<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 MARCH 26, 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 ___
                                                                       -
                                                               UNITS OUTSTANDING
        CLASS                                                     AT MAY 5, 1999
---------------------                                             --------------
Units of limited partnership interest                          
                                                                     292,541,480
<PAGE>
 
                                     INDEX
                                     -----

<TABLE> 
<CAPTION> 
PART I.           FINANCIAL INFORMATION (Unaudited):                             PAGE NO.
                                                                                 -------
<S>                                                                              <C> 
                  Condensed Consolidated Balance Sheets -                           3    
                    March 26, 1999 and December 31, 1998                                 
                                                                                         
                  Condensed Consolidated Statements of Operations -                 4    
                    Twelve Weeks Ended March 26, 1999 and                                
                    March 27, 1998                                                       
                                                                                         
                  Condensed Consolidated Statements of Cash Flows -                 6    
                    Twelve Weeks Ended March 26, 1999 and                                
                    March 27, 1998                                                       
                                                                                         
                  Notes to Condensed Consolidated Financial Statements              7    
                                                                                         
                  Management's Discussion and Analysis of Results of               18     
                    Operations and Financial Condition

                  Quantitative and Qualitative Disclosures about Market Risk       24

PART II.          OTHER INFORMATION AND SIGNATURE                                  25 
</TABLE> 

                                      -2-
<PAGE>
 
                              HOST MARRIOTT, L.P.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN MILLIONS)

<TABLE> 
<CAPTION> 
                                                                                          March 26,    December 31,
                                                                                            1999          1998  
                                                                                         ------------  ------------
                                                                                         (unaudited)
                                                           ASSETS
                                                           ------
<S>                                                                                      <C>           <C>        
Property and equipment, net............................................................   $  7,173       $  7,201
Notes and other receivables (including amounts due from
   affiliates of $133 million and $134 million, respectively)..........................        201            203
Rent receivable........................................................................         78             --
Due from managers......................................................................         --             19
Investments in affiliates..............................................................         44             33
Other assets...........................................................................        391            370
Cash and cash equivalents..............................................................        284            436
                                                                                          --------       --------
                                                                                          $  8,171       $  8,262
                                                                                          ========       ========


                                               LIABILITIES AND SHAREHOLDERS' EQUITY
                                               ------------------------------------
   
Debt
   Senior notes........................................................................   $  2,545       $  2,246
   Mortgage debt.......................................................................      2,111          2,438
   Convertible debt obligation to Host Marriott........................................        567            567
   Other...............................................................................        457            447
                                                                                          --------       --------
                                                                                             5,680          5,698
Accounts payable and accrued expenses..................................................        161            204
Deferred income taxes..................................................................         97             97
Other liabilities......................................................................        439            460
                                                                                          --------       --------
     Total liabilities.................................................................      6,377          6,459
                                                                                          --------       --------

Minority interest......................................................................        150            147
Limited Partnership interests of third parties at redemption value
   (representing 64.6 million units at March 26, 1999
   and December 31, 1998)..............................................................        718            892

Partners' Capital
   General partner.....................................................................          1              1
   Limited partner.....................................................................        930            767
   Accumulated other comprehensive loss................................................         (5)            (4)
                                                                                          --------       --------
     Total shareholders' equity........................................................        926            764
                                                                                          --------       --------
                                                                                          $  8,171       $  8,262
                                                                                          ========       ========
</TABLE> 



           See Notes to Condensed Consolidated Financial Statements

                                      -3-
<PAGE>
 
                              HOST MARRIOTT, L.P.
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
             TWELVE WEEKS ENDED MARCH 26, 1999 AND MARCH 27, 1998
                           (UNAUDITED, IN MILLIONS)


<TABLE> 
<CAPTION> 
                                                                                           1999                1998 
                                                                                        -------             -------
<S>                                                                                     <C>                 <C>   
REVENUES
    Rental income (Note 2).............................................................  $  286              $   --
    Hotel sales
      Rooms............................................................................      --                 509
      Food and beverage................................................................      --                 222
      Other............................................................................      --                  56
    Interest income....................................................................       8                  14
    Net gains on property transactions.................................................      12                   1
    Equity in earnings of affiliates...................................................       1                   1
    Other..............................................................................      --                   2
                                                                                         ------              ------
      Total revenues...................................................................     307                 805
                                                                                         ------              ------

EXPENSES
    Depreciation.......................................................................      66                  53
    Property-level expenses............................................................      58                  62
    Hotel operating expenses
      Rooms............................................................................      --                 114
      Food and beverage................................................................      --                 163
      Other department costs and deductions............................................      --                 189
      Management fees (including Marriott International
         management fees of $55 million in 1998).......................................      --                  58
    Minority interest..................................................................       5                  16
    Interest expense...................................................................     108                  76
    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.................................................................       8                  12
    Other expenses.....................................................................       4                   5
                                                                                         ------              ------
                                                                                            249                 757
                                                                                         ------              ------

INCOME FROM CONTINUING OPERATIONS BEFORE
  INCOME TAXES.........................................................................      58                  48
Provision for income taxes.............................................................      --                 (20)
                                                                                         ------              ------

INCOME FROM CONTINUING OPERATIONS......................................................      58                  28
Income from discontinued operations....................................................      --                   2
                                                                                         ------              ------

NET INCOME.............................................................................  $   58              $   30
                                                                                         ======              ======
</TABLE> 



           See Notes to Condensed Consolidated Financial Statements

                                      -4-
<PAGE>
 
                              HOST MARRIOTT, L.P.
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (CONT.)
             TWELVE WEEKS ENDED MARCH 26, 1999 AND MARCH 27, 1998
                                  (UNAUDITED)

<TABLE> 
<S>                                                                                      <C>          <C>        
BASIC EARNINGS PER UNIT:
CONTINUING OPERATIONS..................................................................  $     .20    $    .13
Discontinued operations (net of income taxes)..........................................         --         .01
                                                                                         ---------    --------

