<PAGE>

=============================================================================

                      SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C. 20549



                                   FORM 10-Q


          [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                                      OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934



For the Quarter Ended September 10, 1999           Commission File No. 0-25087


                              HOST MARRIOTT, L.P.
                              10400 Fernwood Road
                           Bethesda, Maryland 20817
                                (301) 380-9000



        Delaware                                          52-2095412
------------------------                          -------------------------
(State of Incorporation)                               (I.R.S. Employer
                                                    Identification Number)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.

                                                             Yes  X     No___
                                                                 ---




<TABLE>
<CAPTION>
                                                                                        Units outstanding
     Class                                                                            at October 19, 1999
-------------                                                                         -------------------
<S>                                                                                   <C>
Units of limited partnership interest                                                         293,335,128
Units of Class TS Cumulative Redeemable Preferred limited partnership interest                    585,777
Units of Class A Cumulative Redeemable Preferred limited partnership interest                   4,160,000
</TABLE>
<PAGE>

                                     INDEX
                                     -----


Part I.   FINANCIAL INFORMATION (Unaudited):                           Page No.
                                                                       -------

          Condensed Consolidated Balance Sheets -                         3
           September 10, 1999 and December 31, 1998

          Condensed Consolidated Statements of Operations -               4
           Twelve Weeks and Thirty-six Weeks Ended
           September 10, 1999 and September 11, 1998

          Condensed Consolidated Statements of Cash Flows -               8
           Thirty-six Weeks Ended September 10, 1999 and
           September 11, 1998

          Notes to Condensed Consolidated Financial Statements           10

          Management's Discussion and Analysis of Results of             27
           Operations and Financial Condition

          Quantitative and Qualitative Disclosures about Market Risk     35

Part II.  OTHER INFORMATION AND SIGNATURE                                36

                                      -2-

<PAGE>

                              HOST MARRIOTT, L.P.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (in millions)

<TABLE>
<CAPTION>
                                                                                          September 10,  December 31,
                                                                                              1999           1998
                                                                                          -------------  ------------
                                                                                          (unaudited)
<S>                                                                                       <C>            <C>
                                             ASSETS
                                             ------

Property and equipment, net.............................................................  $   7,221      $   7,201
Notes and other receivables (including amounts due from
    affiliates of $131 million and $134 million, respectively)..........................        244            203
Rent receivable.........................................................................         63             --
Due from managers.......................................................................         --             19
Investments in affiliates...............................................................         48             33
Other assets............................................................................        458            370
Cash and cash equivalents...............................................................        290            436
                                                                                          ---------      ---------
                                                                                          $   8,324      $   8,262
                                                                                          =========      =========

                            LIABILITIES AND SHAREHOLDERS' EQUITY
                            ------------------------------------

Debt
    Senior notes........................................................................  $   2,539      $   2,246
    Mortgage debt.......................................................................      2,255          2,438
    Convertible debt obligation to Host Marriott........................................        567            567
    Other...............................................................................        356            447
                                                                                          ---------      ---------
                                                                                              5,717          5,698
Accounts payable and accrued expenses...................................................        142            204
Deferred income taxes...................................................................         96             97
Other liabilities.......................................................................        383            460
                                                                                          ---------      ---------
     Total liabilities..................................................................      6,338          6,459
                                                                                          ---------      ---------

Minority interest.......................................................................        141            147
Class TS cumulative redeemable preferred limited partnership interests of third parties
    at redemption value ("Class TS Preferred Units") (representing 0.6 million units and
    0 units at September 10, 1999 and December 31, 1998, respectively)..................          6             --
Limited partnership interests of third parties at redemption value (representing
    64.3 million units and 64.6 million units at September 10, 1999
    and December 31, 1998, respectively)................................................        611            892

Partners' Capital
    General partner.....................................................................          1              1
    Class A cumulative redeemable preferred limited partner units ("Class A Preferred
      Units")...........................................................................        100             --
    Limited partner.....................................................................      1,124            767
    Accumulated other comprehensive income (loss).......................................          3             (4)
                                                                                          ---------      ---------
      Total shareholders' equity........................................................      1,228            764
                                                                                          ---------      ---------
                                                                                          $   8,324      $   8,262
                                                                                          =========      =========
</TABLE>

           See Notes to Condensed Consolidated Financial Statements

                                      -3-
<PAGE>

                              HOST MARRIOTT, L.P.
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
         Twelve weeks ended September 10, 1999 and September 11, 1998
                           (unaudited, in millions)

<TABLE>
<CAPTION>
                                                                                               1999         1998
                                                                                              ------       ------
<S>                                                                                           <C>          <C>
REVENUES
    Rental income (Note 3)..............................................................       $ 274      $    --
    Hotel sales
      Rooms.............................................................................          --          494
      Food and beverage.................................................................          --          198
      Other.............................................................................          --           49
    Interest income.....................................................................          10           11
    Net gains on property transactions..................................................          --            1
    Equity in earnings of affiliates....................................................           3            2
    Other...............................................................................           2            1
                                                                                             -------      -------
      Total revenues....................................................................         289          756
                                                                                             -------      -------

EXPENSES
    Depreciation and amortization.......................................................          68           53
    Property-level expenses.............................................................          62           67
    Hotel operating expenses
      Rooms.............................................................................          --          121
      Food and beverage.................................................................          --          156
      Other department costs and deductions.............................................          --          194
      Management fees (including Marriott International
         management fees of $36 million in 1998)........................................          --           39
    Minority interest...................................................................           3            6
    Interest expense....................................................................         108           79
    Dividends on Host Marriott-obligated mandatorily
      redeemable convertible preferred securities of a subsidiary
      trust whose sole assets are the convertible subordinated
      debentures due 2026 ("Convertible Preferred Securities")..........................          --            9
    Corporate expenses..................................................................           6           12
    REIT Conversion expenses............................................................          --            8
Other expenses..........................................................................           1            4
                                                                                             -------      -------
                                                                                                 248          748
                                                                                             -------      -------

INCOME FROM CONTINUING OPERATIONS BEFORE
    INCOME TAXES........................................................................          41            8
Provision for income taxes..............................................................          --           (6)
                                                                                             -------      -------

INCOME FROM CONTINUING OPERATIONS.......................................................          41            2
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAXES.......................................          --            2
                                                                                             -------      -------
INCOME BEFORE EXTRAORDINARY ITEM........................................................          41            4
Extraordinary gain (loss)...............................................................           4         (148)
                                                                                             -------      -------

NET INCOME (LOSS).......................................................................     $    45      $  (144)
                                                                                             =======      =======
Less:  Distributions on Class A Preferred Units.........................................          (1)          --
                                                                                             -------      -------

NET INCOME (LOSS) AVAILABLE TO COMMON UNITHOLDERS.......................................     $    44      $  (144)
                                                                                             =======      =======
</TABLE>

           See Notes to Condensed Consolidated Financial Statements

                                      -4-
<PAGE>

                              HOST MARRIOTT, L.P.
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (cont.)
         Twelve weeks ended September 10, 1999 and September 11, 1998
                                  (unaudited)

<TABLE>
<S>                                                                                        <C>            <C>
BASIC EARNINGS PER UNIT:
CONTINUING OPERATIONS...................................................................   $   0.13       $   0.01
Discontinued operations (net of income taxes)...........................................         --           0.01
Extraordinary gain (loss)...............................................................       0.02          (0.69)
                                                                                           --------       --------

BASIC EARNINGS (LOSS) PER UNIT:.........................................................   $   0.15       $  (0.67)
                                                                                           ========       ========

DILUTED EARNINGS PER UNIT:
CONTINUING OPERATIONS...................................................................   $   0.13       $   0.01
Discontinued operations (net of income taxes)...........................................         --           0.01
Extraordinary gain (loss)...............................................................       0.02          (0.67)
                                                                                           --------       --------

DILUTED EARNINGS (LOSS) PER UNIT........................................................   $   0.15       $  (0.65)
                                                                                           ========       ========
</TABLE>

           See Notes to Condensed Consolidated Financial Statements

                                      -5-
<PAGE>

                              HOST MARRIOTT, L.P.
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
       Thirty-six weeks ended September 10, 1999 and September 11, 1998
                           (unaudited, in millions)

<TABLE>
<CAPTION>
                                                                                                     1999         1998
                                                                                                  ----------   ----------
<S>                                                                                               <C>          <C>
REVENUES
Rental income (Note 3)........................................................................    $    885     $     --
Hotel sales...................................................................................
   Rooms......................................................................................          --        1,514
   Food and beverage..........................................................................          --          642
   Other......................................................................................          --          159
Interest income...............................................................................          26           35
Net gains on property transactions............................................................          16           53
Equity in earnings of affiliates..............................................................           5            1
Other ........................................................................................           5            6
                                                                                                  --------     --------
    Total revenues............................................................................         937        2,410
                                                                                                  --------     --------

EXPENSES
    Depreciation and amortization.............................................................         201          166
    Property-level expenses...................................................................         182          189
    Hotel operating expenses
      Rooms...................................................................................          --          348
      Food and beverage.......................................................................          --          477
      Other department costs and deductions...................................................          --          568
      Management fees (including Marriott International management fees of $138
         million in 1998).....................................................................          --          147
    Minority interest.........................................................................          16           36
    Interest expense..........................................................................         325          231
    Dividends on Host Marriott-obligated mandatorily redeemable convertible preferred
      securities of a subsidiary trust whose sole assets are the convertible subordinated
      debentures due 2026 ("Convertible Preferred Securities")................................          --           26
    Corporate expenses........................................................................          22           33
    REIT conversion expenses..................................................................          --           14
    Other expenses............................................................................          10           14
                                                                                                  --------     --------
                                                                                                       756        2,249
                                                                                                  --------     --------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES.........................................         181          161
Provision for income taxes....................................................................          --          (69)
                                                                                                  --------     --------

INCOME FROM CONTINUING OPERATIONS.............................................................         181           92
INCOME FROM DISCONTINUED OPERATIONS, net of taxes.............................................          --            8
                                                                                                  --------     --------

INCOME BEFORE EXTRAORDINARY ITEM..............................................................         181          100
Extraordinary gain (loss).....................................................................          17         (148)
                                                                                                  --------     --------

NET INCOME (LOSS).............................................................................    $    198     $    (48)
                                                                                                  ========     ========
Less: Distributions on Class A Preferred Units................................................          (1)          --
                                                                                                  --------     --------

NET INCOME (LOSS) AVAILABLE TO COMMON UNITHOLDERS.......................................          $    197     $    (48)
                                                                                                  ========     ========
</TABLE>

           See Notes to Condensed Consolidated Financial Statements

                                      -6-
<PAGE>

                              HOST MARRIOTT, L.P.
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (cont.)
       Thirty-six weeks ended September 10, 1999 and September 11, 1998
                                  (unaudited)

<TABLE>
<S>                                                                                        <C>            <C>
BASIC EARNINGS PER UNIT:
CONTINUING OPERATIONS...................................................................   $   0.62       $   0.42
Discontinued operations (net of income taxes)...........................................         --           0.04
Extraordinary gain (loss)...............................................................       0.06          (0.69)
                                                                                           --------       --------

BASIC EARNINGS (LOSS) PER UNIT:.........................................................   $   0.68       $  (0.23)
                                                                                           ========       ========

DILUTED EARNINGS PER UNIT:
CONTINUING OPERATIONS...................................................................   $   0.60       $   0.42
Discontinued operations (net of income taxes)...........................................         --           0.03
Extraordinary gain (loss)...............................................................       0.06          (0.67)
                                                                                           --------       --------

DILUTED EARNINGS (LOSS) PER UNIT........................................................   $   0.66       $  (0.22)
                                                                                           ========       ========
</TABLE>

           See Notes to Condensed Consolidated Financial Statements

                                      -7-
<PAGE>

                              HOST MARRIOTT, L.P.
                CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS
       Thirty-six weeks ended September 10, 1999 and September 11, 1998
                           (unaudited, in millions)

