[HOGAN & HARTSON L.L.P. LETTERHEAD]
Exhibit 8.1
January 8, 2002
Host Marriott Corporation
Host Marriott, L.P.
10400 Fernwood Road
Bethesda, MD 20817
Ladies and Gentlemen:
This firm has 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"), and their affiliates in connection
with (i) the registration statement on Form S-3 (No. 333-61722) (the
"Registration Statement") filed by Host REIT and the Operating Partnership with
the Securities and Exchange Commission (the "SEC"), (ii) the prospectus, dated
January 8, 2002, included in the Registration Statement relating to the
registration of $550,000,000 of Host REIT's common stock, preferred stock,
depositary shares, warrants and subscription rights (the "Host REIT Prospectus")
and (iii) the prospectus, dated January 8, 2002, included in the Registration
Statement relating to the registration of $1,000,000,000 of the Operating
Partnership's senior notes (the "Operating Partnership Prospectus" and, together
with the Host REIT Prospectus, the "Prospectuses.") In connection with the
filing of the Registration Statement, 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 by the
IRS, Congress and the courts (as applicable), which may or may not be
retroactive in effect, that might result in
Host Marriott Corporation
Host Marriott, L.P.
January 8, 2002
Page 2
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 of counsel with respect to an issue represents counsel's best
professional judgment with respect to the outcome on the merits with respect to
such issue, if such issue were to be litigated, but an opinion 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, but
not limited to, the following:
(1) the Registration Statement, including the Prospectuses;
(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;
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Host Marriott, L.P.
January 8, 2002
Page 3
(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") (and
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including, without limitation, the leases acquired in connection with the IHP
Lease Acquisition), the amendments to certain of the Leases, which were entered
into in connection with the Lease Acquisition, and the agreements between and
among the Partnership Subsidiaries owning certain Hotels and the respective TRS
Lessees of such Hotels relating to the extension of the terms of the expiring
Leases on those Hotels (collectively, the "Leases," which term includes, without
limitation, the Harbor Beach Lease);
(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 May 31, 2001 draft of the General Expense Sharing and Cost
Reimbursement Agreement between the Operating Partnership and HMT Lessee;
(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
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Host Marriott, L.P.
January 8, 2002
Page 4
(15) such 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, the Taxable REIT Subsidiaries, the Host
Employee/Charitable Trust, Crestline and the Lessees contained in a letter to us
dated January 7, 2002 (the "Representation Letter").
For purposes of rendering our opinions, although we have knowledge as to
certain of the facts set forth in the above-referenced documents, we have not
made an independent investigation or audit of the facts set forth in such
documents, including the Prospectuses and the Representation Letter. We
consequently have relied upon representations in the Representation Letter 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 (A) 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 it is your current intention
that such representations and statements will continue to be true and correct,
(B) any representation or statement made as a belief or made "to the knowledge
of" or similarly qualified is correct and accurate, and it is your current
intention that such representation or statement will continue to be correct and
accurate, without such qualification, (C) each of the Reviewed Documents that
constitutes an agreement is valid and binding in accordance with its terms, and
(D) 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
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Host Marriott, L.P.
January 8, 2002
Page 5
conformity to originals of documents submitted to us as copies, and the
authenticity of the originals from which any copies were made;
(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; and
(iv) that Crestline (A) is a duly incorporated and validly existing
Maryland corporation; (B) has been, is and will continue to be, operated in
accordance with the laws of the State of Maryland, its organizational documents,
and statements made in the Prospectuses (including the SEC filings incorporated
therein by reference) and the Representation Letter; and (C) was formed, has
operated and will continue to operate with a profit motive.
Any material 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 Prospectuses 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 real estate investment trust
("REIT") under the Code, effective for its taxable years ended December 31,
1999, December 31, 2000, and December 31, 2001 and Host REIT's current
organization and intended method of operation will enable it to continue to meet
the requirements for qualification and taxation as a REIT under the Code for
taxable year 2002 and thereafter.
2. Each of the discussions in the Prospectuses under the heading "Risk
Factors - Federal Income Tax Risks," to the extent that it describes provisions
of federal income tax law or legal conclusions with respect thereto, has been
reviewed by Hogan & Hartson LLP and is correct in all material respects.
* * * * *
Host Marriott Corporation
Host Marriott, L.P.
January 8, 2002
Page 6
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, December 31,
2000, and December 31, 2001 and 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, 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 at the times the
Leases were originally entered into and subsequently renewed or extended (and
taking into account for this purpose changes to the economic and other terms of
the Leases pursuant to subsequent amendments), 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 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
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January 8, 2002
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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, which are described (or incorporated
by reference) in each of the Prospectuses. We have relied upon representations
of Host REIT and the Operating Partnership with respect to these matters
(including those set forth in each of the Prospectuses 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 discussions of federal income tax issues in each Prospectus under the
heading "Risk
Host Marriott Corporation
Host Marriott, L.P.
January 8, 2002
Page 8
Factors - Federal Income Tax Risks" and in the SEC filings incorporated therein
by reference.
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 solely for your use in
connection with the filing of the Registration Statement, and should not be
quoted in whole or in part or otherwise be referred to, nor be filed with or
furnished to any governmental agency (other than the IRS or any state, local or
foreign taxing authority) or other person or entity, without the prior written
consent of this firm. We assume no obligation by reason of this opinion letter
to advise you of any changes in our opinions subsequent to the delivery of this
opinion letter but agree to do so from time to time upon specific request from
you for an update or confirmation.
We consent to your filing this opinion as an exhibit to the Registration
Statement and to the reference to our firm under the caption "Legal Matters" in
each of the Prospectuses included therein.
Very truly yours,
/s/ Hogan & Hartson L.L.P.
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 certain of the Leases prior to the Lease
Acquisition.
"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 elected, 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.
"IHP Lease Acquisition" means the acquisition by HMT Lessee in June of
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2001 of the leasehold interests with respect to three (3) full-service Hotels
that were leased to IHP Lessee LLC.
"Lease Acquisition" means the acquisition by HMT Lessee, pursuant to
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the Acquisition and Exchange Agreement, of the leasehold interests with respect
to 117 full-service Hotels that were leased to the Crestline Lessees.
"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 periods beginning on or after January 1, 2001, any
one of the TRS Lessees, IHP Lessee LLC prior to the IHP Lease Acquisition, the
Crestline Lessees owning leasehold interests (as lessee or sub-lessee) that were
not
A-1
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. Any 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 Lessee" means any of (i) HMT Lessee, (ii) the direct or indirect
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subsidiaries of HMT Lessee that hold the leasehold interests that were acquired
by HMT Lessee from Crestline pursuant to the Acquisition and Exchange Agreement
or in connection with the IHP Lease Acquisition, and (iii) any future lessee of
a Hotel that is a TRS.
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