BASIC EARNINGS PER UNIT:...............................................................  $     .20    $    .14
                                                                                         =========    ========

DILUTED EARNINGS PER UNIT:
CONTINUING OPERATIONS..................................................................  $     .19    $    .13
Discontinued operations (net of income taxes)..........................................         --         .01
                                                                                         ---------    --------

DILUTED EARNINGS PER UNIT..............................................................  $     .19    $    .14
                                                                                         =========    ========
</TABLE> 


           See Notes to Condensed Consolidated Financial Statements

                                      -5-
<PAGE>
 
                              HOST MARRIOTT, L.P.
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
             TWELVE WEEKS ENDED MARCH 26, 1999 AND MARCH 27, 1998
                           (UNAUDITED, IN MILLIONS)

<TABLE> 
<CAPTION> 
                                                                                         1999                1998 
                                                                                        -------             -------
<S>                                                                                     <C>                 <C>    
OPERATING ACTIVITIES
Income from continuing operations......................................................  $   58              $   28
Adjustments to reconcile to income from continuing operations:
   Depreciation and amortization.......................................................      68                  54
   Income taxes........................................................................      (4)                 18
   Gain on sale of hotel properties....................................................     (12)                 (1)
Equity in earnings of affiliates.......................................................      (1)                 (1)
Changes in operating accounts..........................................................    (123)                (20)
Other .................................................................................      18                  19
                                                                                        -------             -------
   Cash from continuing operations.....................................................       4                  97
   Cash from discontinued operations...................................................      --                   2
                                                                                         ------             -------
   Cash from operations................................................................       4                  99
                                                                                         ------             -------

INVESTING ACTIVITIES
Proceeds from sales of assets..........................................................      36                   1
Acquisitions...........................................................................      (4)               (118)
Capital expenditures:
   Renewals and replacements...........................................................     (50)                (40)
   New development projects............................................................     (20)                (12)
   New investment capital expenditures.................................................      (6)                 (9)
Purchases of short-term marketable securities..........................................      --                 (53)
Sales of short-term marketable securities..............................................      --                 246
Note receivable collections............................................................       2                  --
Affiliate collections, net.............................................................      --                  14
Other .................................................................................      --                  (6)
                                                                                         ------             -------
   Cash (used in) from investing activities from continuing operations.................     (42)                 23
   Cash used in investing activities from discontinued operations......................      --                 (28)
                                                                                         ------             -------
   Cash used in investing activities...................................................     (42)                 (5)
                                                                                         ------             -------

FINANCING ACTIVITIES
Issuances of debt, net.................................................................     299                   1
Repurchase of units....................................................................      (4)                 --
Distribution...........................................................................     (69)                 --
Scheduled principal repayments.........................................................     (12)                 (6)
Debt prepayments ......................................................................    (323)                 (1)
Other .................................................................................      (5)                (16)
                                                                                         ------             -------
   Cash used in financing activities from continuing operations........................    (114)                (22)
   Cash used in financing activities from discontinued operations......................      --                 (27)
                                                                                         ------             -------
   Cash used in financing activities...................................................    (114)                (49)
                                                                                         ------             -------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.......................................  $ (152)             $   45
                                                                                         ======              ======

Non-cash financing activities:
    Assumption of mortgage debt for the acquisition of, or purchase of
      controlling interests in, certain hotel properties...............................  $   --              $  164
                                                                                         ======              ======
</TABLE> 

     

           See Notes to Condensed Consolidated Financial Statements

                                      -6-
<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 full-service hotel properties.
     Host Marriott operates as a self-managed and self-administered real estate
     investment trust ("REIT") and its operations are conducted solely through
     an operating partnership and its subsidiaries. As REITs are not 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 interim financial statements, the "Company"
     or "Host Marriott" refers to Host Marriott Corporation before, and Host
     Marriott, L.P. (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. 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 March 26, 1999, Host Marriott
     owned approximately 78% of the Operating Partnership.
     
     As a result of the spin-off noted above, 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 interim 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 interim 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 March 26, 1999 
     and December 31, 1998, and the results of operations and cash flows for 
     the twelve weeks ended March 26, 1999 and March 27, 1998. The statements of
     operations and cash flows for the twelve weeks ended March 27, 1998 reflect
     the historical results of Host Marriott Corporation as discussed in Note 

                                      -7-
<PAGE>
 
                              HOST MARRIOTT, L.P.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

     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 weeks ended March 26, 1999, $115 million of
     contingent rent is included in the statement of operations.
     
3.   RENTAL REVENUE
     
     The Company's 1999 rental revenue represents earnings 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 weeks ended March 27, 1998
     was to increase both revenues and operating expenses by approximately $466
     million with no impact on net income or earnings per share.
     
     The comparison of the 1999 quarterly results with 1998 is also affected by
     a change in the reporting period for the Company's hotels not managed by
     Marriott International, which resulted in the inclusion of only two months
     of results in the 1999 first quarter versus three months in 1998 for the 24
     such hotels (8,524 rooms) that the Company owned as of the beginning of
     1998. The change in reporting was required as part of the REIT Conversion.
     The 1998 hotel revenues include approximately $54 million representing the
     incremental month of operations.
     
     The table below represents hotel sales for both periods for comparative
     purposes.

<TABLE> 
<CAPTION> 
                                                                                               Twelve Weeks Ended
                                                                                              ---------------------
                                                                                              March 26,    March 27,
                                                                                                1999        1998
                                                                                              ---------   ---------
                                                                                                (in millions)
     <S>                                                                                      <C>         <C> 
     Hotel Sales
          Rooms........................................................................       $     600   $     509
          Food and beverage............................................................             268         222
          Other........................................................................              63          56
                                                                                              ---------   ---------
               Total hotel sales.......................................................       $     931   $     787
                                                                                              =========   =========
</TABLE> 

                                      -8-
<PAGE>
 
                              HOST MARRIOTT, L.P.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


4.   EARNINGS PER UNIT
     
     Basic earnings per unit is computed by dividing net income by the weighted
     average number of units. Diluted earnings per unit is computed by dividing
     net income as adjusted for potentially dilutive securities, by the weighted
     average number of units outstanding plus other potentially dilutive
     securities. For 1998 diluted earnings per unit was not adjusted for the
     impact of the Convertible Preferred Securities as they were anti-dilutive.
     