<TABLE>
<CAPTION>
                                                                                             1999          1998
                                                                                           --------      --------
<S>                                                                                        <C>           <C>
OPERATING ACTIVITIES
Income from continuing operations.......................................................   $    181      $     92
Adjustments to reconcile to cash from continuing operations:
    Depreciation and amortization.......................................................        203           168
    Income taxes........................................................................         --            50
    Gain on sale of hotel properties....................................................        (16)          (50)
    Equity in earnings of affiliates....................................................         (5)           (1)
    Changes in operating accounts.......................................................       (127)          (35)
    Other...............................................................................         20            30
                                                                                           --------      --------
    Cash from continuing operations.....................................................        256           254
    Cash from discontinued operations...................................................         --            24
                                                                                           --------      --------
    Cash from operations................................................................        256           278
                                                                                           --------      --------

INVESTING ACTIVITIES
Proceeds from sales of assets...........................................................         49           211
Acquisitions............................................................................        (17)         (607)
Capital expenditures:
    Renewals and replacements...........................................................       (143)         (108)
    Development projects................................................................       (102)          (32)
    Other investments...................................................................        (16)          (19)
Purchases of short-term marketable securities...........................................         --          (134)
Sales of short-term marketable securities...............................................         --           451
Note receivable advances, net of collections............................................        (47)            4
Affiliate collections, net..............................................................         --            13
Other...................................................................................         --           (12)
                                                                                           --------      --------
    Cash used in investing activities from continuing operations........................       (276)         (233)
    Cash used in investing activities from discontinued operations......................         --           (10)
                                                                                           --------      --------
    Cash used in investing activities...................................................       (276)         (243)
                                                                                           --------      --------

FINANCING ACTIVITIES
Issuances of debt, net..................................................................      1,282         2,004
Issuances of Class A Preferred Units....................................................        100            --
Issuances of common units...............................................................          2            --
Distributions...........................................................................       (195)           --
Scheduled principal repayments..........................................................        (26)          (39)
Debt prepayments........................................................................     (1,275)       (1,631)
Costs of extinguishment of debt.........................................................         (2)         (175)
Other...................................................................................        (12)          (14)
                                                                                           --------      --------
    Cash (used in) from financing activities from continuing operations.................       (126)          145
    Cash used in financing activities from discontinued operations......................         --          (152)
                                                                                           --------      ---------
    Cash used in financing activities...................................................       (126)           (7)
                                                                                           --------      --------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........................................   $   (146)     $     28
                                                                                           ========      ========
</TABLE>

           See Notes to Condensed Consolidated Financial Statements

                                      -8-
<PAGE>

                              HOST MARRIOTT, L.P.
                CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS
       Thirty-six weeks ended September 10, 1999 and September 11, 1998
                           (unaudited, in millions)


Supplemental schedule of noncash investing and financing activities:

Approximately 586,000 Class TS Preferred Units valued at $7.4 million were
issued in connection with the acquisition by merger of two partnerships that own
limited partnership interests in the partnership that owns the New York Marriott
Marquis.

In the first quarter of 1998, the Company assumed $164 million of mortgage debt
for the acquisition of, or purchase of controlling interests in, certain hotel
properties.


           See Notes to Condensed Consolidated Financial Statements

                                      -9-
<PAGE>

                              HOST MARRIOTT, L.P.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)

1.   Organization

     Host Marriott Corporation ("Host Marriott"), operating through an umbrella
     partnership REIT structure, is the owner of hotel properties. Host Marriott
     operates as a self-managed and self-administered real estate investment
     trust ("REIT") and its operations are conducted through an operating
     partnership and its subsidiaries. As REITs are not currently permitted to
     derive revenues directly from the operation of hotels, Host Marriott leases
     substantially all of its hotels to subsidiaries of Crestline Capital
     Corporation ("Crestline" or the "Lessee") and certain other lessees.

     In these condensed consolidated financial statements, the "Company" or
     "Host Marriott" refers to Host Marriott Corporation and its consolidated
     subsidiaries before, and Host Marriott, L.P. and its consolidated
     subsidiaries (the "Operating Partnership"), after Host Marriott
     Corporation's conversion to a REIT (the "REIT Conversion"). Host Marriott
     Corporation is presented as the predecessor to the Operating Partnership
     since the Operating Partnership and its subsidiaries received substantially
     all of the continuing operations, assets and liabilities of Host Marriott
     Corporation and its subsidiaries.

     On December 15, 1998, shareholders of Host Marriott approved a plan to
     reorganize Host Marriott's business operations through the spin-off of Host
     Marriott's senior living business as part of Crestline and the contribution
     of Host Marriott's hotels and certain other assets and liabilities to a
     newly formed Delaware limited partnership, Host Marriott, L.P. Host
     Marriott merged into HMC Merger Corporation (the "Merger"), a newly formed
     Maryland corporation (renamed Host Marriott Corporation) which intends to
     qualify, effective January 1, 1999 as a REIT and is the sole general
     partner of the Operating Partnership. On December 29, 1998, Host Marriott
     completed the previously announced spin-off of Crestline through a taxable
     stock dividend to its shareholders. Each Host Marriott shareholder of
     record on December 28, 1998 received one share of Crestline for every ten
     shares of Host Marriott Corporation owned (the "Distribution"). In
     connection with the REIT Conversion, Host Marriott contributed its hotels
     and substantially all of its other assets and liabilities to the Operating
     Partnership and subsidiaries (the "Contribution") in exchange for units of
     partnership interest in the Operating Partnership. The Contribution was
     accounted for at Host Marriott's historical basis. As of September 10,
     1999, Host Marriott owned approximately 78% of the Operating Partnership.

     As a result of the Distribution, the Company's financial statements have
     been restated to present the senior living communities business results of
     operations and cash flows as discontinued operations. All historical
     financial statements presented have been restated to conform to this
     presentation.

2.   Summary of Significant Accounting Policies

     The accompanying unaudited condensed consolidated financial statements of
     the Company and its subsidiaries have been prepared without audit. Certain
     information and footnote disclosures normally included in financial
     statements presented in accordance with generally accepted accounting
     principles have been condensed or omitted. The Company believes the
     disclosures made are adequate to make the information presented not
     misleading. However, the unaudited condensed consolidated financial
     statements should be read in conjunction with the consolidated financial
     statements and notes thereto included in the Company's annual report on
     Form 10-K for the fiscal year ended December 31, 1998.

     In the opinion of the Company, the accompanying unaudited condensed
     consolidated financial statements reflect all adjustments necessary to
     present fairly the financial position of the Company as of September 10,
     1999 and December 31, 1998, and the results of operations for the twelve
     and thirty-six weeks ended September 10, 1999 and September 11, 1998 and
     cash flows for the thirty-six weeks

                                      -10-
<PAGE>

                              HOST MARRIOTT, L.P.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)

     ended September 10, 1999 and September 11, 1998. The statements of
     operations for the twelve and thirty-six weeks ended September 11, 1998 and
     the cash flows for the thirty-six weeks ended September 11, 1998 reflect
     the historical results of Host Marriott Corporation as discussed in Note 1.
     Interim results are not necessarily indicative of fiscal year performance
     because of the impact of seasonal and short-term variations.

     The Company's leases have remaining terms ranging from 2 to 10 years,
     subject to earlier termination upon the occurrence of certain
     contingencies, as defined. The rent due under each lease is the greater of
     base rent or percentage rent, as defined. Percentage rent applicable to
     room, food and beverage and other types of hotel revenue varies by lease
     and is calculated by multiplying fixed percentages by the total amounts of
     such revenues over specified threshold amounts. Both the minimum rent and
     the revenue thresholds used in computing percentage rents are subject to
     annual adjustments based on increases in the United States Consumer Price
     Index and the Labor Index, as defined. Certain amounts of the percentage
     rent recognized are considered contingent until such time as the revenue
     recognized exceeds annual thresholds, which are determined individually by
     property. For the twelve and thirty-six weeks ended September 10, 1999, $86
     million and $339 million of contingent rent is included in the statement of
     operations, respectively.

3.   Rental Revenue

     The Company's 1999 revenue primarily represents the rental income from its
     leased hotels and is not comparable to 1998 hotel revenues which reflect
     gross sales generated by the properties. Also, in December 1998 the Company
     retroactively adopted Emerging Issues Task Force Issue No. 97-2,
     "Application of FASB Statement No. 94 and APB Opinion No. 16 to Physician
     Management Entities and Certain Other Entities with Contractual Management
     Arrangements." The impact of the adoption of Issue 97-2 on the condensed
     consolidated financial statements for the twelve and thirty-six weeks ended
     September 11, 1998 was to increase both revenues and operating expenses by
     approximately $471 million and $1,393 million, respectively, with no impact
     on net income or earnings per share.

     The comparison of the 1999 results with 1998 is also affected by a change
     in the reporting period for the Company's hotels not managed by Marriott
     International. The 1998 year to date historical results would have to be
     adjusted to exclude the results of these hotels for December 1997 and
     include August 1998 for the thirty-six weeks ended September 11, 1998 in
     order to be comparable to the 1999 period results as reported. Also, for
     the third quarter the 1998 historical results would have to be adjusted to
     exclude the results of these hotels for May 1998 and include August 1998
     for the twelve weeks ended September 11, 1998 in order to be comparable to
     the 1999 period results as reported.

     The table below represents hotel sales for which rental income is computed
for 1999.

<TABLE>
<CAPTION>
                                                       Twelve Weeks Ended            Thirty-six Weeks Ended
                                                  -----------------------------   -----------------------------
                                                  September 10,   September 11,   September 10,   September 11,
                                                      1999            1998            1999             1998
                                                  -------------   -------------   -------------   -------------
                                                         (in millions)                    (in millions)
     <S>                                          <C>             <C>             <C>             <C>
     Hotel Sales
             Rooms.............................      $  609           $  494         $  1,881        $  1,514
             Food and beverage.................         250              198              828             642
             Other.............................          66               49              201             159
                                                  -------------   -------------   -------------   -------------
               Total hotel sales...............      $  925           $  741         $  2,910        $  2,315
                                                  =============   =============   =============   =============
</TABLE>



                                      -11-
<PAGE>

                              HOST MARRIOTT, L.P.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)

4.   Earnings Per Unit

     Basic earnings per common unit is computed by dividing net income less
     dividends on preferred limited partner interests by the weighted average
     number of common units outstanding. Diluted earnings per unit is computed
     by dividing net income less dividends on preferred limited partner units as
     adjusted for potentially dilutive securities, by the weighted average
     number of common units outstanding plus other potentially dilutive
     securities. Dilutive securities may include units distributed to Host
     Marriott Corporation for Host Marriott Corporation common shares granted
     under comprehensive stock plans, warrants and the Convertible Preferred
     Securities. Dilutive securities also include those common and preferred
     Operating Partnership Units ("OP Units") issuable or outstanding that are
     held by minority partners which are assumed to be converted. Diluted
     earnings per unit was not adjusted for the impact of the Convertible
     Preferred Securities as they were anti-dilutive for all periods presented.

