitment or Revolving Loan Commitment.

          "Commitment Commission" shall have the meaning provided in Section
2.01(a).

          "Condemnation Proceeds" shall mean all compensation, awards, damages,
rights of action and proceeds awarded to Holdings or any of its Subsidiaries by
reason of any Taking.

          "Consolidated EBITDA" shall mean, for any period, the Consolidated Net
Income of the Borrower for such period adjusted (A) to add thereto the sum of
(I) (to the extent deducted in determining Consolidated Net Income for such
period), without duplication, the sum of the amounts for such period of (i)
Consolidated Interest Expense, (ii) provisions for taxes based on income, (iii)
depreciation and amortization expense (provided that the depreciation and
amortization expense of a non-Wholly-Owned Subsidiary shall be included only to
the extent of the equity interest of such Person in such non-Wholly-Owned
Subsidiary), (iv) any other noncash items reducing Consolidated Net Income of
the Borrower for such period (except to the extent that such noncash items
relate to the write-off or write-down of any item included in Consolidated Net
Income in a prior period), (v) the one time costs incurred as part of the
Courtyard Settlement and (vi) any cash receipts of such Person or a Subsidiary
thereof during such period that represent items included in Consolidated Net
Income of the Borrower for a prior period which were excluded from Consolidated
EBITDA in such prior period by virtue of clause (B) of this definition, and (II)
to the extent not already included in the determination of Consolidated EBITDA
for such period, cash interest expense of an Unconsolidated Entity in which the
Borrower has an equity Investment in an aggregate amount not to exceed the
Designated Cash Interest Expense Amount for such Unconsolidated Entity, (B) to
subtract therefrom, without duplication, the sum of the amounts for such period
of (i) all noncash items increasing Consolidated Net Income of the Borrower for
such period and (ii) any cash expenditures of the Borrower and its Subsidiaries
during such period to the extent that such cash expenditures (x) did not reduce
Consolidated Net Income of the Borrower for such period and (y) were applied
against reserves or accruals that constituted noncash items reducing
Consolidated Net Income of the Borrower when reserved or accrued for in a prior
period and (C) as provided in the definition of Pro Forma Basis; provided that
                                                --- -----        --------
Consolidated EBITDA shall be determined without giving effect to any
extraordinary gains or losses (including any taxes attributable to any such
extraordinary gains or losses) or gains or losses from sales of assets other
than from sales of inventory (excluding Real Property) in the ordinary course of
business. Notwithstanding anything to the contrary contained in this Agreement,
for purposes of determining compliance with Sections 8.08, 8.09, 8.11 and 8.12
and for purposes of determining the Applicable Margin, to the extent that the
portion of Consolidated EBITDA for any period attributable to Non-Controlled
Entities exceeds 16% (or, for any period on or after consummation of the initial
Crestline Exchange, 8%) of the total Consolidated EBITDA for such period, such
excess shall be ignored in making such determinations.

          "Consolidated Fixed Charge Coverage Ratio" shall mean, for any period,
the ratio of (x) Consolidated EBITDA for such period to (y) Consolidated Fixed
Charges for such period.

                                      -71-


          "Consolidated Fixed Charges" shall mean, for any period, the sum of
(i) Consolidated Interest Expense for such period, (ii) to the extent that same
does not otherwise constitute Consolidated Interest Expense, all interest
expense on the QUIPs Debt for such period, (iii) preferred stock dividends (or
the equivalent thereof) accrued and/or paid in cash by the Borrower during such
period, (iv) 5% of Gross Revenues during such period received from all Hotel
Properties and (v) 3% of Gross Revenues during such period received from all
other high quality real estate.

          "Consolidated Interest Coverage Ratio" shall mean, for any period, the
ratio of (x) Consolidated EBITDA for such period to (y) Consolidated Interest
Expense for such period.

          "Consolidated Interest Expense" shall mean, for any period, the total
consolidated interest expense of the Borrower for such period (calculated
without regard to any limitations on the payment thereof) plus, without
duplication, that portion of Capitalized Lease Obligations of such Person and
its Subsidiaries representing the interest factor for such period, but excluding
the amortization of any deferred financing costs; provided that (i) any interest
                                                  --------
expense on the QUIPs Debt shall be excluded as Consolidated Interest Expense to
the extent that same would otherwise have been included therein for such period
and (ii) Consolidated Interest Expense shall be adjusted as provided in the
definition of Pro Forma Basis. Notwithstanding anything to the contrary
contained elsewhere in this Agreement or the requirements of GAAP, the amount of
Capitalized Interest incurred during any period shall be added as a component of
Consolidated Interest Expense.

          "Consolidated Net Income" shall mean, for any period, the net income
(or loss) of the Borrower and its Subsidiaries for such period, determined on a
consolidated basis; provided that (i) net income (or loss) of (x) any other
                    --------
Person which is accounted for by such specified Person by the equity method of
accounting or (y) any Subsidiary of such Person that is restricted from
declaring or paying dividends or other distributions, directly or indirectly, by
operation of the terms of its charter, any applicable agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation or otherwise
shall (in each case) be included only to the extent of the amount of cash
dividends or distributions paid to the specified Person or a Wholly-Owned
Subsidiary of such Person, (ii) the net income (or loss) of any other Person
acquired by such specified Person or a Subsidiary of such Person in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded, (iii) to the extent Consolidated Net Income reflects amounts
attributable to minority interests in Subsidiaries that are not Wholly-Owned
Subsidiaries of the Borrower, Consolidated Net Income shall be reduced by the
amounts attributable to such minority interests and (iv) Consolidated Net Income
shall be calculated without giving effect to any Operating Lease termination fee
paid in connection with the Crestline Exchanges to the extent that any such
termination fee would otherwise have reduced Consolidated Net Income in the
respective period.

          "Consolidated Total Debt" shall mean, at any time, the sum of (without
duplication) (I) the amount of all Indebtedness of the Borrower and its
Subsidiaries as would be required to be reflected on the liability side of a
balance sheet as prepared in accordance with generally accepted accounting
principles and as determined on a consolidated basis at such time, including, in
any event, all Loans, all Senior Notes, all Limited Partner Notes, all
Capitalized Lease Obligations, all purchase money Indebtedness and all Permitted
Non-Recourse

                                      -72-


Indebtedness, (II) the amount of all Indebtedness of the Borrower and its
Subsidiaries of the type described in clauses (ii), (iii) and (vi) of the
definition of Indebtedness issued or given in support of Indebtedness or other
payment obligations of any third Person (other than guaranties of operating
leases for equipment and restaurant facilities to the extent such guaranties
constitute Existing Indebtedness) and (III) to the extent not otherwise included
in preceding clauses (I) and (II), the amount of all obligations of the Borrower
and its Subsidiaries owed to a Facility Manager in connection with a renovation
project of a Hotel Property in the event that such obligations are secured by a
Lien on any asset of the Borrower or any of its Subsidiaries and the aggregate
amount of such obligations (and the fair market value of all property subject to
such Liens) equals or exceeds 2.5% of the fair market value (as determined by
the Borrower) of the respective Hotel Property; provided, however, (x)
                                                --------  -------
Consolidated Total Debt shall exclude (i) Specified Bottom Guaranties in an
aggregate amount not to exceed $300,000,000 at any time outstanding for all such
Specified Bottom Guaranties and (ii) Specified Credit Worthy Supported Debt in
an aggregate amount not to exceed $250,000,000 at any time outstanding for all
such Specified Credit Worthy Supported Debt and (y) Consolidated Total Debt
shall be further adjusted as provided in the definition of Pro Forma Basis.
                                                           ---------

          "Contingent Obligation" shall mean, as to any Person, any obligation
of such Person guaranteeing or intended to guarantee (including, without
limitation, as a result of such Person being a general partner of the other
Person, unless the underlying obligation is expressly made non-recourse as to
such general partner) any Indebtedness, leases, dividends or other obligations
("primary obligations") of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, including, without limitation, any
obligation of such Person, whether or not contingent, (i) to purchase any such
primary obligation or any property constituting direct or indirect security
therefor, (ii) to advance or supply funds (x) for the purchase or payment of any
such primary obligation or (y) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the holder of such primary obligation
against loss in respect thereof; provided, however, that the term Contingent
                                 --------  -------
Obligation shall not include (x) endorsements of instruments for deposit or
collection in the ordinary course of business or (y) liabilities of Holdings or
any of its Subsidiaries arising solely as a result of their being a general
partner in a Person which is not a Subsidiary to the extent such liabilities are
of the type described in Section 8.04(ii) or are in respect of other
Indebtedness which provides that recourse thereunder is limited to those
circumstances of the type described in Section 12.18. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.

          "Continuing Directors" shall mean the directors of Holdings on the
Effective Date and each other director, if such other director's nomination for
election to the Board of Directors of Holdings is recommended by a majority of
the then Continuing Directors or is recommended by a committee of the Board of
Directors a majority of which is composed of the then Continuing Directors.

                                      -73-


          "Courtyard Settlement" shall mean the transactions described in, and
entered into in connection with the settlement of the lawsuit described in,
Schedule X.

          "Credit Documents" shall mean this Agreement and, after the execution
and delivery thereof pursuant to the terms of this Agreement, each Note, the
Pledge and Security Agreement, the Subsidiaries Guaranty and each Additional
Revolving Loan Commitment Agreement.

          "Credit Party" shall mean Holdings, the Borrower and each Subsidiary
Guarantor.

          "Credit Worthy Person" shall mean a Person which meets (and continues
to meet) all of the criteria set forth in either clause (A) or (B) below in this
definition:

          (A)  the long-term senior unsecured Indebtedness of such Person is
     rated at least BBB- by S&P and at least Baa3 by Moody's; or

          (B)  such Person meets all of the following criteria:

               (i) such Person has a minimum consolidated net worth of at least
          $500,000,000 (and taking into account any Permitted Pro Forma
                                                              --- -----
          Adjustments);

               (ii) such Person has at least $100,000,000 of consolidated cash
          flow (i.e., net income plus interest expense, taxes, depreciation and
                ---
          amortization (without taking into account any extraordinary items))
          for each period of four consecutive fiscal quarters for which such
          determination is required to be made (and taking into account any
          Permitted Pro Forma Adjustments); and
                    --- -----

               (iii) such Person's consolidated leverage ratio as of the end of
          each fiscal quarter is no greater than 4.50:1.00 (with such leverage
          ratio being defined as the ratio of (x) consolidated indebtedness as
          of the end of each such fiscal quarter to (y) consolidated cash flow
          (as determined in clause (ii) above) for the four consecutive fiscal
          quarters ending on the last day of such fiscal quarter (and taking
          into account any Permitted Pro Forma Adjustments)).
                                     --- -----

All financial calculations required to be made pursuant to clause (B) above
shall be made in accordance with generally accepted accounting principles in the
United States consistently applied throughout the periods involved.

          "Crestline" shall mean Crestline Capital Corporation, a Maryland
     corporation.

          "Crestline Exchanges" shall mean one or more transactions the end
result of which is that the Borrower or one or more of its Subsidiaries acquires
the Operating Leases from Crestline, any Subsidiary of Crestline or any other
Person that is an existing Approved Lessee (or acquires (including by merger)
the equity interests of the respective Approved Lessees), which acquisition also
may consist of the related purchase of the equity interests of the Person or
Persons which own the FF&E which is used at the Hotel Properties for which such
Operating Leases relate, provided that the following conditions are also
                         --------
satisfied:

                                      -74-


          (i) the consideration to be paid by the Borrower and its Subsidiaries
shall consist of a combination of cash, Hotel Properties (and related assets),
the HPT Leases, the equity interests of the Person or Persons owning such Hotel
Properties, the equity interests of Unconsolidated Entities and/or the equity
interests of the Person or Persons who own the HPT Leases; provided, however, in
                                                           --------  -------
no event shall the aggregate fair market value of all non-cash consideration
paid in respect of all Crestline Exchanges (as determined in good faith by the
Borrower) exceed $350,000,000 (it being understood that, in making the foregoing
calculation, to the extent that the Borrower or any Subsidiary of the Borrower
contributes less than all of its interest in an asset as part of a Crestline
Exchange, the fair market value of the Borrower's or such Subsidiary's entire
interest in such asset (including any portion thereof retained by the Borrower
or such Subsidiary) shall be counted towards, and applied against, the
$350,000,000 limitation set forth above in this proviso);

          (ii) the new Approved Lessee under each such Operating Lease is a
Taxable REIT Subsidiary or a Non-Controlled Entity that, within 60 days after
such Crestline Exchange, becomes a Taxable REIT Subsidiary; and

          (iii) any Indebtedness and associated Liens that become Indebtedness
of, and Liens granted by, a Subsidiary of the Borrower as part of a Crestline
Exchange are Indebtedness and associated Liens that (x) are existing at the time
of (and are not created in contemplation or anticipation of) such Crestline
Exchange (other than a Lien required to be granted by the Borrower or such
Subsidiary to a lender to which the Borrower and/or any such Subsidiary is
already indebted to in respect of Secured Indebtedness otherwise permitted under
this Agreement), (y) are owed to the Borrower or a then existing Subsidiary of
the Borrower and/or to a lender to which the Borrower and/or any such Subsidiary
is already indebted to in respect of such assumed Indebtedness as otherwise
permitted under this Agreement, and (z) in the case of such Liens, they do not
encumber any other asset of the Borrower or any of its Subsidiaries.

          "Customary Non-Recourse Exclusions" shall mean exceptions by reason of
(i) any fraudulent misrepresentation made by Holdings or any of its other
Subsidiaries in or pursuant to any document evidencing any Indebtedness or other
liabilities of any Designated Immaterial Subsidiary or any Specified Subsidiary,
as applicable, (ii) any unlawful act on the part of Holdings or any of its other
Subsidiaries in respect of the Indebtedness or other liabilities of any
Designated Immaterial Subsidiary or any Specified Subsidiary, (iii) any
misappropriation of funds by Holdings or any of its other Subsidiaries in
contravention of the provisions of the Indebtedness or other liabilities of any
Designated Immaterial Subsidiary or any Specified Subsidiary, as applicable, or
(iv) customary environmental indemnities associated with the Real Property of
any Designated Immaterial Subsidiary or any Specified Subsidiary, as applicable.

          "Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.

          "Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is in effect.

          "Designated Cash Interest Expense Amount" shall mean, in respect of
any Unconsolidated Entity in which the Borrower has an equity Investment, that
amount of cash

                                      -75-


interest expense of such Unconsolidated Entity that is actually paid in cash
during the respective period multiplied by a fraction, the numerator of which is
equal to the aggregate exposure of the Borrower under any guaranty of the
Indebtedness of such Unconsolidated Entity for which such cash interest expense
relates to and the denominator of which is equal to aggregate principal amount
of such Indebtedness.

          "Designated Immaterial Subsidiary" shall mean each of FIBM One LLC, a
Delaware limited liability company, RIBM One LLC, a Delaware limited liability
company, and RIBM Two LLC, a Delaware limited liability company, in each case
only so long as (i) the only material asset of such Subsidiary is (A) in the
case of FIBM One LLC, a 1% general partnership interest and a 10% limited
partnership interest in Fairfield Inn by Marriott Limited Partnership, a
Delaware limited partnership, (B) in the case of RIBM One LLC, a 1% general
partnership interest and a de minimis limited partnership interest in Marriott
                           -- -------
Residence Inn Limited Partnership, and (C) in the case of RIBM Two LLC, a 1%
general partnership interest and a de minimis limited partnership interest in
                                   -- -------
Marriott Residence Inn II Limited Partnership, and (ii) there is no recourse,
whether contractual, by operation of law or otherwise, against Holdings or any
of its Subsidiaries in respect of the Indebtedness and other liabilities of any
such partnership (other than in respect of Customary Non-Recourse Exclusions).

          "Determination Date" shall have the meaning provided in the definition
of "Pro Forma Basis."

          "Dividends" with respect to any Person shall mean that such Person has
declared or paid a dividend or returned any equity capital to its stockholders,
partners or members or authorized or made any other distribution, payment or
delivery of property (other than common stock or other common equity interests
of such Person or Qualified Preferred Stock of Holdings or the Borrower) or cash
to its stockholders, partners or members in their capacity as such, or redeemed,
retired, purchased or otherwise acquired, directly or indirectly, for a
consideration any shares of any class of its capital stock or any other equity
interests outstanding on or after the Effective Date (or any options or warrants
issued by such Person with respect to its capital stock or other equity
interest), or set aside any funds for any of the foregoing purposes, or shall
have permitted any of its Subsidiaries to purchase or otherwise acquire for
consideration any shares of any class of the capital stock or any partnership
interests of such Person outstanding on or after the Effective Date (or any
options or warrants issued by such Person with respect to its capital stock or
other equity interest).

          "Dollars" and the sign "$" shall each mean freely transferable lawful
money of the United States.

          "Domestic Subsidiary" shall mean each Subsidiary of Holdings
incorporated or organized in the United States or any State or territory
thereof.

          "Effective Date" shall have the meaning provided in Section 12.10.

          "Eligible Transferee" shall mean and include a commercial bank,
financial institution, any fund that invests in loans or any other "accredited
investor" (as defined in Regulation D under the Securities Act).

                                      -76-


          "End Date" shall mean, for any Margin Reduction Period, the last day
of such Margin Reduction Period.

          "Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of non-compliance or violation, investigations or proceedings relating
in any way to any Environmental Law (hereafter "Claims") or any permit issued
under any such law, including, without limitation, (a) any and all Claims by
governmental or regulatory authorities for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any applicable
Environmental Law, and (b) any and all Claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from alleged
injury to health, safety or the environment.

          "Environmental Law" shall mean any applicable Federal, state, foreign
or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy and rule of common
law now or hereafter in effect and in each case as amended, and any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment relating to the environment, Hazardous
Materials or employee health or safety relating to Hazardous Materials,
including, without limitation, CERCLA; RCRA; the Federal Water Pollution Control
Act, 33 U.S.CA.ss.2601 et seq., the Clean Air Act, 42 U.S.CA.ss. 7401 et seq.;
                       -- ---                                         -- ---
the Safe Drinking Water Act, 42 U.S.CA.ss. 3803 et seq.; the Oil Pollution Act
                                                -- ---
of 1990, 33 U.S.CA.ss. 2701 et seq.; the Emergency Planning and the Community
                            -- ---
Right-to-Know Act of 1986, 42 U.S.CA.ss. 11001 et seq., the Hazardous Material
                                               -- ---
Transportation Act, 49 U.S.CA.ss. 1801 et seq. and the Occupational Safety and
                                       -- ---
Health Act, 29 U.S.CA.ss.651 et seq. (to the extent it regulates occupational
                             -- ---
exposure to Hazardous Materials); and any state and local or foreign
counterparts or equivalents, in each case as amended from time to time.

          "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder. Section references to ERISA are to ERISA, as in effect on the
Effective Date and any subsequent provisions of ERISA, amendatory thereof,
supplemental thereto or substituted therefor.

          "ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with Holdings or any Subsidiary of Holdings would be
deemed to be a "single employer" within the meaning of Section 414(b),(c), (m)
or (o) of the Code.

          "Eurodollar Loan" shall mean each Loan designated as such by the
Borrower at the time of the incurrence thereof or conversion thereto.

          "Eurodollar Rate" shall mean (a) the offered quotation to first-class
banks in the New York interbank Eurodollar market by BTCo for Dollar deposits of
amounts in immediately available funds comparable to the outstanding principal
amount of the Eurodollar Loan of BTCo with maturities comparable to the Interest
Period applicable to such Eurodollar Loan commencing two Business Days
thereafter as of 10:00 A.M. (New York time) on the date which is two Business
Days prior to the commencement of such Interest Period, divided (and rounded off
to the nearest 1/16 of 1% or, if there is no nearest 1/16 of 1%, to the next
highest 1/16 of 1%)

                                      -77-


by (b) a percentage equal to 100% minus the then stated maximum rate of all
reserve requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves required by applicable law) applicable
to any member bank of the Federal Reserve System in respect of Eurocurrency
funding or liabilities as defined in Regulation D (or any successor category of
liabilities under Regulation D).

          "Event of Default" shall have the meaning provided in Section 9.

          "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

          "Existing Indebtedness" shall have the meaning provided in Section
6.20.

          "Facility Manager" shall mean each manager of a Hotel Property or
other Real Property pursuant to a Management Agreement.

          "Federal Funds Rate" shall mean, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal Funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal Funds
brokers of recognized standing selected by the Administrative Agent.

          "Fees" shall mean all amounts payable pursuant to or referred to in
Section 2.01.

          "FF&E" shall mean, with respect to any Hotel Property, any furniture,
fixtures and equipment, including any beds, lamps, bedding, tables, chairs,
sofas, curtains, carpeting, smoke detectors, mini bars, paintings, decorations,
televisions, telephones, radios, desks, dressers, towels, bathroom equipment,
heating, cooling, lighting, laundry, incinerating, loading, swimming pool,
landscaping, garage and power equipment, machinery, engines, vehicles, fire
prevention, refrigerating, ventilating and communications apparatus, carts,
dollies, elevators, escalators, kitchen appliances, restaurant equipment,
computers, reservation systems, software, cash registers, switchboards, cleaning
equipment or other items of furniture, fixtures and equipment typically used in
hotel properties (including furniture, fixtures and equipment used in guest
rooms, lobbies and common areas (other than those items of furniture, fixtures
and equipment owned by the occupant or tenant in any such room)).

          "Foreign Pension Plan" shall mean any plan, fund (including, without
limitation, any superannuation fund) or other similar program established or
maintained outside the United States of America by Holdings or any one or more
of its Affiliates primarily for the benefit of employees of Holdings or such
Affiliates residing outside the United States of America, which plan, fund or
other similar program provides, or results in, retirement income, a deferral of
income in contemplation of retirement or payments to be made upon termination of
employment, and which plan is not subject to ERISA or the Code, and as to which
plan neither the Borrower nor any other Credit Party has any material liability.

                                      -78-


          "Foreign Subsidiary" shall mean each Subsidiary of Holdings other than
a Domestic Subsidiary.

          "Franchise Agreements" shall mean all franchise or similar agreements
entered into with respect to a Hotel Property.

          "Full-Service Hotel" shall mean (i) a Hotel (including an all-suites
Hotel) which may reasonably be categorized as one which offers customary food
and beverage facilities and room service and (ii) a metropolitan Marriott
Courtyard, Residence Inn or another nationally branded chain of equal of higher
quality, in each case (in the case of this clause (ii)) with 200 or more rooms
and which is served by a restaurant facility.

          "Gross Revenues" shall mean, for any Hotel Property or other high
quality real estate, all revenues and receipts of every kind derived from
operating such Hotel Property or other high quality real estate and parts
thereof, including, but not limited to: income (from both cash and credit
transactions), before commissions and discounts for prompt or cash payments,
from rentals or sales of rooms, stores, offices, meeting space, exhibit space or
sales space of every kind; license, lease and concession fees and rentals (not
including gross receipts of licensees, lessees and concessionaires); net income
from vending machines; health club membership fees; food and beverage sales;
sales of merchandise (other than proceeds from the sale of FF&E no longer
necessary to the operation of such Hotel Property or other high quality real
estate); service charges, to the extent not distributed to the employees at such
Hotel Property or other high quality real estate as, or in lieu of, gratuities;
and proceeds, if any, from business interruption or other loss of income
insurance; provided, however, that Gross Revenues shall not include the
           --------  -------
following: gratuities to employees of such Hotel Property or other high quality
real estate, federal, state or municipal excise, sales, use or similar taxes
collected directly from tenants, patrons or guests or included as part of the
sales price of any goods or services; insurance proceeds (other than proceeds
from business interruption or other loss of income insurance); condemnation
proceeds; or any proceeds from any sale of such Hotel Property or other high
quality real estate.