     A reconciliation of the number of units utilized for the calculation of
     diluted earnings per unit follows:
     
<TABLE> 
<CAPTION> 
                                                                                             Twelve Weeks Ended
                                                                                            ----------------------   
                                                                                            March 26,    March 27,
                                                                                              1999        1998
                                                                                            ---------    ---------   
                                                                                              (in millions)
     <S>                                                                                    <C>          <C>         
     Weighted average number of units outstanding......................................        291.5        215.7
     Assuming distribution of units to Host Marriott Corporation for Host                                           
     Marriott Corporation common shares granted under the comprehensive stock plan,                       
         less shares assumed purchased at average market price.........................          5.9          4.4
     Assuming distribution of common shares issuable for warrants, less shares                                      
         assumed purchased at average market price.....................................           --          0.3
     Assuming conversion of minority operating partnership units                                                    
         outstanding or issuable.......................................................          9.8           --
     Assuming conversion of Convertible Preferred Securities...........................           --           --
                                                                                            ---------    ---------
         Units utilized for the calculation of diluted earnings per unit...............        307.2         20.4
                                                                                            =========    =========
</TABLE> 

     A reconciliation of net income to earnings used for the calculation of
     diluted earnings per unit follows:
     
<TABLE> 
<CAPTION>
                                                                                              Twelve Weeks Ended
                                                                                             ----------------------
                                                                                             March 26,    March 27,
                                                                                               1999        1998
                                                                                             ---------    ---------   
                                                                                                   (in millions) 
     <S>                                                                                     <C>          <C>  
     Net income........................................................................      $      58    $      30
     Dividends of Convertible Preferred Securities.....................................             --           --
     Minority interest expense, assuming conversion of OP units........................              1           --
                                                                                             ---------    ---------
     Earnings used for the calculation of diluted earnings per unit....................      $      59    $      30
                                                                                             =========    =========
</TABLE> 
     
5.   DIVIDENDS AND DISTRIBUTIONS PAYABLE
     On March 15, 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 unit of limited partnership
     interest ("OP Unit"). The dividend and distribution was paid on April 14,
     1999 to shareholders and unitholders of record on March 31, 1999.
     
     On December 18, 1998, in conjunction with the REIT Conversion, the Company
     declared a special dividend which entitled shareholders of record on
     December 28, 1998 to elect to receive either $1.00 in cash or .087 of a
     share of common stock of the Company for each outstanding share of the
     Company's common stock owned by such shareholder on the record date (the
     "Special Dividend"). Cash totaling $69 million and 11.9 million shares of
     common stock that were elected in the Special Dividend were paid


                                      -9-
<PAGE>
 
                              HOST MARRIOTT, L.P.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

 
     and/or issued on February 10, 1999. The 1998 earnings per share has been
     restated to reflect the impact of the stock portion of the Special
     Dividend.
     
6.   DISPOSITION

     In February 1999, the Company sold the 479-room Minneapolis/Bloomington
     Marriott for $35 million and recorded a pre-tax gain of $11 million.
     
7.   DEBT ISSUANCES
     
     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
     December 1998.
     
8.   GEOGRAPHIC AND BUSINESS SEGMENT INFORMATION
     
     The Company operates 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. 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 consolidated 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 March 26, 1999
                                                     -------------------------------------------------------       
                                                     Hotels           Corporate & Other         Consolidated
                                                     ------           -----------------         ------------
     <S>                                             <C>              <C>                       <C>        
     Revenues.....................................   $  304                 $    3               $   307
     Income (loss) from continuing operations
       before income taxes........................       75                    (17)                   58
</TABLE> 
     
<TABLE> 
<CAPTION> 
                                                             Twelve Weeks Ended March 27, 1998      
                                                     -------------------------------------------------------      
                                                     Hotels           Corporate & Other         Consolidated
                                                     -------          -----------------         ------------ 
     <S>                                            <C>               <C>                       <C>   
     Revenues...................................    $   801                 $    4               $   805
     Income (loss) from continuing operations
       before income taxes......................         71                    (23)                   48
</TABLE> 

     As of March 26, 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 
                                                                                       ------------------------         
                                                                                         March 26,  March 27,
                                                                                           1999        1998         
                                                                                       -----------  -----------
     <S>                                                                               <C>          <C>  
     United States..................................................................   $       303  $       779
     International..................................................................             4           26 
                                                                                       -----------  -----------
              Total.................................................................   $       307  $       805
                                                                                       ===========  ===========
</TABLE> 

9.   COMPREHENSIVE INCOME

                                      -10-
<PAGE>
 
                              HOST MARRIOTT, L.P.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


     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 subsequent to the exercise of the options held by certain former and
     current employees of Marriott International. For the twelve weeks ended
     March 26, 1999, comprehensive income totaled $57 million. Comprehensive
     income was equivalent to net income for the twelve weeks ended March 27,
     1998. As of March 26, 1999 and December 31, 1998 the Company's accumulated
     other comprehensive loss was approximately $5 million and $4 million,
     respectively.
     
10.  SUBSEQUENT EVENTS
     
     In April 1999, a subsidiary of the Company completed the refinancing of the
     mortgage on the New York Marriott Marquis. The mortgage is for $245 million
     maturing in June 2000 and bears interest at a rate of LIBOR plus 2.125% for
     the period from March 31, 1999 through December 31, 1999 and LIBOR plus
     2.5% until maturity. The Company is required to make principal payments of
     $1.25 million on June 30, 1999 and September 30, 1999 in addition to $10
     million and $5 million on December 31, 1999 and March 31, 2000,
     respectively, as well as pay an extension fee of 0.5% of the principal
     balance of the loan outstanding at December 31, 1999.
     
