Exhibit 8.1
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[Hogan & Hartson L.L.P. Letterhead]
February 1, 2001
Host Marriott Corporation
Host Marriott, L.P.
10400 Fernwood Road
Bethesda, MD 20817
Ladies and Gentlemen:
We have acted as special tax counsel to Host Marriott Corporation, a
Maryland corporation ("Host REIT"), and Host Marriott, L.P., a Delaware limited
partnership (the "Operating Partnership"), in connection with the filing by Host
REIT with the Securities and Exchange Commission (the "Commission") of a
prospectus supplement dated February 1, 2001 (the "Prospectus Supplement") to be
used in connection with the sale of 12,500,000 shares of Host REIT's common
stock, par value $0.01, by the selling shareholders referenced in the
Registration Statement on Form S-3 (File No. 333-78091) filed by Host REIT with
the Commission, which includes a prospectus of Host REIT dated July 2, 1999. In
connection with such registration, you have requested our opinion as to certain
federal income tax matters set forth in this letter. Capitalized terms used
herein, unless otherwise defined in the body of this letter, shall have the
meanings set forth in Appendix A.
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Bases for Opinions
The opinions set forth in this letter are based on relevant current
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
Treasury Regulations thereunder (including proposed and temporary Treasury
Regulations), and interpretations of the foregoing as expressed in court
decisions, applicable legislative history, and the administrative rulings and
practices of the Internal Revenue Service (the "IRS"), including its practices
and policies in issuing private letter rulings, which are not binding on the IRS
except with respect to a taxpayer that receives such a ruling, all as of the
date hereof. These provisions and interpretations are subject to change, which
may or may not be retroactive in effect, that might result in material
modifications of our opinions. Our opinions do not foreclose the possibility of
a contrary determination by the IRS or a court of competent jurisdiction, or of
a contrary position taken by the IRS or the Treasury Department in regulations
or rulings issued in the future. In this regard, an opinion
Host Marriott Corporation
Host Marriott, L.P.
February 1, 2001
Page 2
of counsel with respect to an issue merely represents counsel's best judgment
with respect to the outcome on the merits with respect to such issue, is not
binding on the IRS or the courts, and is not a guarantee that the IRS will not
assert a contrary position with respect to such issue or that a court will not
sustain such a position asserted by the IRS.
In rendering the following opinions, we have examined such statutes,
regulations, records, agreements, certificates and other documents as we have
considered necessary or appropriate as a basis for the opinions, including the
following:
(1) the Prospectus Supplement;
(2) the Acquisition and Exchange Agreement;
(3) the Second Amended and Restated Agreement of Limited Partnership of the
Operating Partnership, dated as of December 30, 1998, as amended through the
date hereof;
(4) the Articles of Amendment and Restatement of Articles of Incorporation
of Host REIT, filed with the State Department of Assessments and Taxation of
Maryland on December 29, 1998, and the Bylaws of Host REIT, as amended;
(5) the Articles of Incorporation of Crestline, dated November 9, 1998, and
the Bylaws of Crestline;
(6) the operating agreement of HMT Lessee, dated November 10, 2000;
(7) the partnership agreement of each partnership and the operating
agreement of each limited liability company other than HMT Lessee in which
either Host REIT or the Operating Partnership has a direct or indirect interest;
(8) all real estate leases on the Hotels, pursuant to which the Operating
Partnership or a Partnership Subsidiary, as lessor or sub-lessor, leases a hotel
to a lessee or sub-lessee, respectively, the majority of which leases were
entered into with entities that were indirect subsidiaries of Crestline prior to
the Lease Acquisition (as further defined in Appendix A, the "Lessees")
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(collectively, the "Leases," which term includes, without limitation, the Harbor
Beach Lease), and the amendments to the Leases, effective January 1, 2001, which
were entered into in connection with the Lease Acquisition;
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Host Marriott Corporation
Host Marriott, L.P.