<TABLE>
<CAPTION>
                                                                               Twelve weeks ended
                                                     -------------------------------------------------------------------------
                                                               September 10, 1999                   September 11, 1998
                                                     ----------------------------------   ------------------------------------
                                                       Income       Units      Per Unit      Income       Units       Per Unit
                                                     (Numerator) (Denominator)  Amount     (Numerator) (Denominator)   Amount
                                                     ----------------------------------   ------------------------------------
     <S>                                             <C>         <C>           <C>        <C>          <C>            <C>
     Net Income...................................    $    45         292.9      $  .15    $   (144)       216.2       $  (.67)
      Distributions on Class A Preferred Units....         (1)           --          --          --           --            --
                                                     --------     ---------    --------   ---------    ---------      --------
     Basic earnings available to common
      unitholders per unit........................         44         292.9         .15        (144)       216.2          (.67)
      Assuming distribution of units to Host
       Marriott Corporation for Host Marriott
       Corporation common shares granted under
       the Host Marriott comprehensive stock
       plan, less shares assumed purchased at
       average market price.......................         --           5.3          --          --          4.0           .02
      Assuming distribution of units to Host
       Marriott Corporation for Host Marriott
       common shares issuable for warrants, less
       shares assumed purchased at average
       market price...............................         --            --          --          --          0.1            --
      Assuming conversion of Class TS Preferred
       Units......................................         --           0.6          --          --           --            --
      Assuming issuance of OP Units issuable
       under certain purchase agreements..........          2           9.1          --          --           --            --
      Assuming conversion of Convertible
       Preferred Securities.......................         --            --          --          --           --            --
                                                     --------     ---------    --------   ---------    ---------      --------
     Diluted Earnings per Unit....................    $    46         307.9      $  .15    $   (144)       220.3       $  (.65)
                                                     ========     =========    ========   =========    =========      ========
</TABLE>

                                      -12-
<PAGE>

                              HOST MARRIOTT, L.P.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                             Thirty-six Weeks Ended
                                                      ------------------------------------------------------------------------
                                                                September 10, 1999                   September 11, 1998
                                                      ------------------------------------------------------------------------
                                                       Income       Units       Per Unit      Income       Units      Per Unit
                                                      (Numerator) (Denominator)  Amount     (Numerator) (Denominator)  Amount
                                                      ----------------------------------   -----------------------------------
      <S>                                             <C>         <C>           <C>        <C>          <C>           <C>
      Net Income....................................  $    198        292.4      $   .68    $     (48)       216.0     $  (.23)
       Distributions on Class A preferred units.....        (1)          --           --           --           --          --
                                                      --------    ---------     --------   ----------   ----------    --------
      Basic earnings available to common
       unitholders per unit.........................       197        292.4          .68          (48)       216.0        (.23)
       Assuming distribution of units to Host
        Marriott Corporation for Host Marriott
        Corporation common shares granted under
        the Host Marriott comprehensive stock
        plan, less shares assumed purchased at
        average market price........................        --          5.6         (.02)          --          4.2         .01
       Assuming distribution of units to Host
        Marriott Corporation for Host Marriott
        common shares issuable for warrants, less
        shares assumed purchased at average
        market price................................        --           --           --           --          0.1          --
       Assuming conversion of Class TS Preferred
        Units.......................................        --          0.6           --           --           --          --
       Assuming issuance of OP Units issuable
        under certain purchase agreements...........         6          9.1           --           --           --          --
       Assuming conversion of Convertible
        Preferred Securities........................        --           --           --           --           --          --
                                                      --------    ---------     --------   ----------   ----------    --------
      Diluted Earnings per Unit.....................  $    203        307.7      $   .66    $     (48)       220.3     $  (.22)
                                                      ========    =========     ========   ==========   ==========    ========
</TABLE>

     In September 1999, the Board of Directors of Host Marriott Corporation
     approved the repurchase, from time to time on the open market and/or in
     privately negotiated transactions, of up to 22 million of the outstanding
     shares of Host Marriott common stock or a corresponding amount (based on
     the appropriate conversion ratio) of Host Marriott Convertible Preferred
     Securities. Such repurchases will be made at management's discretion,
     subject to market conditions, and may be suspended at any time at Host
     Marriott Corporation's discretion. Additionally, under the terms of the
     partnership agreement, an equivalent number of OP units will also be
     repurchased on a one-for-one basis from Host Marriott Corporation.
     Subsequent to quarter end, Host Marriott has spent approximately $7.7
     million to repurchase 797,000 shares.

5.   Class A Cumulative Redeemable Preferred Limited Partner Interest

     In August 1999, Host Marriott sold 4.16 million shares of 10% Class A
     cumulative redeemable preferred stock ("Class A Preferred Shares") with a
     $0.01 par value and we issued an equivalent security, the Class A Preferred
     Units to Host Marriott Corporation. Holders of the shares are entitled to
     receive cumulative cash dividends at a rate of 10% per annum of the $25.00
     per share liquidation preference. Dividends are payable quarterly in
     arrears commencing October 15, 1999. A corresponding distribution on the
     Class A Preferred Units is also payable quarterly in arrears commencing
     October 15, 1999. After August 3, 2004 Host Marriott Corporation has the
     option to redeem the Class A Preferred Shares for $25.00 per share, plus
     accrued and unpaid dividends to the date of redemption. The Class A
     Preferred Units rank senior to the common units and the Class TS Preferred
     Units. The Class A Preferred shareholders generally have no voting rights.

     Cumulative cash distributions on the Class A Preferred Units have been
     accrued from the date of issuance, August 3, 1999, through the balance
     sheet date. The Company declared a pro rata distribution of $0.50 per unit
     on September 23, 1999, which was paid on October 15, 1999.


                                      -13-
<PAGE>

                              HOST MARRIOTT, L.P.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)

6.   Dividends and Distributions Payable

     On September 23, 1999, the Board of Directors of Host Marriott declared a
     cash dividend of $0.21 per share of Host Marriott Corporation common stock
     and a corresponding distribution of $0.21 per OP Unit, which was paid on
     October 15, 1999 to shareholders and unitholders of record on September 30,
     1999. Total dividends and corresponding distributions year to date are
     $0.63 per share and per unit, respectively.

     The 1998 earnings per share has been restated to reflect the impact of the
     stock portion of a special dividend totaling 11.9 million shares of common
     stock issued in February, 1999 as a result of the REIT Conversion.

7.   Acquisitions and Property Expansions

     On December 30, 1998, the Company acquired a portfolio of twelve luxury
     hotels and other assets (the "Blackstone Acquisition") from the Blackstone
     Group, a Delaware limited partnership, and a series of funds controlled by
     affiliates of Blackstone Real Estate Partners. Approximately 467,000 OP
     Units issued in connection with the Blackstone Acquisition were redeemed
     for common stock  of Host Marriott Corporation during the third quarter of
     1999.

     The Company completed a 210-room expansion of the Philadelphia Marriott in
     April 1999 at a cost of approximately $37 million.

     In June 1999, the Company acquired by merger Timewell Group, L.P. and
     Timeport, L.P. which each own limited partnership interests in the
     partnership that owns the New York Marriott Marquis. As part of the merger,
     the general partners of Timewell Group, L.P. and Timeport, L.P. received
     345,559 and 240,218 Class TS Preferred Units, respectively. The Class TS
     Preferred Units are convertible into OP Units on a one-for-one basis,
     subject to certain adjustments, at any time beginning one year after the
     merger at the option of the holders. At any time beginning two years after
     the merger, the Company can redeem the Class TS Preferred Units for OP
     Units or cash. Also as part of the merger, the Company repaid in cash
     outstanding Partner loans totaling $5.9 million on behalf of each of the
     partnerships.

8.   Dispositions

     In February 1999, the Company sold the 479-room Minneapolis/Bloomington
     Marriott for $35 million and recorded a gain of $10 million. In May 1999,
     the Company sold the 221-room Saddle Brook Marriott for $15 million and
     recorded a gain of $4 million.

     In the fourth quarter, the Company sold the 306-room Grand Hotel Resort and
     Golf Club for $28 million, recognizing a loss of $1 million. The Company
     also announced it has reached an agreement to sell the Ritz-Carlton Boston
     for total proceeds of approximately $122 million in 1999, subject to normal
     closing requirements.

9.   Debt Issuances and Refinancing

     In February 1999, the Company issued $300 million of 83/8% Series D senior
     notes due in 2006. The senior notes were used to refinance, or purchase,
     debt which had been acquired through the merger of certain partnerships or
     the purchase of hotel properties in connection with the REIT Conversion in

                                      -14-
<PAGE>

                              HOST MARRIOTT, L.P.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)

     December 1998. The notes were exchanged during the third quarter for Series
     E senior notes on a one-for-one basis, which are freely transferable by the
     holders.

     In April 1999, a subsidiary of the Company completed the refinancing of the
     $245 million mortgage on the New York Marriott Marquis, maturing June 2000.
     The Company was required to make a principal payment of $1.25 million on
     June 30, 1999. In connection with the refinancing, the Company renegotiated
     the management agreement and recognized an extraordinary gain of $13
     million on the forgiveness of accrued incentive management fees by the
     manager. This mortgage was subsequently refinanced as part of the $665
     million financing agreement discussed below.

     In June 1999, the Company refinanced the debt on the San Diego Marriott
     Hotel and Marina. The mortgage is for $195 million for a term of 10 years
     at a rate of 8.45%. In addition, the Company issued $23 million of mortgage
     debt on the Philadelphia Marriott expansion in July 1999 at an interest
     rate of approximately 8.6%, maturing 2009.

     In July 1999, the Company entered into a financing agreement pursuant to
     which it borrowed $665 million due 2009 at a fixed interest rate of 7.47%.
     The New York Marriott Marquis as well as seven other hotels serve as
     collateral. The proceeds from this financing were used to refinance
     existing mortgage indebtedness maturing at various times through 2000.

     In August 1999, the Company repaid $100 million of the outstanding balance
     on a $350 million term loan entered into in August 1998 as part of its
     $1.25 billion line of credit. During the fourth quarter an additional $50
     million repayment was made, reducing the outstanding balance of the term
     loan to $200 million. Subsequent to these repayments, the available
     capacity under the line of credit balance remains $900 million while the
     total line has been permanently reduced to $1.1 billion as a result of the
     term loan payments.

     In August 1999, the Company made a prepayment of $19 million to pay down in
     full the mezzanine mortgage on the Marriott Desert Springs Resort and Spa.
     In September 1999, the Company made a prepayment of $45 million to pay down
     in full the mortgage note on the Philadelphia Four Seasons Hotel.

10.  Geographic and Business Segment Information

     The Company operates in one business segment, hotel ownership. The
     Company's hotels are primarily operated under the Marriott or Ritz-Carlton
     brands. Substantially all of the Company's revenues are earned through
     leases with Crestline. With respect to 1998, the allocation of taxes is not
     evaluated at the segment level or reflected in the following information
     because the Company does not believe the information is material to the
     readers of the financial statements.

     The Company's segmented revenues and income (loss) from continuing
     operations before income taxes are as follows (in millions):

<TABLE>
<CAPTION>
                                                            Twelve Weeks Ended September 10, 1999
                                                     ----------------------------------------------------
                                                       Hotels       Corporate & Other        Consolidated
                                                     ---------     -------------------     --------------
      <S>                                            <C>           <C>                     <C>
      Revenues.....................................   $   287              $   2                $   289
      Income (loss) from continuing operations
        before income taxes........................        56                (15)                    41
</TABLE>

                                      -15-
<PAGE>

                              HOST MARRIOTT, L.P.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                Twelve Weeks Ended September 11, 1998
                                                         -------------------------------------------------
                                                          Hotels     Corporate & Other       Consolidated
                                                         --------   -------------------    ---------------
      <S>                                                <C>        <C>                    <C>
      Revenues.......................................    $   752            $   4               $   756
      Income (loss) from continuing operations
          before income taxes........................         38              (30)                    8

<CAPTION>
                                                             Thirty-six Weeks Ended September 10, 1999
                                                         -------------------------------------------------
                                                          Hotels     Corporate & Other       Consolidated
                                                         --------   -------------------    ---------------
      <S>                                                <C>        <C>                    <C>
      Revenues.......................................    $   926            $  11               $   937
      Income (loss) from continuing operations
          before income taxes........................        228              (47)                  181

<CAPTION>
                                                             Thirty-six Weeks Ended September 11, 1998
                                                         -------------------------------------------------
                                                          Hotels     Corporate & Other       Consolidated
                                                         --------   -------------------    ---------------
      <S>                                                <C>        <C>                    <C>
      Revenues.......................................    $ 2,350            $  60               $ 2,410
      Income (loss) from continuing operations
          before income taxes........................        191              (30)                  161
</TABLE>

