##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




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FORM 10-K



| |                                                                                               
| | ----------------------------------------------------------------------------------------------
| | [X]     Annual Report
	Pursuant to Section 13 or 15(d) of the Securities Exchange
	Act of 1934

For the Fiscal Year Ended December 31,
2001


OR



| |                                                                                                   
| | --------------------------------------------------------------------------------------------------
| | [ ]     Transition
	Report Pursuant to Section 13 or 15(d) of the Securities
	Exchange Act of 1934

For the Transition Period
from                     to


Commission File Number: 0-15097

WESTIN HOTELS LIMITED PARTNERSHIP

(Exact name of Registrant as specified in its
charters)


|                                                                |  |                                                      
|--------------------------------------------------------------- |  | -----------------------------------------------------
|Delaware                                                        |  | 91-1328985                                           
|(State or other jurisdiction of incorporation or
	organization) |  | (I.R.S. employer identification no.)                 
|1111 Westchester Avenue
	White Plains, NY 10604                 |  | 1-800-323-5888                                       
|(Address of principal executive offices,
	including zip code)   |  | (Registrants telephone number, including
	area code)

Securities Registered Pursuant to
Section 12(b) of the Act:

None

Securities Registered Pursuant to
Section 12(g) of the Act:

Units of limited partnership interests

(Title of Class)


There is no public market for Units of limited
partnership interests in the Westin Hotels Limited Partnership.

Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of
Registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this
Form 10-K.  [X]

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 (or for such shorter period
that the Registrant was required to file such reports), and
(2) has been subject to such filing requirements for the
past 90 days.  Yes [X]  No [ ]

Indicate the number of shares (Units) outstanding
of each of the issuers classes of common stock (Units), as
of the latest practicable date (applicable only to corporate
issuers).

135,600 limited partnership Units issued and
outstanding as of March 20, 2002.



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TABLE OF CONTENTS



|         |                                                                                                 |  |  |  |  |  |  | 
|-------- | ----------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I  
|         | Forward-Looking Statements                                                                     
|         | Item 1. Business.                                                                              
|         | Item 2. Property.                                                                              
|         | Item 3. Legal Proceedings.                                                                     
|         | Item 4. Submission of Matters to a Vote of Security Holders.                                   
|PART II 
|         | Item 5. Market for Registrants Common Equity and Related Unitholder Matters.                  
|         | Item 6. Selected Financial Data.                                                               
|         | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations. 
|         | Item 7A. Quantitative and Qualitative Disclosures about Market Risk.                           
|         | Item 8. Financial Statements and Supplementary Data.                                           
|         | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.  
|PART III
|         | Item 10. Directors and Executive Officers of the Registrant.                                   
|         | Item 11. Executive Compensation.                                                               
|         | Item 12. Security Ownership of Certain Beneficial Owners and Management.                       
|         | Item 13. Certain Relationships and Related Transactions.                                       
|PART IV 
|         | Item 14. Exhibits, Financial Statements, Financial Statement Schedules and Reports on Form 8-K.
|EX-10.26
|EX-99.1 



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##### Table of Contents



TABLE OF CONTENTS

|         |  |                                                                                        |  |      |    | 
|-------- |  | -------------------------------------------------------------------------------------- |  | ---- | -- | 
|         |  |                                                                                        |  | Page
|         |  |                                                                                        |  |     
|PART I  
|         |  | Forward-Looking Statements                                                             |  |      | 2  | 
|Item 1.  |  | Business                                                                               |  |      | 4  | 
|Item 2.  |  | Property                                                                               |  |      | 6  | 
|Item 3.  |  | Legal Proceedings                                                                      |  |      | 7  | 
|Item 4.  |  | Submission of Matters to a Vote of Security
	Holders                                   |  |      | 7  | 
|PART II 
|Item 5.  |  | Market for Registrants Common Equity and
	Related Unitholder Matters                  |  |      | 7  | 
|Item 6.  |  | Selected Financial Data                                                                |  |      | 10 | 
|Item 7.  |  | Managements Discussion and Analysis of
	Financial Condition and Results of Operations |  |      | 10 | 
|Item 7A. |  | Quantitative and Qualitative Disclosures about
	Market Risk                            |  |      | 14 | 
|Item 8.  |  | Financial Statements and Supplementary Data                                            |  |      | 14 | 
|Item 9.  |  | Changes in and Disagreements with Accountants on
	Accounting and Financial Disclosure  |  |      | 14 | 
|PART III
|Item 10. |  | Directors and Executive Officers of the Registrant                                     |  |      | 27 | 
|Item 11. |  | Executive Compensation                                                                 |  |      | 27 | 
|Item 12. |  | Security Ownership of Certain Beneficial Owners
	and Management                        |  |      | 27 | 
|Item 13. |  | Certain Relationships and Related Transactions                                         |  |      | 28 | 
|PART IV 
|Item 14. |  | Exhibits, Financial Statements, Financial
	Statement Schedules and Reports on Form 8-K |  |      | 28 | 