February 1, 2001
Page 3
(9) the Certificate of Incorporation, dated December 3, 1998, and the
Bylaws, dated December 14, 1998, of Fernwood, and the Amended and Restated
Certificate of Incorporation, dated December 3, 1998, and the Bylaws, dated
December 14, 1998, of Rockledge;
(10) the Declaration of Trust for the Host Marriott Statutory
Employee/Charitable Trust, a Delaware business trust (the "Host
Employee/Charitable Trust"), dated December 30, 1998, and the Declaration of
Trust for the Host Marriott Employees' Trust, a common law trust formed under
Maryland law, dated December 30, 1998;
(11) Amendment No. 6 to the Distribution Agreement;
(12) the Asset Management Agreement between the Operating Partnership and
Crestline, dated as of December 31, 1998, which agreement terminated immediately
prior to January 1, 2001 in connection with the Lease Acquisition;
(13) the January 22, 2001 draft of the Asset Management Sharing and Cost
Reimbursement Agreement between the Operating Partnership and HMT Lessee,
effective January 1, 2001;
(14) with respect to each class or series of preferred stock of Host REIT,
the Articles Supplementary to the Articles of Amendment and Restatement of
Articles of Incorporation of Host REIT establishing and fixing the rights and
preferences of such class or series of preferred stock; and
(15) any other documents as we deemed necessary or appropriate.
The opinions set forth in this letter also are premised on certain written
factual representations of Host REIT and the Operating Partnership regarding the
organization, ownership and operations (including the income, assets,
businesses, liabilities, properties and accumulated undistributed earnings and
profits) of Host REIT, the Operating Partnership, the Partnership Subsidiaries,
the Non-Controlled Subsidiaries, HMT Lessee, the Host Employee/Charitable Trust,
Crestline and the Lessees contained in a letter to us dated on the date of this
letter (the "Representation Letter").
For purposes of rendering our opinions, we have not made an independent
investigation or audit of the facts set forth in any of the above-referenced
documents, including the Prospectus Supplement or the Representation Letter. We
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Host Marriott Corporation
Host Marriott, L.P.
February 1, 2001
Page 4
consequently have relied upon representations in the Representation Letter and
upon the assumption that the information presented in such documents or
otherwise furnished to us is accurate and complete in all material respects. We
are not aware, however, of any material facts or circumstances contrary to, or
inconsistent with, the representations we have relied upon as described herein,
or other assumptions set forth herein.
In this regard, we have assumed with your consent the following:
(i) that all of the representations and statements set forth in the
documents that we reviewed, including the Representation Letter (collectively,
the "Reviewed Documents") are true and correct and will continue to be true and
correct, any representation or statement made as a belief or made "to the
knowledge of" or similarly qualified is correct and accurate and will continue
to be correct and accurate without such qualification, each of the Reviewed
Documents that constitutes an agreement is valid and binding in accordance with
its terms, and all of the obligations imposed by the Reviewed Documents on the
parties thereto have been and will continue to be performed or satisfied in
accordance with their terms;
(ii) the genuineness of all signatures, the proper execution of all
documents, the authenticity of all documents submitted to us as originals, the
conformity to originals of documents submitted to us as copies, and the
authenticity of the originals from which any copies were made; and
(iii) that any documents as to which we have reviewed only a form were or
will be duly executed without material changes from the form reviewed by us.
Any variation or difference in the facts from those set forth in the
documents that we have reviewed and upon which we have relied (including, in
particular, the Prospectus Supplement and the Representation Letter) may
adversely affect the conclusions stated herein.
Opinions
Based upon, subject to, and limited by the assumptions and qualifications
set forth herein (including those set forth below), we are of the opinion that:
1. Host REIT was organized and has operated in conformity with the
requirements for qualification and taxation as a REIT under the Code, effective
for its taxable years ended December 31, 1999 and December 31, 2000, and Host
REIT's current organization and intended method of operation will enable it to
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Host Marriott Corporation
Host Marriott, L.P.
February 1, 2001
Page 5
continue to meet the requirements for qualification and taxation as a REIT under
the Code for taxable year 2001 and thereafter.
2. The Leases will be respected as leases for federal income tax purposes.
3. The discussion in the Prospectus Supplement under the heading "Federal
Income Tax Consequences," to the extent that it describes provisions of federal
income tax law, is correct in all material respects.