     As of September 10, 1999, the Company's foreign operations consisted of
     four hotel properties located in Canada. There were no intercompany sales
     between the properties and the Company. The following table presents rental
     revenues in 1999 and hotel revenues in 1998 for each of the geographical
     areas in which the Company owns hotels (in millions):

<TABLE>
<CAPTION>
                                                            Twelve Weeks Ended             Thirty-six Weeks Ended
                                                      ---------------------------------------------------------------
                                                       September 10,   September 11,    September 10,   September 11,
                                                            1999           1998            1999            1998
                                                      ---------------------------------------------------------------
      <S>                                             <C>              <C>              <C>             <C>
      United States..................................      $  268          $  713          $  869          $ 2,237
      International..................................           6              28              16               78
                                                           ------          ------          ------          -------
          Total......................................      $  274          $  741          $  885          $ 2,315
                                                           ======          ======          ======          =======
</TABLE>

11.  Comprehensive Income

     The Company's other comprehensive income consists of foreign currency
     translation adjustments and the right to receive up to 1.4 million shares
     of Host Marriott Services Corporation's common stock or an equivalent cash
     value, at Host Marriott Services Corporation's option, subsequent to the
     exercise of the options held by certain former and current employees of
     Marriott International. For the twelve and thirty-six weeks ended September
     10, 1999, comprehensive income totaled $51 million and $205 million,
     respectively. The comprehensive loss was $148 million and $51 million for
     the twelve and thirty-six weeks ended September 11, 1998. As of September
     10, 1999 the Company's accumulated other comprehensive income was
     approximately $3 million. As of December 31, 1998, the Company's
     accumulated other comprehensive loss was approximately $4 million

     On August 27, 1999, Autogrill Acquisition Co., a wholly-owned subsidiary of
     Autogrill SpA of Italy, completed its cash tender offer for all the
     outstanding shares of common stock of Host Marriott Services Corporation.
     Since Host Marriott Services Corporation is no longer publicly traded, the
     Company has adjusted the unrealized gain on the receivable to reflect the
     tender price of $15.75. Further, all future payments to the Company will be
     made in cash as Host Marriott Services Corporation has indicated that the
     receivable will not be settled in Autogrill stock.



                                      -16-
<PAGE>

                              HOST MARRIOTT, L.P.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)

12.  Subsequent Events

     In September 1999, the mortgage note receivable on a hotel property matured
     and the Company collected the outstanding balance of approximately $65
     million. The note was originally acquired as part of the Blackstone
     Acquisition.

     In October 1999, the Company initiated a tender offer to acquire the
     remaining partnership interests in the Hopewell Group, Ltd., a minority
     owner in the Atlanta Marriott Marquis, for preferred OP Units and cash.

13.  Summarized Lease Pool Financial Statements

     As discussed in Note 2, as of September 10, 1999, almost all the properties
     of the Company and its subsidiaries were leased to Crestline Capital
     Corporation and managed by Marriott International, Inc. In conjunction with
     these leases, Crestline and certain of its subsidiaries entered into
     limited guarantees of the lease obligations of each lessee. The full-
     service hotel leases are grouped into four lease pools, with Crestline's
     guarantee limited to the greater of 10% of the aggregate rent payable for
     the preceding year or 10% of the aggregate rent payable under all leases in
     the respective pool. Additionally, the lessee's obligation under each lease
     agreement is guaranteed by all other lessees in the respective lease pool.
     As a result, the Company believes that the operating results of each full-
     service lease pool may be material to the Company's financial statements.
     Financial information of certain pools related to the sublease agreements
     for limited service properties are not presented, as the Company believes
     they are not material to the Company's financial statements. Financial
     information of Crestline may be found in its quarterly and annual filings
     with the Securities and Exchange Commission. Further information regarding
     these leases and Crestline's limited guarantees may be found in the
     Company's annual report on Form 10-K for the fiscal year ended December 31,
     1998. The results of operations for the twelve and thirty-six weeks ended
     September 10, 1999 and summarized balance sheet data as of September 10,
     1999 of the lease pools in which the Company's hotels are organized are as
     follows (in millions):

                                      -17-
<PAGE>

                              HOST MARRIOTT, L.P.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                 Twelve Weeks Ended September 10, 1999
                                                                 -------------------------------------
                                                         Pool 1     Pool 2      Pool 3     Pool 4      Combined
                                                         ------     ------      ------     ------      --------
      <S>                                                <C>        <C>         <C>        <C>         <C>
      Hotel Sales
           Rooms.....................................     $ 135      $ 142       $ 126      $ 128       $ 531
           Food and beverage.........................        57         59          55         67         238
           Other.....................................        16         15          16         17          64
                                                          -----      -----       -----      -----       -----
                Total hotel sales....................       208        216         197        212         833
      Operating Costs and Expenses
           Rooms.....................................        34         40          32         30         136
           Food and beverage.........................        46         48          44         50         188
           Other.....................................        58         50          54         55         217
           Management fees...........................         9         13           9         13          44
           Lease expense.............................        57         59          56         61         233
                                                          -----      -----       -----      -----       -----
                Total operating expenses.............       204        210         195        209         818
                                                          -----      -----       -----      -----       -----
      Operating Profit...............................         4          6           2          3          15
      Corporate and Interest Expenses................        (1)        (1)         --         (1)         (3)
                                                          -----      -----       -----      -----       -----
            Income before taxes......................         3          5           2          2          12
            Income taxes.............................        (1)        (3)         (1)        (1)         (6)
                                                          -----      -----       -----      -----       -----
                Net Income...........................     $   2      $   2       $   1      $   1       $   6
                                                          =====      =====       =====      =====       =====
<CAPTION>
                                                               Thirty-six Weeks Ended September 10, 1999
                                                               -----------------------------------------
                                                         Pool 1     Pool 2      Pool 3     Pool 4      Combined
                                                         ------     ------      ------     ------      --------
      <S>                                                <C>        <C>         <C>        <C>         <C>
      Hotel Sales
           Rooms.....................................     $ 408       $ 436      $ 394       $ 401     $ 1,639
           Food and beverage.........................       184         196        183         220         783
           Other.....................................        46          44         54          51         195
                                                          -----       -----      -----       -----     -------
                Total hotel sales....................       638         676        631         672       2,617
      Operating Costs and Expenses
           Rooms.....................................        98         108         95          88         389
           Food and beverage.........................       143         150        135         154         582
           Other.....................................       168         157        161         158         644
           Management fees...........................        29          43         30          46         148
           Lease expense.............................       190         206        202         218         816
                                                          -----       -----      -----       -----     -------
                Total operating expenses.............       628         664        623         664       2,579
                                                          -----       -----      -----       -----     -------
      Operating Profit...............................        10          12          8           8          38
      Corporate and Interest Expenses................        (2)         (2)        (1)         (2)         (7)
                                                          -----       -----      -----       -----     -------
            Income before taxes......................         8          10          7           6          31
            Income taxes.............................        (3)         (5)        (3)         (2)        (13)
                                                          -----       -----      -----       -----     -------
                Net Income...........................     $   5       $   5      $   4       $   4     $    18
                                                          =====       =====      =====       =====     =======

<CAPTION>
                                                                        As of September 10, 1999
                                                                        ------------------------
                                                         Pool 1     Pool 2      Pool 3     Pool 4      Combined
                                                         ------     ------      ------     ------      --------
      <S>                                                <C>        <C>         <C>        <C>         <C>
      Assets.........................................    $  43       $  32       $  35      $  34       $  144
      Liabilities....................................       38          27          31         30          126
      Equity.........................................        5           5           4          4           18
</TABLE>




                                      -18-
<PAGE>

                              HOST MARRIOTT, L.P.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)

14.  Supplemental Guarantor and Non-Guarantor Subsidiary Information

     All subsidiaries of the operating partnership guarantee the Company's
     senior notes except those among the twenty full service hotels listed below
     and HMH HPT Residence Inn, LLC and HMH HPT Courtyard, LLC, the lessees of
     the Residence Inn and Courtyard properties, respectively. The separate
     financial statements of each guaranteeing subsidiary (each, a "Guarantor
     Subsidiary") are not presented because management has concluded that such
     financial statements are not material to investors. The guarantee of each
     Guarantor Subsidiary is full and unconditional and joint and several and
     each Guarantor Subsidiary is a wholly owned subsidiary of the Company. The
     non-guarantor subsidiaries (the "Non-Guarantor Subsidiaries") own the
     following full-service hotels: the Albany Marriott; Atlanta Marriott
     Marquis; Grand Hyatt, Atlanta; Harbor Beach Resort; Hartford Marriott;
     Hyatt Regency, Cambridge; Hyatt Regency, Reston; Manhattan Beach Marriott;
     Minneapolis Southwest Marriott; New York Marriott Marquis; Ontario Airport
     Marriott; Pittsburgh City Center Marriott; The Ritz-Carlton, Amelia Island;
     San Diego Marriott Hotel and Marina; San Diego Mission Valley; Swissotel,
     Atlanta; Swissotel, Boston; Swissotel, Chicago; The Drake (Swissotel) New
     York; and the Oklahoma City Waterford Marriott.

     The following condensed combined consolidating information sets forth the
     financial position as of September 10, 1999 and December 31, 1998 and
     results of operations for the twelve and thirty-six weeks ended September
     10, 1999 and September 11, 1998, and cash flows for the thirty-six weeks
     ended September 10, 1999 and September 11, 1998 of the parent, Guarantor
     Subsidiaries and the Non-Guarantor Subsidiaries.

                                      -19-
<PAGE>

                              HOST MARRIOTT, L.P.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)

         Supplemental Condensed Combined Consolidating Balance Sheets
                                 (in millions)
                              September 10, 1999


<TABLE>
<CAPTION>
                                                                            Non-
                                                           Guarantor      Guarantor
                                                Parent   Subsidiaries   Subsidiaries   Eliminations   Consolidated
                                               --------  ------------   ------------   ------------   ------------
<S>                                            <C>       <C>            <C>            <C>            <C>
Property and equipment, net..................   $ 1,224     $ 3,787        $ 2,210       $     --        $ 7,221
Investments in affiliate.....................     1,685          --             --         (1,637)            48
Notes and other receivables..................       840          53             19           (668)           244
Other assets.................................       165         178            215            (37)           521
Cash and cash equivalents....................       119         148             23             --            290
                                                -------     -------        -------       --------        -------
   Total assets..............................   $ 4,033     $ 4,166        $ 2,467       $ (2,342)       $ 8,324
                                                =======     =======        =======       ========        =======

Debt.........................................   $ 1,317     $ 3,014        $ 1,173       $   (354)       $ 5,150
Convertible debt obligations to Host Marriott       567          --             --             --            567
Deferred income taxes........................        57          32              7             --             96
Other liabilities............................       234         446            196           (351)           525
                                                -------     -------        -------       --------        -------
   Total liabilities.........................     2,175       3,492          1,376           (705)         6,338

Minority interests...........................        13          54             74             --            141
Limited partner interest of third parties
at redemption value..........................       617          --             --             --            617
Owner's capital..............................     1,228         620          1,017         (1,637)         1,228
                                                -------     -------        -------       ---------       -------
   Total liabilities and owner's capital.....   $ 4,033     $ 4,166        $ 2,467       $ (2,342)       $ 8,324
                                                =======     =======        =======       ========        =======
<CAPTION>
                                                         December 31, 1998

                                                                            Non-
                                                           Guarantor      Guarantor
                                                Parent   Subsidiaries   Subsidiaries   Eliminations   Consolidated
                                               --------  ------------   ------------   ------------   ------------
<S>                                            <C>       <C>            <C>            <C>            <C>
Property and equipment, net..................   $ 1,172     $ 3,796        $ 2,233        $    --        $ 7,201
Investments in affiliate.....................     1,475          --             --         (1,442)            33
Notes and other receivables..................       782          52             19           (650)           203
Other assets.................................       259         145            141           (156)           389
Cash and cash equivalents....................       330          91             15             --            436
                                                -------     -------        -------        -------         ------
   Total assets..............................   $ 4,018     $ 4,084        $ 2,408        $(2,248)       $ 8,262
                                                =======     =======        =======        =======        =======