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PART I




Forward-Looking Statements

Certain statements contained in this report
constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such
statements appear in a number of places in this report,
including, without limitation, the sections of Items 1, 2
and 5 captioned Business, Property and
Market for Registrants Common Equity and Related
Unitholder Matters and Item 7,
Managements Discussion and Analysis of Financial
Condition and Results of Operations. Such forward-looking
statements may include statements regarding the intent, belief
or current expectations of the Partnership or Hotel Partnerships
(as defined below) or their respective general partners and
their officers or directors with respect to the matters
discussed in this report. All such forward-looking statements
involve risks, uncertainties and other factors that could cause
actual results to differ materially from those projected in the
forward-looking statements, including, without limitation, the
impacts of the September 11, 2001 terrorist attacks in New
York, Washington, D.C. and Pennsylvania (the
September 11 Attacks) and their aftermath on
the travel and hospitality industries; competition within the
lodging industry, both on a local and national level; general
economic conditions, including the duration and severity of the
recent downturn in the economy; the seasonality of the hotel
business; general real estate and economic conditions; the
availability of capital for renovations; government and
regulatory action; and the other risks and uncertainties set
forth in the annual, quarterly and current reports of the
Partnership. The Partnership undertakes no obligation to
publicly update or revise any forward-looking statements to
reflect current or future events or circumstances.

Risks Relating to Hotel Operations

We Are Subject to All the Operating Risks
Common to the Hotel and Leisure
Industry.Operating risks common
to the hotel and leisure industry include:



|  |                                                                                                                                                                                               
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | changes in general economic conditions, including
	the severity and duration of the current economic downturn
	exacerbated by the September 11 Attacks and their aftermath;                   
| 
| | decreases in the level of demand for rooms and
	related services, including the recent reduction in business
	travel as a result of general economic conditions and the
	September 11 Attacks;
| 
| | restrictive changes in zoning and similar land
	use laws and regulations or in health, safety and environmental
	laws, rules and regulations;                                                 
| 
| | changes in travel patterns; and                                                                                                                                                               
| 
| | changes in operating costs including, but not
	limited to, energy and labor costs.                                                                                                            

The Hotel Business Is Capital Intensive.In order for The Westin Michigan
Avenue, Chicago (the Michigan Avenue or the
Hotel) to remain attractive and competitive, we have
to spend money periodically to keep it well maintained,
modernized and refurbished. This creates an ongoing need for
cash and, to the extent expenditures cannot be funded from cash
generated by our operations, we may be required to borrow or
otherwise obtain these funds. Accordingly, our financial results
may be sensitive to the cost and availability of funds.

We Must Compete for Customers.The hotel industry is highly
competitive. The Michigan Avenue competes for customers with
other hotel and resort properties in its geographic market. Some
of our competitors may have substantially greater marketing and
financial resources than we do, and they may improve their
facilities, reduce their prices or expand or improve their
marketing programs in ways that adversely affect our operating
results.

The Hotel Industry Is Seasonal in Nature.The hotel industry is seasonal in
nature, and the periods during which the Michigan Avenue
experiences higher revenue vary. Our revenue historically has
been lower in the first quarter than in the second, third or
fourth quarters.