          "Hazardous Materials" shall mean (a) any petrochemical or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated biphenyls, and
radon gas; and (b) any chemicals, materials or substances defined as or included
in the definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "restricted hazardous materials," "extremely hazardous wastes,"
"restrictive hazardous wastes," "toxic substances," "toxic pollutants,"
"contaminants" or "pollutants," or words of similar meaning and regulatory
effect under any applicable Environmental Law.

          "Holdings" shall have the meaning provided in the first paragraph of
this Agreement.

          "Hotel" shall mean any Real Property (including Improvements thereon
and any retail, golf, tennis, spa or other resort amenities appurtenant thereto)
comprising an operating facility offering hotel or lodging services.

                                      -79-


          "Hotel Property" shall mean each Hotel owned or leased by Holdings or
any of its Subsidiaries (including the furniture, fixture and equipment
thereon), provided that the term "Hotel Property" shall not include any casino
          --------
or gaming hotel.

          "HPT Leases" shall mean (a) the Master Lease Agreement, dated as of
April 30, 1999, by and among Hospitality Properties Trust and HPTCY Properties
Trust, as landlord, and HMH HPT Courtyard LLC, as tenant, and (b) the Master
Lease Agreement, dated as of April 30, 1999, by and among HPTRI Properties
Trust, as landlord, and HMH HPT Residence Inn LLC, as tenant.

          "Improvements" shall mean all buildings, structures, fixtures, tenant
improvements and other improvements of every kind and description now or
hereafter located in or on or attached to any Real Property, including all
building materials, water, sanitary and storm sewers, drainage, electricity,
steam, gas, telephone and other utility facilities, parking areas, roads,
driveways, walks and other site improvements; and all additions and betterments
thereto and all renewals, substitutions and replacements thereof.

          "Indebtedness" shall mean, as to any Person, without duplication, (i)
all indebtedness (including principal, interest, fees and charges) of such
Person for borrowed money or for the deferred purchase price of property or
services, (ii) the maximum amount available to be drawn under all letters of
credit issued for the account of such Person and all unpaid drawings in respect
of such letters of credit, (iii) all Indebtedness of the types described in
clause (i), (ii), (iv), (v), (vi) or (vii) of this definition secured by any
Lien on any property owned by such Person, whether or not such Indebtedness has
been assumed by such Person, (iv) the aggregate amount required to be
capitalized under leases under which such Person is the lessee, (v) all
obligations of such Person to pay a specified purchase price for goods or
services, whether or not delivered or accepted, i.e., take-or-pay and similar
                                                ---
obligations, (vi) all Contingent Obligations of such Person, and (vii) all
obligations of such Person under any Interest Rate Protection Agreement or Other
Hedging Agreement or under any similar type of agreement or arrangement.

          "Insurance Premiums" shall have the meaning provided in Section
7.03(c).

          "Insurance Proceeds" shall mean all insurance proceeds, damages,
claims and rights of action and the right thereto under any insurance policies
relating to any portion of any Hotel Property or other Real Property.

          "Intangible Asset" shall mean, with respect to any Person, a
long-lived asset that is useful in the operations of such Person, that is not
directly used in revenue generation and is not held for sale, and is without
physical qualities, including but not limited to patents, copyrights, trademarks
and goodwill, but excluding capitalized costs associated with the acquisition of
brand names, franchises and trademarks, franchise agreements and management
agreements.

          "Interest Determination Date" shall mean, with respect to any
Eurodollar Loan, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.

          "Interest Period" shall have the meaning provided in Section 1.09.

                                      -80-


          "Interest Rate Protection Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement, interest
rate hedging agreement, interest rate floor agreement or other similar agreement
or arrangement.

          "Investment" shall have the meaning provided in Section 8.05.

          "Leasehold" of any Person shall mean all of the right, title and
interest of such Person as lessee or licensee in, to and under any lease or
license of land, improvements and/or fixtures.

          "Leverage Ratio" shall mean, at any time, the ratio of (x)
Consolidated Total Debt at such time to (y) Consolidated EBITDA for the Test
Period then last ended.

          "Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other) or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under the UCC or
any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).

          "Limited Partner Note" shall mean an existing unsecured note of the
Borrower issued prior to the Effective Date to certain limited partners of a
previous public partnership in which Holdings or a Subsidiary thereto was a
general partner, each of which Limited Partner Notes does not have any maturity
or amortization prior to December 15, 2005 (except in connection with the sale
of assets formerly owned, directly or indirectly, by the public partnership to
which such Limited Partner Note relates as contemplated by the definition of
"Net Sale Proceeds").

          "Loan" shall mean (i) each Term Loan and (ii) each Revolving Loan.

          "Look-Through Subsidiary" shall mean (i) a Wholly-Owned Subsidiary of
the Borrower that is not recognized as existing and is treated as part of the
Borrower for federal income tax purposes (such as, but not limited to, a single
member limited liability company or a partnership in which the sole partners are
the Borrower and/or other Look-Through Subsidiaries of the Borrower) or (ii)(A)
a Wholly-Owned Subsidiary of the Borrower that is treated as a partnership for
federal income tax purposes or (B) a Wholly-Owned Subsidiary of an entity
described in clause (ii)(A) of this definition that is not recognized as
existing and is treated as part of such entity described in such clause (ii)(A)
for federal income tax purposes.

          "Management Agreements" shall mean all agreements with respect to the
management of a Hotel Property or other Real Property owned or leased by
Holdings or any of its Subsidiaries. With respect to each Hotel Property
acquired after the Effective Date, the terms and conditions of the Management
Agreement with respect thereto shall be consistent with those contained in
Management Agreements as in effect on the Effective Date, with any material
differences to be reasonably approved by the Administrative Agent, and the
manager thereunder shall be a Permitted Facility Manager.

                                      -81-


          "Margin Reduction Period" shall mean each period which shall commence
on the date occurring after the Effective Date on which the respective officer's
certificates are delivered pursuant to Section 7.01(d) (together with the
related financial statements pursuant to Section 7.01(a) or (b), as the case may
be) and which shall end on the earlier of (i) the date of actual delivery of the
next officer's certificates pursuant to Section 7.01(d) (together with the
related financial statements) and (ii) the latest date on which the next
officer's certificates are required to be delivered pursuant to Section 7.01(d)
(together with the related financial statements).

          "Margin Stock" shall have the meaning provided in Regulation U.

          "Marriott Family Members" shall mean any of Alice Marriott (deceased),
J.W. Marriott, Jr., Richard E. Marriott, any brother or sister of J.W. Marriott,
Sr. (deceased), any children or grandchildren of any of the foregoing, any
spouses of any of the foregoing, or any trust or other entity established
primarily for the benefit of one or more of the foregoing.

          "Marriott International" shall mean Marriott International, Inc., a
Delaware corporation.

          "Material Adverse Effect" shall mean (i) a material adverse effect on
the business, operations, properties, assets, liabilities, condition (financial
or otherwise) or prospects of Holdings, Holdings and its Subsidiaries taken as a
whole, the Borrower or the Borrower and its Subsidiaries taken as a whole or
(ii) a material adverse effect (x) on the rights or remedies of the Banks or the
Administrative Agent hereunder or under any other Credit Document or (y) on the
ability of any Credit Party to perform its obligations to the Lenders or the
Administrative Agent hereunder or under any other Credit Document.

          "Maturity Date" shall mean August 5, 2003.

          "Minimum Borrowing Amount" shall mean (i) for Revolving Loans,
$5,000,000, and (ii) for Term Loans, $10,000,000.

          "Minimum Tangible Net Worth" shall mean, at any time, the sum of (i)
75% of Tangible Net Worth as of the Effective Date plus (ii) 75% of the
aggregate Net Equity Proceeds received by Holdings (to the extent contributed to
the Borrower) or the Borrower (without duplication) after the Effective Date in
connection with any issuance of Stock, Stock Equivalents or any OP Units, in
each case to any Person other than Holdings or any Subsidiary thereof.

          "Moody's" shall mean Moody's Investors Service, Inc.

          "Multiemployer Plan" shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA subject to Title IV of ERISA.

          "Naples Golf Resort" shall mean the Ritz-Carlton Hotel golf resort
currently under construction by the Borrower or a Subsidiary thereof in Naples,
Florida.

          "Naples Spa" shall mean the health spa located at the Borrower's
existing Ritz-Carlton Hotel in Naples, Florida.

                                      -82-


          "Net Debt Proceeds" shall mean, with respect to any incurrence of
Indebtedness for borrowed money, the cash proceeds (net of underwriting
discounts and commissions and other costs associated therewith) received by the
respective Person from the respective incurrence of such Indebtedness for
borrowed money.

          "Net Equity Proceeds" shall mean, with respect to each issuance or
sale of any equity by any Person or any capital contribution to such Person, the
cash proceeds (net of underwriting discounts and commissions and other costs
associated therewith) received by such Person from the respective sale or
issuance of its equity or from the respective capital contribution.

          "Net Insurance/Condemnation Proceeds" shall mean all Insurance
Proceeds on account of any Casualty Event to any Hotel Property or other Real
Property owned or leased by Holdings or any of its Subsidiaries or all
Condemnation Proceeds in respect of any Taking of any Hotel Property or any such
other Real Property, net of (i) the reasonable cost, if any, of recovering such
proceeds and of paying out such proceeds, including reasonable attorneys' fees
and costs allocable to inspecting the Work and the plans and specifications
therefor, and (ii) the amount of such Insurance Proceeds or Condemnation
Proceeds required to be used to repay any Indebtedness which is secured by the
respective property which is the subject of such Casualty Event or Taking.

          "Net Sale Proceeds" shall mean, for any Asset Sale, the gross cash
proceeds (including any cash received by way of deferred payment pursuant to a
promissory note, receivable or otherwise, but only as and when received from any
Asset Sale, net of (i) reasonable transaction costs (including, without
limitation, any underwriting, brokerage or other customary selling commissions
and reasonable legal, advisory and other fees and expenses, including title and
recording expenses, associated therewith), (ii) the amount of such gross cash
proceeds required to be used to repay any Indebtedness (other than the Loans,
the Senior Notes or any other Indebtedness secured pursuant to the Pledge and
Security Agreement) which is secured by the respective assets which were sold,
or, in the case of the Limited Partner Notes, the amount of such gross cash
proceeds which is required to be used to repay such Limited Partner Notes as a
result of such Asset Sale, (iii) the estimated marginal increase in income taxes
which will be payable by Holdings' consolidated group with respect to the fiscal
year in which the sale occurs as a result of such Asset Sale, and (iv) unless
taxes thereon are paid by Holdings or any of its Subsidiaries as set forth in
clause (iii) above in this definition, amounts required to be distributed as a
result of the realization of gains from the respective Asset Sale in order to
maintain or preserve Holdings' status as a real estate investment trust.

          "Non-Conforming Assets" shall mean various assets (principally
comprising partnership or other interests in Hotels which are not leased,
certain international hotels in which Holdings or its Subsidiaries own
interests, and certain FF&E relating to Hotels owned by the Borrower and its
Subsidiaries) which assets, if owned by the Borrower, could jeopardize Holdings'
status as a real estate investment trust or otherwise could cause significant
adverse tax consequences to Holdings and its Subsidiaries.

          "Non-Controlled Entity" shall mean any corporation, limited
partnership or limited liability corporation in which Holdings and its
Subsidiaries own at least 94% of the

                                      -83-


economic interests of such entity and no more than 6% of the voting rights or
controlling interests of such entity and whose assets consist primarily of
Non-Conforming Assets.

          "Non-Defaulting Bank" shall mean and include each Bank other than a
Defaulting Bank.

          "Note" shall mean each Term Note and each Revolving Note.

          "Notice of Borrowing" shall have the meaning provided in Section
1.03(a).

          "Notice of Conversion" shall have the meaning provided in Section
1.06.

          "Notice Office" shall mean the office of the Administrative Agent
located at 130 Liberty Street, New York, New York 10006, Attention: Gloria
Argueta, or such other office or person as the Administrative Agent may
hereafter designate in writing as such to the other parties hereto.

          "Obligations" shall mean all amounts owing to the Administrative
Agent, any Co-Arranger, the Collateral Agent or any Bank pursuant to the terms
of this Agreement or any other Credit Document.

          "Operating Lease" shall mean a lease or sublease between the Borrower
or any Subsidiary thereof, as lessor, and an Approved Lessee, as lessee, which
lease shall be reasonably satisfactory to the Administrative Agent and shall
provide for rent payments which provide an economic return to the lessor
thereunder generally comparable to the economic returns provided to the lessors
from the rent payments under the Operating Leases originally delivered to and
approved by the Administrative Agent prior to the Effective Date. With respect
to each Hotel Property acquired after the Effective Date, the terms and
conditions of the Operating Lease with respect thereto shall be consistent with
those contained in Operating Leases as in effect on the Effective Date, with any
material differences to be reasonably approved by the Administrative Agent, and
the lessee thereunder shall be an Approved Lessee.

          "OP Units" shall mean the partnership units of the Borrower.

          "Original Credit Agreement" shall have the meaning provided in the
first WHEREAS clause of this Agreement.

          "Other Hedging Agreements" shall mean any foreign exchange contracts,
currency swap agreements, commodity agreements or other similar agreements or
arrangements designed to protect against the fluctuations in currency values.

          "Payment Office" shall mean the office of the Administrative Agent
located at 130 Liberty Street, New York, New York 10006, or such other office as
the Administrative Agent may hereafter designate in writing as such to the other
parties hereto.

          "PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.

                                      -84-


          "Permitted Designated Investments" shall mean and include (i) any
equity investment in and/or loan to a Person (other than a Subsidiary of
Holdings or the Borrower) engaged primarily in the ownership of hotel properties
or other high quality real estate consistent with the quality of the Borrower's
and its Subsidiaries' existing portfolio of Hotel Properties or in a Related
Business, or (ii) any equity investment in and/or loan to a Subsidiary of the
Borrower that is not a Subsidiary Guarantor.

          "Permitted Facility Manager" shall mean, with respect to each Hotel
Property, Marriott International, a Wholly-Owned Subsidiary of Marriott
International, Interstate Hotels Corporation (or a successor thereto (so long as
such successor remains a first-class nationally recognized hotel management
company)), a Wholly-Owned Subsidiary of Interstate Hotels Corporation (or such
successor), Hyatt Corporation, a Wholly-Owned Subsidiary of Hyatt Corporation,
Four Seasons Hotel Limited, a Wholly-Owned Subsidiary of Four Seasons Hotel
Limited, Swissotel Management (US) LLC, Crestline, a Wholly-Owned Subsidiary of
Crestline or another first-class nationally recognized hotel management company
in good standing reasonably acceptable to the Administrative Agent.

          "Permitted Liens" shall have the meaning provided in Section 8.01.

          "Permitted Like-Kind Exchange Property" shall mean, with respect to
any sale of real estate property (and related personal property), one or more
other real estate assets (and related personal property) with a fair market
value reasonably equivalent to the property sold (either by itself or together
with cash paid for such assets), so long as (i) such other real estate assets
(and related personal property) is designated to be received as consideration
for such sale within 45 days of the consummation of such sale and (b) such other
real estate assets (and related personal property) are actually received by the
Borrower or its respective Subsidiary within 180 days of the consummation of
such sale.

          "Permitted Non-Recourse Indebtedness" shall mean, with respect to any
Specified Subsidiary, Indebtedness permitted to be incurred by such Specified
Subsidiary pursuant to Sections 8.04(i) and (vi), which Indebtedness (i) shall
be secured only by the assets of such Specified Subsidiary, (ii) shall be made
expressly non-recourse to Holdings and its other Subsidiaries (other than in
respect of a Customary Non-Recourse Exclusion) and (iii) shall have (A) a final
maturity date of not earlier than August 5, 2004 and (B) a remaining
amortization schedule based upon a schedule of no less than 20 years.

          "Permitted Pro Forma Adjustments" shall mean that the calculations
                     ---------
required by clauses (i), (ii) and (iii) of the definition of Credit Worthy
Person may be calculated on a pro forma basis to give effect to (A) any
incurrence, acquisition or assumption of Indebtedness with a principal amount of
$5,000,000 or more which has been incurred on or prior to the last day of the
applicable fiscal quarter of the respective Credit Worthy Person or in
connection with the acquisition of the specified asset or assets from the
respective Specified Subsidiary, in each case as if such Indebtedness had been
incurred, acquired or assumed on the first day of the applicable consecutive
four quarter period, and (B) any acquisition or sale of any assets with a fair
market value of $5,000,000 or more which was made on or prior to the last day of
the applicable fiscal quarter of the respective Credit Worthy Person or as part
of the acquisition of the specified asset or assets from the respective
Specified Subsidiary, in each case as if such acquisition or sale had

                                      -85-


occurred on the first day of the applicable consecutive four quarter period,
provided that the foregoing adjustments shall only be permitted if the Borrower
- --------
has delivered to the Administrative Agent with each set of financial information
required by clauses (v) and (vi) of the definition of Specified Credit Worthy
Supported Debt (which financial information shall contain in reasonable detail
such pro forma adjustments), a certificate (which may be relied upon by the
     --- -----
Administrative Agent and the Borrower) of the respective Credit Worthy Person's
independent certified public accountants (who must be of recognized national
standing and reasonably acceptable to the Administrative Agent) certifying as to
the accuracy of such Credit Worthy Person's pro forma adjustments in making the
                                            --- -----
required calculations.

          "Permitted REIT Subsidiary" shall mean a Wholly-Owned Subsidiary of
Holdings which engages in no significant business, has no material liabilities
and otherwise has no material assets other than (i) equity interests in other
Permitted REIT Subsidiaries, (ii) de minimis interests in Subsidiaries of the
Borrower, (iii) OP Units or (iv) Investments made pursuant to Section 8.05(x).

          "Permitted Sharing Arrangements" shall mean any contracts, agreements
or other arrangements between the Borrower and/or one or more of its
Subsidiaries and Holdings and/or one or more other Subsidiaries of Holdings,
pursuant to which such Persons share centralized services, establish joint
payroll arrangements, procure goods or services jointly or otherwise make
payments with respect to goods or services on a joint basis, or allocate
corporate expenses (other than taxes based on income) (provided that (i) such
                                                       --------
Permitted Sharing Arrangements are, in the determination of management of the
Borrower, the Subsidiary Guarantors or their Subsidiaries in the best interests
of the Borrower, the Subsidiary Guarantors or their Subsidiaries and (ii) the
liabilities of the Borrower, the Subsidiary Guarantors and their Subsidiaries
under such Permitted Sharing Arrangements are determined in good faith and on a
reasonable basis).

          "Permitted Tax Payments" shall mean payment of any liability of
Holdings, the Borrower or any of their respective Subsidiaries for all Federal,
state, local and foreign taxes, and other assessments of a similar nature
(whether imposed directly or through withholding), including any interest,
additions to tax, or penalties applicable thereto, imposed by any domestic or
foreign governmental authority responsible for the administration of any such
taxes.

          "Person" shall mean any individual, partnership, limited liability
company, joint venture, firm, corporation, association, trust or other
enterprise or any government or political subdivision or any agency, department
or instrumentality thereof.

          "Personal Property" shall mean, for any Person, to the extent owned by
such Person, all machinery, equipment, fixtures (including but not limited to
all heating, air conditioning, plumbing, lighting, communications, elevator
fixtures, inventory, and goods), inventory and articles of personal property and
accessions thereof and renewals, replacements thereof and substitutions,
therefor (including, but not limited to, beds, bureaus, chiffoniers, chests,
chairs, desks, lamps, mirrors, bookcases, tables, rugs, carpeting, drapes,
draperies, curtains, shades, venetian blinds, screens, paintings, hangings,
pictures, divans, couches, luggage carts, luggage racks, stools, sofas,
chinaware, linens, pillows, blankets, glassware, silverware, foodcarts,
cookware, dry cleaning facilities, dining room wagons, keys or other entry
systems, bars, bar fixtures, liquor and other drink dispensers, icemakers,
radios, television sets, intercom

                                      -86-


and paging equipment, electric and electronic equipment, dictating equipment,
private telephone systems, medical equipment, potted plants, heating, lighting
and plumbing fixtures, fire prevention and extinguishing apparatus, cooling and
air-conditioning systems, elevators, escalators, fittings, plants, apparatus,
stoves, ranges, refrigerators, laundry machines, tools, machinery, engines,
dynamos, motors, boilers, incinerators, switchboards, conduits, compressors,
vacuum cleaning systems, floor cleaning, waxing and polishing equipment, call
systems, brackets, electrical signs, bulbs, bells, ash and fuel, conveyors,
cabinets, lockers, shelving, spotlighting equipment, dishwashers, garbage
disposals, washers and dryers), other customary hotel equipment and other
tangible property of every kind and nature whatsoever, now or hereafter located
upon the Hotel Properties and the other Real Property owned or leased by
Holdings or any of its Subsidiaries, or appurtenances thereto, or usable in
connection with the present or future operation and occupancy of the Hotel
Properties and such other Real Property and all building equipment, materials
and supplies of any nature whatsoever, now or hereafter located upon the Hotel
Properties and such other Real Property.

          "Plan" shall mean any pension plan as defined in Section 3(2) of
ERISA, which is maintained or contributed to by (or to which there is an
obligation to contribute of) Holdings or any of its Subsidiaries or ERISA
Affiliates, and each such plan for the five-year period immediately following
the latest date on which Holdings or any of its Subsidiaries or ERISA Affiliates
maintained, contributed to or had an obligation to contribute to such plan.

          "Pledge and Security Agreement" shall have the meaning provided in
Section 4.05.

          "Pledge and Security Agreement Collateral" shall mean all "Collateral"
as defined in the Pledge and Security Agreement.

          "Pledged Securities" shall have the meaning provided in the Pledge and
Security Agreement.

          "Pledgor" shall have the meaning provided in the Pledge and Security
Agreement.

          "Policies" shall have the meaning provided in Section 7.03(c).

          "Prime Lending Rate" shall mean the rate which BTCo announces from
time to time as its prime lending rate, the Prime Lending Rate to change when
and as such prime lending rate changes. The Prime Lending Rate is a reference
rate and does not necessarily represent the lowest or best rate actually charged
to any customer. BTCo may make commercial loans or other loans at rates of
interest at, above or below the Prime Lending Rate.