Debt.........................................   $ 1,438     $ 2,837        $ 1,183        $  (327)       $ 5,131
Convertible debt obligation to Host Marriott.       567          --             --             --            567
Deferred income taxes........................        51          39              7             --             97
Other liabilities............................       291         600            252           (479)           664
                                                -------     -------        -------        -------        -------
  Total liabilities..........................     2,347       3,476          1,442           (806)         6,459

Minority interests...........................        15          56             76             --            147
Limited partner interest of third parties
at redemption value..........................       892          --             --             --            892
Owner's capital..............................       764         552            890         (1,442)           764
                                                -------     -------        -------        -------        -------
  Total liabilities and owner's capital......   $ 4,018     $ 4,084        $ 2,408        $(2,248)       $ 8,262
                                                =======     =======        =======        =======        =======
</TABLE>

                                      -20-
<PAGE>

                              HOST MARRIOTT, L.P.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)

           Supplemental Condensed Combined Statements of Operations
                                 (in millions)

<TABLE>
<CAPTION>
                                          Twelve Weeks Ended September 10, 1999

                                                                               Non-
                                                              Guarantor      Guarantor
                                                   Parent   Subsidiaries   Subsidiaries   Eliminations   Consolidated
                                                  --------  ------------   ------------   ------------   ------------
<S>                                               <C>       <C>            <C>            <C>            <C>
REVENUES........................................   $   96      $   137        $    93        $   (37)       $   289
Depreciation....................................      (13)         (35)           (20)            --            (68)
Property-level expenses.........................      (10)         (24)           (28)            --            (62)
Hotel operating expenses........................       --           --             --             --             --
Minority interest...............................       (1)          --             (2)            --             (3)
Interest expense................................      (17)         (64)           (22)            (5)          (108)
Dividends on convertible preferred securities...       --           --             --             --             --
Corporate expenses..............................       (1)          (3)            (2)            --             (6)
Other expenses..................................       --           (1)            --             --             (1)
                                                   ------      -------        -------        -------        -------
Income before extraordinary gain................       54           10             19            (42)            41
Extraordinary item-gain on forgiveness of debt..       --            1              3             --              4
                                                   ------      -------        -------        -------        -------
NET INCOME......................................   $   54      $    11        $    22        $   (42)       $    45
                                                   ======      =======        =======        =======        =======
<CAPTION>
                                          Twelve Weeks Ended September 11, 1998

                                                                               Non-
                                                              Guarantor      Guarantor
                                                   Parent   Subsidiaries   Subsidiaries   Eliminations   Consolidated
                                                  --------  ------------   ------------   ------------   ------------
<S>                                               <C>       <C>            <C>            <C>            <C>
REVENUES........................................   $   22      $   309        $   428        $    (3)       $   756
Depreciation....................................      (11)         (26)           (16)            --            (53)
Property-level expenses.........................       (2)         (28)           (37)            --            (67)
Hotel operating expenses........................       (8)        (210)          (292)            --           (510)
Minority interest...............................       (1)          (2)            (3)            --             (6)
Interest expense................................      (21)         (47)           (17)             6            (79)
Dividends on convertible preferred securities...       (9)          --             --             --             (9)
Corporate expenses..............................       (6)          (4)            (2)            --            (12)
REIT Conversion expenses........................       (8)          --             --             --             (8)
Other expenses..................................       (3)          --             (1)            --             (4)
                                                   ------      -------        -------        -------        -------
Income from continuing operations before taxes..      (47)          (8)            60              3              8
Provision for income taxes......................       18            2            (26)            --             (6)
                                                   ------      -------        -------        -------        -------
Income from continuing operations...............      (29)          (6)            34              3              2
Income from discontinued operations.............        2           --             --             --              2
                                                   ------      -------        -------        -------        -------
INCOME BEFORE EXTRAORDINARY
   ITEM.........................................   $  (27)     $    (6)       $    34        $     3        $     4
                                                   ======      =======        =======        =======        =======
</TABLE>

                                      -21-
<PAGE>

                              HOST MARRIOTT, L.P.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)

           Supplemental Condensed Combined Statements of Operations
                                 (in millions)

<TABLE>
<CAPTION>
                                             Thirty-six Weeks Ended September 10, 1999

                                                                               Non-
                                                              Guarantor      Guarantor
                                                   Parent   Subsidiaries   Subsidiaries   Eliminations   Consolidated
                                                  --------  ------------   ------------   ------------   ------------
<S>                                               <C>       <C>            <C>            <C>            <C>
REVENUES........................................  $   393     $   471        $   284        $  (211)       $   937
Depreciation....................................      (41)       (105)           (55)            --           (201)
Property-level expenses.........................      (31)        (69)           (82)            --           (182)
Hotel operating expenses........................       --          --             --             --             --
Minority interest...............................       (5)         (6)            (5)            --            (16)
Interest expense................................     (108)       (168)           (68)            19           (325)
Dividends on convertible preferred securities...       --          --             --             --             --
Corporate expenses..............................       (4)        (11)            (7)            --            (22)
Other expenses..................................       (6)         (3)            (1)            --            (10)
                                                  -------     -------        -------        -------        -------
Income before extraordinary gain................      198         109             66           (192)           181
Extraordinary item-gain on forgiveness of debt..       --           1             16             --             17
                                                  -------     -------        -------        -------        -------
NET INCOME (LOSS)...............................  $   198     $   110        $    82        $  (192)       $   198
                                                  =======     =======        =======        =======        =======
<CAPTION>
                                             Thirty-six Weeks Ended September 11, 1998

                                                                               Non-
                                                              Guarantor      Guarantor
                                                   Parent   Subsidiaries   Subsidiaries   Eliminations   Consolidated
                                                  --------  ------------   ------------   ------------   ------------
<S>                                               <C>       <C>            <C>            <C>            <C>
REVENUES........................................  $  683      $ 1,160        $   678        $  (111)       $ 2,410
Depreciation....................................     (50)         (83)           (33)            --           (166)
Property-level expenses.........................     (43)         (91)           (55)            --           (189)
Hotel operating expenses........................    (352)        (740)          (448)            --         (1,540)
Minority interest...............................     (23)          (8)            (5)            --            (36)
Interest expense................................     (58)        (141)           (54)            22           (231)
Dividends on convertible preferred securities...     (26)          --             --             --            (26)
Corporate expenses..............................     (11)         (15)            (7)            --            (33)
REIT Conversion expenses........................     (14)          --             --             --            (14)
Other expenses..................................     (12)          (1)            (1)            --            (14)
                                                  ------      -------        -------        -------        --------
Income from continuing operations before taxes..      94           81             75            (89)           161
Provision for income taxes......................      (2)         (35)           (32)            --            (69)
                                                  ------      -------        -------        -------        -------
Income from continuing operations...............      92           46             43            (89)            92
Income from discontinued operations.............       8           --             --             --              8
                                                  ------      -------        -------        -------        -------
INCOME BEFORE EXTRAORDINARY
   ITEM.........................................  $  100      $    46        $    43        $   (89)       $   100
                                                  ======      =======        =======        =======        =======
</TABLE>

                                      -22-
<PAGE>

                              HOST MARRIOTT, L.P.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)

           Supplemental Condensed Combined Statements of Cash Flows
                                 (in millions)


<TABLE>
<CAPTION>
                                             Thirty-six Weeks Ended September 10, 1999

                                                                                    Non-
                                                                   Guarantor      Guarantor
                                                        Parent   Subsidiaries   Subsidiaries   Consolidated
                                                       --------  ------------   ------------   ------------
<S>                                                    <C>       <C>            <C>            <C>
OPERATING ACTIVITIES
Cash (used in) from operations....................     $     17      $     147       $    92        $    256
                                                       ---------     ----------      --------       ---------

INVESTING ACTIVITIES
Cash received from sales of assets................            1             48            --              49
Capital expenditures..............................          (58)          (172)          (31)           (261)
Acquisitions......................................           --            (12)           (5)            (17)
Other.............................................          (47)            --            --             (47)
                                                       ---------     ----------      ---------      ---------

Cash used in investing activities ................         (104)          (136)          (36)           (276)
                                                       ---------     ----------      --------       ---------

FINANCING ACTIVITIES
Repayment of debt.................................         (111)          (333)         (857)         (1,301)
Issuances of debt.................................          290             35           957           1,282
Distributions.....................................         (195)            --            --            (195)
Issuances of common units.........................            2             --            --               2
Issuances of Class A Preferred Units..............          100             --            --             100
Cost of extinguishment of debt....................           --             --            (2)             (2)
Transfers to/from Parent..........................         (198)           344          (146)             --
Other.............................................          (12)            --            --             (12)
                                                       ---------     ----------      --------       ---------

Cash (used in) from financing activities..........         (124)            46           (48)           (126)
                                                       ---------     ----------      --------       ---------

INCREASE (DECREASE) IN CASH AND CASH
   EQUIVALENTS....................................     $   (211)     $      57       $     8        $   (146)
                                                       =========     ==========      ========       =========
</TABLE>

                                      -23-
<PAGE>

                              HOST MARRIOTT, L.P.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)

                   Thirty-six Weeks Ended September 11, 1998

<TABLE>
<CAPTION>
                                                                                                Non-
                                                                              Guarantor       Guarantor
                                                                  Parent    Subsidiaries    Subsidiaries   Consolidated
                                                                ----------  ------------    ------------   ------------
      <S>                                                       <C>         <C>             <C>            <C>
      OPERATING ACTIVITIES
      Cash from continuing operations.........................   $     (2)     $   149         $   107        $   254
      Cash from discontinued operations.......................         24           --              --             24
                                                                 --------      -------         -------        -------
      Cash from operations....................................         22          149             107            278
                                                                 --------      -------         -------        -------

      INVESTING ACTIVITIES
      Cash received from sales of assets......................        211           --              --            211
      Capital expenditures....................................        (38)         (96)            (25)          (159)
      Acquisitions............................................       (470)         (22)           (115)          (607)
      Sales of short-term marketable securities, net..........        317           --              --            317
      Other...................................................          5           --              --              5
                                                                 --------      -------         -------        -------
      Cash from (used in) investing activities from
         continuing operations................................         25         (118)           (140)          (233)
      Cash used in investing activities from discontinued
         Operations...........................................        (10)          --              --            (10)
                                                                 --------      -------         -------        -------
      Cash from (used in) investing activities ...............         15         (118)           (140)          (243)
                                                                 --------      -------         -------        -------

      FINANCING ACTIVITIES
      Repayment of debt.......................................     (1,596)         (56)            (18)        (1,670)
      Issuances of debt.......................................      1,998            5               1          2,004
      Costs of extinguishment of debt.........................       (175)          --              --           (175)
      Transfers to/from Parent................................        (64)           5              59             --
      Other...................................................        (14)          --              --            (14)
                                                                 --------      -------         -------        -------
      Cash from (used in) financing activities from
         continuing operations................................        149          (46)             42            145
      Cash used in financing activities from discontinued
         operations...........................................       (152)          --              --           (152)
                                                                 --------      -------         -------        -------
      Cash (used in) from financing activities................         (3)         (46)             42             (7)
                                                                 --------      -------         -------        -------

      INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........   $     34      $   (15)        $     9        $    28
                                                                 ========      =======         =======        =======
</TABLE>

15.   Contingencies

      Courtyard by Marriott II Limited Partnership (CBM II)
      -----------------------------------------------------

      A group of partners in CBM II filed a lawsuit, Whitey Ford, et al. v. Host
      Marriott Corporation, et al., Case No. 96-CI-08327, on June 7, 1996, in
      the 285th Judicial District Court of Bexar County, Texas against the
      Company and others alleging breach of fiduciary duty, breach of contract,
      fraud, negligent misrepresentation, tortious interference, violation of
      the Texas Free Enterprise and Antitrust Act of 1983 and conspiracy in
      connection with the formation, operation and management of CBM II and its
      hotels. The plaintiffs are seeking unspecified damages. On January 29,
      1998, two other limited partners, A.R. Milkes and D.R. Burklew, filed a
      petition in intervention seeking to convert the lawsuit into a class
      action. The defendants have filed an answer, the class has been certified,
      class counsel has been appointed, and discovery is underway. On March 11,
      1999, Palm Investors, L.L.C., the assignee of a number of limited
      partnership units acquired through various tender offers, filed a plea in
      intervention to bring additional claims relating to the 1993 split of
      Marriott Corporation and to the 1995 refinancing of CBM II's indebtedness.
      The original plaintiffs subsequently filed a second amended complaint on
      March 19, 1999 and in a third amended complaint, filed May 24, 1999,
      asserted as derivative claims,

                                      -24-
<PAGE>

                              HOST MARRIOTT, L.P.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)

      some of the claims previously asserted as individual claims. On March 25,
      1999, Equity Resource, an assignee, through various of its funds, of a
      number of limited partnership units, also filed a plea in intervention
      similar to that which was filed by Palm Investors. A trial date of January
      3, 2000 has been set.