     On December 30, 1998, the Operating Partnership 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. The Operating Partnership issued
     approximately 43.9 million OP Units and assumed debt and made cash payments
     of approximately $920 million and distributed 1.4 million of the shares of
     Crestline common stock to the Blackstone Real Estate Partners. An
     additional 3.8 million OP Units were issued in April 1999 in accordance
     with the purchase agreement based on certain adjustments determined on
     March 31, 1999.
     
     The Company also completed a 210-room extension of the Philadelphia
     Marriott Convention Center in April 1999 at a cost of approximately $43
     million including debt of $9 million.








11.   SUMMARIZED LEASE POOL FINANCIAL STATEMENTS

                                      -11-
<PAGE>
 
                              HOST MARRIOTT, L.P.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

     As discussed in Note 2, as of March 26, 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 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 weeks ended March 26, 1999
     and summarized balance sheet data of the lease pools in which the Company's
     hotels are organized are as follows (in millions):


<TABLE> 
<CAPTION> 
                                                         Pool 1     Pool 2      Pool 3     Pool 4      Combined
                                                         ------     ------      ------     ------      --------
     <S>                                                 <C>        <C>         <C>        <C>         <C>     
     Hotel Sales
          Rooms.....................................     $ 129       $ 137      $ 127       $ 128      $ 521
          Food and beverage.........................        59          61         61          72        253
          Other.....................................        14          13         19          15         61
                                                         -----       -----      -----       -----      -----
               Total hotel sales....................       202         211        207         215        835
     Operating Costs and Expenses
          Rooms.....................................        31          32         29          27        119
          Food and beverage.........................        46          47         44          48        185
          Other.....................................        53          52         50          48        203
          Management fees...........................         9          14         11          16         50
          Lease expense.............................        61          64         70          74        269
                                                         -----       -----      -----       -----      -----
               Total operating expenses.............       200         209        204         213        826
                                                         -----       -----      -----       -----      -----
     Operating Profit...............................         2           2          3           2          9
     Corporate and Interest Expenses................        (1)         --         (1)         (1)        (3)
                                                         -----       -----      -----       -----      -----
           Income before taxes......................         1           2          2           1          6
           Income taxes.............................        --          (1)        (1)         (1)        (3)
                                                         -----       -----      -----       -----      -----
               Net Income...........................     $   1       $   1      $   1       $  --      $   3
                                                         =====       =====      =====       =====      =====
</TABLE> 

<TABLE> 
<CAPTION> 
                                                         Pool 1     Pool 2      Pool 3     Pool 4      Combined
                                                         ------     ------      ------     ------      --------
     <S>                                                 <C>        <C>         <C>        <C>         <C>  
     Assets.........................................     $ 47       $ 37        $ 46       $ 47        $ 177
     Liabilities....................................     $ 46       $ 36        $ 45       $ 46        $ 173
     Equity.........................................     $  1       $  1        $  1       $  1        $   4
</TABLE> 







12.   SUPPLEMENTAL GUARANTOR AND NON-GUARANTOR SUBSIDIARY INFORMATION

                                      -12-
<PAGE>
 
                              HOST MARRIOTT, L.P.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


     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 March 26, 1999 and December 31, 1998 and results
     of operations and cash flows for the twelve weeks ended March 26, 1999 and
     March 27, 1998 of the parent, Guarantor Subsidiaries and the Non-Guarantor
     Subsidiaries.








         SUPPLEMENTAL CONDENSED COMBINED CONSOLIDATING BALANCE SHEETS
                                 (IN MILLIONS)

                                MARCH 26, 1999

                                      -13-
<PAGE>
 
                              HOST MARRIOTT, L.P.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

<TABLE> 
<CAPTION> 
                                                                                          NON-
                                                                         GUARANTOR      GUARANTOR                                 
                                                               PARENT   SUBSIDIARIES   SUBSIDIARIES   ELIMINATIONS   CONSOLIDATED 
                                                               ------   ------------   ------------   ------------   ------------
      <S>                                                      <C>      <C>            <C>            <C>            <C>  
      Property and equipment, net..........................    $ 1,227     $ 3,723        $ 2,223        $    --        $ 7,173
      Investments in affiliate.............................      1,109          --             --         (1,065)            44
      Notes and other receivables..........................        777          51             19           (646)           201
      Other assets.........................................        261         178            167           (137)           469
      Cash and cash equivalents............................        101         155             28             --            284
                                                               -------     -------        -------        -------        -------
         Total assets......................................    $ 3,475     $ 4,107        $ 2,437        $(1,848)       $ 8,171
                                                               =======     =======        =======        =======        =======

      Debt.................................................    $ 1,491     $ 2,833        $ 1,113        $  (324)       $ 5,113
      Convertible debt obligations to Host Marriott........        567          --             --             --            567
      Deferred income taxes................................         51          39              7             --             97
      Other liabilities....................................         90         576            260           (326)           600
                                                               -------     -------        -------        -------        -------
         Total liabilities.................................      2,199       3,448          1,380           (650)         6,377
      Minority interests...................................         16          59             75             --            150
      Limited partner interest of third parties at
       redemption value....................................        718          --             --             --            718
      Owner's capital......................................        542         600            982         (1,198)           926
                                                               -------     -------        -------        -------        -------
         Total liabilities and owner's capital.............    $ 3,475     $ 4,107        $ 2,437        $(1,848)       $ 8,171
                                                               =======     =======        =======        =======        =======
</TABLE>