          "Pro Forma Basis" shall mean, with respect to (i) any incurrence,
           --- -----
acquisition or assumption of Indebtedness, (ii) any acquisition or sale of a
Hotel Property or other assets with a fair market value of $5,000,000 or more
(or the equity interest of the Person or Persons owning such Hotel Property or
other assets), (iii) any substitution of a Hotel Property as permitted by
Section 8.01(iii) or (iv) any Crestline Exchange in each case occurring (or that
has occurred) on or after the Borrower's fiscal quarter beginning closest to
April 1, 1999, the calculation of the consolidated results of the Borrower and
its Subsidiaries otherwise determined in accordance with this Agreement as if
the respective Indebtedness, acquisition, sale, substitution or Crestline

                                      -87-


Exchanges (and all other Indebtedness incurred or assumed or other such
acquisitions, sales, substitutions or Crestline Exchanges effected during the
respective Calculation Period or thereafter and on or prior to the date of
determination) (each such date, a "Determination Date") had been effected on the
first day of the respective Calculation Period; provided that all such
calculations shall take into account the following assumptions:

          (i) pro forma effect shall be given to (1) any Indebtedness incurred
              --- -----
     subsequent to the end of the Calculation Period and prior to the
     Determination Date, (2) any Indebtedness incurred during such period to the
     extent such Indebtedness is outstanding at the Determination Date and (3)
     any Indebtedness to be incurred on the Determination Date, in each case as
     if such Indebtedness had been incurred on the first day of such Calculation
     Period and after giving effect to the application of the proceeds thereof
     (but excluding normal fluctuations in revolving Indebtedness incurred for
     working capital purposes and not to finance any acquisition or Investment);

          (ii) interest expense attributable to interest or dividends on any
     Indebtedness (whether existing or being incurred) bearing a floating
     interest rate shall be computed as if the rate in effect on the date of
     computation (taking into account any Interest Rate Protection Agreement
     applicable to such Indebtedness if such Interest Rate Protection Agreement
     has a remaining term in excess of 12 months) had been the applicable rate
     for the entire period;

          (iii) there shall be excluded from interest expense any interest
     expense related to any amount of Indebtedness that was outstanding during
     such Calculation Period or thereafter but that is not outstanding or is to
     be permanently repaid on the Determination Date; and

          (iv) pro forma effect shall be given to all sales and acquisitions of
               --- -----
     Hotel Properties and other assets with a fair market value of $5,000,000 or
     more (by excluding or including, as the case may be, the historical
     financial results for the respective Hotel Properties and/or such other
     assets) that occur during such Calculation Period or thereafter and on or
     prior to the Determination Date (including any Indebtedness assumed or
     acquired in connection therewith) as if they had occurred on the first day
     of such Calculation Period, provided that in connection with any such
     acquisitions, pro forma effect (for periods prior to such acquisition)
     shall be given to the management fees payable pursuant to the respective
     Management Agreement as if such management fees had been payable throughout
     the Calculation Period.

          "Projections" shall mean the Projections prepared by Holdings and
which are contained in the Confidential Information Memorandum, dated April
2000, and delivered to the Banks prior to the Effective Date.

          "Qualified Full Service Hotel" shall mean a Full Service Hotel of the
type described in clause (ii) of the definition thereof.

          "Qualified Insurer" shall have the meaning provided in Section
7.03(c).

                                      -88-


          "Qualified Preferred Stock" shall mean any preferred stock or other
preference shares of Holdings or the Borrower, so long as the terms of such
preferred stock or other preference shares (i) do not provide any collateral
security, (ii) do not provide any guaranty or other support by Holdings or any
of its Subsidiaries, (iii) do not require any cash dividends or cash
distributions (other than dividends or distributions payable when and if
declared by the Board of Directors of Holdings or the Borrower) or contain any
mandatory put, redemption, repayment, sinking fund or other similar provision in
each case occurring before August 5, 2004 (other than any such provision that
can be satisfied, at the election of Holdings or the Borrower, by the issuance
of OP Units or common stock or Qualified Preferred Stock of Holdings), (iv) do
not contain any covenants other than periodic reporting requirements, (v) do not
grant the holders thereof any voting rights expect for (x) voting rights
required to be granted to such holders under applicable law or listing
requirements and (y) limited customary voting rights on fundamental matters such
as mergers, consolidations, sales of all or substantially all of the assets of
Holdings, liquidations involving Holdings or dividend arrearages, and (vi) do
not provide for the conversion into, or the exchange for (unless at the sole
discretion of the issuer thereof), debt securities.

          "Quarterly Payment Date" shall mean the last Business Day of each
February, May, August and November.

          "QUIPs" shall mean the 63/4% Convertible Preferred Securities issued
by Host Financial Trust, a statutory business trust and a Subsidiary of
Holdings.

          "QUIPs Debt" shall mean the $567,000,000 aggregate principal amount of
63/4% convertible subordinated debentures due 2026 of Holdings, held by Host
Marriott Financial Trust, a statutory business trust and a Subsidiary of
Holdings.

          "RCRA" shall mean the Resource Conservation and Recovery Act, as the
same may be amended from time to time, 42 U.S.C. ss. 6901 et seq.

          "Real Property" of any Person shall mean all the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.

          "Register" shall have the meaning provided in Section 12.16.

          "Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.

          "Regulation T" shall mean Regulation T of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.

          "Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.

          "Regulation X" shall mean Regulation X of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.

                                     -89-


          "Related Businesses" shall mean any and all businesses (including real
estate related businesses) that in the good faith judgment of the Borrower's
Board of Directors are materially related to the businesses conducted by the
Borrower and its Subsidiaries on the Effective Date.

          "Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
disposing or migration into the environment.

          "Replaced Bank" shall have the meaning provided in Section 1.13.

          "Replacement Bank" shall have the meaning provided in Section 1.13.

          "Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Single Employer Plan other than those events as to which
the 30-day notice period is waived under subsection .22, .23, .25, .27 or .28 of
PBGC Regulation Section 4043.

          "Required Banks" shall mean Non-Defaulting Banks the sum of whose
outstanding Term Loans and Revolving Loan Commitments (or after the termination
thereof, outstanding Revolving Loans) represent at least 50.1% of the sum of all
outstanding Term Loans of Non-Defaulting Banks and the Total Revolving Loan
Commitment less the Revolving Loan Commitments of Defaulting Banks at such time
(or after the termination of the Total Revolving Loan Commitment, the then total
outstanding Revolving Loans of all Non-Defaulting Banks).

          "Returns" shall have the meaning provided in Section 6.09.

          "Revolving Loan" shall have the meaning provided in Section 1.01(b).

          "Revolving Loan Commitment" shall mean, for each Bank, the amount set
forth opposite such Bank's name in Schedule I directly below the column entitled
"Revolving Loan Commitment," as same may be (x) reduced from time to time
pursuant to Sections 2.02, 2.03 and/or 9, (y) increased from time to time
pursuant to Section 1.14 or (z) adjusted from time to time as a result of
assignments to or from such Bank pursuant to Section 1.13 or 12.04(b).

          "Revolving Note" shall have the meaning provided in Section 1.05(a).

          "S&P" shall mean Standard & Poor's Ratings Services.

          "SEC" shall have the meaning provided in Section 7.01(g).

          "Section 3.04(b)(ii) Certificate" shall have the meaning provided in
Section 3.04(b).

          "Secured Creditors" shall have the meaning provided in the Pledge and
Security Agreement.

          "Secured Indebtedness" shall mean any Indebtedness secured by a Lien
(other than a Lien under the Pledge and Security Agreement and a Lien in favor
of the Borrower or any Subsidiary Guarantor) upon the property of the Borrower
or any of its Subsidiaries.

                                     -90-


          "Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.

          "Senior Note Documents" shall mean the Senior Note Indenture, the
Senior Notes and each other document or agreement relating to the issuance of
the Senior Notes.

          "Senior Note Indenture" shall mean the Indenture, dated as of August
5, 1998, among the Borrower, the subsidiary guarantors named therein and Marine
Midland Bank as Trustee, in connection with the Senior Notes.

          "Senior Notes" shall mean each of the Borrower's (i) $500,000,000
7-7/8% Series A Senior Notes due August 2005, (ii) $1,200,000,000 7-7/8% Series
B Senior Notes due August 2008, (iii) $500,000,000 8.45% Series C Senior Notes
due December 2008, (iv) $300,000,000 8-3/8% Series E Senior Notes due February
2006, and (v) any other issue of senior notes issued pursuant to the Senior Note
Indenture.

          "Single Employer Plan" shall have the meaning set forth in Section
7.10.

          "Specified Assets" shall mean, without duplication, (i) Hotel
Properties, (ii) other real estate assets, (iii) income attributable to FF&E
Leases and non-real estate Related Businesses and (iv) cash interest income on
unrestricted cash.

          "Specified Bottom Guaranty" shall mean an unsecured guaranty given by
the Borrower in support of secured Indebtedness for borrowed money of an
Unconsolidated Entity in which the Borrower has an equity Investment so long as
(i) such guaranty only guaranties that the asset securing such Indebtedness
would be sold for a minimum amount, (ii) the amount of such guaranty does not
exceed 50% of the fair market value of such asset (as determined in good faith
by the Borrower) and (iii) such guaranty is only given by the Borrower to
preserve an outside limited partner's tax basis in such asset.

          "Specified Credit Worthy Supported Debt" shall mean that portion of
any Indebtedness incurred under a commercial mortgage-backed securities
transaction entered into by a Specified Subsidiary which is attributable to a
Hotel Property and any office properties associated therewith subject to such
transaction and which is subsequently sold to a Person which is not the Borrower
or a Subsidiary thereof so long as all of the following conditions are (and
remain) satisfied:

          (i) such portion of such Indebtedness remains on the consolidated
     balance sheet of the Borrower;

          (ii) such portion of such Indebtedness is guaranteed (and continues to
     be guaranteed) on an irrevocable and unconditional basis by a Credit Worthy
     Person, which guaranty shall be a guaranty of payment and not of
     collection;

          (iii) the Specified Credit Worthy Supported Debt is only created as
     part of the sale of a Hotel Property and any office properties associated
     therewith to a Credit Worthy Person;

                                     -91-


          (iv) the respective Credit Worthy Person (directly or indirectly) has
     an economic and equity interest of at least 25% in the asset so acquired
     (or in the Person owning such asset);

          (v) within 20 days after the creation of any Specified Credit Worthy
     Supported Debt, the Borrower shall notify the Administrative Agent thereof,
     which notice shall be accompanied by such financial statements and other
     supporting financial and other information as to the respective Credit
     Worthy Person sufficient to demonstrate to the Administrative Agent's
     reasonable satisfaction that such Credit Worthy Person meets the
     requirements of the definition thereof; and

          (vi) so long as such Specified Credit Worthy Supported Debt remains in
     effect, the Borrower shall deliver to the Administrative Agent, within 60
     days after the end of each of the first three fiscal quarters of the
     respective Credit Worthy Person and within 100 days after the end of each
     fiscal year of such Credit Worthy Person, such financial statements and
     other supporting financial and other information as to the respective
     Credit Worthy Person sufficient to demonstrate to the Administrative
     Agent's reasonable satisfaction that such Credit Worthy Person continues to
     meet the requirements of the definition thereof.

          "Specified Default" shall mean any Default under Sections 9.01, 9.03
(solely as a result of a failure to comply with Section 7.01(a), 7.01(b), or
7.01(d)), 9.05 or 9.09.

          "Specified Senior Indebtedness" shall mean Indebtedness permitted to
be issued by the Borrower pursuant to Section 8.04(vi) which (i) is either
issued (x) pursuant to an effective registration statement under the Securities
Act or Rule 144A thereunder or (y) in a private placement transaction to
institutional lenders, (ii) has no amortization, maturity, sinking fund or
similar payment requirement prior to January 4, 2004 and (iii) is otherwise
unsecured.

          "Specified Subsidiary" shall mean any Subsidiary of the Borrower so
long as such Subsidiary has no material assets other than Hotel Properties,
other Real Property and assets of a Related Business encumbered, or to be
encumbered, with Permitted Non-Recourse Indebtedness incurred pursuant to
Section 8.04(i) or (vi) or which has incurred Subsidiary Indebtedness.

          "Start Date" shall mean, with respect to any Margin Reduction Period,
the first day of such Margin Reduction Period.

          "Stock" shall mean shares of capital stock, beneficial or partnership
interests, participations or other equivalents (regardless of how designated) of
or in a corporation or equivalent entity, whether voting or non-voting, and
includes, without limitation, common stock and preferred stock.

          "Stock Equivalents" shall mean all securities (other than Stock)
convertible into or exchangeable for Stock and all warrants, options or other
rights to purchase or subscribe for any stock, whether or not presently
convertible, exchangeable or exercisable.

          "Subsidiaries Guaranty" shall have the meaning provided in Section
4.06.

                                     -92-


          "Subsidiary" shall mean, as to any Person, (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person, and (ii) any partnership, limited liability
company, association, joint venture or other entity (other than a corporation)
in which such Person and/or one or more Subsidiaries of such Person has more
than a 40% equity interest at the time and in which such Person or one or more
Subsidiaries of such Person is, at the time, a general partner, managing member
or similar Person and which is controlled by such Person in a manner sufficient
to permit its financial statements to be consolidated with the financial
statements of such Person in conformance with generally accepted accounting
principles and the financial statements of which are so consolidated, provided
that (x) the term Subsidiary shall include for all purposes of this Agreement
(A) in the case of Holdings, the Borrower and its Subsidiaries, and (B) in the
case of the Borrower, each Non-Controlled Entity (including its Subsidiaries for
this purpose) so long as the terms of the organizational documents of such
Non-Controlled Entity expressly require that at any time that an Event of
Default exists and is continuing, such Non-Controlled Entity will pay, and will
cause each of its Subsidiaries to pay, on a quarterly basis, the maximum amount
of cash Dividends that such Non-Controlled Entity is permitted to pay under
applicable law and under contractual restrictions contained in any agreement or
instrument evidencing, securing or relating to Indebtedness for borrowed money
to which such Non-Controlled Entity or any Subsidiary thereof is a party or by
which any of its assets are subject or bound and which is permitted to be
incurred under this Agreement (although each such Non-Controlled Entity thereof
may retain, and not pay as a Dividend, cash in an amount that such
Non-Controlled Entity reasonably determines is necessary to meet its current
liabilities and expenses as well as to make current anticipated Capital
Expenditures) and (y) the term Subsidiary shall not include One Broadway Hotel
Venture, Rockledge Pavilion LLC and Tecon Hotel Corporation in each case only so
long as (A) the only material asset of such Persons is the Hotel located at One
Broadway, St. Louis, Missouri, and related Personal Property or equity interests
in One Broadway Hotel Venture, and (B) there is no recourse, whether
contractual, by operation of law or otherwise, against Holdings or any its
Subsidiaries in respect of the Indebtedness and other liabilities of such
Persons (other than in respect of Customary Non-Recourse Exclusions).

          "Subsidiary Guarantor" shall mean each Subsidiary of Holdings (other
than the Borrower) or the Borrower which executes and delivers the Subsidiaries
Guaranty, or a counterpart thereof, as required by Sections 4.06 or 7.16 or any
other provision of this Agreement; provided that any such Subsidiary shall cease
                                   --------
to be a Subsidiary Guarantor at such time, if any, as it is released from the
Subsidiaries Guaranty in accordance with the express provisions hereof and
thereof.

          "Subsidiary Indebtedness" shall mean unsecured Indebtedness incurred
by a Subsidiary of the Borrower that is not a Subsidiary Guarantor (other than
unsecured Indebtedness incurred under Section 8.04(ii) or owed to a Facility
Manager under Section 8.04(v) or in connection with a renovation project of a
Hotel Property).

                                     -93-


          "Supermajority Banks" shall mean those Non-Defaulting Banks which
would constitute the Required Banks under, and as defined in, this Agreement if
the percentage "50.1%" contained therein were changed to "66-2/3%".

          "Taking" shall mean the taking or appropriation (including by deed in
lieu of condemnation or by voluntary sale or transfer under threat of
condemnation or while legal proceedings for condemnation are pending) of any
Hotel Property or other Real Property owned or leased by Holdings or any of its
Subsidiaries, or any part thereof or interest therein, for public or
quasi-public use under the power of eminent domain, by reason of any public
improvement or condemnation proceeding, or in any other manner or any damage or
injury or diminution in value through condemnation, inverse condemnation or
other exercise of the power of eminent domain. The term "Taken" used as a verb
has a correlative meaning.

          "Tangible Net Worth" shall mean, at any time, (a) the value of all OP
Units minus (b) the sum of all Intangible Assets (net of accumulated
amortization) of the Borrower and its Subsidiaries, each as shown on the
consolidated balance sheet of the Borrower as at such time; provided, however,
                                                            --------  -------
Tangible Net Worth shall be calculated without giving effect to any Operating
Lease termination fee paid in connection with the Crestline Exchanges to the
extent that the payment of any such termination fee would otherwise have reduced
Tangible Net Worth.

          "Taxable REIT Subsidiary" shall mean any Subsidiary of the Borrower
that is a "taxable REIT subsidiary" within the meaning of Section 856(l) of the
Code on or after January 1, 2001.

          "Taxes" shall have the meaning provided in Section 3.04(a).

          "Term Loan" shall have the meaning provided in Section 1.01(a).

          "Term Loan Commitment" shall mean, for each Bank, the amount set forth
opposite such Bank's name in Schedule I hereto directly below the column
entitled "Term Loan Commitment", as same may be terminated pursuant to Sections
2.03 and/or 9.

          "Term Note" shall have the meaning provided in Section 1.05(a).

          "Test Period" shall mean the four consecutive fiscal quarters of
Holdings then last ended, in each case taken as one accounting period.

          "Total Assets" shall mean, at any time, the sum of (i) Undepreciated
Real Estate Assets at such time and (ii) all other assets (excluding
intangibles) of the Borrower and its Subsidiaries determined on a consolidated
basis at such time (it being understood that the accounts of Subsidiaries which
are not Wholly-Owned Subsidiaries shall be consolidated with those of the
Borrower only to the extent of the Borrower's proportionate interest therein).

          "Total Commitment" shall mean, at any time, the sum of the Commitments
of each of the Banks.

          "Total Revolving Loan Commitment" shall mean, at any time, the sum of
the Revolving Loan Commitments of each of the Banks.

                                     -94-


          "Total Term Loan Commitment" shall mean, at any time, the sum of the
Term Loan Commitments of each of the Banks.

          "Total Unutilized Revolving Loan Commitment" shall mean, at any time,
an amount equal to the remainder of (x) the Total Revolving Loan Commitment then
in effect less (y) the aggregate principal amount of Revolving Loans outstanding
at such time.

          "Tranche" shall mean the respective facility and commitments utilized
in making Loans hereunder, with there being two separate Tranches, i.e., (i)
                                                                   ---
Term Loans and (ii) Revolving Loans.

          "Treasury Regulation" shall mean regulations promulgated under the
Code.

          "Type" shall mean the type of Loan determined with regard to the
interest option applicable thereto, i.e., whether a Base Rate Loan or a
                                    ----
Eurodollar Loan.

          "UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the relevant jurisdiction.

          "Unconsolidated Entity" shall mean, with respect to any Person, at any
date, any other Person in whom such Person holds an Investment, and whose
financial results would not be consolidated under generally accepted accounting
principles with the financial results of such Person on the consolidated
financial statements of such Person, if such statements were prepared as of such
date.

          "Undepreciated Real Estate Assets" shall mean, as of any date, the
cost (being the original cost to the Borrower or any its Subsidiaries plus
capital improvements) of real estate assets of the Borrower and its Subsidiaries
on such date, before depreciation and amortization of such real estate assets,
determined on a consolidated basis (it being understood that the accounts of
Subsidiaries which are not Wholly-Owned Subsidiaries shall be consolidated with
those of the Borrower only to the extent of the Borrower's proportionate
interest therein).

          "Unencumbered Consolidated EBITDA" shall mean, for any period, that
portion of Consolidated EBITDA for such period attributable to those Specified
Assets which are not encumbered by Liens securing Secured Indebtedness or which
are owned by Subsidiaries of the Borrower that have not incurred Subsidiary
Indebtedness.

          "Unencumbered EBITDA Ratio" shall mean, for any period, the ratio of
(x) Unencumbered Consolidated EBITDA for such period to (y) Consolidated EBITDA
for such period.

          "Unfunded Current Liability" of any Plan shall mean the amount, if
any, by which the actuarial present value of the accumulated plan benefits under
such Plan as of the close of its most recent plan year exceeds the fair market
value of the assets allocable thereto, each determined in accordance with
Statement of Financial Accounting Standards No. 35, based upon the actuarial
assumptions used by such Plan's actuary in the most recent annual valuation of
such Plan.

                                     -95-


          "United States" and "U.S." shall each mean the United States of
America.

          "Unsecured Consolidated Interest Expense", shall mean, for any period,
that portion of Consolidated Interest Expense attributable to Indebtedness that
is not Secured Indebtedness or is not Subsidiary Indebtedness.

          "Unsecured Interest Coverage Ratio" shall mean, for any period, the
ratio of (x) Unencumbered Consolidated EBITDA for such period to (y) Unsecured
Consolidated Interest Expense for such period.

          "Unutilized Revolving Loan Commitment" with respect to any Bank at any
time shall mean such Bank's Revolving Loan Commitment at such time, if any, less
the aggregate outstanding principal amount of all Revolving Loans made by such
Bank at such time.

          "Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock (other than director's qualifying
shares) is at the time owned by such Person and/or one or more Wholly-Owned
Subsidiaries of such Person and (ii) any partnership, limited liability company,
association, joint venture or other entity in which such Person and/or one or
more Wholly-Owned Subsidiaries of such Person has a 100% equity interest at such
time (it being understood that a Subsidiary of the Borrower that otherwise meets
the requirements of a Wholly-Owned Subsidiary set forth above shall still
constitute a Wholly-Owned Subsidiary of the Borrower even though Holdings or a
Permitted REIT Subsidiary owns a de minimis equity interest in such Subsidiary).

          SECTION 11. The Administrative Agent.
                      ------------------------

          11.01 Appointment. The Banks hereby designate BTCo as Administrative
                -----------
Agent (for purposes of this Section 11, the term "Administrative Agent" shall
include BTCo in its capacity as Collateral Agent pursuant to the Pledge and
Security Agreement) to act as specified herein and in the other Credit
Documents. Each Bank hereby irrevocably authorizes, and each holder of any Note
by the acceptance of such Note shall be deemed irrevocably to authorize, the
Administrative Agent to take such action on its behalf under the provisions of
this Agreement, the other Credit Documents and any other instruments and
agreements referred to herein or therein and to exercise such powers and to
perform such duties hereunder and thereunder as are specifically delegated to or
required of the Administrative Agent by the terms hereof and thereof and such
other powers as are reasonably incidental thereto. The Administrative Agent may
perform any of its duties hereunder by or through its respective officers,
directors, agents, employees or affiliates.

          11.02 Nature of Duties. The Administrative Agent shall not have any
                ----------------
duties or responsibilities except those expressly set forth in this Agreement
and in the other Credit Documents. Neither the Administrative Agent nor any of
its respective officers, directors, agents, employees or affiliates shall be
liable for any action taken or omitted by it or them hereunder or under any
other Credit Document or in connection herewith or therewith, unless caused by
its or their gross negligence or willful misconduct (as determined by a court of
competent jurisdiction in a final and non-appealable decision). The duties of
the Administrative Agent shall be mechanical and administrative in nature; the
Administrative Agent shall not have

                                     -96-


by reason of this Agreement or any other Credit Document a fiduciary
relationship in respect of any Bank or the holder of any Note; and nothing in
this Agreement or any other Credit Document, expressed or implied, is intended
to or shall be so construed as to impose upon the Administrative Agent
obligations in respect of this Agreement or any other Credit Document except as
expressly set forth herein or therein.