* * * * *
Host REIT's ability to qualify as a REIT depends in particular upon whether
each of the Leases is respected as a lease for federal income tax purposes. If
one or more Leases are not respected as leases for federal income tax purposes,
Host REIT may fail to qualify as a REIT. The determination of whether the Leases
are leases for federal income tax purposes is highly dependent on specific facts
and circumstances. In addition, for the rents payable under a Lease to qualify
as "rents from real property" under the Code, the rental provisions of the
Leases and the other terms thereof must conform with normal business practice
and not be used as a means to base the rent paid on the income or profits of the
lessees. In delivering the opinions set forth above that Host REIT's
organization and method of operation (as described in the Representation Letter)
have enabled Host REIT to meet the requirements for qualification and taxation
as a REIT for its taxable years ended December 31, 1999 and December 31, 2000,
that Host REIT's current organization and intended method of operation will
enable Host REIT to meet such requirements for the current taxable year and
subsequent taxable years, and that the Leases will be respected as leases for
federal income tax purposes, we expressly rely upon, among other things, Host
REIT's representations as to various factual matters with respect to the Leases,
including representations as to the commercial reasonableness of the economic
and other terms of the Leases, the intent and economic expectations of the
parties to the Leases, the allocation of various economic risks between the
parties to the Leases, taking into account all surrounding facts and
circumstances, the conformity of the rental provisions and other terms of the
Leases with normal business practice, the conduct of the parties to the Leases,
and the conclusion that, except in connection with the Harbor Beach Lease and
any other leases that Host REIT acknowledges will not qualify as producing "rent
from real property" under the Code, such terms are not being, and will not be,
used as a means to base the rent paid on the income or profits of the lessees.
We express no opinion as to any of the economic terms of the Leases, the
commercial reasonableness thereof, or whether the actual economic relationships
created thereby are such that the Leases will be respected for federal income
tax
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Host Marriott Corporation
Host Marriott, L.P.
February 1, 2001
Page 6
purposes or whether the rental and other terms of the Leases conform with
normal business practice (and are not being used as a means to base the rent
paid on the income or profits of the Lessees).
Host REIT's ability to qualify as a REIT for its taxable year ended
December 31, 1999 also depends upon Host REIT not having had as of December 31,
1999 any "earnings and profits" accumulated in any prior taxable year of Host
REIT or any of its predecessors or subsidiaries (which would be based on the
consolidated earnings and profits of Host REIT (including each of its
predecessors) accumulated from 1929, the first year that a predecessor of Host
REIT was a "C" corporation, through and including 1998). The calculation of
"earnings and profits" depends upon a number of factual and legal
interpretations related to the activities and operations of Host REIT's
predecessors and their corporate affiliates during their entire corporate
existence and is subject to review and challenge by the IRS. Host REIT has
represented to us for purposes of our opinions that Host REIT distributed by the
close of its taxable year ending December 31, 1999 any "earnings and profits"
accumulated in any prior taxable year of Host REIT or any of its predecessors or
subsidiaries. There can be no assurance, however, that the IRS will not examine
the tax returns of Host REIT's predecessors and their affiliates for all years
prior to 1999 and propose adjustments to increase their taxable income, which
could result in Host REIT being considered to have had undistributed "earnings
and profits" at the close of its taxable year ending December 31, 1999, in which
event Host REIT would not qualify as a REIT for such year. We express no
opinion as to Host REIT's current and accumulated "earnings and profits" or
whether Host REIT will be considered to have had undistributed "earnings and
profits" at the close of 1999.
Host REIT's qualification and taxation as a REIT depends upon Host REIT's
ability to meet on an ongoing basis (through actual annual operating results,
distribution levels, diversity of share ownership and otherwise) the various
qualification tests imposed under the Code and described in the Prospectus
Supplement. We have relied upon representations of Host REIT and the Operating
Partnership with respect to these matters (including those set forth in the
Prospectus Supplement and the Representation Letter) and will not review Host
REIT's compliance with these requirements on a continuing basis. Accordingly, no
assurance can be given that the actual results of Host REIT's operations, the
sources of its income, the nature of its assets, the level of its distributions
to shareholders and the diversity of its share ownership for any given taxable
year will satisfy the requirements under the Code for qualification and taxation
as a REIT.
For a discussion relating the law to the facts, and the legal analysis
underlying the opinions set forth in this letter, we incorporate by reference
the discussion of federal income tax issues in the section of the Prospectus
Supplement under the heading "Federal Income Tax Consequences."
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Host Marriott Corporation
Host Marriott, L.P.
February 1, 2001
Page 7
We assume no obligation to advise you of any changes in our opinions
subsequent to the delivery of this opinion letter.
This opinion letter addresses only the specific federal income tax matters
set forth above and does not address any other federal, state, local or foreign
tax issues. This opinion letter has been prepared for your benefit in
connection with the filing of the Prospectus Supplement. This opinion letter
may not be used or relied upon by any other person or for any other purpose and
may not be disclosed, quoted, filed with any governmental agency or otherwise
referred to without our prior written consent.
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Host Marriott Corporation
Host Marriott, L.P.