                               DECEMBER 31, 1998

<TABLE>
<CAPTION>
                                                                                         NON-
                                                                         GUARANTOR     GUARANTOR
                                                              PARENT   SUBSIDIARIES   SUBSIDIARIES   ELIMINATIONS   CONSOLIDATED
                                                              ------   ------------   ------------   ------------   ------------
      <S>                                                     <C>      <C>            <C>            <C>            <C>
      Property and equipment, net...........................  $ 1,225     $ 3,743        $ 2,233        $    --        $ 7,201
      Investments in affiliate..............................    1,038          --             --         (1,005)            33
      Notes and other receivables...........................      783          51             19           (650)           203
      Other assets..........................................      258         146            141           (156)           389
      Cash and cash equivalents.............................      330          91             15             --            436
                                                              -------     -------        -------        -------         ------
         Total assets.......................................  $ 3,634     $ 4,031        $ 2,408        $(1,811)       $ 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.....................................       99         598            252           (285)           664
                                                              -------     -------        -------        -------        -------
         Total liabilities..................................    2,155       3,474          1,442           (612)         6,459
      Minority interests....................................       15          56             76             --            147
      Limited partner interest of third parties at
       redemption value.....................................      892          --             --             --            892
      Owner's capital.......................................      572         501            890         (1,199)           764
                                                              -------     -------        -------        -------        -------
       Total liabilities and owner's capital................  $ 3,634     $ 4,031        $ 2,408        $(1,811)       $ 8,262
                                                              =======     =======        =======        =======        =======
</TABLE>

                                      -14-
<PAGE>
 
                              HOST MARRIOTT, L.P.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)                        

           SUPPLEMENTAL CONDENSED COMBINED STATEMENTS OF OPERATIONS
                                 (IN MILLIONS)

                       TWELVE WEEKS ENDED MARCH 26, 1999


<TABLE> 
<CAPTION> 
                                                                                  NON-
                                                                GUARANTOR      GUARANTOR
                                                      PARENT   SUBSIDIARIES   SUBSIDIARIES   ELIMINATIONS   CONSOLIDATED
                                                      ------   ------------   ------------   ------------   ------------
<S>                                                   <C>      <C>            <C>            <C>            <C>
REVENUES..........................................    $    62     $   161        $    86        $    (2)       $   307
Depreciation......................................        (13)        (35)           (18)            --            (66)
Property-level expenses...........................        (10)        (22)           (26)            --            (58)
Hotel operating expenses..........................         --          --             --             --             --
Minority interest.................................         (1)         (3)            (1)            --             (5)
Interest expense..................................        (41)        (48)           (21)             2           (108)
Dividends on convertible preferred securities.....         --          --             --             --             --
Corporate expenses................................         (1)         (4)            (3)            --             (8)
Other expenses....................................         (4)         --             --             --             (4)
                                                      -------     -------        -------        -------        -------
NET INCOME (LOSS).................................    $    (8)    $    49        $    17        $    --        $    58
                                                      ========    =======        =======        =======        =======
</TABLE>


                       TWELVE WEEKS ENDED MARCH 27, 1998

<TABLE>
<CAPTION>
                                                                       GUARANTOR    NON-GUARANTOR
                                                             PARENT   SUBSIDIARIES   SUBSIDIARIES   ELIMINATIONS   CONSOLIDATED
                                                            --------  ------------  --------------  ------------   ------------
<S>                                                         <C>       <C>           <C>             <C>            <C> 
REVENUES............................................        $    249  $      378    $       194     $     (16)     $      805
Depreciation........................................             (14)        (27)           (12)            --            (53)
Property-level expenses.............................             (11)        (20)           (31)            --            (62)
Hotel operating expenses............................            (152)       (251)          (121)            --           (524)
Minority interest...................................             (12)        (13)            (4)            13            (16)
Interest expense....................................             (19)        (46)           (14)             3            (76)
Dividends on convertible preferred securities.......              (9)         --             --             --             (9)
Corporate expenses..................................              (3)         (6)            (3)             -            (12)
Other expenses......................................              (5)         --             --             --             (5)
                                                            --------  ----------    -----------     ----------     ----------
Income from continuing operations before taxes......              24          15              9             --             48
Provision for income taxes..........................             (10)         (6)            (4)            --            (20)
                                                            --------  ----------    -----------     ----------     ----------
Income from continuing operations...................              14           9              5             --             28
Income from discontinued operations.................               2          --             --             --              2
                                                            --------  ----------    -----------     ----------     ----------
NET INCOME..........................................        $     16  $        9    $         5     $        -     $       30
                                                            ========  ==========    ===========     ==========     ==========
</TABLE> 

                                      -15-
<PAGE>
 
                              HOST MARRIOTT, L.P.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

           SUPPLEMENTAL CONDENSED COMBINED STATEMENTS OF CASH FLOWS
                                 (IN MILLIONS)

                       TWELVE WEEKS ENDED MARCH 26, 1999

<TABLE> 
<CAPTION> 
                                                                                               NON-
                                                                              GUARANTOR      GUARANTOR                
                                                                  PARENT    SUBSIDIARIES    SUBSIDIARIES   CONSOLIDATED
                                                                  ------    ------------    ------------   ------------ 
<S>                                                              <C>        <C>             <C>            <C> 
OPERATING ACTIVITIES                                          
Cash (used in) from operations..........................         $    (10)     $     21        $     (7)      $      4
                                                                 --------      --------        --------       --------
INVESTING ACTIVITIES                                           
Cash received from sales of assets......................                2            34              --             36
Capital expenditures....................................              (21)          (46)             (9)           (76)
Acquisitions............................................               --            --              (4)            (4)
Other...................................................                2            --              --              2
                                                                 --------      --------        --------       --------
                                                               
Cash used in investing activities ......................              (17)          (12)            (13)           (42)
                                                                 --------      --------        --------       --------
FINANCING ACTIVITIES                                           
Repayment of debt.......................................               (1)         (267)            (67)          (335)
Issuances of debt.......................................               40           259              --            299
Transfers to/from Parent................................             (162)           62             100             --
Dividends...............................................              (69)           --              --            (69)
Repurchase of common stock..............................               (4)           --              --             (4)
Other...................................................               (5)           --              --             (5)
                                                                 --------      --------        --------       --------
                                                               