      On August 17, 1999, the general partner of CBM II appointed an independent
      special litigation committee (the "SLC"), comprised of the Honorable
      William Webster and the Honorable Charles Renfrew, to investigate the
      derivative claims described above and to recommend to the general partner
      whether it is in the best interests of CBM II for the derivative
      litigation to proceed. The general partner has agreed to adopt the
      recommendation of the SLC. Under Delaware law, the recommendation of a
      duly appointed independent litigation committee is binding on the general
      partner and the limited partners. On August 30, 1999, the court held a
      hearing to consider the defendant's motion to stay these proceedings until
      the committee makes its recommendation. Similarly, the SLC has asked the
      court to postpone the trial for up to six months so that the SLC can
      complete its investigation. The court has not yet ruled on these requests.

      Courtyard by Marriott Limited Partnership I (CBM I) and CBM II Derivative
      -------------------------------------------------------------------------
      Action
      ------

      After intervening in the CBM II class action, Palm Investors and Equity
      Resource, together with Repp Properties, joined in a complaint filed in
      April 1999, Equity Resource Fund X et al. v. CBM One Corporation et al.,
      Case No. 99-CI-04765, in the 57th Judicial District Court of Bexar County,
      Texas. This action asserted as derivative claims, on behalf of CBM I and
      CBM II, the same kind of claims asserted individually in the Ford and
      Milkes actions described above. After the appointment of the SLC, this
      complaint was withdrawn by the plaintiffs in September 1999.

      Texas Multi-Partnership Lawsuits
      --------------------------------

      On March 16, 1998, limited partners in several limited partnerships
      sponsored by Host Marriott or its subsidiaries filed a lawsuit, Robert M.
      Haas, Sr. and Irwin Randolph Joint Tenants, et al. v. Marriott
      International, Inc., et al., Case No. 98-CI-04092, in the 57th Judicial
      District Court of Bexar County, Texas, alleging that the defendants
      conspired to sell hotels to the partnerships for inflated prices and that
      they charged the partnerships excessive management fees to operate the
      partnerships' hotels. The plaintiffs further allege that the defendants
      committed fraud, breached fiduciary duties and violated the provisions of
      various contracts. A Marriott International subsidiary manages each of the
      hotels involved and, as to some properties, Marriott International, or one
      of its subsidiaries, is the ground lessor and collects rent. The Company,
      Marriott International, several of their subsidiaries, and J.W. Marriott,
      Jr. are among the various named defendants. The plaintiffs are seeking
      unspecified damages. Those allegations concerning CBM II have been
      transferred to the CBM II lawsuit described above. On March 18, 1999, two
      limited partners in CBM I filed a class action petition in intervention
      seeking to treat CBM I in a similar manner by converting that portion of
      the lawsuit into a class action. On April 29, 1999, the court denied this
      petition and refused to certify the class. No trial date has been set.

      We are from time to time the subject of, or involved in, judicial
      proceedings, including those lawsuits discussed above and also other
      lawsuits involving other syndicated partnerships which could, if adversely
      decided, result in losses to our Company. We believe that the lawsuits
      described above are without merit, and we intend to vigorously defend
      against the claims being made against us. We cannot assure you as to the
      outcome of these lawsuits and we are uncertain as to any potential loss to
      the Company.

                                      -25-
<PAGE>

                              HOST MARRIOTT, L.P.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)

16.   Extraordinary Items

      In connection with the refinancing of the mortgage and the renegotiation
      of the management agreement on the New York Marriott Marquis, we
      recognized an extraordinary gain of $13 million on the forgiveness of debt
      in the form of accrued incentive management fees in the second quarter. An
      extraordinary loss of $3 million representing the write-off of deferred
      financing fees occurred in July 1999 when the mortgage debt for eight
      properties was refinanced, including the New York Marriott Marquis. In
      connection with this refinancing, the interest rate swap agreements
      associated with some of the original debt were terminated and a $7 million
      extraordinary gain was recognized. In connection with the purchase of the
      Old Senior Notes, the Company recognized an extraordinary loss of $148
      million in the third quarter of 1998, which represents the bond premium
      and consent payments totaling approximately $175 million and the write-off
      of deferred financing fees of approximately $52 million related to the Old
      Senior Notes, net of taxes.

                                      -26-
<PAGE>

                              HOST MARRIOTT, L.P.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

      Forward-looking Statements

      Certain matters discussed herein are forward-looking statements. Certain,
      but not necessarily all, of such forward-looking statements can be
      identified by the use of forward-looking terminology, such as "believes,"
      "expects," "may," "will," "should," "estimates," or "anticipates," or the
      negative thereof or other variations thereof or comparable terminology.
      All forward-looking statements involve known and unknown risks,
      uncertainties and other factors which may cause our actual transactions,
      results, performance or achievements to be materially different from any
      future transactions, results, performance or achievements expressed or
      implied by such forward-looking statements. Although we believe the
      expectations reflected in such forward-looking statements are based upon
      reasonable assumptions, we can give no assurance that our expectations
      will be attained or that any deviations will not be material. We undertake
      no obligation to publicly release the result of any revisions to these
      forward-looking statements that may be made to reflect any future events
      or circumstances.

      Results of Operations

      Revenues. Our historical revenues have primarily represented gross
      property-level sales from hotels, net gains on property transactions,
      interest income and equity in earnings of affiliates. As of January 1,
      1999, we lease substantially all of our hotels to subsidiaries of
      Crestline Capital Corporation. As a result of these leases, we no longer
      record property-level revenues and expenses, rather we recognize rental
      income on the leases. Thus, 1999 revenues and expenses are not comparable
      with prior periods. Note 3 to the financial statements presents a table
      comparing gross hotel sales for all periods presented to facilitate an
      investor's understanding of the operation of our properties. The
      comparison of the 1999 results with 1998 is also affected by a change in
      the reporting period for the Company's hotels not managed by Marriott
      International. The 1998 year to date historical results would have to be
      adjusted to exclude the results of these hotels for December 1997 and
      include August 1998 for the thirty-six weeks ended September 11, 1998 in
      order to be comparable to the 1999 period results as reported. Also, for
      the third quarter the 1998 historical results would have to be adjusted to
      exclude the results of these hotels for May 1998 and include August 1998
      for the twelve weeks ended September 11, 1998 in order to be comparable to
      the 1999 period results as reported. The change in reporting was required
      as part of the REIT conversion.

      Year-to-date results for 1999 were primarily driven by the addition of 36
      properties in 1998. The increase in hotel sales also reflects the growth
      in room revenues generated per available room or REVPAR. For comparable
      properties, REVPAR increased 2.8% to $106.45 for the third quarter of
      1999. Year-to-date REVPAR increased 3.8% to $115.40. On a comparable
      basis, average room rates increased approximately 3% for the third quarter
      and year-to-date, while average occupancy decreased less than one
      percentage point for the third quarter and increased less than one
      percentage point year-to-date.

      Interest income decreased as the result of a lower level of cash and
      marketable securities held during the first three quarters of 1999
      compared to the first three quarters of 1998.

      The net gain on property transactions for 1999 primarily resulted from the
      $10 million gain on the sale of the 479-room Minneapolis/Bloomington
      Marriott for approximately $35 million and the $4 million gain on the sale
      of the 221-room Saddle Brook Marriott for approximately $15 million.

      Expenses. As discussed above, hotel revenues and hotel operating costs are
      not comparable with the prior year. The lessee pays certain direct
      property-level costs including management fees and we receive a rent
      payment, which is generally calculated as a percentage of revenue, subject
      to a minimum

                                      -27-
<PAGE>

                              HOST MARRIOTT, L.P.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

      level, net of certain property-level owner costs. All of these costs were
      our expenses in 1998. Property-level owner costs which are comparable,
      including depreciation, property taxes, insurance, ground and equipment
      rent increased 8% to $130 million for the third quarter 1999 versus third
      quarter 1998 and increased $28 million or 8% to $383 million year-to-date,
      primarily reflecting the depreciation from 36 properties acquired during
      1998.

      Minority Interest. Minority interest expense decreased $3 million to $3
      million for the third quarter of 1999 and decreased $20 million to $16
      million year-to-date, primarily reflecting the impact of the consolidation
      of partnerships which occurred as part of the REIT conversion.

      Interest Expense. Interest expense increased 37% to $108 million in the
      third quarter of 1999 and increased 41% to $325 million year-to-date,
      primarily due to the issuance of senior notes, establishment of a new
      credit facility, interest expense on the convertible debt obligation to
      Host Marriott Corporation, and additional mortgage debt on properties
      acquired in 1998.

      Dividends on Convertible Preferred Securities. The dividends on the
      Convertible Preferred Securities reflect the amount accrued for the first
      three quarters of fiscal year 1998 on the $550 million in 6 3/4%
      Convertible Preferred Securities. The Convertible Preferred Securities are
      held by the REIT. The dividends paid by the REIT are supported by the $567
      million debt obligation to Host Marriott Corporation on our balance sheet.
      The Operating Partnership incurs interest expense on the debt obligation,
      and, therefore, no dividends are included in the current period statement
      of operations.

      Corporate Expenses. Corporate expenses decreased $6 million to $6 million
      for the third quarter of 1999 and decreased $11 million to $22 million
      year-to-date, resulting primarily from lower staffing levels after the
      Crestline spin-off, lower costs associated with reduced acquisition
      activity and lower costs related to various stock compensation plans.

      Income from Discontinued Operations. Income from discontinued operations
      represents the senior living communities business' results of operations
      for the third quarter of 1998 and year-to-date 1998 as restated for the
      spin-off of Crestline.

      Extraordinary Gain (Loss). In connection with the refinancing of the
      mortgage and the renegotiation of the management agreement on the New York
      Marriott Marquis, we recognized an extraordinary gain of $13 million on
      the forgiveness of debt in the form of accrued incentive management fees
      in the second quarter. An extraordinary loss of $3 million representing
      the write-off of deferred financing fees occurred in July 1999 when the
      mortgage debt for eight properties was refinanced, including the New York
      Marriott Marquis. In connection with this refinancing, the interest rate
      swap agreements associated with some of the original debt were terminated
      and a $7 million extraordinary gain was recognized. In connection with the
      purchase of the Old Senior Notes, the Company recognized an extraordinary
      loss of $148 million in the third quarter of 1998, which represents the
      bond premium and consent payments totaling approximately $175 million and
      the write-off of deferred financing fees of approximately $52 million
      related to the Old Senior Notes, net of taxes.

      Net Income. Our net income increased $189 million for the third quarter of
      1999 to $45 million and increased $246 million to $198 million for year-
      to-date 1999.

