[LETTERHEAD OF HOGAN & HARTSON L.L.P.]
Exhibit 8.1
June 4, 2001
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 the sale of 18,200,000 shares of common stock, par value $0.01 per share
(the "Shares"), of Host REIT, by the selling stockholders (the "Selling
Stockholders") identified on Schedule II to the underwriting agreement (the
"Underwriting Agreement") dated May 29, 2001, among Host REIT, the Operating
Partnership, and the Selling Stockholders, as confirmed and accepted by Salomon
Smith Barney Inc. pursuant to a registration statement on Form S-3 under the
Securities Act of 1933, as amended, filed with the Securities and Exchange (File
No. 333-67907), a related prospectus, dated July 2, 1999, a prospectus
supplement related to the Shares, dated May 29, 2001 (the "Prospectus
Supplement"), and the Underwriting Agreement. In connection with the filing of
the Prospectus Supplement, 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.
June 4, 2001
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) an executed copy of the Underwriting Agreement;
(2) the Registration Statement on Form S-3 (No. 333-78091), as amended
by Amendment No. 1 thereto;
(3) the base Prospectus dated July 2, 1999, and the Prospectus
Supplement dated May 29, 2001 relating to the Shares (the "Prospectus
Supplement"), as filed pursuant to Rule 424(b) under the Securities Act of 1933,
as amended;
(4) the Acquisition and Exchange Agreement;
(5) 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;
(6) 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;
Host Marriott Corporation
Host Marriott, L.P.
June 4, 2001
Page 3
(7) the Articles of Incorporation of Crestline, dated November 9,
1998, and the Bylaws of Crestline;
(8) the operating agreement of HMT Lessee, dated November 10, 2000;
(9) 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;
(10) 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
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"Lessees"), and the amendments to certain of the Leases, effective January 1,
2001, which were entered into in connection with the Lease Acquisition
(collectively, the "Leases," which term includes, without limitation, the Harbor
Beach Lease);
(11) 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;
(12) 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;
(13) Amendment No. 6 to the Distribution Agreement;
(14) 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;
(15) 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
Host Marriott Corporation
Host Marriott, L.P.
June 4, 2001
Page 4
of Incorporation of Host REIT establishing and fixing the rights and preferences
of such class or series of preferred stock; and
(16) 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 June 4, 2001 (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 Prospectus Supplement or the Representation Letter. We
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 (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;
Host Marriott Corporation
Host Marriott, L.P.
June 4, 2001
Page 5
(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 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 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 real estate investment trust
("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 continue to meet the requirements for
qualification and taxation as a REIT under the Code for taxable year 2001 and
thereafter.
2. (i) The discussion in the Tax Consequences Exhibit, to the
extent that it describes provisions of federal income tax law or legal
conclusions with respect thereto, has been reviewed by us and is correct in all
material respects, and (ii) although we have not undertaken to determine
independently the accuracy, completeness, or fairness, on a factual basis, of
the statements set forth therein, on the basis of our activities as counsel for
Host REIT, no facts have come to our attention which cause us to believe that
such section, as of the date hereof, contains an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they are made, not misleading.
* * * * *
Host Marriott Corporation
Host Marriott, L.P.
June 4, 2001
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 and December 31, 2000, 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 time the
Leases were originally entered into (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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Host Marriott, L.P.
June 4, 2001
Page 7
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 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 discussions of federal income tax issues in the sections of the Prospectus
Host Marriott Corporation
Host Marriott, L.P.
June 4, 2001
Page 8
Supplement under the headings "Risk Factors - Federal Income Tax Risks" and
"Material Federal Income Tax Consequences."
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 Prospectus Supplement, 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.
Very truly yours,
/s/ Hogan & Hartson L.L.P.
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 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.
"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 periods beginning on or after January 1, 2001, any
one of the TRS Lessees, IHP Lessee LLC, the Crestline Lessees owning leasehold
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.
A-1
"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 Lessees" means those indirect subsidiaries of HMT Lessee that
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hold the leasehold interests that were acquired by HMT Lessee from Crestline
pursuant to the Acquisition and Exchange Agreement, HMT Lessee and any future
lessee of a Hotel that is a TRS.
A-2