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Real Estate Investments Are Subject to
Numerous Risks.Because we own the
Michigan Avenue, we are subject to the risks that generally
relate to investments in real property. The investment returns
available from equity investments in real estate depend in large
part on the amount of income earned and capital appreciation
generated, as well as the expenses incurred. In addition, a
variety of other factors affect income from properties and real
estate values, including governmental regulations, real estate,
zoning, tax and eminent domain laws, interest rate levels and
the availability of financing. For example, new or existing real
estate, zoning or tax laws can make it more expensive and/or
time-consuming to develop real property or expand, modify or
renovate hotels. When interest rates increase, the cost of
expanding or renovating real property increases and real
property values may decrease as the number of potential buyers
decreases. Similarly, as financing becomes less available, it
becomes more difficult both to acquire and to sell real
property. Finally, governments can, under eminent domain laws,
take real property. Sometimes this taking is for less
compensation than the owner believes the property is worth. Any
of these factors could have a material adverse impact on our
results of operations or financial condition, as well as on our
ability to make distributions to our Unitholders. In addition,
equity real estate investments, such as the investment we hold,
are relatively difficult to sell quickly. If our property does
not generate revenue sufficient to meet operating expenses,
including debt service and capital expenditures, our income will
be adversely affected.

General Economic Conditions May Negatively
Impact Our Results.Moderate or
severe economic downturns or adverse conditions may negatively
affect operations of the Hotel. In addition, a tightening of the
labor markets may result in fewer and/or less qualified
applicants for job openings at the Michigan Avenue and higher
wages.

Risks Relating to Acts of God, Terrorist
Activity and War

Our financial and operating performance may be
adversely affected by acts of God, such as natural disasters.
Similarly, wars, terrorist activity (including threats of
terrorist activity), political unrest and other forms of civil
strife have caused in the past, and may cause in the future, our
results to differ materially from anticipated results.

Internet Reservation Channels

Some of the hotel rooms at the Michigan Avenue
are booked through internet travel intermediaries such as
Travelocity, Expedia and Priceline. As this percentage
increases, these intermediaries may be able to obtain higher
commissions or reduced room rates. Moreover, some of these
internet travel intermediaries are attempting to commoditize
hotel rooms, by increasing the importance of price and general
indicators of quality (such as three-star downtown
hotel) at the expense of brand identification. These
agencies hope that consumers will eventually develop brand
loyalties to their reservations system rather than to our
lodging brands. Although most of our business is expected to be
derived from traditional channels, if the amount of sales made
through internet intermediaries increases significantly, the
business and profitability of the Hotel may be significantly
harmed.

Risks Relating to Disposition
Opportunities

In February 2001, the Partnership retained Jones
Lang LaSalle Hotels, a nationally recognized broker
(JLL), to market the Michigan Avenue for sale. In
April 2001, formal marketing materials were distributed and
discussions with several potential purchasers subsequently
commenced. After the occurrence of the September 11
Attacks, certain of the most qualified potential purchasers
indicated they would expect significant discounts on their
preliminary offers made prior to the attacks. Based on the
unstable and depressed hotel real estate market, the General
Partner (as defined below) does not feel that it is in the best
interest of the limited partners to sell the Michigan Avenue at
this time.

While the General Partner continues to explore a
sale of the property, it has also engaged JLL to assist in
exploring a refinancing of the Partnerships mortgage debt.
At this time, it is too early for the General Partner to fully
evaluate the feasibility or benefits of a refinancing. The
General Partner will continue to make efforts

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to pursue a sale or refinancing transaction that
it believes is in the best interest of the limited partners. The
ultimate disposition of the Hotel has a number of risks,
including the following:




| |   |                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Net proceeds distributed to the limited partners
	after the sale may not exceed amounts previously offered to the
	limited partners in mini-tender offers.
|
| |  | We may be unable to find an acceptable buyer.                                                                                                             
|
| |  | We may be unable to sell the Michigan Avenue at
	or above its most recent appraised value.                                                                
|
| |  | We may not be able to make a prompt distribution
	to the limited partners after the sale of the hotel.                                                    




Item 1.     Business.