                                      -28-
<PAGE>

                              HOST MARRIOTT, L.P.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

      FFO and EBITDA

      We consider Funds From Operations or FFO as defined by the National
      Association of Real Estate Investment Trusts and our consolidated earnings
      before interest expense, income taxes, depreciation, amortization and
      other non-cash items or EBITDA to be indicative measures of our operating
      performance due to the significance of our long-lived assets. FFO and
      EBITDA are also useful in measuring our ability to service debt, fund
      capital expenditures and expand our business. Furthermore, management
      believes that FFO and EBITDA are meaningful disclosures that will help
      shareholders and the investment community to better understand our
      financial performance, including comparing our performance to other Real
      Estate Investment Trusts. However, FFO and EBITDA as presented may not be
      comparable to amounts calculated by other companies. This information
      should not be considered as an alternative to net income, operating
      profit, cash from operations, or any other operating or liquidity
      performance measure prescribed by generally accepted accounting
      principles. Cash expenditures for various long-term assets, interest
      expense (for EBITDA purposes only) and income taxes have been, and will be
      incurred which are not reflected in the EBITDA and FFO presentation.

      FFO increased $36 million, or 47%, to $112 million in the third quarter of
      1999 over the third quarter of 1998. For periods prior to 1999, the FFO
      disclosed represents comparative FFO (FFO plus deferred tax expense). The
      following is a reconciliation of income from continuing operations to FFO
      (in millions):


<TABLE>
<CAPTION>
                                                              Twelve weeks Ended               Thirty-six weeks Ended
                                                         -----------------------------     -------------------------------
                                                         September 10,    September 11,    September 10,     September 11,
                                                              1999             1998            1999              1998
                                                         ------------     ------------      ------------     -------------
<S>                                                      <C>              <C>               <C>              <C>
      Funds from Operations
      Income from continuing operations............       $     41         $      2          $    181          $     92
      Depreciation and amortization................             68               54               203               168
      Other real estate activities.................             --               (1)              (16)              (53)
      Partnership adjustments......................              3               (2)               13                (9)
      REIT conversion expenses.....................             --                8                --                14
      Deferred taxes...............................             --                7                --                46
                                                          --------         --------          --------          --------
      Funds from continuing operations.............            112               68               381               258
      Discontinued operations......................             --                8                --                24
                                                          --------         --------          --------          --------
      Funds from operations before distribution on
        Class A Preferred Units....................            112               76               381               282
      Distributions on Class A Preferred Units.....             (1)              --                (1)               --
                                                          --------         --------          --------          --------
      Funds from operations available to common ...
OP unitholders.....................................       $    111         $     76          $    380          $    282
                                                          ========         ========          ========          ========
</TABLE>

      EBITDA increased $56 million, or 36%, to $212 million in the third quarter
      of 1999 and $126 million or 22%, to $694 million year-to-date. Hotel
      EBITDA increased $43 million, or 26%, to $210 million in the third quarter
      of 1999, and $111 million or 19% to $703 million year-to-date, reflecting
      comparable hotel EBITDA growth, as well as incremental EBITDA from 1998
      acquisitions offset by amounts representing hotel sales which are retained
      by Crestline.

The following is a reconciliation of EBITDA to income from continuing operations
(in millions):

                                      -29-
<PAGE>

                              HOST MARRIOTT, L.P.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 RESULTS OF OPERATIONS AND FINANCIAL CONDITION


<TABLE>
<CAPTION>
                                                                     Twelve Weeks Ended              Thirty-six Weeks Ended
                                                                ----------------------------     ------------------------------
                                                                September 10,   September 11,    September 10,    September 11,
                                                                    1999            1998             1999             1998
                                                                -------------   ------------     ------------     -------------
<S>                                                             <C>             <C>              <C>              <C>
      EBITDA................................................       $   212        $   156           $   694          $   568
      Interest expense......................................          (108)           (79)             (325)            (231)
      Dividends on Convertible Preferred Securities.........            --             (9)               --              (26)
      Depreciation and amortization.........................           (68)           (54)             (203)            (168)
      Minority interest expense.............................            (3)            (6)              (16)             (36)
      Income taxes..........................................            --             (6)               --              (69)
      REIT Conversion expense...............................            --             (8)               --              (14)
      Other non-cash charges, net...........................             8              8                31               68
                                                                   -------        -------           -------          -------
        Income from continuing operations...................       $    41        $     2           $   181          $    92
                                                                   =======        =======           =======          =======
</TABLE>

      Our interest coverage, defined as EBITDA divided by cash interest expense,
      was 2.2 times and 2.4 times year to date for 1999 and 1998, respectively,
      and 2.7 times for full year 1998. The ratio of earnings to fixed charges
      was 1.6 to 1 through the third quarter of 1999 and 1.7 to 1 through the
      third quarter of 1998.

      Cash Flows and Financial Condition

      We reported a decrease in cash and cash equivalents of $146 million during
      the thirty-six weeks ended September 10, 1999. Cash from continuing
      operations was $256 million through the third quarter of 1999 and $254
      million through the third quarter of 1998. There was no cash activity
      related to discontinued operations through the third quarter of 1999;
      however, cash from discontinued operations totaled $24 million through the
      third quarter of 1998.

      Cash used in investing activities from continuing operations was $276
      million and $233 million through the third quarter of 1999 and 1998,
      respectively. Cash used in investing activities through the third quarter
      includes capital expenditures of $261 million and $159 million for 1999
      and 1998, respectively, mostly related to renewals and replacements on
      existing properties and development projects. In addition, we generated
      $49 million of cash from the net sale of assets, primarily the
      Minneapolis/Bloomington and Saddle Brook properties. There was no cash
      related to investing activities from discontinued operations through the
      third quarter 1999; however, cash used in investing activities from
      discontinued operations totaled $10 million year-to-date 1998. Property
      and equipment balances include $162 million and $78 million for
      construction in progress as of September 10, 1999 and December 31, 1998,
      respectively. The current balance primarily relates to properties in
      Tampa, Orlando, Memphis, Naples and various other expansion and
      development projects.

      In June 1999, we acquired by merger Timewell Group, L.P. and Timeport,
      L.P., which each own limited partnership interests in the partnership that
      owns the New York Marriott Marquis. As part of the merger, the general
      partners of Timewell Group, L.P. and Timeport, L.P. received 345,559 and
      240,218 Class TS Preferred Units, respectively. The Class TS Preferred
      Units are convertible into OP Units on a one-for-one basis, subject to
      certain adjustments, at any time beginning one year after the merger at
      the option of the holders. At any time, beginning two years after the
      merger, we can redeem the Class TS Preferred Units for OP Units or cash.
      Also as part of the merger, the Company re-paid in cash outstanding
      Partner loans totaling $5.9 million on behalf of each of the partnerships.

      Cash used in financing activities from continuing operations was $126
      million through the third quarter of 1999. Cash from financing activities
      from continuing operations was $145 million through the third quarter of
      1998. Cash used in financing activities includes $1.3 billion in
      prepayment of debt, offset by a similar amount of debt issuances, the
      issuance of preferred stock and the payment of distributions.

                                      -30-
<PAGE>

                              HOST MARRIOTT, L.P.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

      The $300 million of 8 3/8% series D senior notes were issued in February
      1999 and were used to refinance, or purchase, debt which had been assumed
      through the merger of certain partnerships or the purchase of hotel
      properties in connection with the REIT conversion in December 1998. In
      August 1999, the Series D Senior notes were exchanged on a one-for-one
      basis for Series E Senior notes, which are freely transferable by the
      holders.

      In April 1999, a subsidiary completed the refinancing of the $245 million
      mortgage on the New York Marriott Marquis, maturing June 2000. We
      subsequently refinanced this mortgage as part of the $665 million
      financing agreement completed in the third quarter of 1999. The financing
      agreement for $665 million is secured by eight hotels, and is due 2009
      with a fixed interest rate of 7.47%. The proceeds from this financing were
      used to refinance existing mortgage indebtedness maturing at various times
      through 2000 on eight hotels including the New York Marriott Marquis.

      Also in June 1999, we refinanced the debt on the San Diego Marriott Hotel
      and Marina. The mortgage is for $195 million for a term of 10 years at a
      rate of 8.45%. In addition, we completed a 210-room extension of the
      Philadelphia Marriott in April 1999 at a cost of approximately $37
      million. We established a mortgage on the extension of the Philadelphia
      Marriott in July 1999 for $23 million at an interest rate of approximately
      8.6%, maturing in 2009.

      In August 1999, we repaid $100 million of the outstanding balance on a
      $350 million term loan entered into in August 1998 as part of our $1.25
      billion line of credit. During the fourth quarter, an additional $50
      million repayment was made, reducing the outstanding balance of the term
      loan to $200 million. Subsequent to these repayments, the available
      capacity under the line of credit balance remains $900 million while the
      total line has been permanently reduced to $1.1 billion as a result of the
      term loan payments.

      In August 1999, the Company made a prepayment of $19 million to pay down
      in full the mezzanine mortgage on the Marriott Desert Springs Resort and
      Spa. In September 1999, the Company made a prepayment of $45 million to
      pay down in full the mortgage note on the Philadelphia Four Seasons Hotel.

      Distributions reflect the $69 million in payments for a special
      distribution declared in December 1998 as well as the $0.42 distribution
      per common unit paid as of September 11, 1999. In addition, on September
      23, 1999, the Board of Directors declared a regular cash distribution of
      $0.21 per unit. The third quarter distribution was paid on October 15,
      1999 to unit holders of record on September 30, 1999. Total distributions
      year-to-date are $0.63 per common unit.

      In August 1999, Host Marriott sold 4.16 million shares of 10% Class A
      Preferred Stock with a $0.01 par value and we issued an equivalent
      security, the Class A Preferred Units to Host Marriott Corporation.
      Holders of the shares are entitled to receive cumulative cash dividends at
      a rate of 10% per annum of the $25.00 per share liquidation preference.
      Dividends are payable quarterly in arrears commencing October 15, 1999. A
      corresponding distribution on the Class A Preferred Units is also payable
      quarterly in arrears commencing October 15, 1999. After August 3, 2004 the
      Company has the option to redeem the Class A Preferred Shares for $25.00
      per share, plus accrued and unpaid dividends to the date of redemption.
      The Class A Preferred Units rank senior to the common units and the Class
      TS Preferred Units. The Class A Preferred shareholders generally have no
      voting rights.


      Cumulative cash distributions on the Class A Preferred Units have been
      accrued from the date of issuance, August 3, 1999, through the balance
      sheet date. The Company declared a pro rata distribution of $0.50 per unit
      on September 23, 1999, which was paid on October 15, 1999.

                                      -31-
<PAGE>

                              HOST MARRIOTT, L.P.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

      In September 1999, the Board of Directors of Host Marriott Corporation
      approved the repurchase, from time to time on the open market and/or in
      privately negotiated transactions, of up to 22 million of the outstanding
      shares of Host Marriott common stock or a corresponding amount (based on
      the appropriate conversion ratio) of Host Marriott Convertible Preferred
      Securities. Based on current market conditions, we believe that the stock
      repurchase program reflects the best return on investment for our
      shareholders. However, we will continue to look at strategic acquisitions
      as well as evaluate our stock repurchase program based on changes in
      market conditions and our stock price. The repurchases will be financed in
      part through cash from operations and the net proceeds from sales of
      assets, prior to their reinvestment in real estate assets, such as the
      fourth quarter sale of the Grand Hotel Resort and Golf Club or the
      recently announced contract to sell our interest in the Ritz-Carlton
      Boston. This is consistent with our strategy of improving the overall
      portfolio by selling assets that may be in suburban locations, require
      significant capital improvements or do not fit our long-term strategy.
      Such repurchases will be made at management's discretion, subject to
      market conditions, and may be suspended at any time at our discretion.
      Additionally, under the terms of the partnership agreement, an equivalent
      number of OP units will also be repurchased on a one-for-one basis from
      Host Marriott Corporation. Subsequent to quarter end, we have spent
      approximately $7.7 million to repurchase 797,000 units.