February 1, 2001
Page 8
We hereby consent to the filing of this opinion letter as an exhibit to the
Prospectus Supplement, which will be filed as a current report on Form 8-K, and
to the references to Hogan & Hartson L.L.P. under the captions "Legal Matters"
and "Federal Income Tax Consequences" in the Prospectus Supplement. In giving
this consent, we do not thereby admit that we are an expert within the meaning
of the Securities Act of 1933, as amended.
Very truly yours,
/s/ Hogan & Hartson L.L.P.
Hogan & Hartson L.L.P.
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Host Marriott Corporation
Host Marriott, L.P.
February 1, 2001
Page 9
Appendix A
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Definitions
"Acquisition and Exchange Agreement" means that certain Acquisition
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and Exchange Agreement, dated as of November 13, 2000, among HMT Lessee, the
Operating Partnership, Crestline and the other parties named therein, as amended
from time to time.
"Crestline" means Crestline Capital Corporation, a Maryland
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corporation.
"Crestline Lessees" means those indirect subsidiaries of Crestline
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that leased Hotels pursuant to the Leases prior to January 1, 2001.
"Distribution Agreement" means the Distribution Agreement between Host
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REIT (f/k/a as "Marriott Corporation") and Marriott International, Inc., dated
as of September 15, 1993, as amended.
"Fernwood" means Fernwood Hotel Assets, Inc., a Delaware corporation.
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"Harbor Beach Lease" means the lease of the Marriott Harbor Beach
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Resort from Lauderdale Beach Association to Marriott Hotel Services, Inc.
"HMT Lessee" means HMT Lessee LLC, a Delaware limited liability
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company that will elect, effective January 1, 2001, to be treated as a
corporation (and a TRS) for federal income tax purposes.
"Hotel" means each hotel in which the Operating Partnership has a
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direct or indirect interest.
"Lease Acquisition" means the acquisition by HMT Lessee on January 11,
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2001, effective January 1, 2001, pursuant to the Acquisition and Exchange
Agreement, of the leasehold interests with respect to 116 full-service Hotels
that were leased to the Crestline Lessees prior to that date.
"Lessee" means, with regard to Host REIT's taxable years ended prior
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to January 1, 2001, any one of the Crestline Lessees or IHP Lessee LLC, and with
regard to Host REIT's taxable years beginning on or after January 1, 2001, any
one of the TRS Lessees, IHP Lessee LLC, the Crestline Lessees owning leasehold
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Host Marriott Corporation
Host Marriott, L.P.
February 1, 2001
Page 10
interests (as lessee or sub-lessee) that were not acquired by HMT Lessee
pursuant to the Lease Acquisition, and any other lessee to which the Operating
Partnership, directly or through another Partnership Subsidiary, leases one or
more Hotels in the future.
"Noncontrolled Subsidiaries" means, with regard to Host REIT's taxable
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years ended prior to January 1, 2001, Fernwood and Rockledge.
"Partnership Subsidiary" means the Operating Partnership and any
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partnership, limited liability company, or other entity treated as a partnership
for federal income tax purposes or disregarded as a separate entity for federal
income tax purposes in which either Host REIT or the Operating Partnership owns
(or owned on or after January 1, 1999) an interest, either directly or through
one or more other partnerships, limited liability companies or other entities
treated as a partnership for federal income tax purposes or disregarded as a
separate entity for federal income tax purposes (whether or not Host REIT or the
Operating Partnership has a controlling interest in, or otherwise has the
ability to control or direct the operation of, such entity). Notwithstanding
the foregoing, the term "Partnership Subsidiary" shall not in any way be deemed
to include the Non-Controlled Subsidiaries or subsidiaries thereof or the
Taxable REIT Subsidiaries or subsidiaries thereof.
"Rockledge" means Rockledge Hotel Properties, Inc., a Delaware
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corporation.
"Taxable REIT Subsidiary" means, with regard to Host REIT's taxable
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years commencing after December 31, 2000, any of HMT Lessee, Fernwood, Rockledge
or any other TRS of Host REIT.
"TRS" means a "taxable REIT subsidiary," as described in Section
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856(l) of the Code. An entity taxable as a corporation in which a TRS of Host
REIT owns (x) securities possessing more than 35% of the total voting power of
the outstanding securities of such entity or (y) securities having a value of
more than 35% of the total value of the outstanding securities of such entity
shall also be treated as a TRS of Host REIT whether or not a separate election
is made with respect to such other entity.
"TRS Lessees" means those indirect subsidiaries of HMT Lessee that
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hold the leasehold interests acquired by HMT Lessee from Crestline on January
11, 2001, effective January 1, 2001, pursuant to the Acquisition and Exchange
Agreement.
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