Securities and Exchange Commission
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 1, 1998
MARRIOTT RESIDENCE INN LIMITED PARTNERSHIP
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(Exact name of registrant as specified in its charter)
Delaware 033-20022 52-1558094
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(State or other (Commission File Number) (I.R.S.Employer
jurisdiction or identification no.)
organization)
10400 Fernwood Road, Bethesda, MD 20817-1109
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: 301-380-2070
ITEM 5. OTHER EVENTS
On October 1, 1998, the General Partner sent to the Limited Partners of the
Partnership a letter to inform them that the proposed Consolidation to form a
new REIT focused on limited service hotels is no longer being pursued. In
addition, the letter informs the Limited Partners that, to date, there have been
no acceptable offers from third parties to purchase the Partnership's hotels.
Such a letter is being filed as an exhibit to this Current Report on Form 8-K.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
99.1 Letter from the General Partner to the Limited Partners
of the Partnership, dated October 1, 1998.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
MARRIOTT RESIDENCE INN
LIMITED PARTNERSHIP
By: RIBM ONE CORPORATION
General Partner
October 9, 1998 By: /s/ Earla L. Stowe
Name: Earla L. Stowe
Title: Vice President and
Chief Accounting Officer
EXHIBIT INDEX
Exhibit No.: Description:
99.1 Letter from the General Partner to the Limited Partners
of the Partnership, dated October 1, 1998
EXHIBIT 99.1
October 1, 1998
Dear Limited Partner:
The General Partner previously advised you that it is reviewing strategic
alternatives that could result in increased liquidity for Limited Partners. In
December 1997, we reported that Host Marriott Corporation ("Host"), on behalf of
the General Partner, filed a preliminary Prospectus/Consent Solicitation
Statement with the SEC. This statement proposed the consolidation (the
"Consolidation") of this Partnership and five other limited partnerships into a
publicly traded real estate investment trust (REIT). Subsequently, we reported
to you that there were existing REITs active in the moderate price and
extended-stay hotel segment that had expressed an interest in acquiring some of
the hotels owned by the six limited partnerships. The General Partner retained
Merrill Lynch to advise the Partnerships with respect to these alternatives.
You may also be aware that although the hotel industry is generally continuing
to report improving operating results, stock prices for the companies that own
hotels, including REITs, have been on a downward slide. There are a number of
reasons given by the industry's analysts for this development ranging from
increased supply in certain segments of the market to the global market trends
influencing the US securities markets. The effect of these developments is that
many of the traditional purchasers of hotels such as those owned by the
Partnership are restricted in their ability to raise capital to purchase hotels.
Although over the past months we have reviewed various alternatives, to date,
there have been no acceptable offers from third parties to purchase the
Partnership's hotels.
These same market conditions have adversely affected the proposed Consolidation
that would form a new REIT focused on limited service hotels. The original
Consolidation plan included an initial public offering of the REIT's common
shares. We have been advised that it would be difficult to raise the appropriate
level of outside equity and that the perceived benefits of the Consolidation are
not achievable at this time. Therefore, we are not pursuing the plan to form a
new REIT.
We are continuing to work with Merrill Lynch to explore alternatives designed to
maximize the long term value of your investment. We will promptly advise you of
any developments.
On October 1, 1998, the Partnership will make a $5 million repayment of its
mortgage debt. This repayment is in addition to the required monthly payments of
principal and interest. Of this amount, $2 million was required under the loan
agreements and an additional $3 million was repaid at the option of the
Partnership. These repayments are in accordance with the terms of the
Partnership's loan agreements. It was determined that these debt repayments were
in the best interest of the Partnership for the following reasons:
The reduction of $5 million in mortgage debt enhances the
Partnership's financial position, which may increase the Partnership's
suitability for purchase by potential purchasers of the Partnership's Inns.
$2.3 million of the optional $3 million repayment was made on the
Second Mortgage, which bears interest at 15.25%. In addition, $700,000 of
the $3 million repayment was made on the Senior Mortgage, which bears
interest at 8.6%. Therefore, mortgage interest expense will be reduced by
approximately $411,000 per year.
The Partnership continues to face possible shortfalls in the property
improvement fund. As previously reported, the Partnership will utilize
funds reserved since 1996 (the "Capital Reserve") to fund $2.6 million of
the shortfall with an additional $1 million to be funded from an increase
in the property improvement fund contribution rate in 1998 and 1999.
Based on the foregoing information, there will be no cash distributions from
1998 operations.
If you have any questions regarding the information in this letter or any other
aspect of your investment, please contact Partnership Investor Relations at
301/380-2070.
Sincerely yours,
RIBM ONE CORPORATION
General Partner
/s/ Bruce F. Stemerman
Bruce F. Stemerman
President