      On December 30, 1998, we acquired a portfolio of twelve luxury hotels and
      other assets from the Blackstone Group, a Delaware limited partnership,
      and a series of funds controlled by affiliates of Blackstone Real Estate
      Partners. Approximately 467,000 OP Units issued in connection with the
      Blackstone Acquisition were redeemed for Host Marriott Corporation common
      stock during the third quarter of 1999.

      There was no cash related to financing activities from discontinued
      operations through the third quarter of 1999; however, cash used in
      financing activities from discontinued operations totaled $152 million
      through the third quarter of 1998.

      Year 2000 Issue

      Year 2000 issues have arisen because many existing computer programs and
      chip-based embedded technology systems use only the last two digits to
      refer to a year, and therefore do not properly recognize a year that
      begins with "20" instead of the familiar "19". If not corrected, many
      computer applications could fail or create erroneous results. The
      following disclosure provides information regarding the current status of
      our Year 2000 compliance program.

      We have adopted the compliance program because we recognize the importance
      of minimizing the number and seriousness of any disruptions that may occur
      as a result of the Year 2000 issue. Our compliance program includes an
      assessment of our hardware and software computer systems and embedded
      systems, as well as an assessment of the Year 2000 issues relating to
      third parties with which we have a material relationship or whose systems
      are material to the operations of our hotel properties. Our efforts to
      ensure that our computer systems are Year 2000 compliant have been
      segregated into two separate phases: in-house systems and third-party
      systems. Following the REIT conversion, Crestline, as the lessee of most
      of our hotels, will deal directly with Year 2000 matters material to the
      operation of the hotels, and Crestline has agreed to adopt and implement
      the program outlined below with respect to third-party systems for all
      hotels for which it is lessee.

      In-House Systems. Since the distribution of Marriott International on
      October 8, 1993, we have invested in the implementation and maintenance of
      accounting and reporting systems and equipment that are intended to enable
      us to provide adequately for our information and reporting needs and which

                                      -32-
<PAGE>

                              HOST MARRIOTT, L.P.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

      are also Year 2000 compliant. Substantially all of our in-house systems
      have already been certified as Year 2000 compliant through testing and
      other mechanisms and we have not delayed any systems projects due to the
      Year 2000 issue. We engaged a third party to review our Year 2000 in-house
      readiness and found no problems with any mission critical systems.
      Management believes that future costs associated with Year 2000 issues for
      our in-house systems will be insignificant and therefore not impact our
      business, financial condition and results of operations. We have not
      developed, and do not plan to develop, a separate contingency plan for our
      in-house systems due to their current Year 2000 compliance. We do,
      however, have the normal disaster recovery procedures in place should we
      have a systems failure.

      Third-Party Systems. We rely upon operational and financial systems
      provided by third parties, primarily the managers and operators of our
      hotel properties, to provide the appropriate property-specific operating
      systems, including reservation, phone, elevator, security, HVAC and other
      systems, and to provide us with financial information. Based on discussion
      with the third parties that are critical to our business, including the
      managers and operators of our hotels, we believe that these parties are in
      the process of studying their systems and the systems of their respective
      vendors and service providers and, in many cases, have begun to implement
      changes, to ensure that they are Year 2000 compliant. We continue to
      receive verbal and written assurances that these third parties are, or
      will be, Year 2000 compliant on time. To the extent these changes impact
      property-level systems, we may be required to fund capital expenditures
      for upgraded equipment and software. We do not expect these charges to be
      material, but we are committed to making these investments as required. To
      the extent that these changes relate to a third party manager's
      centralized systems, including reservations, accounting, purchasing,
      inventory, personnel and other systems, management agreements generally
      provide for these costs to be charged to our properties subject to annual
      limitations, which costs will be borne by Crestline under the leases. We
      expect that the third party managers will incur Year 2000 costs in lieu of
      costs for their centralized systems related to system projects that
      otherwise would have been pursued and other centralized costs and,
      therefore, the overall level of centralized systems charges allocated to
      the properties will not materially increase as a result of the Year 2000
      compliance effort. We believe that this deferral of certain system
      projects will not have a material impact on our future results of
      operations, although it may delay certain productivity enhancements at our
      properties. We and Crestline will continue to monitor the efforts of these
      third parties to become Year 2000 compliant and will take appropriate
      steps to address any non-compliance issues. We believe that, in the event
      of material Year 2000 non-compliance, we will have the right to seek
      recourse against the manager under our third party management agreements.
      The management agreements, however, generally do not specifically address
      the Year 2000 compliance issue. Therefore, the amount of any recovery in
      the event of Year 2000 non-compliance at a property, if any, is not
      determinable at this time, and only a portion of such recovery would
      accrue to us through increased lease rental payments from Crestline.

      We and Crestline will work with the third parties to ensure that
      appropriate contingency plans will be developed to address the most
      reasonably likely worst case Year 2000 scenarios, which may not have been
      identified fully. In particular, we and Crestline have had extensive
      discussions regarding the Year 2000 problem with Marriott International,
      the manager of a substantial majority of our hotel properties. Due to the
      significance of Marriott International to our business, a detailed
      description of Marriott International's state of readiness follows.

      Marriott International has adopted an eight-step process toward Year 2000
      readiness, consisting of the following: (i) Awareness: fostering
      understanding of, and commitment to, the problem and its potential risks;
      (ii) Inventory: identifying and locating systems and technology components
      that may be affected; (iii) Assessment: reviewing these components for
      Year 2000 compliance, and assessing the scope of

                                      -33-
<PAGE>

                              HOST MARRIOTT, L.P.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

      Year 2000 issues; (iv) Planning: defining the technical solutions and
      labor and work plans necessary for each affected system; (v)
      Remediation/Replacement: completing the programming to renovate or replace
      the problem software or hardware; (vi) Testing and Compliance Validation:
      conducting testing, followed by independent validation by a separate
      internal verification team; (vii) Implementation: placing the corrected
      systems and technology back into the business environment; and (viii)
      Quality Assurance: utilizing an internal audit team to review significant
      projects for adherence to quality standards and program methodology.

      Marriott International has grouped its systems and technology into three
      categories for purposes of Year 2000 compliance: (i) information resource
      applications and technology (IT Applications)--enterprise-wide systems
      supported by Marriott International's centralized information technology
      organization ("IR"); (ii) Business-initiated Systems ("BIS")--systems that
      have been initiated by an individual business unit, and that are not
      supported by Marriott International's IR organization; and (iii) Building
      Systems--non-IT equipment at properties that use embedded computer chips,
      such as elevators, automated room key systems and HVAC equipment. Marriott
      International is prioritizing its efforts based on how severe an effect
      noncompliance would have on customer service, core business processes or
      revenues, and whether there are viable, non-automated fallback procedures
      (System Criticality).

      Marriott International measures the completion of each phase based on
      documentation and quantified results weighted for System Criticality. As
      of September 10, 1999, the Awareness, Inventory, Assessment, and Planning
      phases were complete for IT Applications, BIS, and Building Systems. For
      IT Applications, the Remediation/Replacement and Testing phases were 95
      percent complete. Compliance Validation had been completed for over 90
      percent of key systems, with most of the remaining work in its final
      stage. For BIS and Building Systems, Remediation/Replacement is over 95
      percent complete. For BIS, Testing is approximately 80 percent complete
      and Compliance Validation is in progress. Testing is over 95% complete for
      Building Systems and Compliance Validation is in progress. Implementation
      is approximately 85 percent complete and Quality Assurance is 80 percent
      complete for IT Applications. For BIS, Implementation is approximately 85
      percent complete while Quality Assurance is in progress. Implementation is
      over 95 percent complete and Quality Assurance is in progress for Building
      Systems.

      Year 2000 compliance communications with Marriott International's
      significant third party suppliers, vendors and business partners,
      including its franchisees are ongoing. Marriott International's efforts
      are focused on the connections most critical to customer service, core
      business processes and revenues, including those third parties that
      support the most critical enterprise-wide IT Applications, franchisees
      generating the most revenues, suppliers of the most widely used Building
      Systems and BIS, the top 100 suppliers, by dollar volume, of non-IT
      products and services, and financial institutions providing the most
      critical payment processing functions. Responses have been received from a
      majority of the firms in this group. A majority of these respondents have
      either given assurances of timely Year 2000 compliance or have identified
      the necessary actions to be taken by them or Marriott International to
      achieve timely Year 2000 compliance for their products. Where Marriott
      International has not received satisfactory responses it is addressing the
      potential risks of failure through its contingency planning process.

      Marriott International has established a common approach for testing and
      addressing Year 2000 compliance issues for its managed and franchised
      properties. This includes guidance for operated properties, and a Year
      2000 "Toolkit" for franchisees containing relevant Year 2000 compliance
      information. Marriott International is also utilizing a Year 2000 best-
      practices sharing system. Marriott International is monitoring the
      progress of the managed and franchised properties towards Year 2000


                                      -34-
<PAGE>

                              HOST MARRIOTT, L.P.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

      compliance.

      Risks. There can be no assurances that Year 2000 remediation by us or
      third parties will be properly and timely completed, and failure to do so
      could have a material adverse effect on us, our business and our financial
      condition. We cannot predict the actual effects to us of the Year 2000
      problem, which depends on numerous uncertainties such as: whether
      significant third parties properly and timely address the Year 2000 issue
      and whether broad-based or systemic economic failures may occur. Moreover,
      we are reliant upon Crestline to interface with third parties in
      addressing the Year 2000 issue at the hotels leased by Crestline. We are
      also unable to predict the severity and duration of any such failures,
      which could include disruptions in passenger transportation or
      transportation systems generally, loss of utility and/or
      telecommunications services, the loss or disruption of hotel reservations
      made on centralized reservation systems and errors or failures in
      financial transactions or payment processing systems such as credit cards.
      Due to the general uncertainty inherent in the Year 2000 problem and our
      dependence on third parties, including Crestline following the REIT
      Conversion, we are unable to determine at this time whether the
      consequences of Year 2000 failures will have a material impact on us. Our
      Year 2000 compliance program and Crestline's adoption thereof are expected
      to significantly reduce the level of uncertainty about the Year 2000
      problem and management believes that the possibility of significant
      interruptions of normal operations should be reduced.

      Item 3.  Quantitative and Qualitative Disclosures about Market Risk

      We have certain financial instruments that are sensitive to changes in
      interest rates. The interest recognized on the debt obligations is based
      on various LIBOR terms, which were 5.18% and 5.06%, respectively, at
      September 10, 1999 and 5.1% and 5% at December 31, 1998, respectively. The
      interest rates, fair values and future maturities associated with these
      financial instruments have not changed materially from the amounts
      reported in our annual report on Form 10-K except for the refinancing and
      termination discussed below.

      We repaid a $40 million variable rate mortgage with proceeds from the $300
      million senior notes offering discussed in Note 8 to the financial
      statements during the first quarter of 1999. We terminated the associated
      swap agreement incurring a termination fee of approximately $1 million.

      In July 1999, we completed the refinancing of approximately $790 million
      of outstanding variable rate mortgage debt and terminated the related
      interest rate swap agreements. See Note 11 to the condensed consolidated
      financial statements. As a result of the refinancing we no longer have any
      interest rate swap agreements outstanding. As of September 10, 1999, our
      remaining variable debt consists of the credit facility and the mortgage
      debt on the Ritz-Carlton Amelia Island property which total $340 million,
      $50 million of which has been repaid subsequent to quarter end.

                                      -35-
<PAGE>

                          PART II. OTHER INFORMATION


Item 1.  Legal Proceedings

Incorporated by reference to the description of legal proceedings in the
"Contingencies" footnote to the condensed consolidated financial statements set
forth in Part I, "Financial Information."

                                      -36-
<PAGE>

                                   SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.





                                              HOST MARRIOTT, L.P.


                                              BY: HOST MARRIOTT CORPORATION
                                              Its General Partner


October 19, 1999                              /s/ Donald D. Olinger
----------------                              -----------------------------
Date                                          Donald D. Olinger
                                              Senior Vice President and
                                              Corporate Controller
                                              (Chief Accounting Officer)