General Development of Business

Westin Hotels Limited Partnership (the
Partnership) and its subsidiary limited
partnerships, The Westin St. Francis Limited Partnership
(the St. Francis Partnership) and The Westin
Chicago Limited Partnership (the Chicago Partnership
or the Hotel Partnership), each a Delaware limited
partnership (collectively the Hotel Partnerships),
were formed on April 25, 1986 for the purpose of acquiring
two hotels, The Westin St. Francis in San Francisco,
California (the St. Francis) and the Michigan
Avenue (formerly The Westin Hotel, Chicago) in downtown Chicago,
Illinois (collectively the Hotels).

The St. Francis and the Michigan Avenue have
been managed as part of the Westin hotel chain since 1945 and
1964, respectively. As a result of the acquisition of Westin
Hotel Company (Westin) by Starwood Hotels &
Resorts Worldwide, Inc. (Starwood) in 1998, the
management agreements for the St. Francis and the Michigan
Avenue were assigned to St. Francis Hotel Corporation
(St. Francis Corp.) and 909 North Michigan
Avenue Corporation (909 Corp.), respectively.

Westin Realty Corp. (Westin Realty)
is the sole general partner of the Partnership (the
General Partner). 909 Corp. and
St. Francis Corp. are the respective general partners of
the subsidiary limited partnerships, the Chicago Partnership and
the St. Francis Partnership, which directly own and operate
(or in the case of the St. Francis Corp., owned and
operated) each Hotel. Since January 2, 1998, the General
Partner has been a subsidiary of Starwood.

On January 18, 2000, the St. Francis
Partnership entered into a definitive agreement to sell the
St. Francis to BRE/ St. Francis L.L.C., an affiliate
of the Blackstone Group, for gross proceeds of $243,000,000.
Upon obtaining the consent of a majority of the limited
partners, the sale was consummated on April 26, 2000.

Financial Information about Industry
Segments

The Hotel Partnerships are engaged solely in the
business of owning and operating the Hotels (as of
April 26, 2000, only the Michigan Avenue) and are,
therefore, engaged in only one industry segment.

Description of Business

The Michigan Avenue is operated as part of the
full-service, upscale Westin hotel chain. Starwood owns, manages
and franchises hotels throughout the world. The inclusion of the
Hotel within a global system provides the benefits of name
recognition, centralized reservations and advertising,
system-wide marketing programs, centralized purchasing and
training and support services. The hotel business in general is
highly competitive. To the extent hotel capacity expands or
demand for hotel accommodations decreases, competition will
increase. The demand for particular accommodations and related
services are subject to various factors, including, but not
limited to, seasonal variance, changes in economic conditions,
and changes in travel patterns and preferences (which may be
affected by airline schedules, weather conditions or
availability). Specific information regarding competitive
conditions at the Michigan Avenue is set forth in Item 2,
Property.

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The Hotels are managed by wholly owned
subsidiaries of Starwood. Because Starwood also owns, operates,
manages and franchises hotels under the St. Regis®, The
Luxury Collection®, Sheraton®, W® and Four
Points® by Sheraton brands, potential conflicts of interest
may exist. While Starwood and its affiliates have the right to
own, operate and develop competing hotels, the general partners
have a fiduciary duty to conduct the affairs of the Partnership
and the Hotel Partnerships in the best interests of these
entities and their partners.

Neither the Partnership nor the Hotel
Partnerships have any employees. Administrative and Hotel
personnel are employees of either Starwood or the Hotels
general partner. The Hotel and the Hotel Partnership reimburse
Starwood and the general partner for the costs of such
employees. However, neither the Partnership nor the Hotel
Partnership is directly responsible for the payment of executive
compensation to the officers of the general partners.