          11.03 Lack of Reliance on the Administrative Agent. Independently and
                --------------------------------------------
without reliance upon the Administrative Agent, each Bank and the holder of each
Note, to the extent it deems appropriate, has made and shall continue to make
(i) its own independent investigation of the financial condition and affairs of
each Credit Party and each of their Subsidiaries in connection with the making
and the continuance of the Loans and the taking or not taking of any action in
connection herewith and (ii) its own appraisal of the creditworthiness of each
Credit Party and each of its Subsidiaries and, except as expressly provided in
this Agreement, the Administrative Agent shall not have any duty or
responsibility, either initially or on a continuing basis, to provide any Bank
or the holder of any Note with any credit or other information with respect
thereto, whether coming into its possession before the making of the Loans or at
any time or times thereafter. The Administrative Agent shall not be responsible
to any Bank or the holder of any Note for any recitals, statements, information,
representations or warranties herein or in any document, certificate or other
writing delivered in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, perfection, collectibility, priority or
sufficiency of this Agreement or any other Credit Document or the financial
condition of any Credit Party or any of its Subsidiaries or be required to make
any inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement or any other Credit Document, or the
financial condition of any Credit Party or any of its Subsidiaries or the
existence or possible existence of any Default or Event of Default.

          11.04 Certain Rights of the Administrative Agent. If the
                ------------------------------------------
Administrative Agent shall request instructions from the Required Banks with
respect to any act or action (including failure to act) in connection with this
Agreement or any other Credit Document, the Administrative Agent shall be
entitled to refrain from such act or taking such action unless and until the
Administrative Agent shall have received instructions from the Required Banks
or, if required by Section 12.12, the Supermajority Banks or all of the Banks,
as the case may be; and the Administrative Agent shall not incur liability to
any Person by reason of so refraining. Without limiting the foregoing, no Bank
or the holder of any Note shall have any right of action whatsoever against the
Administrative Agent as a result of the Administrative Agent acting or
refraining from acting hereunder or under any other Credit Document in
accordance with the instructions of the Required Banks or, if required by
Section 12.12, the Supermajority Banks or all of the Banks, as the case may be.

          11.05 Reliance. The Administrative Agent shall be entitled to rely,
                --------
and shall be fully protected in relying, upon any note, writing, resolution,
notice, statement, certificate, telex, teletype or telecopier message,
cablegram, radiogram, order or other document or telephone message signed, sent
or made by any Person that the Administrative Agent believed to be the proper
Person, and, with respect to all legal matters pertaining to this Agreement and
any other Credit Document and its duties hereunder and thereunder, upon advice
of counsel selected by the Administrative Agent.

                                     -97-


          11.06 Indemnification. To the extent the Administrative Agent is not
                ---------------
reimbursed and indemnified by the Borrower, the Banks will reimburse and
indemnify the Administrative Agent, in proportion to its "percentage" as used in
determining the Required Banks, for and against any and all liabilities,
obligations, losses, damages, penalties, claims, actions, judgments, costs,
expenses or disbursements of whatsoever kind or nature which may be imposed on,
asserted against or incurred by the Administrative Agent in performing its
respective duties hereunder or under any other Credit Document, in any way
relating to or arising out of this Agreement or any other Credit Document;
provided that no Bank shall be liable for any portion of such liabilities,
- --------
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Administrative Agent's gross
negligence or willful misconduct (as determined by a court of competent
jurisdiction in a final and non-appealable decision).

          11.07 The Administrative Agent in its Individual Capacity. With
                ---------------------------------------------------
respect to its obligation to make Loans under this Agreement, the Administrative
Agent shall have the rights and powers specified herein for a "Bank" and may
exercise the same rights and powers as though it were not performing the duties
specified herein; and the term "Banks," "Required Banks," "holders of Notes" or
any similar terms shall, unless the context clearly otherwise indicates, include
the Administrative Agent in its individual capacity. The Administrative Agent
may accept deposits from, lend money to, make equity investments in, and
generally engage in any kind of banking, trust or other business with, any
Credit Party or any Affiliate of any Credit Party as if they were not performing
the duties specified herein, and may accept fees and other consideration from
the Borrower or any other Credit Party for services in connection with this
Agreement and otherwise without having to account for the same to the Banks.

          11.08 Holders. The Administrative Agent may deem and treat the payee
                -------
of any Note as the owner thereof for all purposes hereof unless and until a
written notice of the assignment, transfer or endorsement thereof, as the case
may be, shall have been filed with the Administrative Agent. Any request,
authority or consent of any Person who, at the time of making such request or
giving such authority or consent, is the holder of any Note shall be conclusive
and binding on any subsequent holder, transferee, assignee or endorsee, as the
case may be, of such Note or of any Note or Notes issued in exchange therefor.

          11.09 Resignation by the Administrative Agent; Removal of the
                -------------------------------------------------------
Administrative Agent. (a) The Administrative Agent may resign from the
- --------------------
performance of all its functions and duties hereunder and/or under the other
Credit Documents at any time by giving 30 Business Days' prior written notice to
the Borrower and the Banks. Such resignation shall take effect upon the
appointment of a successor Administrative Agent pursuant to clauses (b) and (c)
below or as otherwise provided below.

          (b) Upon any such notice of resignation by the Administrative Agent,
the Required Banks shall appoint a successor Administrative Agent hereunder or
thereunder who shall be a commercial bank or trust company reasonably acceptable
to the Borrower.

          (c) If a successor Administrative Agent shall not have been so
appointed within such 30 Business Day period, the Administrative Agent, with the
consent of the Borrower, shall then appoint a successor Administrative Agent who
shall serve as Administrative Agent

                                     -98-


hereunder or thereunder until such time, if any, as the Required Banks appoint a
successor Administrative Agent as provided above.

          (d) If no successor Administrative Agent has been appointed pursuant
to clause (b) or (c) above by the 35th Business Day after the date such notice
of resignation was given by the Administrative Agent, the Administrative Agent's
resignation shall become effective and the Banks shall thereafter perform all
the duties of the Administrative Agent hereunder and/or under any other Credit
Document until such time, if any, as the Required Banks appoint a successor
Administrative Agent as provided above.

          (e) In addition, the Required Banks shall have the right to remove the
Administrative Agent and appoint a successor Administrative Agent who shall be a
commercial bank or trust company reasonably acceptable to the Borrower in the
event that the Administrative Agent has been grossly negligent or has willfully
misconducted itself in performing its functions and duties under this Agreement
or any other Credit Document (as determined by a court of competent jurisdiction
in a final and non-appealable decision).

          SECTION 12. Miscellaneous.
                      -------------

          12.01 Payment of Expenses, etc. The Borrower agrees that it shall: (i)
                -------------------------
whether or not the transactions contemplated herein are consummated, pay all
reasonable out-of-pocket costs and expenses of the Administrative Agent
(including, without limitation, the reasonable fees and disbursements of White &
Case LLP, local counsel and environmental, engineering, real estate and
insurance independent consultants retained by the Administrative Agent) in
connection with the preparation, execution, delivery and performance of this
Agreement and the other Credit Documents and the documents and instruments
referred to herein and therein, any amendment, waiver or consent relating hereto
or thereto, of the Administrative Agent in connection with its syndication
efforts with respect to this Agreement and, upon the occurrence and during the
continuance of an Event of Default, the reasonable costs and expenses of each of
the Banks in connection with the enforcement of this Agreement and the other
Credit Documents and the documents and instruments referred to herein and
therein (including, without limitation, the reasonable fees and disbursements of
counsel for the Administrative Agent and, following an Event of Default, for
each of the Banks) (it being understood that the provisions of this clause (i)
does not include the normal administrative charges of the Administrative Agent
in administering the Loans (which amounts are included in a separate letter with
the Administrative Agent)); (ii) pay and hold each of the Banks harmless from
and against any and all present and future stamp, excise and other similar taxes
with respect to the foregoing matters and save each of the Banks harmless from
and against any and all liabilities with respect to or resulting from any delay
or omission (other than to the extent attributable to such Bank) to pay such
taxes; and (iii) indemnify the Administrative Agent and each Bank, and each of
their respective officers, directors, employees, representatives, affiliates and
agents from and hold each of them harmless against any and all liabilities,
obligations (including removal or remedial actions), losses, damages, penalties,
claims, actions, judgments, suits, costs, expenses and disbursements (including
reasonable attorneys' and consultants' fees and disbursements) incurred by,
imposed on or assessed against any of them as a result of, or arising out of, or
in any way related to, or by reason of, (a) any investigation, litigation or
other proceeding (whether or not the Administrative Agent or any Bank is a party
thereto) related to the entering into and/or performance of this

                                     -99-


Agreement or any other Credit Document or the use or proposed use of the
proceeds of any Loans hereunder or the consummation of any transactions
contemplated herein or in any other Credit Document or the exercise of any of
their rights or remedies provided herein or in the other Credit Documents, or
(b) the actual or alleged presence of Hazardous Materials in the air, surface
water or groundwater or on the surface or subsurface of any Real Property owned,
leased or at any time operated by Holdings or any of its Subsidiaries, the
Release, generation, storage, transportation, handling or disposal of Hazardous
Materials at any location, whether or not owned, leased or operated by Holdings
or any of its Subsidiaries, the non-compliance of any Real Property with
foreign, federal, state and local laws, regulations, and ordinances (including
applicable permits thereunder) applicable to any Real Property, or any
Environmental Claim asserted against Holdings, any of its Subsidiaries or any
Real Property owned, leased or at any time operated by Holdings or any of its
Subsidiaries, including, in each case, without limitation, the reasonable fees
and disbursements of counsel and other consultants incurred in connection with
any such investigation, litigation or other proceeding (but excluding any
losses, liabilities, claims, damages or expenses to the extent incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified (as determined by a court of competent jurisdiction in a final and
non-appealable decision)). To the extent that the undertaking to indemnify, pay
or hold harmless the Administrative Agent or any Bank set forth in the preceding
sentence may be unenforceable because it is violative of any law or public
policy, the Borrower shall make the maximum contribution to the payment and
satisfaction of each of the indemnified liabilities which is permissible under
applicable law.

          12.02 Right of Setoff. In addition to any rights now or hereafter
                ---------------
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence and during the continuance of an Event of
Default, each Bank is hereby authorized at any time or from time to time,
without presentment, demand, protest or other notice of any kind to any Credit
Party or to any other Person, any such notice being hereby expressly waived, to
set off and to appropriate and apply any and all deposits (general or special)
and any other Indebtedness at any time held or owing by such Bank (including,
without limitation, by branches and agencies of such Bank wherever located or by
any Person controlling such Bank) to or for the credit or the account of any
Credit Party against and on account of the Obligations and liabilities of such
Credit Party to such Bank under this Agreement or under any of the other Credit
Documents, including, without limitation, all interests in Obligations purchased
by such Bank pursuant to Section 12.06(b), and all other claims of any nature or
description arising out of or connected with this Agreement or any other Credit
Document, irrespective of whether or not such Bank shall have made any demand
hereunder and although said Obligations, liabilities or claims, or any of them,
shall be contingent or unmatured.

          12.03 Notices. Except as otherwise expressly provided herein, all
                -------
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered: if to the Borrower, at
the Borrower's address specified opposite its signature below; if to Holdings,
at Holdings' address specified opposite its signature below; if to any Bank, at
its address specified opposite its name on Schedule II; and if to the
Administrative Agent, at the Notice Office; or, as to the Borrower, the
Administrative Agent, at such other address as shall be designated by such party
in a written notice to the other parties hereto and, as to each Bank, at such
other address as shall be designated by such Bank in a written notice to the
Borrower and

                                     -100-


the Administrative Agent. All such notices and communications shall, when
mailed, telegraphed, telexed, telecopied, or cabled or sent by overnight
courier, be effective when deposited in the mails, delivered to the telegraph
company, cable company or overnight courier, as the case may be, or sent by
telex or telecopier, except that notices and communications to the
Administrative Agent and the Borrower shall not be effective until received by
the Administrative Agent or the Borrower, as the case may be (or when the
addressee refuses to accept delivery).

          12.04 Benefit of Agreement. (a) This Agreement shall be binding upon
                --------------------
and inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided, however, that neither Holdings nor the
                               --------  -------
Borrower may assign or transfer any of its rights, obligations or interest
hereunder or under any other Credit Document without the prior written consent
of the Banks and, provided further, that, although any Bank may transfer, assign
                  -------- -------
or grant participations in its rights hereunder, such Bank shall remain a "Bank"
for all purposes hereunder (and may not transfer or assign all or any portion of
its Commitments hereunder except as provided in Section 12.04(b)) and the
transferee, assignee or participant, as the case may be, shall not constitute a
"Bank" hereunder and, provided further, that no Bank shall transfer or grant any
                      -------- -------
participation under which the participant shall have rights to approve any
amendment to or waiver of this Agreement or any other Credit Document except to
the extent such amendment or waiver would (i) extend the final scheduled
maturity of any Loan or Note in which such participant is participating, or
reduce the rate or extend the time of payment of interest or Fees thereon
(except in connection with a waiver of applicability of any post-default
increase in interest rates) or reduce the principal amount thereof (it being
understood that any amendment or modification to the financial definitions in
this Agreement or to Section 12.07(a) shall not constitute a reduction in any
rate of interest or Fees for purposes of this clause (i), so long as the primary
purpose of the respective amendments or modifications to the financial
definitions or to Section 12.07(a) was not to reduce the interest or Fees
payable hereunder), or increase the amount of the participant's participation
over the amount thereof then in effect (it being understood that a waiver of any
Default or Event of Default or of a mandatory reduction in the Total Commitment
shall not constitute a change in the terms of such participation, and that an
increase in any Commitment or Loan shall be permitted without the consent of any
participant if the participant's participation is not increased as a result
thereof), (ii) consent to the assignment or transfer by the Borrower of any of
its rights and obligations under this Agreement or (iii) release all or
substantially all of the Pledge and Security Agreement Collateral under the
Pledge and Security Agreement (except as expressly provided in the Credit
Documents) supporting the Loans hereunder in which such participant is
participating. In the case of any such participation, the participant shall not
have any rights under this Agreement or any of the other Credit Documents (the
participant's rights against such Bank in respect of such participation to be
those set forth in the agreement executed by such Bank in favor of the
participant relating thereto) and all amounts payable by the Borrower hereunder
shall be determined as if such Bank had not sold such participation.

          (b) Notwithstanding the foregoing, any Bank (or any Bank together with
one or more other Banks) may (x) assign all or a portion of its Revolving Loan
Commitment (and related outstanding Obligations hereunder) and/or its
outstanding Term Loans to (i) its parent company and/or any affiliate of such
Bank which is at least 50% owned by such Bank or its parent company or to one or
more Banks or (ii) in the case of any Bank that is a fund that invests

                                     -101-


in loans, any other fund that invests in loans and is managed or advised by the
same investment advisor of such Bank or by an Affiliate of such investment
advisor or (y) assign all or a portion of all of the assigning Bank's Revolving
Loan Commitment (and related outstanding Obligations hereunder) and/or
outstanding Term Loans to an Eligible Transferee, and, in the case of a partial
assignment of such Revolving Loan Commitment and/or outstanding Term Loans, such
assignment shall be in a minimum amount of $5,000,000 or such lesser amount as
is acceptable to the Administrative Agent (and the assignor shall maintain a
minimum amount of $5,000,000 for its own account unless the assignor shall
assign its entire interest), and all assignees shall become a party to this
Agreement as a Bank by execution of an Assignment and Assumption Agreement,
provided that (i) at such time Schedule I shall be deemed modified to reflect
- --------
the Revolving Loan Commitments and/or outstanding Term Loans, as the case may
be, of such new Bank and of the existing Banks, (ii) upon surrender of the old
Notes, if any, new Notes will be issued to such new Bank and to the assigning
Bank (to the extent requested by such Banks), such new Notes to be in conformity
with the requirements of Section 1.05 (with appropriate modifications) to the
extent needed to reflect the revised Revolving Loan Commitments and/or
outstanding Terms Loans, as the case may be, (iii) the consent of the
Administrative Agent shall be required in connection with any such assignment
pursuant to clause (y) above (which consent shall not be unreasonably withheld)
and (iv) the Administrative Agent shall receive at the time of each such
assignment, from the assigning or assignee Bank, the payment of a non-refundable
assignment fee of $3,500 and, provided further, that such transfer or assignment
                              -------- -------
will not be effective until recorded by the Administrative Agent on the Register
pursuant to Section 12.16. The Administrative Agent will promptly give the
Borrower notice of any assignment to an Eligible Transferee pursuant to clause
(y) of the first sentence of this Section 12.04(b), although the failure to give
any such notice shall not affect such assignment or result in any liability by
the Administrative Agent. To the extent of any assignment pursuant to this
Section 12.04(b), the assigning Bank shall be relieved of its obligations
hereunder with respect to its assigned Revolving Loan Commitments and/or its
assigned outstanding Term Loans. At the time of each assignment pursuant to this
Section 12.04(b) to a Person which is not already a Bank hereunder and which is
not a United States person (as such term is defined in Section 7701(a)(30) of
the Code) for Federal income tax purposes, the respective assignee Bank shall
provide to the Borrower and the Administrative Agent the appropriate Internal
Revenue Service Forms (and, if applicable a Section 3.04(b)(ii) Certificate)
described in Section 3.04(b). To the extent that an assignment of all or any
portion of a Bank's Revolving Loan Commitments and related outstanding
Obligations and/or outstanding Term Loans pursuant to Section 1.13 or this
Section 12.04(b) would, at the time of such assignment, result in increased
costs under Section 1.10, 1.11 or 3.04 from those being charged by the
respective assigning Bank prior to such assignment, then the Borrower shall not
be obligated to pay or reimburse such increased costs (although the Borrower
shall be obligated to pay any other increased costs of the type described above
resulting from changes after the date of the respective assignment).

          (c) Nothing in this Agreement shall prevent or prohibit any Bank from
pledging its Loans and Notes hereunder to a Federal Reserve Bank in support of
borrowings made by such Bank from such Federal Reserve Bank and, with the
consent of the Administrative Agent, any Bank which is a fund may pledge all or
any portion of its Loans and Notes to its trustee in support of its obligations
to its trustee. No pledge pursuant to this clause (c) shall release the
transferor Bank from any of its obligations hereunder.

                                     -102-


          12.05 No Waiver; Remedies Cumulative. No failure or delay on the part
                ------------------------------
of the Administrative Agent or any Bank or any holder of any Note in exercising
any right, power or privilege hereunder or under any other Credit Document and
no course of dealing between the Borrower or any other Credit Party and the
Administrative Agent or any Bank or the holder of any Note shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or under any other Credit Document preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights, powers and remedies herein or in any other
Credit Document expressly provided are cumulative and not exclusive of any
rights, powers or remedies which the Administrative Agent or any Bank or the
holder of any Note would otherwise have. No notice to or demand on any Credit
Party in any case shall entitle any Credit Party to any other or further notice
or demand in similar or other circumstances or constitute a waiver of the rights
of the Administrative Agent or any Bank or the holder of any Note to any other
or further action in any circumstances without notice or demand.

          12.06 Payments Pro Rata. (a) Except as otherwise provided in this
                -----------------
Agreement, the Administrative Agent agrees that promptly after its receipt of
each payment from or on behalf of the Borrower in respect of any Obligations
hereunder, it shall distribute such payment to the Banks (other than any Bank
that has consented in writing to waive its pro rata share of any such payment)
                                           --- ----
pro rata based upon their respective shares, if any, of the Obligations with
- --- ----
respect to which such payment was received.

          (b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise), which is applicable to the payment of the principal of, or interest
on, the Loans or Commitment Commission, of a sum which with respect to the
related sum or sums received by other Banks is in a greater proportion than the
total of such Obligation then owed and due to such Bank bears to the total of
such Obligation then owed and due to all of the Banks immediately prior to such
receipt, then such Bank receiving such excess payment shall purchase for cash
without recourse or warranty from the other Banks an interest in the Obligations
of the respective Credit Party to such Banks in such amount as shall result in a
proportional participation by all the Banks in such amount; provided that if all
                                                            --------
or any portion of such excess amount is thereafter recovered from such Bank,
such purchase shall be rescinded and the purchase price restored to the extent
of such recovery, but without interest.

          (c) Notwithstanding anything to the contrary contained herein, the
provisions of the preceding Sections 12.06(a) and (b) shall be subject to the
express provisions of this Agreement which require, or permit, differing
payments to be made to Non-Defaulting Banks as opposed to Defaulting Banks.

          12.07 Calculations; Computations. (a) The financial statements to be
                --------------------------
furnished to the Banks pursuant hereto shall be made and prepared in accordance
with generally accepted accounting principles in the United States consistently
applied throughout the periods involved (except as set forth in the notes
thereto or as otherwise disclosed in writing by the Borrower to the Banks);
provided that, except as otherwise specifically provided herein, all
- --------
computations used in determining compliance with Sections 8.07 through 8.12,
inclusive, shall utilize

                                     -103-


accounting principles and policies in conformity with those used to prepare the
historical financial statements referred to in Section 6.05(a). Notwithstanding
anything to the contrary contained in this Agreement, to the extent that
Holdings has any Indebtedness, liabilities, operating expenses or taxes, such
Indebtedness, liabilities, operating expenses or taxes, as applicable, shall be
treated as obligations of the Borrower for the purposes of calculating
compliance with the financial covenants contained in Sections 8.08 through 8.12,
inclusive, as well as for purposes of determining the Applicable Margin.

          (b) All computations of interest, Commitment Commission and other Fees
hereunder shall be made on the basis of a year of 360 days for the actual number
of days (including the first day but excluding the last day) occurring in the
period for which such interest, Commitment Commission or other Fees are payable.

          12.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY
                ----------------------------------------------------------------
TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND
- -----
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT
MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES
FOR THE SOUTHERN DISTRICT OF NEW YORK, IN EACH CASE WHICH ARE LOCATED IN THE
CITY OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF
HOLDINGS AND THE BORROWER HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. EACH OF HOLDINGS AND THE BORROWER HEREBY FURTHER IRREVOCABLY
WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK JURISDICTION OVER SUCH CREDIT PARTY,
AND AGREES NOT TO PLEAD OR CLAIM, IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT
TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN ANY OF THE AFORESAID
COURTS, THAT ANY SUCH COURT LACKS JURISDICTION OVER SUCH CREDIT PARTY. EACH OF
HOLDINGS AND THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
SUCH CREDIT PARTY AT ITS ADDRESS SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH
SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. EACH OF HOLDINGS AND THE
BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND
FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR
PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT THAT SERVICE
OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT
THE RIGHT OF THE ADMINISTRATIVE AGENT, ANY BANK OR THE HOLDER OF ANY NOTE TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST HOLDINGS OR THE BORROWER IN ANY OTHER
JURISDICTION.