Cash (used in) from financing activities................             (201)           54              33           (114)
                                                                 --------      --------        --------       ---------
                                                               
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........         $   (228)     $     63        $     13       $   (152)
                                                                 ========     =========        ========       =========
</TABLE> 

                                      -16-
<PAGE>
 
                              HOST MARRIOTT, L.P.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

                       TWELVE WEEKS ENDED MARCH 27, 1998

<TABLE> 
<CAPTION>
                                                                                               NON- 
                                                                              GUARANTOR      GUARANTOR                
                                                                  PARENT    SUBSIDIARIES    SUBSIDIARIES   CONSOLIDATED
                                                                  ------    ------------    ------------   ------------
<S>                                                              <C>        <C>             <C>            <C>   
OPERATING ACTIVITIES                                          
Cash from continuing operations.........................         $     45      $    36         $    16        $    97
Cash from discontinued operations.......................                2           --              --              2
                                                                 --------      -------         -------        -------
Cash from operations....................................               47           36              16             99
                                                                 --------      -------         -------        -------
INVESTING ACTIVITIES                                          
Cash received from sales of assets......................                1           --              --              1
Capital expenditures....................................              (18)         (34)             (9)           (61)
Acquisitions............................................               --           --            (118)          (118)
Sales of short-term marketable securities...............              193           --              --            193
Other...................................................               (4)           2              10              8
                                                                 --------      -------         -------        -------
Cash from (used in) investing activities from                                                                            
   continuing operations................................              172          (32)           (117)            23
Cash used in investing activities from discontinued                                                                      
   operations...........................................              (28)          --              --            (28)
                                                                 --------      -------         -------        -------
Cash from (used in) investing activities ...............              144          (32)           (117)            (5)
                                                                 --------      -------         -------        -------

FINANCING ACTIVITIES                                          
Repayment of debt.......................................               (2)          (3)             (2)            (7)
Issuances of debt.......................................               --           --               1              1
Transfers to/from Parent................................             (119)           4             115             --
Other...................................................              (16)          --              --            (16)
                                                                 --------      -------         -------        -------
Cash (used in) from financing activities from                                                                            
   continuing operations................................             (137)           1             114            (22)
Cash used in financing activities from discontinued                                                                      
   operations...........................................              (27)          --              --            (27)
                                                                 --------      -------         -------        -------
Cash (used in) from financing activities................             (164)           1             114            (49)
                                                                 --------      -------         -------        --------

INCREASE IN CASH AND CASH EQUIVALENTS...................         $     27      $     5         $    13        $    45
                                                                 ========      =======         =======        =======
</TABLE> 

                                      -17-
<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 quarterly results with 1998 is also affected by a
      change in the reporting period for the Company's hotels not managed by
      Marriott International, which resulted in the inclusion of only two months
      of results in the 1999 first quarter versus three months in 1998 for the
      24 of such hotels (8,524 rooms) the Company owned as of the beginning of
      1998. The change in reporting period was required as part of the REIT
      Conversion. Results in the first quarter of 1999 were driven by the
      addition of 36 properties in 1998. The increase in hotel sales reflects
      growth in room revenues generated per available room or REVPAR. For
      comparable properties, REVPAR increased 4.4% to $120.37 for the first
      quarter of 1999. On a comparable basis, average room rates increased
      approximately 3%, while average occupancy increased one percentage point.

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

      The net gain on property transactions for 1999 resulted from the $11
      million pre-tax gain on the sale of the 479-room Minneapolis/Bloomington
      Marriott for approximately $35 million.

      EXPENSES. As discussed above, hotel revenues and hotel operating costs are
      not comparable with the prior year. The lessee pays certain property-level
      costs including management fees and we receive a rent payment, which is
      net of those costs. Property-level costs which are comparable, including
      depreciation, property taxes, insurance, ground and equipment rent
      increased $9 million or 8% to $124 million, primarily reflecting the
      depreciation from the 36 properties added in 1998.

      MINORITY INTEREST. Minority interest expense decreased $11 million to $5
      million for the first quarter of 1999, primarily reflecting the impact of
      the consolidation of partnerships which occurred in connection with the
      REIT Conversion. 

                                      -18-
<PAGE>
 
                              HOST MARRIOTT, L.P.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

     INTEREST EXPENSE. Interest expense increased 42% to $108 million in the
     first quarter of 1999, primarily due to the issuance of senior notes,
     establishment of a new credit facility, interest expense on the convertible
     debt obligation to Host Marriott and additional mortgage debt on properties
     acquired in connection with the REIT Conversion.

     DIVIDENDS ON CONVERTIBLE PREFERRED SECURITIES. The dividends on Convertible
     Preferred Securities reflect the accrual for the first twelve weeks of
     fiscal year 1998 on the $550 million in 63/4% 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 on the 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 $4 million to $8 million
     for the first quarter of 1999 resulting primarily from the timing of
     certain project costs not incurred in 1999.

     INCOME FROM DISCONTINUED OPERATIONS. Income from discontinued operations
     represents the senior living communities business' results of operations
     for the first quarter of 1998 as restated for the spin-off of Crestline.

     NET INCOME. Our net income for the first quarter of 1999 was $58 million
     compared to $30 million for the first quarter of 1998. Basic earnings per
     unit were $0.20 and $0.14 for the first quarter of 1999 and 1998,
     respectively. Diluted earnings per unit was $0.19 and $0.14 for the first
     quarter of 1999 and 1998, respectively.

     EBITDA AND FFO
     --------------

     Our consolidated earnings before interest expense, taxes, depreciation,
     amortization and other non-cash items ("EBITDA") increased $23 million, or
     11%, to $226 million in the first quarter of 1999. Hotel EBITDA increased
     $26 million, or 13%, to $230 million in the first quarter of 1999,
     reflecting comparable full-service hotel EBITDA growth, as well as
     incremental EBITDA from 1997 and 1998 acquisitions offset by amounts
     representing approximately 1% to 1.5% of hotel sales which are retained by
     Crestline.