In February 2001, the Partnership retained JLL to
market the Michigan Avenue for sale. In April 2001, formal
marketing materials were distributed and discussions with
several potential purchasers subsequently commenced. After the
occurrence of the September 11 Attacks, certain of the most
qualified potential purchasers indicated they would expect
significant discounts on their preliminary offers made prior to
the attacks. Based on the unstable and depressed hotel real
estate market, the General Partner does not feel that it is in
the best interest of the limited partners to sell the Michigan
Avenue at this time.

While the General Partner continues to explore a
sale of the property, it has engaged JLL to assist in exploring
a refinancing of the Partnerships mortgage debt. At this
time, it is too early for the General Partner to fully evaluate
the feasibility or benefits of a refinancing. The General
Partner will continue to make efforts to pursue a sale or
refinancing transaction that it believes is in the best interest
of the limited partners.

Competitive Conditions

Chicagos hospitality industry continued to
experience strong competition during 2001 and new hotel projects
are expected to enter the market in the near future. Four hotels
with a total of 1,295 rooms opened in 2001 in Chicago. One
property is expected to open in 2002, a 415-room Sofitel hotel.
In addition, a number of competing hotels have just completed
renovations. For 2002, the Hotel believes that it can maintain
its share of the market by emphasizing its premier
Magnificent Mile location and its new and improved
rooms, including the addition of the Heavenly Bed® and
Heavenly BathSM, Westin amenities. Significant growth
for the Chicago market is not expected for 2002, with 52,000
fewer hotel room nights from major convention business scheduled
for the McCormick Place (Chicagos convention center).
There is another Westin hotel located at the OHare
International Airport near Chicago and another in the financial
district of downtown Chicago. The General Partner believes that
neither is in direct competition with the Michigan Avenue and
that their close proximity allows for efficiencies in both
staffing and productivity. Starwood also operates the Sheraton
Chicago Hotel and Towers in downtown Chicago, owns four hotels
in downtown Chicago (two of which were rebranded to W Hotels in
the latter half of 2001) and manages five properties in the
Chicago metropolitan area under management agreements. These
properties are not considered to be primary competitors due to
differences in their locations, orientations or facilities.

Mortgage Loans

On August 21, 1986, mortgage loans in the
amount of $83,800,000 with respect to the St. Francis and
$32,800,000 with respect to the Michigan Avenue were refinanced
by Teacher Retirement System of Texas (the Lender).
On June 2, 1994, the General Partner, on behalf of the
Partnership, successfully completed a restructuring of the
mortgage loans and entered into a restructuring agreement
(Restructuring Agreement) with the Lender. On
May 27, 1997, a second restructuring agreement modifying
the existing mortgage loans on the Partnerships Hotels was
completed. The modifications to the mortgage loans consist
primarily of a reduction of the effective interest rates, an
extension of the maturity dates and revisions of prepayment
penalties. On April 26, 2000, $99,433,000 of the mortgage
loans and accrued interest was repaid in connection with the St.
Francis sale.

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Insurance

The Michigan Avenue is covered by comprehensive
general liability insurance, fire and extended property
insurance (including earthquake coverage), business
interruption, workers compensation, employers
liability insurance and such other insurance as is customarily
obtained for similar properties.

The Michigan Avenue also participates in
Starwoods insurance program, whereby general liability and
workers compensation insurance coverage premiums are paid
through Starwood to Zurich American Insurance Group, Cigna
Property and Casualty and Westel Insurance Company, the latter
being a wholly owned subsidiary of Starwood.