                                     -104-


          (b) EACH OF HOLDINGS AND THE BORROWER HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF
THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN
CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD
OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

          (c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

          12.09 Counterparts. This Agreement may be executed in any number of
                ------------
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Administrative Agent.

          12.10 Effectiveness. This Agreement shall become effective on the date
                -------------
(the "Effective Date") on which (i) Holdings, the Borrower, the Administrative
Agent and each of the Banks set forth on Schedule I shall have signed a
counterpart hereof (whether the same or different counterparts) and shall have
delivered the same to the Administrative Agent at the Notice Office or, in the
case of the Banks, shall have given to the Administrative Agent telephonic
(confirmed in writing) or written notice at such office that the same has been
signed and mailed to it, and (ii) the conditions contained in Section 4 are met
to the satisfaction of the Administrative Agent and the Required Banks. Unless
the Administrative Agent has received actual notice from any Bank that the
conditions described in clause (ii) of the preceding sentence have not been met
to its satisfaction, upon the satisfaction of the condition described in clause
(i) of the immediately preceding sentence and upon the Administrative Agent's
good faith determination that the conditions described in clause (ii) of the
immediately preceding sentence have been met, then the Effective Date shall have
deemed to have occurred, regardless of any subsequent determination that one or
more of the conditions thereto had not been met (although the occurrence of the
Effective Date shall not release the Borrower from any liability for failure to
satisfy one or more of the applicable conditions contained in Section 4). The
Administrative Agent will give Holdings, the Borrower and each Bank prompt
written notice of the occurrence of the Effective Date.

          12.11 Headings Descriptive. The headings of the several sections and
                --------------------
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.

          12.12 Amendment or Waiver; etc. (a) Neither this Agreement nor any
                -------------------------
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or

                                     -105-


terminated unless such change, waiver, discharge or termination is in writing
signed by the respective Credit Parties party thereto and the Required Banks,
provided that no such change, waiver, discharge or termination shall, without
- --------
the consent of each Bank having Obligations being directly affected thereby
(other than a Defaulting Bank), (i) extend the final scheduled maturity of any
Loan or Note, or reduce the rate or extend the time of payment of interest or
Fees thereon, or reduce the principal amount thereof (except to the extent
repaid in cash) (it being understood that any amendment or modification to the
financial definitions in this Agreement or to Section 12.07(a) shall not
constitute a reduction in any rate of interest or Fees for purposes of this
clause (i), so long as the primary purpose of the respective amendments or
modifications to the financial definitions or to Section 12.07(a) was not to
reduce the interest or Fees payable hereunder), (ii) release all or
substantially all of the Pledge and Security Agreement Collateral or Subsidiary
Guarantors from the Subsidiaries Guaranty (except (in either case) as expressly
provided in the Credit Documents), (iii) amend, modify or waive any provision of
this Section 12.12 (except for technical amendments with respect to additional
extensions of credit pursuant to this Agreement which afford the protections to
such additional extensions of credit of the type provided to the Term Loans and
the Revolving Loan Commitments on the Effective Date), (iv) reduce the
percentage specified in the definition of Required Banks or Supermajority Bank
(it being understood that, with the consent of the Required Banks, additional
extensions of credit pursuant to this Agreement may be included in the
determination of the Required Banks and the Supermajority Banks on substantially
the same basis as the extensions of Term Loans and Revolving Loan Commitments
are included on the Effective Date) or (v) consent to the assignment or transfer
by the Borrower of any of its rights and obligations under this Agreement;
provided further, that no such change, waiver, discharge or termination shall
- ----------------
(w) increase the Commitments of any Bank over the amount thereof then in effect
without the consent of such Bank (it being understood that waivers or
modifications of conditions precedent, covenants, Defaults or Events of Default
or of a mandatory reduction in the Total Commitment shall not constitute an
increase of the Commitment of any Bank, and that an increase in the available
portion of the Commitment of any Bank shall not constitute an increase in the
Commitment of such Bank), (x) without the consent of the Administrative Agent,
amend, modify or waive any provision of Section 11 as same applies to the
Administrative Agent or any other provision as same relates to the rights or
obligations of the Administrative Agent, (y) without the consent of the
Collateral Agent, amend, modify or waive any provision relating to the rights or
obligations of the Collateral Agent or (z) without the consent of the
Supermajority Banks, (A) amend, modify or waive any provision of Section 8.08,
8.09 or 8.11 or (B) amend or modify the definition of Change of Control or waive
any Default or Event of Default under Section 9.12.

          (b) If, in connection with any proposed change, waiver, discharge or
termination with respect to any of the provisions of this Agreement as
contemplated by clauses (i) through (v), inclusive, of the first proviso to
Section 12.12(a), the consent of the Required Banks is obtained but the consent
of one or more of such other Banks whose consent is required is not obtained,
then the Borrower shall have the right, so long as no Default or Event of
Default has occurred and is continuing and all non-consenting Banks whose
individual consent is required are treated as described in either clause (A) or
(B) below, to either (A) replace each such non-consenting Bank or Banks with one
or more Replacement Banks pursuant to Section 1.13 so long as at the time of
such replacement, each such Replacement Bank consents to the proposed change,
waiver, discharge or termination or (B) terminate such non-consenting Bank's
Revolving Loan Commitment and repay such non-consenting Bank's outstanding Loans
in accordance with

                                     -106-


Sections 2.02(b) and/or 3.01(b), provided that, unless the Revolving Loan
                                 --------
Commitments are terminated, and Loans repaid, pursuant to the preceding clause
(B) are immediately replaced in full at such time through the addition of new
Banks or the increase of the Revolving Loan Commitments and/or outstanding Loans
of existing Banks (who in each case must specifically consent thereto), then in
the case of any action pursuant to the preceding clause (B) the Required Banks
(determined before giving effect to the proposed action) shall specifically
consent thereto, provided further, that in any event the Borrower shall not have
                 ----------------
the right to replace a Bank, terminate its Revolving Loan Commitment or repay
its Loans solely as a result of the exercise of such Bank's rights (and the
withholding of any required consent by such Bank) pursuant to the second proviso
to Section 12.12(a).

          12.13 Survival. All indemnities set forth herein including, without
                --------
limitation, in Sections 1.10, 1.11, 3.04, 12.01 and 12.06 shall survive the
execution, delivery and termination of this Agreement and the Notes and the
making and repayment of the Loans.

          12.14 Domicile of Loans. Each Bank may transfer and carry its Loans
                -----------------
at, to or for the account of any office, Subsidiary or Affiliate of such Bank.
Notwithstanding anything to the contrary contained herein, to the extent that a
transfer of Loans pursuant to this Section 12.14 would, at the time of such
transfer, result in increased costs under Section 1.10, 1.11 or 3.04 from those
being charged by the respective Bank prior to such transfer, then the Borrower
shall not be obligated to pay such increased costs (although the Borrower shall
be obligated to pay any other increased costs of the type described above
resulting from changes after the date of the respective transfer).

          12.15 Confidentiality. (a) Subject to the provisions of clause (b) of
                ---------------
this Section 12.15, each Bank agrees that it will use its reasonable efforts not
to disclose without the prior consent of the Borrower (other than to its
employees, auditors, advisors or counsel or to another Bank if such Bank or such
Bank's holding or parent company in its reasonable good faith discretion
determines that any such party should have access to such information, provided
such Persons shall be subject to the provisions of this Section 12.15 to the
same extent as such Bank) any information with respect to any Credit Party or
any of its Subsidiaries which has been, is now or in the future furnished
pursuant to this Agreement or any other Credit Document and which is designated
by any Credit Party to the Banks in writing as confidential, provided that any
                                                             --------
Bank may disclose any such information (a) as has become generally available to
the public, (b) as may be required or appropriate in any report, statement or
testimony submitted to any municipal, state or Federal regulatory body having or
claiming to have jurisdiction over such Bank or to the Federal Reserve Board or
the Federal Deposit Insurance Corporation or similar organizations (whether in
the United States or elsewhere) or their successors, (c) as may be required or
appropriate in respect to any summons or subpoena or in connection with any
litigation, (d) in order to comply with any law, order, regulation or ruling
applicable to such Bank, (e) to the Administrative Agent or the Collateral
Agent, (f) any direct or indirect contractual counterparty in swap agreements or
such contractual counterparty's professional advisor (so long as such
contractual counterparty or professional advisor to such contractual
counterparty agrees to be bound by the provisions of this Section 12.15(a)), or
to the National Association of Insurance Commissioners or any similar
organization or any nationally recognized rating agency that requires access to
information about a Bank and (g) to any prospective or actual transferee or
participant in connection with any contemplated transfer or

                                     -107-


participation of any of the Notes, Commitments or Loans or any interest therein
by such Bank, provided, that such prospective transferee agrees to be subject to
              --------
the provisions of this Section 12.15(a).

          (b) Holdings and the Borrower hereby acknowledge and agree that each
Bank may share with any of its affiliates any information related to Credit
Parties or any of their respective Subsidiaries (including, without limitation,
any nonpublic customer information regarding the creditworthiness of the Credit
Parties and their respective Subsidiaries, provided such Persons shall be
subject to the provisions of this Section 12.15 to the same extent as such
Bank), it being understood that for purposes of this Section 12.15(b), the term
"affiliate" shall mean any direct or indirect holding company of a Bank as well
as any direct or indirect Subsidiary of such holding company.

          12.16 Register. The Borrower hereby designates the Administrative
                --------
Agent to serve as the Borrower's agent, solely for purposes of this Section
12.16, to maintain a register (the "Register") on which it will record the
Commitments from time to time of each of the Banks, the Loans made by each of
the Banks and each repayment in respect of the principal amount of the Loans of
each Bank. Failure to make any such recordation, or any error in such
recordation, shall not affect the Borrower's obligations in respect of such
Loans. With respect to any Bank, the transfer of the Commitments of such Bank
and the rights to the principal of, and interest on, any Loan made pursuant to
such Commitments shall not be effective until such transfer is recorded on the
Register maintained by the Administrative Agent with respect to ownership of
such Commitments and Loans and prior to such recordation all amounts owing to
the transferor with respect to such Commitments and Loans shall remain owing to
the transferor. The registration of assignment or transfer of all or part of any
Commitments and Loans shall be recorded by the Administrative Agent on the
Register only upon the acceptance by the Administrative Agent of a properly
executed and delivered Assignment and Assumption Agreement pursuant to Section
12.04(b). Coincident with the delivery of such an Assignment and Assumption
Agreement to the Administrative Agent for acceptance and registration of
assignment or transfer of all or part of a Loan, or as soon thereafter as
practicable, the assigning or transferor Bank shall surrender the Note
evidencing such Loan, and thereupon one or more new Notes in the same aggregate
principal amount shall be issued to the assigning or transferor Bank and/or the
new Bank. The Borrower agrees to indemnify the Administrative Agent from and
against any and all losses, claims, damages and liabilities of whatsoever nature
which may be imposed on, asserted against or incurred by the Administrative
Agent in performing its duties under this Section 12.16, provided that the
Borrower shall have no obligation to indemnify the Administrative Agent for any
loss, claim, damage, liability or expense which resulted solely from the gross
negligence or willful misconduct of the Administrative Agent.

          12.17 Commercial Loan Transactions. Each of the Banks acknowledges
                ----------------------------
that the making of its Loans and the issuance by the Borrower of a Note to such
Bank are in the nature of a commercial loan transaction, and that no such Bank
shall assert that such actions are a securities transaction regulated under the
Exchange Act, the Securities Act or any other Federal or state securities laws,
it being understood that nothing in this Section 12.17 shall limit the rights of
the Banks pursuant to Section 12.01 or 12.04.

                                     -108-


          12.18 Limitations on Recourse. (a) Notwithstanding anything to the
                -----------------------
contrary set forth in this Agreement or in any of the other Credit Documents,
but subject to the last sentence of this Section 12.18(a) and clause (b) of this
Section 12.18, the Borrower's Obligations hereunder and under the other Credit
Documents shall be limited recourse obligations of the Borrower, enforceable
against the Borrower (and its assets) only and not against any constituent
partner in the Borrower. The foregoing provisions of this Section 12.18 shall
not impair the liability of the Subsidiary Guarantors under the Subsidiaries
Guaranty or the liens and security interests created by the Pledge and Security
Agreement which were granted as security for the Obligations of the Borrower and
the Guaranteed Obligations (as defined in the Subsidiaries Guaranty) of the
Subsidiary Guarantors.

          (b) Notwithstanding the foregoing provisions of clause (a) of this
Section 12.18, (x) the Administrative Agent and the Banks shall have recourse to
Holdings (in its capacity as the general partner in the Borrower) to the extent
(but only to the extent) of any loss, cost, damage, expense or liability
incurred by the Administrative Agent or any of the Banks by reason of (i) any
fraudulent misrepresentation made by Holdings in or pursuant to the Credit
Documents, (ii) any unlawful act on the part of Holdings, or (iii) any
misappropriation of funds by Holdings in contravention of the provisions of the
Credit Documents and (y) Holdings shall automatically be and become jointly and
severally obligated with the Borrower in respect of all of the Obligations from
and after any breach by Holdings of the covenant contained in Section 8.16(b).
Additionally, upon the occurrence of the event specified in clause (y) of the
preceding sentence, the Pledge and Security Agreement shall be reinstated as to
Holdings for purposes of securing the joint and several liability of Holdings in
respect of the Obligations. At the request of the Administrative Agent, Holdings
shall (at its expense) take all actions deemed reasonably necessary by the
Administrative Agent to confirm the provisions of this Section 12.18(b).

                                      * * *

                                     -109-


          IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.

Address:
- -------

10400 Fernwood Road                          HOST MARRIOTT CORPORATION
Bethesda, Maryland  20817
Telecopier No.: (301) 380-3588
Attention:  General Counsel, Dept. 923       By:  /s/ W. Edward Walter
                                                --------------------------------
                                                Title:  Treasurer


with a copy to:

10400 Fernwood Road
Bethesda, Maryland  20817
Telecopier No.: (301) 380-3155
Attention:    Treasurer, Dept. 916


10400 Fernwood Road                          HOST MARRIOTT, L.P.
Bethesda, Maryland  20817                    By:  Host Marriott Corporation,
Telecopier No.: (301) 380-3588                     its General Partner
Attention: General Counsel, Dept. 923

                                             By:  /s/ W. Edward Walter
                                                --------------------------------
                                                Title:  Treasurer

with a copy to:

10400 Fernwood Road
Bethesda, Maryland 20817
Telecopier No.: (301) 380-3155
Attention: Treasurer, Dept. 916

                                             BANKERS TRUST COMPANY,
                                             Individually and as Administrative
                                             Agent


                                             By:   /s/ Laura Burwick
                                                --------------------------------
                                                Title:


                                             CREDIT LYONNAIS NEW YORK BRANCH


                                             By:  /s/ Mary P. Daly
                                                --------------------------------
                                                 Title:   Vice President



                                             THE BANK OF NOVA SCOTIA


                                             By:   /s/  Burce G. Ferguson
                                                --------------------------------
                                                 Title:  Managing Director



                                             BANK LEUMI USA


                                             By:  /s/ Charles C. D'Amico
                                                --------------------------------
                                                 Title:  Vice President



                                             BANK OF HAWAII


                                             By:   /s/ Donna R. Parker
                                                --------------------------------
                                                 Title:  Vice President



                                             FLEET NATIONAL BANK


                                             By:  /s/ Floyd P. Wiggins
                                                --------------------------------
                                                 Title:  Director


                                             ERSTE BANK DER OESTERREICHISCHEN
                                                  SPARKASSEN AG


                                             By:  /s/ Paul Judicke
                                                --------------------------------
                                                 Title:  Vice President



                                             By:  /s/ John Rennion
                                                --------------------------------
                                                 Title:  First Vice President



                                             FIRST COMMERCIAL BANK, NEW YORK
                                                  AGENCY


                                             By:   /s/ Vincent T. C. Chen
                                                --------------------------------
                                                 Title:  SVP & GM



                                             HELLER FINANCIAL, INC.


                                             By:  /s/ Dean A. Egerter
                                                --------------------------------
                                                 Title:  Senior Vice President



                                             BANK OF AMERICA, N.A.


                                             By:   /s/ Ansel McDowell
                                                --------------------------------
                                                 Title:  Vice President



                                             SOCIETE GENERALE, SOUTHWEST AGENCY


                                             By:   /s/ Carina T. Huynh
                                                --------------------------------
                                                 Title:  Vice President


                                             THE BANK OF NEW YORK


                                             By:  /s/ David V. Fowler
                                                --------------------------------
                                                 Title:  Vice President



                                             DLJ CAPITAL FUNDING, INC.


                                             By: /s/ Eric Swanson
                                                --------------------------------
                                                 Title:  Managing Director


                                             BANK ONE, N.A.


                                             By:  /s/ Dennis J. Redpath
                                                --------------------------------
                                                 Title:  First Vice President



                                             THE INTERNATIONAL COMMERCIAL BANK
                                                  OF CHINA, NEW YORK AGENCY


                                             By:  /s/ Wen-Hui Wang
                                                --------------------------------
                                                 Title: AVP & Deputy GM



                                             WELLS FARGO BANK, N.A.


                                             By:   /s/ James A. McCartney
                                                --------------------------------
                                                 Title:  Vice President


                                             KZH CNC LLC


                                             By:  /s/ Susan Lee
                                                --------------------------------
                                                 Title:  Authorized Agent



                                             WINGED FOOT FUNDING TRUST


                                             By:   /s/ Ashley R. Hamilton
                                                --------------------------------
                                                 Title:  Authorized Agent



                                             CHANG HWA COMMERCIAL BANK, LTD.,
                                                  NEW YORK BRANCH


                                             By:  /s/ Wan-Tu Yeh
                                                --------------------------------
                                                 Title:  VP & General Manager


                                                                      SCHEDULE I
                                                                      ----------

                                   COMMITMENTS
                                   -----------



                                                                         Term Loan                 Revolving
                                                                         ---------                 ---------
                             Bank                                        Commitment            Loan Commitment
                             ----                                        ----------            ---------------
                                                                                            
Bankers Trust Company                                                  $15,580,645.16             $64,919,354.84
Credit Lyonnais New York Branch                                         15,483,870.97              64,516,129.03
The Bank of Nova Scotia                                                 15,483,870.97              64,516,129.03
Bank Leumi USA                                                           1,354,838.71               5,645,161.29
Bank of Hawaii                                                           1,935,483.87               8,064,516.13
Fleet National Bank                                                      9,677,419.35              40,322,580.65
Chang Hwa Commercial Bank, Ltd., New York Agency                         2,903,225.81              12,096,774.19
Erste Bank der Oesterreichischen Sparkassen AG                           3,870,967.74              16,129,032.26
First Commercial Bank, New York Agency                                   3,870,967.74              16,129,032.26
Heller Financial, Inc.                                                   4,838,709.68              20,161,290.32
Bank of America, N.A.                                                   14,516,129.03              60,483,870.97
Societe Generale, Southwest Agency                                      14,516,129.03              60,483,870.97
The Bank of New York                                                     9,677,419.35              40,322,580.65
Bank One, N.A.                                                           9,677,419.35              40,322,580.65
The International Commercial Bank of China, New York Agency              4,838,709.68              20,161,290.32
Wells Fargo Bank, N.A.                                                  14,516,129.03              60,483,870.97
KZH CNC LLC                                                              1,209,677.42               5,040,322.58
Winged Foot Funding Trust                                                1,209,677.42               5,040,322.58
DLJ Capital Funding, Inc.                                                4,838,709.68              20,161,290.32
                                                                          -----------                -----------
         TOTAL:                                                          $150,000,000               $625,000,000



                                                                     SCHEDULE II
                                                                     -----------

                                 BANK ADDRESSES
                                 --------------


Bank                                     Address
- ----                                     -------
Bankers Trust Company                    130 Liberty Street
                                         New York, New York  10006
                                         Attention: Laura Burwick
                                         Telephone No.: (212) 250-2568
                                         Facsimile No.: (212) 669-0743

Credit Lyonnais New York Branch          1301 Avenue of the Americas
                                         New York, New York  10019
                                         Attention: Mary Daly
                                         Telephone No.: (212) 261-7842
                                         Facsimile No.: (212) 261-7532

The Bank of Nova Scotia                  One Liberty Plaza
                                         New York, New York  10006
                                         Attention: Bruce G. Ferguson
                                         Telephone No.: (212) 225-5158
                                         Facsimile No.: (212) 225-5166

Bank Leumi USA                           562 Fifth Avenue
                                         New York, New York  10036
                                         Attention: Charles D'Amico
                                         Telephone No.: (212) 626-1220
                                         Facsimile No.: (212) 626-1239

Bank of Hawaii                           1850 North Central Avenue, Suite 400
                                         Phoenix, Arizona  85004
                                         Attention: Donna Parker
                                         Telephone No.: (602) 257-2436
                                         Facsimile No.: (602) 257-2235

Fleet National Bank                      100 Federal Street
                                         Boston, Massachusetts  02106
                                         Attention:  George Ojanuga
                                         Telephone No.: (617) 434-5016
                                         Facsimile No.: (617) 434-8102


                                                                     Schedule II
                                                                          Page 2


Bank                                       Address
- ----                                       -------


Chang Hwa Commercial Bank, Ltd., New       One World Trade Center, Suite 3211
     York Branch                           New York, New York  10048
                                           Attention: Vivian Chen
                                           Telephone No.: (212) 390-7040 ext. 48
                                           Facsimile No.: (212) 390-0120

Erste Bank der Oesterreichischen           280 Park Avenue, 32nd Fl. West Bldg.
     Sparkassen AG                         New York, New York  10017
                                           Attention: Paul Judicke
                                           Telephone No.: (212) 984-5634
                                           Facsimile No.: (212) 984-5627

First Commercial Bank, New York Agency     Two World Trade Center, Suite 7868
                                           New York, New York  10048
                                           Attention: Jeffrey Wang
                                           Telephone No.: (212) 432-6590
                                           Facsimile No.: (212) 432-7250

Heller Financial, Inc.                     500 West Monroe Street
                                           Chicago, Illinois 60601
                                           Attention: Dean Egerter
                                           Telephone No.:  (312) 441-7068
                                           Facsimile No.:  (312) 441-6741

Bank of America, N.A.                      901 Main Street, 51st Floor
                                           Dallas, Texas  75202-3714
                                           Attention:  Lesa Butler
                                           Telephone No.: (214) 209-1506
                                           Facsimile No.: (214) 209-0085

Societe Generale, Southwest Agency         2001 Ross Avenue, Suite 4900
                                           Dallas, Texas 75201
                                           Attention: Carina Huynh
                                           Telephone No.: (214) 979-2781
                                           Facsimile No.: (214) 979-2727

The Bank of New York                       One Wall Street, 21st Floor
                                           New York, New York  10286
                                           Attention: David Fowler
                                           Telephone No.: (212) 635-8113
                                           Facsimile No.: (212) 809-9526


                                                                     Schedule II
                                                                          Page 3


Bank                                       Address
- ----                                       -------

Bank One, N.A.                             One First National Plaza, Suite 0315
                                           Chicago, Illinois 60670
                                           Attention: Dennis Redpath
                                           Telephone No.: (312) 732-3044
                                           Facsimile No.: (312) 732-1117

The International Commercial Bank of       65 Liberty Street
     China, New York Agency                New York, New York 10005
                                           Attention:  Mr. Mong-Shyr Wu
                                           Telephone No.: (212) 815-9113
                                           Facsimile No.: (212) 766-5006

Wells Fargo Bank, N.A.                     2020 K Street, NW, Suite 420
                                           Washington, D.C. 20006
                                           Attention:  James McCartney
                                           Telephone No.: (202) 296-5577
                                           Facsimile No.: (202) 296-6036

KZH CNC LLC                                140 E. 45th Street, 11th Floor
                                           c/o The Chase Manhattan Bank
                                           New York, New York 10017
                                           Attention:  Virginia Conway
                                           Telephone No.: (212) 622-9353
                                           Facsimile No.: (212) 622-0123

Winged Foot Funding Trust                  Conseco Capital Management, Inc.
                                           11825 N. Pennsylvania Street
                                           Carmel, Indiana 46082
                                           Attention: John Nasser/Tom Davis
                                           Telephone No.: (317) 817-6069/
                                                          (317) 817-5696
                                           Facsimile No.: (317) 575-2001

                                           Winged Foot Funding Trust
                                           c/o Banc of America Securities LLC
                                           100 North Tryon Street
                                           NC1-007-06-07
                                           Charlotte, North Carolina  28255
                                           Attention: Diana Mushill
                                           Facsimile No.: (704) 409-0192

DLJ Capital Funding, Inc.                  277 Park Avenue
                                           New York, New York 10017
                                           Attention:  Dana Klein
                                           Telephone No.: (212) 892-7911
                                           Facsimile No.: (212) 892-7542


                                                                     Schedule II
                                                                          Page 4



                                                                    SCHEDULE III
                                                                    ------------



                           PLEDGE OF EQUITY INTERESTS
                           --------------------------


                                                                     SCHEDULE IV
                                                                     -----------

                                  SUBSIDIARIES
                                  ------------


Subsidiary                      Owner                   Percentage Owned
- ----------                      -----                   ----------------


                                                                      SCHEDULE V
                                                                      ----------



                              EXISTING INDEBTEDNESS
                              ---------------------


                                                                     SCHEDULE VI
                                                                     -----------


                       CERTAIN SECTION 7.11(b) EXCEPTIONS
                       ----------------------------------


                                      None.