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

<TABLE> 
<CAPTION> 
                                                                  Twelve Weeks Ended            
                                                              ---------------------------  
                                                                 March 26,    March 27,
                                                                   1999         1998       
                                                              ------------   ------------
     <S>                                                      <C>            <C> 
     EBITDA................................................   $     226        $     203  
     Interest expense......................................        (108)             (76) 
     Dividends on Convertible Preferred Securities.........          --               (9) 
     Depreciation and amortization.........................         (68)             (54) 
     Minority interest expense.............................          (5)             (16) 
     Income taxes..........................................          --              (20) 
     Other non-cash charges, net...........................          13               --  
                                                              ---------        ---------  
       Income from continuing operations...................   $      58        $      28  
                                                              =========        =========     
</TABLE> 

                                      -19-
<PAGE>
 
                              HOST MARRIOTT, L.P.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

      Our interest coverage, defined as EBITDA divided by cash interest expense,
      was 2.4 times for the 1999 first quarter, 2.8 times for the 1998 first
      quarter and 2.5 times for full year 1998. The ratio of earnings to fixed
      charges was 1.6 to 1.0 for the first quarter of 1999 and 1.7 to 1.0 for
      the first quarter of 1998.

      We also believe that Funds From Operations or FFO as defined by the
      National Association of Real Estate Investment Trusts is a meaningful
      disclosure that will help the investment community to better understand
      the financial performance of the Company, including enabling its
      shareholders and analysts to more easily compare the Company's performance
      to other Real Estate Investment Trusts ("REITs"). FFO increased $32
      million, or 38%, to $117 million in the first quarter of 1999. For periods
      prior to 1999, the FFO disclosed represents comparative FFO (FFO plus
      deferred tax expense). The following is a reconciliation of the Company's
      income from continuing operations to FFO (in millions):

<TABLE> 
<CAPTION> 
                                                              Twelve Weeks Ended                        
                                                        ------------------------------
                                                          March 26,         March 27,                         
                                                            1999              1998                    
                                                        ------------      ------------
      <S>                                               <C>               <C> 
      Income from continuing operations...........      $      58         $      28                               
      Depreciation and amortization...............             68                54                           
      Other real estate activities................            (11)               (1)                          
      Partnership adjustments.....................              2                (6)                          
      Deferred taxes..............................             --                10                           
                                                        ---------         ---------                           
         Funds From Operations....................      $     117         $      85                           
                                                        =========         =========                            
</TABLE> 

      On a pro forma basis adjusted for the December 1997 operations discussed
      above FFO increased $39 million or 50% in the first quarter of 1999.

      The Company considers EBITDA and FFO to be indicative measures of the
      Company's operating performance due to the significance of the Company's
      long-lived assets and because such data is considered useful by the
      investment community to better understand the Company's results, and can
      be used to measure the Company's ability to service debt, fund capital
      expenditures and expand its business, however, such 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.

      CASH FLOWS AND FINANCIAL CONDITION

      The Company reported a decrease in cash and cash equivalents of $152
      million during the twelve weeks ended March 26, 1999. Cash from continuing
      operations was $4 million for the first quarter of 1999 and $97 million
      for the first quarter of 1998. The $93 million decrease in cash from
      continuing operations resulted principally due to an increase in rent
      receivable resulting from the timing of the receipt of cash payments under
      the leases versus management agreements. There was no cash from (used in)
      discontinued operations for the first quarter of 1999; however, cash from
      discontinued operations totaled $2 million for the first quarter of 1998.

      Cash used in investing activities from continuing operations was $42
      million for the first quarter of 1999 and cash from investing activities
      from continuing operations was $23 million for the first quarter of 1998.
      Cash used in investing activities for the first quarter of 1999 includes
      capital expenditures of $76 million, mostly related to renewals and
      replacements on existing properties. In addition, the Company generated
      $36 million of cash from the net sale of assets, primarily the
      Minneapolis/Bloomington 

                                      -20-
<PAGE>
 
                              HOST MARRIOTT, L.P.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

      property. There was no cash from (used in) investing activities from
      discontinued operations for the first quarter of 1999; however, cash used
      in investing activities of discontinued operations totaled $28 million for
      the first quarter of 1998.

      Cash used in financing activities from continuing operations was $114
      million for the first quarter of 1999 and $22 million for the first
      quarter of 1998. Cash used in financing activities for the first quarter
      of 1999 includes $323 million in prepayment of debt, offset by $299
      million in debt issuances. Both financing activities were related to the
      Company's February 1999 issuance of $300 million of 83/8% Series D Senior
      notes due in 2006. The Series D Senior notes 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. There was no cash from (used in)
      financing activities from discontinued operations in the first quarter of
      1999; however, cash used in financing activities of discontinued
      operations totaled $27 million in the first quarter of 1998.

      Cash used in financing activities for the first quarter of 1999 also
      includes a dividend distribution related to the REIT Conversion of $69
      million.

      On March 15, 1999, the Board of Directors of Host Marriott declared a
      regular cash dividend of $0.21 per share of common stock and a
      corresponding distribution of $0.21 per unit of limited partnership
      interest ("OP Unit"). The dividend and distribution was paid on April 14,
      1999 to shareholders and unitholders of record on March 31, 1999.

      In April 1999, a subsidiary of the Company completed the refinancing of
      the mortgage on the New York Marriott Marquis. The mortgage is for $245
      million maturing June 2000 and bears interest at a rate of LIBOR plus
      2.125% for the period from March 31, 1999 through December 31, 1999 and
      LIBOR plus 2.5% until maturity. The Company is required to make principal
      payments of $10 million and $5 million on December 31, 1999 and March 31,
      2000, respectively, as well as pay an extension fee of 0.5% of the
      principal balance of the loan outstanding at December 31, 1999.