Environmental Matters

The Partnership is subject to certain
requirements and potential liabilities under various federal,
state and local environmental laws, ordinances and regulations
(Environmental Laws). For example, a current or
previous owner or operator of real property may become liable
for the costs of removal or remediation of hazardous or toxic
substances on, under or in such property. Such laws often impose
liability without regard to whether the owner or operator knew
of, or was responsible for, the presence of such hazardous or
toxic substances. The presence of hazardous or toxic substances
may adversely affect the owners ability to sell or rent
such real property or to borrow using such real property as
collateral. Persons who arrange for the disposal or treatment of
hazardous or toxic wastes may be liable for the costs of removal
or remediation of such wastes at the treatment, storage or
disposal facility, regardless of whether such facility is owned
or operated by such person. The Hotels use certain substances
and generate certain wastes that may be deemed hazardous or
toxic under applicable Environmental Laws, and the Hotels from
time to time have incurred, and in the future may incur, costs
related to cleaning up contamination. Other Environmental Laws
require abatement or removal of certain asbestos-containing
materials (ACMs) (limited quantities of which may be
present in various building materials such as spray-on
insulation, floor coverings, ceiling coverings, tiles,
decorative treatments and piping) in the event of damage or
demolition, or certain renovations or remodeling. These laws
also govern emissions of and exposure to asbestos fibers in the
air. Environmental Laws also regulate polychlorinated biphenyls
(PCBs), which may be present in electrical
equipment. The Hotels may have equipment containing
chlorofluorocarbons (CFCs). The use of equipment
containing CFCs also is regulated by Environmental Laws. In
connection with the Partnerships ownership, operation and
management of the Hotels, the Partnership could be held liable
for costs of remedial or other action with respect to PCBs or
CFCs.

Environmental Laws are not the only source of
environmental liability. Under the common law, owners and
operators of real property may face liability for personal
injury or property damage because of various environmental
conditions such as alleged exposure to hazardous or toxic
substances (including, but not limited to, ACMs, PCBs and CFCs),
poor indoor air quality, radon or poor drinking water quality.

Although the Partnership has incurred and expects
to incur remediation and other environmental costs during the
ordinary course of operations, we anticipate that such costs
will not have a material adverse effect on the operations or
financial condition of the Partnership.




Item 2.     Property.

The Partnerships property consists of the
Michigan Avenue, a first-class hotel operating under the Westin
name and located in a premier central, urban location, providing
guests with convenient access to business districts, shopping
areas and convention facilities.

Description

The Michigan Avenue has 751 guest rooms
(including 28 suites) and 19 meeting rooms. The Hotel has a
fitness center and a business center, provides retail space for
several specialty stores and a gift shop, and has an underground
parking garage with 209 spaces. The Grill on the Alley, a new
upscale 300-seat restaurant and bar operated by Grill Concepts
of California, an affiliate of Starwood (Grill
Concepts), opened in June

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2000. As reported on Schedule 13D filed on
July 31, 2001, Starwood owns 27.4% of the outstanding
common stock of Grill Concepts, which percentage includes rights
to acquire shares of Grill Concepts through the exercise of
warrants. Starwood has rights to acquire additional shares of
Grill Concepts pursuant to a subscription agreement. An employee
of Starwood serves on the Board of Directors of Grill Concepts.


Location

The Michigan Avenue is located on a prime site in
downtown Chicago at the north end of the famous
Magnificent Mile, known for its first-class retail
shopping, fine restaurants and cultural attractions. The Hancock
Center is situated directly south of the Michigan Avenue, as is
the Water Tower Place, offering a variety of shopping and
entertainment possibilities. The Hotel is 18 miles from
OHare International Airport and 12 miles from Midway
Airport.

Capital Improvements

In 2001, the Hotel spent $1,987,000 for capital
expenditures. Of this amount, $493,000 was spent on the
renovation of the main building rooms and guest rooms; $103,000
on the renovation of food and beverage facilities; and
$1,391,000 on various other projects, such as computer equipment
modernization, engineering equipment upgrades and a telephone
switch upgrade. For discussion regarding the funding of these
capital expenditures, see Item 7, Managements
Discussion and Analysis of Financial Condition and Results of
Operations  Liquidity and Capital Resources.




Item 3.     Legal
Proceedings.

Because of the nature of the hotel business, the
Hotel Partnerships are subject to various claims and legal
actions incidental to the ordinary course of their operations,
including such matters as contract and lease disputes and
complaints alleging personal injury, property damage and
employment discrimination. The General Partner believes that the
outcome of any such pending claims or proceedings, individually
or in the aggregate, will not have a material adverse effect
upon the business, financial condition or results of operations
of the Partnership.




Item 4.     Submission
of Matters to a Vote of Security Holders.

No matters were submitted to a vote of the
Unitholders during the fourth quarter of 2001.