                                                                    SCHEDULE VII
                                                                    ------------


                                 EXISTING LIENS
                                 --------------


                                                                   SCHEDULE VIII
                                                                   -------------


                   CERTAIN ASSETS AND LIABILITIES OF HOLDINGS
                   ------------------------------------------


                                                                     SCHEDULE IX
                                                                     -----------


                                CERTAIN EXISTING
                          GENERAL PARTNERSHIP INTERESTS
                          -----------------------------


          As of the Effective Date, the Borrower owns, directly or indirectly,
an interest in the general partner of each of the following partnerships:

          Courtyard by Marriott Limited Partnership

          Courtyard by Marriot II Limited Partnership (and its Subsidiaries)

          Marriott Residence Inn Limited Partnership

          Marriott Residence Inn II Limited Partnership

          Fairfield Inn by Marriott Limited Partnership


                                                                      SCHEDULE X
                                                                      ----------

                           COURTYARD SETTLEMENT TERMS
                           --------------------------


          As used in the Credit Agreement, "Courtyard Settlement" shall mean
those transactions contemplated to be entered into by the Borrower and any of
its Subsidiaries under the Settlement Agreement, dated as of March 9, 2000, as
the same may be amended by the parties thereto or further requirements imposed
in any court order approving the Settlement Agreement, in each case so long as
the effect of any such amendments or further requirements do not materially
increase the economic obligations of the Borrower and its Subsidiaries and could
not reasonably be expected to have a Material Adverse Effect (collectively, the
"Settlement Agreement"). The principal economic requirements of the Settlement
Agreement as the same relate to the Borrower and its Subsidiaries consist of (i)
the Borrower paying up to $125,000,000 in cash (plus associated transaction
costs and imputed interest) and (ii) the Borrower contributing up to $65,000,000
in cash (plus associated transaction costs) to CBM JV to permit CBM2 to
repurchase its senior notes as further described below.

          The Borrower's obligations in respect of the Settlement Agreement as
described above may be consummated through the following transactions:

          (i) the formation of a joint venture ("CBM JV") between Rockledge
     Hotel Properties, Inc. ("Rockledge"), or one or more Subsidiaries of
     Rockledge, and Marriott International, Inc. ("MII"), or one or more
     Subsidiaries of MII, the contribution by the Borrower of cash or the making
     by the Borrower of loans to Rockledge in amounts sufficient to fund the
     obligations of Rockledge under the Settlement Agreement and the operating
     agreement of CBM JV (including any funds required to fund any repurchase of
     senior notes of CBM2 as described below), and the contribution to CBM JV of
     cash and equity interests in one or more Subsidiaries of Rockledge whose
     primary assets consist of cash, equity interests in Courtyard by Marriott
     Limited Partnership ("CBM1"), CBM One LLC, Courtyard by Marriott II Limited
     Partnership ("CBM2"), or CBM Two LLC, in each case in amounts necessary to
     consummate the transactions contemplated by the Settlement Agreement,
     including the acquisition of all equity interests in CBM1 and CBM2 and the
     repurchase of any senior notes of CBM2 that may be tendered by holders
     thereof to CBM2 as a result of a change of control offer made by CBM2 by
     reason of the consummation of the transactions contemplated in the
     Settlement Agreement;

          (ii) guaranties required to be entered by the Borrower or any of its
     Subsidiaries of Customary Non-Recourse Exclusions contained in Indebtedness
     of CBM JV or any of its Subsidiaries (provided that similar guaranties are
     given by MII and its Subsidiaries);

          (iii) performance by Rockledge and its Subsidiaries of their
     respective obligations under the organizational documents of CBM JV,
     provided that any contributions by Rockledge and its Subsidiaries to the
     capital of CBM JV in excess of the amounts necessary to consummate the
     transactions contemplated by the Settlement Agreement and the change of
     control offer referred to above shall be deemed to be Permitted Designated


                                                                      Schedule X
                                                                          Page 2

     Investments made pursuant to (and subject to the limitations contained in)
     Section 8.05(xii) of the Credit Agreement; and

          (iv) any Liens and Indebtedness incurred and/or assumed as part of the
     Settlement Agreement consist of Indebtedness of, and encumber assets of,
     CBM JV and any Subsidiary thereof and for which there is no recourse to
     Holdings, the Borrower or any of their respective Subsidiaries (other than
     in respect of Customary Non-Recourse Exclusions).

          Notwithstanding anything to the contrary in the definition of
"Subsidiary" contained in the Credit Agreement, following the consummation of
the transactions described above, none of CBM JV or any Subsidiary of CBM JV
shall be deemed to be a Subsidiary of the Borrower or Rockledge so long as (i)
Rockledge and its Subsidiaries do not own more than a 50% equity interest in CBM
JV and the Borrower does not hold any direct or indirect equity interest in CBM
JV and its Subsidiaries other than a 50% or less equity interest in CBM JV and a
1% or less equity interest in CBM One LLC, CBM Two LLC, or their respective
successors or assigns and (ii) there is no recourse, whether contractual, by
operation of law or otherwise, against Holdings or any of its Subsidiaries in
respect of the Indebtedness and other liabilities of CBM JV and its Subsidiaries
(other than in respect of Customary Non-Recourse Exclusions).

EX-10.41

                                                                   Exhibit 10.41

                                FIRST AMENDMENT
                                ---------------

     THIS FIRST AMENDMENT (this "Amendment") dated as of October 23, 2000, among
HOST MARRIOTT CORPORATION, a Maryland corporation ("Holdings"), HOST MARRIOTT,
L.P., a Delaware limited partnership (the "Borrower"), the lenders party to the
Credit Agreement referred to below (the "Banks"), and BANKERS TRUST COMPANY, as
Administrative Agent (the "Administrative Agent"). Unless otherwise defined
herein, all capitalized terms used herein and defined in the Credit Agreement
are used herein as so defined.

                                   WITNESSETH:
                                   ----------

     WHEREAS, Holdings, the Borrower, the Banks and the Administrative Agent are
parties to an Amended and Restated Credit Agreement, dated as of June 19, 1997,
and amended and restated as of August 5, 1998, and further amended and restated
as of May 31, 2000 (as amended, modified or supplemented through, but not
including, the date hereof, the "Credit Agreement");

     WHEREAS, the Borrower has requested that the Banks amend and/or waive
certain provisions of the Credit Agreement and the Banks have agreed to amend
and/or waive such provisions on the terms and conditions herein provided; and

     WHEREAS, subject to the terms and conditions set forth below, the parties
hereto agree as follows:

     NOW, THEREFORE, it is agreed:


     1.   Section 7.16 of the Credit Agreement is hereby amended to add a new
clause (e) at the end of such Section, which clause (e) shall read in its
entirety as follows:

          "(e) Notwithstanding anything to the contrary contained above in this
     Section 7.16 or anything else in this Agreement or in any other Credit
     Document, no Subsidiary of Holdings or the Borrower shall be required to
     become a Subsidiary Guarantor (and thereby execute a counterpart of the
     Subsidiaries Guaranty and/or the Pledge and Security Agreement) pursuant to
     clause (x) of Section 7.16(a)(A) unless such Subsidiary is a Wholly Owned
     Subsidiary without reference to the parenthetical clause contained in
     clause (ii) of the definition of "Wholly-Owned Subsidiary" contained in
     Section 10.01. The provisions of this clause (e), however, shall only apply
     to the extent that such Subsidiary's becoming a Subsidiary Guarantor would


     require the Borrower to publicly report separate financial statements for
     such Subsidiary (either individually or together with other similar
     Subsidiaries) pursuant to the Exchange Act and/or the Securities Act."

     2.   Schedule IV to the Credit Agreement shall be replaced in its entirety
by Schedule IV attached hereto, and all references in the Credit Agreement to
Schedule IV (including, without limitation, in Section 4.06 thereof) shall be
deemed to be references to Schedule IV attached hereto.

     3.   Section 6.13 of the Credit Agreement is hereby amended by replacing
the references to "the Effective Date" appearing therein with references to
"October 16, 2000."

     4.   Any Subsidiary of the Borrower that is listed in Annex A hereto, (each
of which Subsidiaries would not have been a Wholly-Owned Subsidiary of the
Borrower but for the final parenthetical in the definition of Wholly-Owned
Subsidiary) that immediately prior to the effectiveness of this Amendment was a
Subsidiary Guarantor shall be automatically released from its obligations under
the Subsidiaries Guaranty and shall no longer constitute a Subsidiary Guarantor
and any equity interests in such Subsidiary listed in Annex A hereto that are
pledged pursuant to the Pledge and Security Agreement shall be automatically
released from the liens and security interests created thereunder, in each case
so long as such Subsidiary is simultaneously released from its guaranty of other
Indebtedness of the Borrower (including the Senior Notes).

     5.   This Amendment shall become effective on the date (the "Amendment
Effective Date") when Holdings, the Borrower and the Required Banks shall have
signed a counterpart hereof (whether the same or different counterparts) and
shall have delivered (including by way of facsimile transmission) the same to
the Administrative Agent at the Notice Office.

     6.   In order to induce the Banks to enter into this Amendment, each Credit
Party hereto represents and warrants that (i) the representations, warranties
and agreements contained in Section 6 of the Credit Agreement are true and
correct in all material respects on and as of the Amendment Effective Date, both
before and after giving effect to this Amendment, and (ii) there exists no
Default or Event of Default on the Amendment Effective Date both before and
after giving effect to this Amendment.

     7.   This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any provision of the Credit Agreement or
any other Credit Document except as specified above.

                                       2


     8.   This Amendment may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Borrower and the Administrative Agent.

     9.   THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF
NEW YORK.

     10.  From and after the Amendment Effective Date, all references in the
Credit Agreement and in the other Credit Documents to the Credit Agreement shall
be deemed to be references to the Credit Agreement as modified hereby.

                                       3


     IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute and deliver this Amendment as of the date first above
written.

                                             HOST MARRIOTT CORPORATION



                                             By:
                                                --------------------------------
                                                Name:
                                                Title:


                                             HOST MARRIOTT, L.P.
                                             By:  Host Marriott Corporation,
                                                  its General Partner


                                             By:
                                                --------------------------------
                                                Name:
                                                Title:

                                       4


                                             BANKERS TRUST COMPANY,
                                             Individually and as Administrative
                                             Agent

                                             By:
                                                --------------------------------
                                                Name:
                                                Title:

                                             CREDIT LYONNAIS NEW YORK BRANCH

                                             By:
                                                --------------------------------
                                                Name:
                                                Title:

                                             THE BANK OF NOVA SCOTIA

                                             By:
                                                --------------------------------
                                                Name:
                                                Title:

                                             BANK LEUMI USA

                                             By:
                                                --------------------------------
                                                Name:
                                                Title:

                                       5


                                             BANK OF HAWAII

                                             By:
                                                --------------------------------
                                                Name:
                                                Title:

                                             FLEET NATIONAL BANK

                                             By:
                                                --------------------------------
                                                Name:
                                                Title:

                                             ERSTE BANK DER OESTERREICHISCHEN
                                                  SPARKASSEN AG

                                             By:
                                                --------------------------------
                                                Name:
                                                Title:

                                             FIRST COMMERCIAL BANK, NEW YORK
                                                  AGENCY

                                       6


                                             By:
                                                --------------------------------
                                                Name:
                                                Title:

                                             HELLER FINANCIAL, INC.

                                             By:
                                                --------------------------------
                                                Name:
                                                Title:

                                             BANK OF AMERICA, N.A.

                                             By:
                                                --------------------------------
                                                Name:
                                                Title:

                                             SOCIETE GENERALE, SOUTHWEST AGENCY

                                             By:
                                                --------------------------------
                                                Name:
                                                Title:

                                             THE BANK OF NEW YORK

                                             By:
                                                --------------------------------
                                                Name:
                                                Title:

                                       7


                                             DLJ CAPITAL FUNDING, INC.

                                             By:
                                                --------------------------------
                                                Name:
                                                Title:

                                             BANK ONE, N.A.

                                             By:
                                                --------------------------------
                                                Name:
                                                Title:

                                             THE INTERNATIONAL COMMERCIAL BANK
                                                  OF CHINA, NEW YORK AGENCY

                                             By:
                                                --------------------------------
                                                Name:
                                                Title:

                                             WELLS FARGO BANK, N.A.

                                             By:
                                                --------------------------------
                                                Name:
                                                Title:

                                             KZH CNC LLC

                                             By:
                                                --------------------------------
                                                Name:
                                                Title:

                                       8


                                             WINGED FOOT FUNDING TRUST

                                             By:
                                                --------------------------------
                                                Name:
                                                Title:

                                             CHANG HWA COMMERCIAL BANK, LTD.,
                                                  NEW YORK BRANCH

                                             By:
                                                --------------------------------
                                                Name:
                                                Title:


                                             CHINATRUST COMMERCIAL BANK

                                             By:
                                                --------------------------------
                                                Name:
                                                Title:


                                             TAIPEI BANK

                                             By:
                                                --------------------------------
                                                Name:
                                                Title:

                                       9


                                             PILGRIM CLO 1999-1, LTD.

                                             By:
                                                --------------------------------
                                                Name:
                                                Title:

                                             SEQUILS PILGRIM-1, LTD.

                                             By:
                                                --------------------------------
                                                Name:
                                                Title:


                                             ISA INCORPORATED

                                             By:
                                                --------------------------------
                                                Name:
                                                Title:

                                       10


                                                                         ANNEX A
                                                                         -------

                      LIST OF SUBSIDIARIES TO BE RELEASED
                            AS SUBSIDIARY GUARANTORS


1.   Atlanta II Limited Partnership
2.   HMC Burlingame II LLC
3.   HMC Diversified American Hotels, L.P.
4.   HMC East Side LLC
5.   HMC Park Ridge II LLC
6.   HMC Park Ridge LP
7.   HMC Partnership Properties LLC
8.   HMC RTZ Loan II LLC
9.   HMC RTZ Loan Limited Partnership
10.  Host DSM Limited Partnership
11.  Ivy Street Hotel Limited Partnership
12.  Ivy Street MPF LLC
13.  Potomac Hotel Limited Partnership

                                       11

EX-12.1

                                                                    Exhibit 12.1

Computation of Ratio of Earnings to Fixed Charges and Preferred Unit
Distributions:



                                    First Three
                                     Quarters           Fiscal Year
                                    ------------  ----------------------------
                                    2000   1999   1999  1998  1997  1996  1995
                                    -----  -----  ----  ----  ----  ----  ----
                                               (in millions)
                                                     
Income (loss) from operations
 before income taxes..............  $(154) $(152) $240  $174  $ 83  $ (8) $(75)
  Add (deduct):
  Fixed charges...................    362    356   518   415   364   283   206
  Capitalized interest............     (4)    (4)   (7)   (4)   (1)   (3)   (5)
  Amortization of capitalized
   interest.......................      4      4     6     6     5     7     6
  Net gains (losses) related to
   certain 50% or less owned
   affiliate......................     (2)     2    (6)   (1)   (1)    1     2
  Minority interest in
   consolidated affiliates........     11     13    21    52    31     6     2
                                    -----  -----  ----  ----  ----  ----  ----
  Adjusted earnings...............  $ 217  $ 219  $772  $642  $481  $286  $136
                                    =====  =====  ====  ====  ====  ====  ====
Fixed charges:
  Interest on indebtedness and
   amortization of deferred
   financing costs................  $ 315  $ 325  $469  $335  $288  $237  $178
  Dividends on convertible
   preferred securities of
   subsidiary trust...............    --     --    --     37    37     3   --
  Distributions on preferred
   limited partner units..........     16      1     6   --    --    --    --
  Portion of rents representative
   of the interest factor.........     31     30    43    43    39    33    17
  Debt service guarantee interest
   expense of unconsolidated
   affiliates.....................    --     --    --    --    --     10    11
                                    -----  -----  ----  ----  ----  ----  ----
  Total fixed charges and
   preferred unit distributions...  $ 362  $ 356  $518  $415  $364  $283  $206
                                    =====  =====  ====  ====  ====  ====  ====
Ratio of earnings to fixed charges
 and preferred unit
 distributions....................    --     --   1.49  1.54  1.32  1.01   --
Deficiency of earnings to fixed
 charges and preferred unit
 distributions....................  $ 145  $ 137   --    --    --    --     70

EX-23.3

                                                                    Exhibit 23.3

                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

   As independent public accountants, we hereby consent to the use of our
reports, and to all references to our Firm included in or made a part of this
registration statement.

                                          Arthur Andersen LLP

Vienna, Virginia
December 14, 2000

EX-25.1

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

- --------------------------------------------------------------------------------

                                    FORM T-1
                    STATEMENT OF ELIGIBILITY UNDER THE TRUST
                     INDENTURE ACT OF 1939 OF A CORPORATION
                          DESIGNATED TO ACT AS TRUSTEE

                      CHECK IF AN APPLICATION TO DETERMINE
                      ELIGIBILITY OF A TRUSTEE PURSUANT TO
                                SECTION 305(b)(2)

                                  HSBC Bank USA
               (Exact name of trustee as specified in its charter)

            New York                                  16-1057879
            (Jurisdiction of incorporation            (I.R.S. Employer
            or organization if not a U.S.             Identification No.)
            national bank)

            140 Broadway, New York, NY                 10005-1180
            (212) 658-1000                             (Zip Code)
            (Address of principal executive offices)

                               Warren L. Tischler
                              Senior Vice President
                               Marine Midland Bank
                                  140 Broadway
                          New York, New York 10005-1180
                               Tel: (212) 658-5167
            (Name, address and telephone number of agent for service)

                               Host Marriott, L.P.
               (Exact name of obligor as specified in its charter)

           Delaware                                 52-2095412
           (State or other jurisdiction             (I.R.S. Employer
           of incorporation or organization)         Identification No.)

           10400 Fernwood Road
           Bethesda, Maryland                        20817-1109
           (301) 380-9000                           (Zip Code)
           (Address of principal executive offices)

                      91/4% Series G Senior Notes due 2007*
                         (Title of Indenture Securities)

   *Specific title to be determined in connection with sale of Debt Securities


                                     General
Item 1. General Information.
        --------------------

          Furnish the following information as to the trustee:

     (a) Name and address of each examining or supervisory authority to which it
     is subject.

          State of New York Banking Department.

          Federal Deposit Insurance Corporation, Washington, D.C.

          Board of Governors of the Federal Reserve System, Washington, D.C.

     (b) Whether it is authorized to exercise corporate trust powers.

               Yes.

Item 2. Affiliations with Obligor.
        --------------------------

          If the obligor is an affiliate of the trustee, describe each such
          affiliation.

               None


                                    SIGNATURE


Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee,
HSBC Bank USA, a banking corporation and trust company organized under the laws
of the State of New York, has duly caused this statement of eligibility to be
signed on its behalf by the undersigned, thereunto duly authorized, all in the
City of New York and State of New York on the 13th day of December, 2000.

                                        HSBC BANK USA

                                        By: /s/ James M. Foley
                                          ----------------------------------
                                            James M. Foley
                                            Assistant Vice President



                                                               Exhibit T1A (vii)

                                                       Board of Governors of the
                                                       Federal Reserve System
                                                       OMB Number: 7100-0036
                                                       Federal Deposit Insurance
                                                       Corporation
                                                       OMB Number: 3064-0052
                                                       Office of the Comptroller
                                                       of the Currency
                                                       OMB Number: 1557-0081

Federal Financial Institutions Examination Council     Expires March 31, 2002
- --------------------------------------------------------------------------------

                                                       Please refer to page i,
                                                       Table of Contents, for
                                                       the required disclosure
                                                       of estimated burden.

                                                                             [1]
- --------------------------------------------------------------------------------
Consolidated Reports of Condition and Income for
A Bank With Domestic and Foreign Offices--FFIEC 031

Report at the close of business September 30, 2000

This report is required by law; 12 U.S.C.ss.324 (State member banks); 12
U.S.C.ss.1817 (State nonmember banks); and 12 U.S.C. ss.161 (National banks).

NOTE: The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than two
directors (trustees) for State nonmember banks and three directors for State
member and National Banks.

I,  Gerald A. Ronning, Executive VP & Controller
   ---------------------------------------------
     Name and Title of Officer Authorized to Sign Report

of the named bank do hereby declare that these Reports of Condition and Income
(including the supporting schedules) have been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and are true
to the best of my knowledge and believe.

   /s/ Gerald A. Ronning
- --------------------------------------------------------------------------------
Signature of Officer Authorized to Sign Report

             11/10/00
- --------------------------------------------------------------------------------
Date of Signature

This report form is to be filed by banks with branches and consolidated
subsidiaries in U.S. territories and possessions, Edge or Agreement
subsidiaries, foreign branches, consolidated foreign subsidiaries, or
International Banking Facilities.

The Reports of Condition and Income are to be prepared in accordance with
Federal regulatory authority instructions.