      On December 30, 1998, the Operating Partnership 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. The Operating Partnership
      issued approximately 43.9 million OP Units and assumed debt and made cash
      payments of approximately $920 million and distributed 1.4 million of the
      shares of Crestline common stock to the Blackstone Real Estate Partners.
      An additional 3.8 million OP Units were issued in April 1999 in accordance
      with the purchase agreement based on certain adjustments determined on
      March 31, 1999.

      The Company also completed a 210-room extension of the Philadelphia
      Marriott Convention Center in April 1999 at a cost of approximately $43
      million including debt of $9 million.

      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

                                      -21-
<PAGE>
 
                              HOST MARRIOTT, L.P.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

      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
      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 have started to
      receive written assurances that these third parties 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, 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.

                                      -22-
<PAGE>
 
                              HOST MARRIOTT, L.P.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

      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 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
      documented and quantified results, weighted for System Criticality. As of
      March 26, 1999, the Awareness and Inventory phases were complete for IT
      Applications, BIS, and Building Systems. For IT Applications, the
      Assessment and Planning phases were complete and Remediation/Replacement
      and Testing phases were 95 percent complete. Compliance Validation had
      been completed for approximately 75 percent of key systems, with most of
      the remaining work in its final stage. For BIS and Building Systems,
      Assessment and Planning are substantially complete. For BIS,
      Remediation/Replacement is substantially complete and Testing is in
      progress. Marriott International is on track for completion of
      Remediation/Replacement and Testing of Building Systems for September of
      1999. Compliance Validation is in progress for both BIS and Building
      Systems. Implementation and Quality Assurance is in progress for IT
      Applications, BIS and 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 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

                                      -23-
<PAGE>
 
                              HOST MARRIOTT, L.P.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

      identified the necessary actions to be taken by them or Marriott
      International to achieve timely Year 2000 compliance for their products.

      Marriott International has established a common approach for testing and
      addressing Year 2000 compliance issues for its managed and franchised
      properties. This includes a guidance protocol 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.

      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

      The Company has certain derivative and other financial instruments that
      are sensitive to changes in interest rates, including interest rate swaps
      and debt obligations. The interest recognized on these instruments is
      based on various LIBOR terms, which was 5.0% at March 26, 1999 and 5.1% at
      December 31, 1998 for the swaps and was approximately 5.8% for both
      periods for the various debt obligations. The interest rates, fair values
      and future maturities associated with these financial instruments have not
      changed materially from the amounts reported in the Company's annual
      report on Form 10-K except for the refinancing and termination discussed
      below.

      The Company repaid a $40 million variable rate mortgage with proceeds from
      the $300 million senior notes offering discussed in Note 7 to the
      financial statements. Additionally, the Company terminated the associated
      swap agreement incurring a termination fee of approximately $1 million in
      February 1999.

                                      -24-
<PAGE>
 
                          PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is from time to time the subject of, or involved in, judicial
proceedings. Management believes that any liability or loss resulting from such
matters will not have a material adverse effect on the financial position or
results of operations of the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      On April 15, 1999, Host Marriott Corporation announced the Annual Meeting
      of Shareholders to be held on May 20, 1999 to elect members of the Board
      of Directors, among other matters.

ITEM 5. OTHER INFORMATION

      None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

a.     Exhibits:

       None.

b.     Reports on Form 8-K:

       .  January 14, 1999--Report that Host Marriott Corporation, through its
          subsidiary Host Marriott L.P., acquired ownership of, or controlling
          interests in, twelve upscale and luxury full-service hotels and
          certain other assets from the Blackstone Group and a series of funds
          controlled by Blackstone Real Estate Partners, and financial
          statements will be filed within 60 days of the filing of the report.

       .  January 14, 1999--Report on the December 29, 1998 Host Marriott
          Corporation distribution of Crestline shares to shareholders of record
          and Host Marriott belief that the fair market value of the Crestline
          shares on December 29, 1998 was $15.30 per share (a distribution of
          $1.53 per Host Marriott share) which is the value determined by the
          Host Marriott Board of Directors.

       .  January 15, 1999--Report of the announcement that on December 30, 1998
          Host Marriott Corporation had completed the final steps in its
          conversion to a real estate investment trust ("REIT") and had
          positioned itself to elect REIT status, effective January 1, 1999.

       .  January 22, 1999--Report that, based on its annual budget for 1999,
          Host Marriott Corporation estimates that on a standalone basis its
          1999 Earnings Before Interest, Expense, Taxes, Depreciation and
          Amortization and other non-cash items will be in the range of
          approximately $1.0 billion to $1.05 billion while its 1999 Funds From
          Operations will be in the range of approximately $565 million to $595
          million.

                                      -25-
<PAGE>
 
     .    January 29, 1999--Report of final exchange values, note election
          amounts, and number of OP Units to be received by limited partners in
          connection with Host Marriott, L.P.'s acquisition of eight public
          partnerships.

     .    March 15, 1999--Report that on December 30, 1998, Host Marriott
          Corporation, through its subsidiary Host Marriott, L.P. acquired
          ownership of, or controlling interests in, 12 upscale and luxury full-
          service hotels and certain other assets from the Blackstone Group, and
          a series of funds controlled by affiliates Blackstone Real Estate
          Partners. In exchange for these assets, (1) Host Marriott, L.P. issued
          approximately 43.9 million of its limited partnership units, assumed
          debt and made cash payments totaling approximately $920 million and
          (2) Host Marriott distributed 1.4 million shares of Crestline Capital
          Corporation. The actual number of OP Units to be issued to the
          Blackstone Entities will fluctuate based upon certain adjustments to
          be determined on March 31, 1999.

                                      -26-
<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      

May 3, 1999                                       /s/ Donald D. Olinger 
-----------                                       -----------------------------
Date                                              Donald D. Olinger         
                                                  Senior Vice President and
                                                  Corporate Controller
                                                  (Chief Accounting Officer)