Exhibit 8.1
[Hogan & Hartson, L.L.P. Letterhead]
August 14, 2003
Host Marriott Corporation
6903 Rockledge Drive
Suite 1500
Bethesda, Maryland 20817
Ladies and Gentlemen:
This firm has acted as special tax counsel to Host Marriott Corporation, a
Maryland corporation ("Host REIT"), in connection with issuance and sale of
27,500,000 shares of Host REIT's common stock, par value $.01 per share (the
"Shares"), as more fully described in Host REIT's prospectus supplement dated
August 11, 2003 (the "Prospectus Supplement"), to Host REIT's prospectus dated
January 9, 2002 (the "Prospectus") (the "Offering"). The shares of Common Stock
being sold in the offering have been registered pursuant to a registration
statement on Form S-3 (File No. 333-61722) previously filed with the Securities
and Exchange Commission (the "Registration Statement"). You have asked us to
provide to you this opinion for use in connection with an amendment to the
Registration Statement that will be filed in connection with the Offiering.
Capitalized terms used herein, unless otherwise defined in the body of this
letter, shall have the meanings set forth in Appendix A.
Bases for Opinion
The opinion set forth in this letter is 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 material modifications of our
opinion. Our opinion does 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
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August 14, 2003
Page 2
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 opinion, we have examined such statutes,
regulations, records, agreements, certificates and other documents as we have
considered necessary or appropriate as a basis for the opinion, including, but
not limited to, the following:
(1) the Prospectus and the Prospectus Supplement;
(2) the Current Report on Form 8-K of Host Marriott Corporation dated
August 11, 2003, filed on August 11, 2003 (the "Tax Disclosure");
(3) the Acquisition and Exchange Agreement;
(4) 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;
(5) 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 (the "Articles of Incorporation"), and the Bylaws
of Host REIT, as amended;
(6) the Articles of Incorporation of Crestline, dated November 9, 1998, and
the Bylaws of Crestline, and the Agreement and Consent, dated as of March 27,
2002, by and among Host REIT and Crestline, Barcelo Gestion Hotelera, S.L., a
Spanish limited liability company ("Barcelo"), and Cowboy Acquisition
Corporation, a Maryland corporation and wholly owned subsidiary of Barcelo
("Merger Sub") (the "Agreement and Consent"), and the Amendment to Agreement and
Consent, dated as of April 26, 2002, by and among Host REIT, Crestline, Barcelo,
Barcelo Corporacion Empresarial, S.A., a Spanish corporation ("Barcelo
Empresarial"), and Merger Sub (the "Amendment to Agreement and Consent");
(7) the operating agreement of HMT Lessee, dated November 10, 2000;
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August 14, 2003
Page 3
(8) 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;
(9) 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
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);
(10) 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;
(11) 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;
(12) Amendment No. 6 to the Distribution Agreement;
(13) 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;
(14) the General Expense Sharing and Cost Reimbursement Agreement between
the Operating Partnership and HMT Lessee;
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August 14, 2003
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(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 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 opinion set forth in this letter also is 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 August 14, 2003 (the "Representation Letter").
For purposes of rendering our opinion, 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 and the Representation Letter. We
consequently have relied upon the representations in the Representation Letter
and the Prospectus and assumed 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 Prospectus, the Prospectus Supplement
and the Representation Letter (collectively, the "Reviewed Documents"), are
true, correct, and complete, (B) any representation or statement made as a
belief or made "to the knowledge of" or similarly qualified is correct and
accurate, and 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 or described in the Reviewed
Documents, including, without limitation, the obligations imposed under the
Articles of Incorporation, have been and will
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August 14, 2003
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continue to be performed or satisfied in accordance with their terms; provided
that, notwithstanding any of the foregoing, we are not making any assumption as
to the accuracy or completeness with respect to statements in the Tax
Disclosuredescribing provisions of federal income tax law, which statements are
covered by our opinion set forth below;
(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;
(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;
(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 Prospectus (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; and
(v) without limiting any other assumption described herein, that the
representations of Crestline and the representations and covenants of Barcelo
Empresarial and Merger Sub set forth in the Agreement and Consent and the
Amendment to Agreement and Consent were true and correct on the date such
representations were made, are true and correct on the date hereof and will
remain true and correct.
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, the Prospectus Supplement, and the Representation
Letter) may adversely affect the conclusions stated herein.
Opinion
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:
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(i) 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, December 31, 2001, and December 31,
2002, 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 2003 and thereafter;
(ii) The discussion in the Tax Disclosure, which discussion is incorporated
by reference into the Prospectus Supplement, 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 opinion 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, December 31, 2001
and December 31, 2002, 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
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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 federalincome 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 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 opinion 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 depend 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 the Prospectus. We have relied upon representations of Host
REIT and the Operating Partnership with respect to these matters (including
those set
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August 14, 2003
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forth in the Prospectus, 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.
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 an amendment to the Registration Statement in
connection with the Offering, 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. 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,
HOGAN & HARTSON L.L.P.
Appendix A
Definitions
"Acquisition and Exchange Agreement" means that certain Acquisition 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, for periods prior to June 7, 2002, Crestline Capital
Corporation, a Maryland corporation, and, for periods beginning on and after
June 7, 2002, Barcelo Crestline Corporation, a Maryland corporation.
"Crestline Lessees" means those indirect subsidiaries of Crestline that
leased Hotels pursuant to certain of the Leases prior to the Lease Acquisition.
"Distribution Agreement" means the Distribution Agreement between Host 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.
"Harbor Beach Lease" means the lease of the Marriott Harbor Beach Resort
from Lauderdale Beach Association to Marriott Hotel Services, Inc.
"HMT Lessee" means HMT Lessee LLC, a Delaware limited liability 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 direct or
indirect interest.
"IHP Lease Acquisition" means the acquisition by HMT Lessee in June of 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 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 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
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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.
"Noncontrolled Subsidiaries" means, with regard to Host REIT's taxable
years ended prior to January 1, 2001, Fernwood and Rockledge.
"Partnership Subsidiary" means the Operating Partnership and any
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 corporation.
"Taxable REIT Subsidiary" means, with regard to Host REIT's taxable 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 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
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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