We, the undersigned directors (trustees), attest to the correctness of this
Report of Condition (including the supporting schedules) and declare that it has
been examined by us and to the best of our knowledge and belief has been
prepared in conformance with the instructions issued by the appropriate Federal
regulatory authority and is true and correct.

     /s/ Youssef A. Nasr
- --------------------------------------------------------------------------------
 Director (Trustee)

     /s/ Bernard J. Kennedy
- --------------------------------------------------------------------------------
Director (Trustee)

     /s/ Sal H. Alfiero
- --------------------------------------------------------------------------------
Director (Trustee)

- --------------------------------------------------------------------------------

Submission of Reports

Each Bank must prepare its Reports of Condition and Income either:

(a) in electronic form and then file the computer data file directly with the
    banking agencies' collection agent, Electronic Data System Corporation
    (EDS), by modem or computer diskette; or

(b) in hard-copy (paper) form and arrange for another party to convert the paper
report to automated for. That party (if other than EDS) must transmit the bank's
computer data file to EDS.

For electronic filing assistance, contact EDS Call report Services, 2150 N.
Prospect Ave., Milwaukee, WI 53202, telephone (800) 255-1571.

To fulfill the siganture and attestation requirement for the Reports of
Condition and Income for this report date, attach this signature page to the
hard-copy if the completed report that the bank places in its files.

- --------------------------------------------------------------------------------
FDIC Certificate Number           0   0    5   8   9
                                  ------------------
                                     (RCRI 9030)


`http://WWW.BANKING.US.HSBC.COM
- --------------------------------------------------------------------------------
      Primary Internet Web Address of Bank (Home Page), if any (TEXT 4087)
      (Example: www.examplebank.com)


HSBC Bank USA
- --------------------------------------------------------------------------------
Legal Title of Bank (TEXT 9010)

Buffalo
- --------------------------------------------------------------------------------
City (TEXT 9130)

N.Y.                                                               14203
- --------------------------------------------------------------------------------
State Abbrev. (TEXT 9200)                                   ZIP Code (TEXT 9220)


   Board of Governors of the Federal Reserve System, Federal Deposit Insurance
             Corporation, Office of the Comptroller of the Currency



                                 REPORT OF CONDITION

Consolidating domestic and foreign subsidiaries of the
HSBC Bank USA                                                of  Buffalo
- ------------------------------------------------------------------------
  Name of Bank                                                   City

in the state of New York, at the close of business September 30, 2000

All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.



ASSETS
                                                                                                               Thousands of dollars
                                                                                                        
Cash and balances due from depository institutions:
     Non-interest-bearing balances currency and coin                                                               $      1,986,803
     Interest-bearing balances                                                                                            6,432,408
     Held-to-maturity securities                                                                                          4,227,953
     Available-for-sale securities                                                                                       16,867,689
     Federal funds sold and securities purchased under agreements to resell                                               2,629,177
Loans and lease financing receivables:
     Loans and leases net of unearned income                                    $    38,813,494
     LESS: Allowance for loan and lease losses                                          531,808
     LESS: Allocated transfer risk reserve
     Loans and lease, net of unearned income, allowance, and reserve                                              $      38,281,686
     Trading assets                                                                                                       4,937,459
     Premises and fixed assets (including capitalized leases)                                                               731,615
Other real estate owned                                                                                                      17,793
Investments in unconsolidated subsidiaries and associated companies                                                       2,549,829
Customers' liability to this bank on acceptances outstanding                                                                226,814
Intangible assets                                                                                                         2,969,884
Other assets                                                                                                              2,165,839
Total assets                                                                                                             84,024,949





LIABILITIES




Deposits:
                                                                                                        
     In domestic offices                                                                                                 34,632,582
     Non-interest-bearing                                                             5,234,945
     Interest-bearing                                                                29,397,637
In foreign offices, Edge and Agreement subsidiaries, and IBFs                                                            21,655,922
     Non-interest-bearing                                                               246,990
     Interest-bearing                                                                21,408,932

Federal funds purchased and securities sold under agreements to repurchase                                                1,314,197
Demand notes issued to the U.S. Treasury                                                                                  4,140,116
Trading Liabilities                                                                                                       2,280,559
Other borrowed money (including mortgage indebtedness and obligations under
     capitalized leases):
     With a remaining maturity of one year or less                                                                        4,396,659
     With a remaining maturity of more than one year through three years                                                    603,614
     With a remaining maturity of more than three years                                                                     568,109
Bank's liability on acceptances executed and outstanding                                                                    226,814
Subordinated notes and debentures                                                                                         1,648,467
Other liabilities                                                                                                         2,908,320
Total liabilities                                                                                                        74,375,359

EQUITY CAPITAL

Perpetual preferred stock and related surplus                                                                                   -
Common Stock                                                                                                                205,000
Surplus                                                                                                                   9,129,848
Undivided profits and capital reserves                                                                                      310,156
Net unrealized holding gains (losses) on available-for-sale securities                                                       20,473
Accumulated net gain (losses) on cash flow hedges                                                                               -
Cumulative foreign currency translation adjustments                                                                         (15,887)
Total equity capital                                                                                                      9,649,590
Total liabilities and equity capital                                                                                     84,024,949

EX-99.1

                             LETTER OF TRANSMITTAL
                                   To Tender
               Unregistered 9 1/4% Series F Senior Notes due 2007
                      (including those in book-entry form)
                                       of
                              HOST MARRIOTT, L.P.
        Pursuant to the Exchange Offer and Prospectus dated [    ] 2000


    THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW
 YORK CITY TIME, ON [      ] 2000 (THE "EXPIRATION DATE"), UNLESS THE EXCHANGE
 OFFER IS EXTENDED BY HOST MARRIOTT, L.P.

                 The Exchange Agent for the Exchange Offer is:
                                 HSBC Bank USA

                                  Deliver to:
                         HSBC Bank USA, Exchange Agent

   By Registered or Certified Mail:           By Hand or Overnight Delivery:

              140 Broadway                              140 Broadway
                A Level                                   A Level
     New York, New York 10005-1180             New York, New York 10005-1180
     Attn: Corporate Trust Services            Attn: Corporate Trust Services


                                 By Facsimile:

                          (Eligible Institutions Only)
                                 (212) 658-2292
                               Attn: Frank Godino

                               For Information or
                           Confirmation by Telephone:
                                 (212) 658-5931

    Originals of all documents sent by facsimile should be sent promptly by
                                 registered or
           certified mail, by hand or by overnight delivery service.

   Delivery of this Letter of Transmittal to an address or transmission of
instructions via facsimile other than as set forth above will not constitute a
valid delivery.

   IF YOU WISH TO EXCHANGE UNREGISTERED 9 1/4% SERIES F SENIOR NOTES DUE 2007
(THE "SERIES F NOTES"), FOR AN EQUAL AGGREGATE PRINCIPAL AMOUNT OF REGISTERED 9
1/4% SERIES G SENIOR NOTES DUE 2007 (THE "SERIES G NOTES"), PURSUANT TO THE
EXCHANGE OFFER, YOU MUST VALIDLY TENDER (AND NOT WITHDRAW) OLD NOTES TO THE
EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.

                          SIGNATURES MUST BE PROVIDED.
           PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY BEFORE
                     COMPLETING THIS LETTER OF TRANSMITTAL


   This Letter of Transmittal is to be completed by holders of Series F senior
notes either if Series F senior notes are to be forwarded herewith or if
tenders of Series F senior notes are to be made by book-entry transfer to an
account maintained by HSBC Bank USA (the "Exchange Agent") at The Depository
Trust Company pursuant to the procedures set forth in "The Exchange Offer--
Procedures for Tendering" in the Prospectus (as defined).

   Holders of Series F senior notes whose certificates for such Series F senior
notes are not immediately available or who cannot deliver their certificates
and all other required documents to HSBC Bank USA on or prior to the Expiration
Date or who cannot complete the procedures for book-entry transfer on a timely
basis, must tender their Series F senior notes according to the guaranteed
delivery procedures set forth in "The Exchange Offer--Guaranteed Delivery
Procedures" in the Prospectus.

                       DESCRIPTION OF TENDERED OLD NOTES
- --------------------------------------------------------------------------------


Name(s) and Address(es) of
   Registered Owner(s)                            Aggregate
  as it appears on the 9       Certificate    Principal Amount
 1/4% Senior Subordinated     Number(s) of       of Series F
      Notes due 2007         Series F senior    senior notes
(Please fill in, if blank)        notes           Tendered
- -------------------------------------------------------------------
                                                       

                            ---------------------------------------

                            ---------------------------------------

                            ---------------------------------------

                            ---------------------------------------

                            ---------------------------------------

                            Total Principal
                             Amount of Old
                             Notes Tendered
- -------------------------------------------------------------------



   (BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY)

[_]CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
   MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
   TRANSFER FACILITY AND COMPLETE THE FOLLOWING:

   Name of Tendering Institution _______________________________________________

   Account Number ______________________________________________________________

   Transaction Code Number _____________________________________________________

[_]CHECK HERE AND ENCLOSE A COPY OF THE NOTICE OF GUARANTEED DELIVERY IF
   TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
   DELIVERY AND COMPLETE THE FOLLOWING:

   Name of Registered Holder(s) ________________________________________________

   Window Ticket Number (if any) _______________________________________________

   Date of Execution of Notice of Guaranteed Delivery __________________________

   Name of Institution which Guaranteed Delivery _______________________________

If Guaranteed Delivery is to be made By Book-Entry Transfer:

   Name of Tendering Institution _______________________________________________

   Account Number ______________________________________________________________

   Transaction Code Number _____________________________________________________

[_]CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED OLD NOTES
   ARE TO BE RETURNED BY CREDITING THE BOOK-ENTRY TRANSFER FACILITY ACCOUNT
   NUMBER SET FORTH ABOVE.

[_]CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE OLD NOTES FOR ITS OWN
   ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING ACTIVITIES (A
   "PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF
   THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.

   Name: _______________________________________________________________________

   Address: ____________________________________________________________________


Ladies and Gentlemen:

   1 The undersigned hereby tenders to Host Marriott, L.P., a Delaware limited
partnership (the "Company"), the Series F senior notes, described above
pursuant to the Company's offer of $1,000 principal amount of the Series G
senior notes, in exchange for each $1,000 principal amount of the Series F
senior notes, upon the terms and subject to the conditions contained in the
Prospectus dated [      ] , 2000 (the "Prospectus"), receipt of which is hereby
acknowledged, and in this Letter of Transmittal (which together constitute the
"Exchange Offer").

   2 The undersigned hereby represents and warrants that it has full authority
to tender the Series F senior notes described above. The undersigned will, upon
request, execute and deliver any additional documents deemed by the Company to
be necessary or desirable to complete the tender of Series F senior notes.

   3 The undersigned understands that the tender of the Series F senior notes
pursuant to all of the procedures set forth in the Prospectus will constitute
an agreement between the undersigned and the Company as to the terms and
conditions set forth in the Prospectus.

   4 Unless the box under the heading "Special Registration Instructions" is
checked, the undersigned hereby represents and warrants that;

     (i) the Series G senior notes acquired pursuant to the Exchange Offer
  are being obtained in the ordinary course of business of the undersigned,
  whether or not the undersigned is the holder;

     (ii) neither the undersigned nor any such other person is engaging in or
  intends to engage in a distribution of such Series G senior notes;

     (iii) neither the undersigned nor any such other person has an
  arrangement or understanding with any person to participate in the
  distribution of such Series G senior notes;

     (iv) if the undersigned is a resident of the State of California, it
  falls under the self-executing institutional investor exemption set forth
  under Section 25102(i) of the Corporate Securities Law of 1968 and Rules
  260.102.10 and 260.105.14 of the California Blue Sky Regulations;

     (v) if the undersigned is a resident of the Commonwealth of
  Pennsylvania, it falls under the self-executing institutional investor
  exemption set forth under Sections 203(c), 102(d) and (k) of the
  Pennsylvania Securities Act of 1972, Section 102.111 of the Pennsylvania
  Blue Sky Regulations and an interpretive opinion dated November 16, 1985;

     (vi) the undersigned acknowledges and agrees that any person who is a
  broker-dealer registered under the Securities Exchange Act of 1934, as
  amended, or is participating in the Exchange Offer for the purpose of
  distributing the Series G senior notes must comply with the registration
  and prospectus delivery requirements of the Securities Act in connection
  with a secondary resale transaction of the Series G senior notes or
  interests therein acquired by such person and cannot rely on the position
  of the staff of the Securities and Exchange Commission set forth in certain
  no-action letters;

     (vii) the undersigned understands that a secondary resale transaction
  described in clause (vi) above and any resales of Series G senior notes or
  interests therein obtained by such holder in exchange for Series F senior
  notes or interests therein originally acquired by such holder directly from
  the Company should be covered by an effective registration statement
  containing the selling security holder information required by Item 507 or
  Item 508, as applicable, of Regulation S-K of the Commission; and

     (viii) neither the holder nor any such other person is an "affiliate,"
  as such term is defined under Rule 405 promulgated under the Securities Act
  of 1933, as amended, of the Company.

   5 The undersigned may, if and only if unable to make all of the
representations and warranties contained in Item 4 above, elect to have its
Series F senior notes registered in the shelf registration described in the


Registration Rights Agreement, dated as of [ ], between the Company and the
initial purchasers in the form filed as an exhibit to the Registration
Statement (all terms used in this Item 5 with their initial letters
capitalized, unless otherwise defined herein, shall have the meanings given
them in the Registration Agreement). Such election may be made by checking the
box under "Special Registration Instructions" on page 6. By making such
election, the undersigned agrees, jointly and severally, as a holder of
Transfer Restricted Securities participating in a shelf registration, to
indemnify and hold harmless the Company, its directors and officers and each
Person who controls the Company within the meaning of Section 15 of the
Securities Act of 1933 or Section 20 of the Securities Exchange Act of 1934
against any and all losses, claims, damages and liabilities whatsoever
(including, without limitation, the reasonable legal and other expenses
actually incurred in connection with any suit, action or proceeding or any
claim asserted) caused by, arising out of or based upon (1) any untrue
statement or alleged untrue statement of any material fact contained in the
Shelf Registration Statement or the Prospectus or in any amendment thereof or
supplement thereto or (2) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, in each case to the extent, but only to the extent, that any such
loss, claim, damage or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with information relating to the
undersigned furnished to the Company in writing by or on behalf of the
undersigned expressly for use therein. Any such indemnification shall be
governed by the terms and subject to the conditions set forth in the
Registration Rights Agreement, including, without limitation, the provisions
regarding notice, retention of counsel, contribution and payment of expenses
set forth therein. The above summary of the indemnification provision of the
Registration Rights Agreement is not intended to be exhaustive and is qualified
in its entirety by reference to the Registration Rights Agreement.

   6 If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of
Series G senior notes. If the undersigned is a broker-dealer that will receive
Series G senior notes for its own account in exchange for Series F senior notes
that were acquired as a result of market-making activities or other trading
activities, it acknowledges that it will deliver a prospectus in connection
with any resale of such Series G senior notes, however, by so acknowledging and
delivering a prospectus, the undersigned will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act of 1933. If the
undersigned is a broker-dealer and Series F senior notes held for its own
account were not acquired as a result of market-making or other trading
activities, such Series F senior notes cannot be exchanged pursuant to the
Exchange Offer.

   7 Any obligation of the undersigned hereunder shall be binding upon the
successors, assigns, executors, administrators, trustees in bankruptcy and
legal and personal representatives of the undersigned.

   8 Unless otherwise indicated herein under "Special Delivery Instructions,"
the certificates for the Series G senior notes will be issued in the name of
the undersigned.



   SPECIAL DELIVERY INSTRUCTIONS           SPECIAL REGISTRATION INSTRUCTIONS
        (See Instruction 1)                           (See Item 5)

  To be completed ONLY IF the Se-           To be completed ONLY IF (1) the
 ries G senior notes are to be is-         undersigned satisfies the condi-
 sued or sent to someone other             tions set forth in Item 5 above,
 than the undersigned or to the            (2) the undersigned elects to
 undersigned at an address other           register its Series F senior
 than that provided above.                 notes in the Shelf Registration
                                           described in the Registration
 Mail [_]  Issue [_]                       Rights Agreement and (3) the un-
                                           dersigned agrees to indemnify
                                           certain entities and individuals
                                           as set forth in the Registration
                                           Rights Agreement and summarized
                                           in Item 5 above.

 (check appropriate boxes) certif-
 icates to:


 Name _____________________________
           (Please Print)                   [_] By checking this box the un-
                                           dersigned hereby (1) represents
 Address __________________________        that it is unable to make all of
                                           the representations and warran-
 __________________________________        ties set forth in Item 4 above,
         (Include Zip Code)                (2) elects to have its Series F
                                           senior notes registered pursuant
 __________________________________        to the Shelf Registration de-
                                           scribed in the Registration
                                           Rights Agreement and (3) agrees
                                           to indemnify certain entities and
                                           individuals identified in, and to
                                           the extent provided in, the Reg-
                                           istration Rights Agreement and
                                           summarized in Item 5 above.


                                   SIGNATURE

    To be completed by all exchanging noteholders. Must be signed by
 registered holder exactly as name appears on Series F senior notes. If
 signature is by trustee, executor, administrator, guardian, attorney-in-fact,
 officer of a corporation or other person acting in a fiduciary or
 representative capacity, please set forth full title. See Instruction 3.

 X ___________________________________________________________________________

 X ___________________________________________________________________________
          Signature(s) of Registered Holder(s) or Authorized Signature

 Dated: ______________________________________________________________________

 Name(s): ____________________________________________________________________
                             (Please Type or Print)

 Capacity: ___________________________________________________________________

 Address: ____________________________________________________________________

 _____________________________________________________________________________

 _____________________________________________________________________________
                              (Including Zip Code)

 Area Code and Telephone

 No.: ________________________________________________________________________

               SIGNATURE GUARANTEE (If Required by Instruction 1)

        Certain Signatures Must be Guaranteed by an Eligible Institution

 _____________________________________________________________________________
             (Name of Eligible Institution Guaranteeing Signatures)

 _____________________________________________________________________________
  (Address (including zip code) and Telephone Number (including area code) of
                                     Firm)

 _____________________________________________________________________________
                             (Authorized Signature)

 _____________________________________________________________________________
                                 (Printed Name)

 _____________________________________________________________________________
                                    (Title)

 Dated: ______________________________________________________________________


                      PLEASE READ THE INSTRUCTIONS BELOW,
                WHICH FORM A PART OF THIS LETTER OF TRANSMITTAL


                                  INSTRUCTIONS

   1. Guarantee of Signatures. Signatures on this Letter of Transmittal must be
guaranteed by an eligible guarantor institution that is a member of or
participant in the Securities Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Program or by an "eligible guarantor
institution" within the meaning of Rule l7Ad-15 promulgated under the Exchange
Act of 1934 (an "Eligible Institution") unless the box entitled "Special
Registration Instructions" or "Special Delivery Instructions" above has not
been completed or the Series F senior notes described above are tendered for
the account of an Eligible Institution.

   2. Delivery of Letter of Transmittal and Series F senior notes. The Series F
senior notes, together with a properly completed and duly executed Letter of
Transmittal (or copy thereof), should be mailed or delivered to the Exchange
Agent at the address set forth above.

   THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES,
OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.

   3. Signature on Letter of Transmittal, Bond Powers and Endorsements. If this
Letter of Transmittal is signed by a person other than a registered holder of
any Series F senior notes, such Series F senior notes must be endorsed or
accompanied by appropriate bond powers, signed by such registered holder
exactly as such registered holder's name appears on such Series F senior notes.

   If this Letter of Transmittal or any Series F senior notes or bond powers
are signed by trustees, executors, administrators, guardians, attorneys-in-
fact, officers of corporations, or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and,
unless waived by the Company, proper evidence satisfactory to the Company of
their authority to so act must be submitted with this Letter of Transmittal.

   4. Miscellaneous. All questions as to the validity, form, eligibility
(including time of receipt), acceptance, and withdrawal of tendered Series F
senior notes will be determined by the Company in its sole discretion, which
determination will be final and binding on all parties. The Company reserves
the absolute right to reject any or all Series F senior notes not properly
tendered or any Series F senior notes the Company's acceptance of which would,
in the opinion of counsel for the Company, be unlawful. The Company also
reserves the right to waive any defects, irregularities, or conditions of
tender as to particular Series F senior notes. The Company's interpretation of
the terms and conditions of the Exchange Offer (including the instructions in
this Letter of Transmittal) will be final and binding. Unless waived, any
defects or irregularities in connection with tenders of Series F senior notes
must be cured within such time as the Company shall determine. Neither the
Company, the Exchange Agent, nor any other person shall be under any duty to
give notification of defects in such tenders or shall incur any liability for
failure to give such notification. Tenders of Series F senior notes will not be
deemed to have been made until such defects or irregularities have been cured
or waived. Any Series F senior notes received by the Exchange Agent that are
not properly tendered and as to which the defects or irregularities have not
been cured or waived will be returned by the Exchange Agent to the tendering
holder thereof as soon as practicable following the Expiration Date.


                               LETTER TO CLIENTS
                        REGARDING THE OFFER TO EXCHANGE
     $300,000,000 PRINCIPAL AMOUNT OF 9 1/4% SERIES G SENIOR NOTES DUE 2007
                          FOR ANY AND ALL OUTSTANDING
     $300,000,000 PRINCIPAL AMOUNT OF 9 1/4% SERIES F SENIOR NOTES DUE 2007
                                       OF
                              HOST MARRIOTT, L.P.

To Our Clients:

   We are enclosing herewith a Prospectus, dated [   ] 2000, of Host Marriott,
L.P. (the "Company") and a related Letter of Transmittal (which together
constitute the "Exchange Offer") relating to the offer by the Company to
exchange its new 9 1/4% Series G Senior Notes due 2007 (the "Series G senior
notes"), pursuant to an offering registered under the Securities Act of 1933,
as amended (the "Securities Act"), for a like principal amount of its issued
and outstanding 9 1/4% Senior Notes due 2007 (the "Series F senior notes") upon
the terms and subject to the conditions set forth in the Prospectus and the
Letter of Transmittal.


    PLEASE NOTE THAT THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK
 CITY TIME, ON [      ] 20[  ] , UNLESS EXTENDED.

   The Exchange Offer is not conditioned upon any minimum number of Series F
senior notes being tendered.

   We are the Registered Holder or DTC participant through which you hold an
interest in the Series F senior notes. A tender of such Series F senior notes
can be made only by us pursuant to your instructions. The Letter of Transmittal
is furnished to you for your information only and cannot be used by you to
tender your beneficial ownership of Series F senior notes held by us for your
account.

   We request instructions as to whether you wish to tender any or all of your
Series F senior notes held by us for your account pursuant to the terms and
subject to the conditions of the Exchange Offer. We also request that you
confirm that we may on your behalf make the representations contained in the
Letter of Transmittal that are to be made with respect to you as beneficial
owner.

   Pursuant to the Letter of Transmittal, each holder of Series F senior notes
must make certain representations and warranties that are set forth in the
Letter of Transmittal and in the attached form that we have provided to you for
your instructions regarding what action we should take in the Exchange Offer
with respect to your interest in the Series F senior notes.