PART II




Item 5.     Market
for Registrants Common Equity and Related Unitholder
Matters.

As of March 20, 2002, there were 6,830
holders of record of the 135,600 limited partnership units
(Units).

There is no public market for the Units, and it
is not anticipated that a public market for the Units will
develop. The transfer of Units, or any interest therein, is
subject to a variety of restrictions. Limited partners may not
transfer their interests in the Partnership if, in the opinion
of the Partnerships counsel, such transfers might violate
the registration requirements of the Securities Act of 1933, as
amended, or the laws of any other jurisdiction or agency
applicable to the transfers, cause the Partnership to be
regarded as an association taxable as a corporation, result in
the dissolution or termination of the Partnership or result in
the Hotel Partnership not being able to obtain or continue in
effect any license permitting the service or sale of alcoholic
beverages in the Hotel. The assignee must also meet certain
other requirements set forth in the Partnerships Amended
and Restated Agreement of Limited Partnership (the
Partnership Agreement) before it may be recognized
as a substituted limited partner, including the payment of all
reasonable expenses connected with the transfer of any interest.
The limited partners or their representatives must furnish, as
to voluntary transfers, sufficient information to counsel to
permit the foregoing determination to be made.

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Beginning in 1996, the General Partner became
aware of offers to purchase Units, which were mailed to limited
partners, that have ranged from $185 (in 1996) to $1,119 (in
1999) per Unit. Recently, the General Partner became aware of an
offer to purchase Units in 2002 dated on or about
February 19, 2002 to purchase up to 3,800 Units for $400
per Unit. The General Partner recommended that the limited
partners not tender their Units under this offer.

The following information reflects the
Partnerships records of the average and range of Unit sale
prices to date as quoted in the Limited Partnership Exchanges:

|                                                        |  |                  |        |                                  |  |                     
|------------------------------------------------------- |  | ---------------- | ------ | -------------------------------- |  | --------------------
|                                                        |  | Average Per Unit |        |                                 
|                                                        |  | Sales Price(1)   |        | Range of Per Unit Sales Price(1)
|                                                        |  |                  |        |                                 
|2000                                                    |  |                  |        |                                  |  |                     
|First Quarter                                           |  | $                | 965.85 |                                  |  | $725.00 to $1,050.00
|(through March 29, 2000, when sales were
	suspended)    |  |                  |        |                                  |  |                     
|2001                                                    |  |                  |        |                                  |  |                     
|Fourth Quarter                                          |  | $                | 542.63 |                                  |  | $200.00 to $1,065.00
|(through November 20, 2001, when sales were
	suspended) |  |                  |        |                                  |  |                     
|2002                                                    |  |                  |        |                                  |  |                     
|First Quarter                                           |  | $                | 465.89 |                                  |  | $250.00 to $ 628.00 
|(through March 20, 2002)                                |  |                  |        |                                  |  |                     



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|    |                                                                                                                                                                                                                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The Per Unit Sales Price is the actual contracted
	price agreed upon by the respective limited partner and new
	purchaser. This balance does not reflect any reductions in the
	sales price due to subsequent distributions made to the limited
	partners, as specified by some of the mini-tender offers.

In October 1996, the General Partner determined
it to be in the best interest of the Partnership to implement a
Unit transfer policy that relies on the protections of a 5%
safe harbor provision, promulgated by the Internal
Revenue Service, that prevents the Partnership from being deemed
a publicly traded partnership pursuant to
Section 7704 of the Internal Revenue Code of 1986, as
amended. The safe harbor applies if the sum of the percentage
interests in partnership capital or profits represented by Units
traded during any calendar year does not exceed 5% of the
aggregate Partnership interests outstanding (which approximates
6,848 Units).

On November 20, 2001, upon reaching 2001
Unit sales safe harbor limits, the General Partner suspended its
approval of any further transfer requests for 2001. As of
March 20, 2002, the Partnership has pending Unit sale
transfer requests totaling 596 Units for 2002. Unless cancelled
by the transferor, each of these transfers will be processed and
recorded on the books of the Partnership on March 31, 2002.
The average price of these sales is $465.89 per Unit. When the
Partnership reaches the safe harbor limits for Unit sale
transfer requests in 2002, the General Partner will suspend its
approval of any Unit sale transfer requests for the remainder of
2002.