               LETTER TO REGISTERED HOLDERS AND DTC PARTICIPANTS

                        REGARDING THE OFFER TO EXCHANGE

     $250,000,000 PRINCIPAL AMOUNT OF 9 1/4% SERIES G SENIOR NOTES DUE 2007

                          FOR ANY AND ALL OUTSTANDING

     $250,000,000 PRINCIPAL AMOUNT OF 9 1/4% SERIES F SENIOR NOTES DUE 2007
                                       OF

                              HOST MARRIOTT, L.P.

To Registered Holders and The Depository Trust Company Participants:

   We are enclosing herewith the materials listed below relating to the offer
by Host Marriott, L.P. to exchange our new 9 1/4% Series G Senior Notes due
2007, pursuant to an offering registered under the Securities Act of 1933, as
amended, for a like principal amount of our issued and outstanding 9 1/4%
Series F Senior Notes due 2007 upon the terms and subject to the conditions set
forth in our Prospectus, dated [    ] 2000, and the related Letter of
Transmittal (which together constitute the "Exchange Offer").

   Enclosed herewith are copies of the following documents:

     1. Prospectus dated [    ] 2000;

     2. Letter of Transmittal;

     3. Notice of Guaranteed Delivery;

     4. Instruction to Registered Holder or DTC Participant from Beneficial
  Owner; and

     5. Letter which may be sent to your clients for whose account you hold
  definitive registered notes or book-entry interests representing Series F
  senior notes in your name or in the name of your nominee, to accompany the
  instruction form referred to above, for obtaining such client's instruction
  with regard to the Exchange Offer.


    WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE
 EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON [    ] 2000,
 UNLESS EXTENDED.

   The Exchange Offer is not conditioned upon any minimum number of Series F
senior notes being tendered.

   To participate in the Exchange Offer, a beneficial holder must either (1)
cause to be delivered to HSBC Bank USA (the "Exchange Agent") at the address
set forth in the Letter of Transmittal Definitive Registered Notes in proper
form for transfer together with a properly executed Letter of Transmittal or
(2) cause a DTC Participant to tender such holder's Series F senior notes to
the Exchange Agent's account maintained at the Depository Trust Company ("DTC")
for the benefit of the Exchange Agent through DTC's Automated Tender Offer
Program ("ATOP"), including transmission of a computer-generated message that
acknowledges and agrees to be bound by the terms of the Letter of Transmittal.
By complying with DTC's ATOP procedures with respect to the Exchange Offer, the
DTC Participant confirms on behalf of itself and the beneficial owners of
tendered Series F senior notes all provisions of the Letter of Transmittal
applicable to it and such beneficial owners as fully as if it completed,
executed and returned the Letter of Transmittal to the Exchange Agent.

   Pursuant to the Letter of Transmittal, each holder of Series F senior notes
will represent that: (1) the Series G senior notes or book-entry interests
therein to be acquired by such holder and any beneficial owner(s) of such
Series F senior notes or interests therein ("Beneficial Owner(s)") in
connection with the Exchange Offer are being acquired by such holder and any
Beneficial Owner(s) in the ordinary course of business of the holder and


any Beneficial Owner(s), (2) the holder and each Beneficial Owner are not
participating, do not intend to participate, and have no arrangement or
understanding with any person to participate, in the distribution of the Series
G senior notes, (3) if the holder or Beneficial Owner is a resident of the
State of California, it falls under the self-executing institutional investor
exemption set forth under Section 25102(i) of the Corporate Securities Law of
1968 and Rules 260.102.10 and 260.105.14 of the California Blue Sky
Regulations, (4) if the holder or Beneficial Owner is a resident of the
Commonwealth of Pennsylvania, it falls under the self-executing institutional
investor exemption set forth under Sections 203(c), 102(d) and (k) of the
Pennsylvania Securities Act of 1972, Section 102.111 of the Pennsylvania Blue
Sky Regulations and an interpretive opinion dated November 16, 1985, (5) the
holder and each Beneficial Owner acknowledge and agree that any person who is a
broker-dealer registered under the Securities Exchange Act of 1934, as amended,
or is participating in the Exchange Offer for the purpose of distributing the
Series G senior notes must comply with the registration and prospectus delivery
requirements of the Securities Act of 1933 in connection with a secondary
resale transaction of the Series G senior notes or interests therein acquired
by such person and cannot rely on the position of the staff of the Commission
set forth in certain no-action letters, (6) the holder and each Beneficial
Owner understands that a secondary resale transaction described in clause (5)
above and any resales of Series G senior notes or interests therein obtained by
such holder in exchange for Series F senior notes or interests therein
originally acquired by such holder directly from us should be covered by an
effective registration statement containing the selling security holder
information required by Item 507 or Item 508, as applicable, of Regulation S-K
of the Commission and (7) neither the holder nor any Beneficial Owner(s) is our
"affiliate," as defined in Rule 405 under the Securities Act of 1933. Upon our
request, a holder or beneficial owner will deliver to the Company a legal
opinion confirming its representation made in clause (7) above. If the
tendering holder of Series F senior notes is a broker-dealer (whether or not it
is also an "affiliate") or any Beneficial Owner(s) that will receive Series G
senior notes for its own or their account pursuant to the Exchange Offer, the
tendering holder will represent on behalf of itself and the Beneficial Owner(s)
that the Series F senior notes to be exchanged for the Series G senior notes
were acquired as a result of market-making activities or other trading
activities, and acknowledge on its own behalf and on the behalf of such
Beneficial Owner(s) that it or they will deliver a prospectus meeting the
requirements of the Securities Act of 1933 in connection with any resale of
such Series G senior notes; however, by so acknowledging and by delivering a
prospectus, such tendering holder will not be deemed to admit that it or any
Beneficial Owner is an "underwriter" within the meaning of the Securities Act
of 1933.

   The enclosed "Instruction to Registered Holder or DTC Participant from
Beneficial Owner" form contains an authorization by the beneficial owners of
Series F senior notes for you to make the foregoing representations.

   We will not pay any fee or commission to any broker or dealer or to any
other persons (other than the Exchange Agent) in connection with the
solicitation of tenders of Series F senior notes pursuant to the Exchange
Offer. We will pay or cause to be paid any transfer taxes payable on the
transfer of Series F senior notes to it, except as otherwise provided in
Instruction 7 of the enclosed Letter of Transmittal.

   Additional copies of the enclosed material may be obtained from HSBC Bank
USA, New York.

                                          Very truly yours,

                                          HOST MARRIOTT, L.P.

   NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
THE AGENT OF HOST MARRIOTT, L.P. OR HSBC BANK USA, NEW YORK OR AUTHORIZE YOU TO
USE ANY DOCUMENT OR MAKE ANY STATEMENT ON OUR BEHALF IN CONNECTION WITH THE
EXCHANGE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS
CONTAINED THEREIN.

                                       2


              INSTRUCTION TO REGISTERED HOLDER OR DTC PARTICIPANT

                             FROM BENEFICIAL OWNER

                                      FOR

                     9 1/4% SERIES F SENIOR NOTES DUE 2007

                                       OF

                              HOST MARRIOTT, L.P.

   The undersigned hereby acknowledges receipt of the Prospectus, dated
[      ] 2000 (the "Prospectus"), of Host Marriott, L.P., a Delaware limited
partnership (the "Company"), and the accompanying Letter of Transmittal (the
"Letter of Transmittal") that together constitute the Company's offer (the
"Exchange Offer"). Capitalized terms used but not defined herein have the
meanings assigned to them in the Prospectus and the Letter of Transmittal.

   This will instruct you as to the action to be taken by you relating to the
Exchange Offer with respect to the 9 1/4% Series F Senior Notes due 2007 (the
"Series F senior notes") held by you for the account of the undersigned.

   The principal amount of the Series F senior notes held by you for the
account of the undersigned is (fill in amount):

              $        principal amount of Series F senior notes.

   With respect to the Exchange Offer, the undersigned hereby instructs you
(check appropriate box):

  [_]To TENDER the following principal amount of Series F senior notes held
     by you for the account of the undersigned (insert amount of Series F
     senior notes to be tendered, if any):

              $        principal amount of Series F senior notes.

  [_]NOT to TENDER any Series F senior notes held by you for the account of
     the undersigned.

   If the undersigned instructs you to tender the Series F senior notes held by
you for the account of the undersigned, it is understood that you are
authorized:

     (a) to make, on behalf of the undersigned (and the undersigned, by its
  signature below, hereby makes to you), the representations and warranties
  contained in the Letter of Transmittal that are to be made with respect to
  the undersigned as a beneficial owner, including but not limited to the
  representations that (1) the 9 1/4% Series G Senior Notes due 2007 ("Series
  G senior notes") or book-entry interests therein to be acquired by the
  undersigned (the "Beneficial Owner(s)") in connection with the Exchange
  Offer are being acquired by the undersigned in the ordinary course of
  business of the undersigned, (2) the undersigned is not participating, does
  not intend to participate, and has no arrangement or understanding with any
  person to participate, in the distribution of the Series G senior notes,
  (3) if the undersigned is a resident of the State of California, it falls
  under the self-executing institutional investor exemption set forth under
  Section 25102(i) of the Corporate Securities Law of 1968 and Rules
  260.102.10 and 260.105.14 of the California Blue Sky Regulations, (4) if
  the undersigned is a resident of the Commonwealth of Pennsylvania, it falls
  under the self-executing institutional investor exemption set forth under
  Sections 203(c), 102(d) and (k) of the Pennsylvania Securities Act of 1972,
  Section 102.111 of the Pennsylvania Blue Sky Regulations and an
  interpretive opinion dated November 16, 1985, (5) the undersigned
  acknowledges and agrees that any person who is a broker-dealer registered
  under the Securities Exchange Act of 1934, as amended, or is participating
  in the Exchange Offer for the purpose of distributing the Series G senior
  notes must comply with the registration and prospectus delivery
  requirements of the Securities Act in connection with a secondary resale
  transaction of the Series G senior notes or interests therein acquired by
  such person and cannot rely on the position of the Staff of the


  Securities and Exchange Commission set forth in certain no-action letters,
  (6) the undersigned understands that a secondary resale transaction
  described in clause (5) above and any resales of Series G senior notes or
  interests therein obtained by such holder in exchange for Series F senior
  notes or interests therein originally acquired by such holder directly from
  the Company should be covered by an effective registration statement
  containing the selling security holder information required by Item 507 or
  Item 508, as applicable, of Regulation S-K of the Commission and (7) the
  undersigned is not an "affiliate," as defined in Rule 405 under the
  Securities Act, of the Company. Upon a request by the Company, a holder or
  beneficial owner will deliver to the Company a legal opinion confirming its
  representation made in clause (7) above. If the undersigned is a broker-
  dealer (whether or not it is also an "affiliate") that will receive Series
  G senior notes for its own account pursuant to the Exchange Offer, the
  undersigned represents that the Series F senior notes to be exchanged for
  the Series G senior notes were acquired by it as a result of market-making
  activities or other trading activities, and acknowledges that it will
  deliver a prospectus meeting the requirements of the Securities Act in
  connection with any resale of such Series G senior notes; however, by so
  acknowledging and by delivering a prospectus, the undersigned does not and
  will not be deemed to admit that is and "underwriter" within the meaning of
  the Securities Act of 1933;

     (b) to agree, on behalf of the undersigned, as set forth in the Letter
  of Transmittal; and

     (c) to take such other action as necessary under the Prospectus or the
  Letter of Transmittal to effect the valid tender of such Series F senior
  notes.


                                   SIGN HERE

 Name of Beneficial Owner(s): ________________________________________________

 Signature(s): _______________________________________________________________

 Name(s) (please print): _____________________________________________________

 Address: ____________________________________________________________________
     -----------------------------------------------------------------------

 Telephone Number: ___________________________________________________________

 Taxpayer Identification or Social Security Number: __________________________

 Date: _______________________________________________________________________


                                       2


            GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
                         NUMBER ON SUBSTITUTE FORM W-9

   Guidelines for Determining the Proper Identification Number to Give the
Payer.--Social Security numbers have nine digits separated by two hyphens:
i.e, 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e, 00-0000000. The table below will help determine the
number to give the payer.

- --------------------------------------   --------------------------------------


                             Give the
                             SOCIAL SECURITY
For this type of account     Number of:
- ------------------------------------------------
                          
1. An individual's account   The individual
2. Two or more individuals   The actual owner of
   (joint account)           the account or, if
                             combined funds, any
                             one of other
                             individuals(1)
3. Husband and wife (joint   The actual owner of
   account)                  the account or, if
                             joint funds, either
                             person(1)
4. Custodian account of a    The minor(2)
   minor (Uniform Gift to
   Minors Act)
5. Adult and minor (joint    The adult or, if
   account)                  the minor is the
                             only contributor,
                             the minor(1)
6. Account in the name of    The ward, minor, or
   guardian or committee     incompetent
   for a designated ward,    person(3)
   minor, or incompetent
   person
7.a.  The usual revocable    The grantor-
      savings trust account  trustee(1)
      (grantor is also
      trustee)
  b.  So-called trust        The actual owner(1)
      account that is not a
      legal or valid trust
      under State law
8. Sole proprietorship       The owner(4)
   account
- ------------------------------------------------
                                         -------



                            Give the EMPLOYER
                            IDENTIFICATION
For this type of account    Number of:
                                         ------
                         
 9. A valid trust, estate,  The legal entity
    or pension trust        (Do not furnish the
                            identification
                            number of the
                            personal
                            representative or
                            trustee unless the
                            legal entity itself
                            is not designated
                            in the account
                            title.)(5)
10. Corporate account       The corporation
11. Religious, charitable,  The organization
    or educational
    organization account
12. Partnership account     The partnership
13. Association, club, or   The organization
    other tax-exempt
    organization
14. A broker or registered  The broker or
    nominee                 nominee
15. Account with the        The public entity
    Department of
    Agriculture in the
    name of a public
    entity (such as a
    State or local
    government, school
    district, or prison)
    that receives
    agricultural program
    payments


(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
    person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
    trust.

Note: If no name is circled when there is more than one name, the number will
      be considered to be that of the first name listed.


            GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
                         NUMBER ON SUBSTITUTE FORM W-9
                                    Page 2
Obtaining a Number

  If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local office
of the Social Security Administration or the Internal Revenue Service and
apply for a number.

Payees Exempt from Backup Withholding

  Payees specifically exempted from backup withholding on ALL payments
including the following:
 . A corporation.
 . A financial institution.
 . An organization exempt from tax under section 501(a) of the Internal
  Revenue Code of 1986, as amended (the "Code"), or an individual retirement
  plan.
 . The United States or any agency or instrumentality thereof.
 . A State, the District of Columbia, a possession of the United States, or
  any subdivision or instrumentality thereof.
 . A foreign government, a political subdivision of a foreign government, or
  any agency or instrumentality thereof.
 . An international organization or any agency or instrumentality thereof.
 . A registered dealer in securities or commodities registered in the U.S. or
  a possession of the U.S.
 . A real estate investment trust.
 . A common trust fund operated by a bank under section 584(a) of the Code.
 . An exempt charitable remainder trust, or a non-exempt trust described in
  section 4947(a)(1) of the Code.
 . An entity registered at all times under the Investment Company Act of
  1940.
 . A foreign central bank of issue.

  Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
 . Payments to nonresident aliens subject to withholding under section 1441
  of the Code.
 . Payments to partnerships not engaged in a trade or business in the United
  States and which have at least one nonresident partner.
 . Payments of patronage dividends where the amount renewed is not paid in
  money.
 . Payments made by certain foreign organizations.
 . Payments made to a nominee.

  Payments of interest not generally subject to backup withholding include the
following:
 . Payments of interest on obligations issued by individuals.
  Note: You may be subject to backup withholding if this interest is $600 or
  more and is paid in the course of the payer's trade or business and you have
  not provided your correct taxpayer identification number to the payer.
 . Payments of tax-exempt interest (including exempt-interest dividends under
  section 852) of the code.
 . Payments described in section 6049(b)(5) of the Code to non-resident
  aliens
 . Payments on tax free covenant bonds under section 1451 of the Code.
 . Payments made by certain foreign organizations.
 . Payments made to a nominee.

  EXEMPT PAYEES DESCRIBED ABOVE MUST STILL COMPLETE THE SUBSTITUTE FORM W-9
ENCLOSED HEREWITH TO AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE
SUBSTITUTE FORM W-9 WITH THE PAYER, REMEMBERING TO CERTIFY YOUR TAXPAYER
IDENTIFICATION NUMBER ON PART III OF THE FORM, WRITE "EXEMPT" ON THE FACE OF
THE FORM AND SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.

  Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044,
6045, 6049, 6050A, and 6050N of the Code and their regulations.

  PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividends,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. The IRS uses the numbers for
identification purposes and to help verify the accuracy of your tax return.
Payers must be given the numbers whether or not recipients are required to
file a tax return. Payers must generally withhold 31% of taxable interest,
dividends, and certain other payments to a payee who does not furnish a
taxpayer identification number to a payer. Certain penalties may also apply.

Penalties.

  (1) Penalty for Failure to Furnish Taxpayer Identification Number.--If you
fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.

  (2) Civil Penalty for False Information With Respect to Withholding.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.

  (3) Criminal Penalty for Falsifying Information.--Falsify- ing
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.

  FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.

EX-99.2

                         NOTICE OF GUARANTEED DELIVERY

                                   To Tender
               Unregistered 9 1/4% Series F Senior Notes due 2007
                      (including those in book-entry form)
                                       of

                              HOST MARRIOTT, L.P.
       Pursuant to the Exchange Offer and Prospectus dated [      ], 2000

   As set forth in the Prospectus, dated [      ], 2000, of Host Marriott,
L.P., this form or one substantially equivalent hereto must be used to accept
the Exchange Offer (1) if certificates for unregistered 9 1/4% Series F Senior
Notes due 2007 (the "Series F senior notes") of Host Marriott, L.P., a Delaware
limited partnership (the "Company"), are not immediately available, (2) time
will not permit a holder's Series F senior notes or other required documents to
reach the Exchange Agent on or prior to the expiration date or (3) the
procedure for book-entry transfer cannot be completed on a timely basis. This
form may be delivered by facsimile transmission, registered or certified mail,
by hand or by overnight delivery service to the Exchange Agent. See "The
Exchange Offer--Procedures for Tendering" in the Prospectus.

 THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
 CITY TIME, ON [      ] 2000 (THE "EXPIRATION DATE"), UNLESS THE EXCHANGE
 OFFER IS EXTENDED) BY THE COMPANY.

                 The Exchange Agent for the Exchange Offer is:

                                 HSBC Bank USA

                                  Deliver to:
                    HSBC Bank USA, New York, Exchange Agent

   By Registered or Certified Mail:        By Hand or Overnight Delivery:


            140 Broadway                              140 Broadway
               A Level                                   A Level
    New York, New York 10005-1180             New York, New York 10005-1180
   Attn: Corporate Trust Services            Attn: Corporate Trust Services

                                 By Facsimile:
                          (Eligible Institutions Only)
                                 (212) 658-2292
                               Attn: Frank Godino

                               For Information or
                           Confirmation by Telephone:
                                 (212) 658-5931

    Originals of all documents sent by facsimile should be sent promptly by
    registered or certified mail, by hand or by overnight delivery service.

   Delivery of this Notice of Guaranteed Delivery to an address or transmission
of this Notice of Guaranteed Delivery via facsimile other than as set forth
above will not constitute a valid delivery.


Ladies and Gentlemen:

   The undersigned hereby tenders to the Company, upon the terms and subject to
the conditions set forth in the Prospectus, dated [      ] 2000, it may be
amended or supplemented from time to time, and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the aggregate principal
amount of Series F senior notes set forth below pursuant to the guaranteed
delivery procedures set forth in the Prospectus under the caption "The Exchange
Offer--Guaranteed Delivery Procedures."


 Name(s) of Registered Holder(s): ____________________________________________

 Aggregate Principal
 Amount Tendered: $ __________________________________________________________

 Certificate No.(s)
 (if available): _____________________________________________________________

 (Total Principal Amount Represented by
 Series F senior notes Certificate(s)): ______________________________________

 $ ___________________________________________________________________________

 If Series F senior notes will be tendered by book-entry transfer, provide the
following information:

 DTC Account Number: _________________________________________________________

 Date: _______________________________________________________________________

 --------
 * Must be in denominations of $1,000 and any integral multiple thereof.


   All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned.



                                PLEASE SIGN HERE

 X __________________________________   ______________________________________

 X __________________________________   ______________________________________
       Signature(s) or Owner(s)                          Date
        or Authorized Signatory

 Area Code and Telephone Number: _____________________________________________

    Must be signed by the holder(s) of the Series F senior notes as their
 name(s) appear(s) on certificates for Series F senior notes or on a security
 position listing, or by person(s) authorized to become registered holder(s)
 by endorsement and documents transmitted with this Notice of Guaranteed
 Delivery. If signature is by a trustee, executor, administrator, guardian,
 attorney-in-fact, officer or other person acting in a fiduciary or
 representative capacity, such person must set forth his or her full title
 below.

                      Please print name(s) and address(es)

 Name(s): ____________________________________________________________________
 _____________________________________________________________________________
 _____________________________________________________________________________

 Capacity: ___________________________________________________________________

 Address(es): ________________________________________________________________
 _____________________________________________________________________________
 _____________________________________________________________________________

               THE GUARANTEE ON THE NEXT PAGE MUST BE COMPLETED.



                                   GUARANTEE

                    (Not to be used for signature guarantee)

   The undersigned, a member of or participant in the Securities Transfer
Agents Medallion Program, the New York Stock Exchange Signature Program or a
firm or other entity identified in Rule l7Ad-15 under the Securities Exchange
Act of 1934, as amended, as an "eligible guarantor institution," including (as
such terms are defined therein): (1) a bank; (2) a broker, dealer, municipal
securities broker, municipal securities dealer, government securities broker,
government securities dealer; (3) a credit union; (4) a national securities
exchange, registered securities association or learning agency; or (5) a
savings association that is a participant in a Securities Transfer Association
recognized program (each of the foregoing being referred to as an "Eligible
Institution"), hereby guarantees to deliver to the Exchange Agent, at one of
its addresses set forth above, either the Series F senior notes tendered hereby
in proper form for transfer, or confirmation of the book-entry transfer of such
Series F senior notes to the Exchange Agent's account at The Depositary Trust
Company, pursuant to the procedures for book-entry transfer set forth in the
Prospectus, within three New York Stock Exchange, Inc. trading days after the
date of execution of this Notice of Guaranteed Delivery.

   The undersigned acknowledges that it must deliver the Series F senior notes
tendered hereby to the Exchange Agent within the time period set forth above
and that failure to do so could result in a financial loss to the undersigned.

 _____________________________________   _____________________________________
             Name of Firm                        Authorized Signature
 _____________________________________   _____________________________________
                Address                                  Title
 _____________________________________   _____________________________________
               Zip Code                         (Please Type or Print)
 Area Code and Telephone No.: ________   Dated: ______________________________


          NOTE:DO NOT SEND CERTIFICATES FOR OLD NOTES WITH THIS FORM.