Cash distributions of $6.72 per Unit were paid to
the limited partners on March 15, 2001, June 14, 2001,
September 13, 2001 and December 14, 2001. Future
distributions will be based on available Net Cash Flow, as
defined in the Partnership Agreement. The amount of each
distribution will be determined by the General Partner at the
end of each calendar quarter according to the terms of the
Partnership Agreement and will be distributed to the limited
partners within 75 days of the end of the quarter.

The Partnership Agreement required the General
Partner to use its best efforts to sell or refinance the Hotels
by the end of 2001. On January 18, 2000, the St. Francis
Partnership entered into a definitive agreement to sell the
St. Francis for gross proceeds of $243,000,000. After
approval of the limited partners of record on February 15,
2000 was obtained, the St. Francis sale closed on
April 26, 2000. In February 2001, the Partnership retained
JLL to market the Michigan Avenue for sale. In April 2001,
formal marketing materials were distributed and discussions with
several potential purchasers subsequently commenced. After the
occurrence of the September 11 Attacks, certain of the most
qualified potential purchasers indicated they would expect
significant discounts on their preliminary offers made prior to
the attacks. Based on the unstable

8



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##### Table of Contents



and depressed hotel real estate market, the
General Partner does not feel that it is in the best interest of
the limited partners to sell the Michigan Avenue at this time.


While the General Partner continues to explore a
sale of the property, it has engaged JLL to assist in exploring
a refinancing of the Partnerships mortgage debt. At this
time, it is too early for the General Partner to fully evaluate
the feasibility or benefits of a refinancing. The General
Partner will continue to make efforts to pursue a sale or
refinancing transaction that it believes is in the best interest
of the limited partners. The ultimate sale of the property is
subject to the customary conditions and the consent of the
majority of the limited partners of the Partnership. See related
risk factors in Part I  Risks Relating to
Disposition Opportunities.

The Partnerships investor relations
function is handled by Phoenix American Financial Services, Inc.
at 2401 Kerner Boulevard, San Rafael, CA 94901-5529. The
toll-free number for Phoenix American Financial Services, Inc.
is 1-800-323-5888.

9



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##### Table of Contents






Item 6.     Selected
Financial Data.

The following table sets forth selected financial
information for the Partnership:

|                                                            |                                       |                                         |         |         |  |      |         |        |  |      |         |        |  |   |         |        |  |   |         |        | 
|----------------------------------------------------------- | ------------------------------------- | --------------------------------------- | ------- | ------- |  | ---- | ------- | ------ |  | ---- | ------- | ------ |  | - | ------- | ------ |  | - | ------- | ------ | 
|                                                            |                                       |                                        
|                                                            |                                       | Year Ended December 31,                
|                                                            |                                       |                                        
|                                                            |                                       | 2001                                    |         | 2000(1) |  | 1999 |         | 1998   |  | 1997
|                                                            |                                       |                                         |         |         |  |      |         |        |  |     
|                                                            |                                       |                                        
|                                                            |                                       | (In thousands, except per Unit amounts)
|Operating revenues:                                         |                                       |                                         |         |         |  |      |         |        |  |      |         |        |  |   |         |        |  |   |         |       
|                                                            | Rooms                                 |                                         | $       | 30,188  |  |      | $       | 58,232 |  |      | $       | 97,973 |  |   | $       | 94,724 |  |   | $       | 83,600 | 
|                                                            | Food and beverage                     |                                         |         | 7,610   |  |      |         | 20,771 |  |      |         | 45,277 |  |   |         | 37,354 |  |   |         | 32,793 | 
|                                                            | Other operating departments           |                                         |         | 4,117   |  |      |         | 7,873  |  |      |         | 13,047 |  |   |         | 12,158 |  |   |         | 10,660 | 
|                                                            |                                       |                                         |         |         |  |      |         |        |  |      |         |        |  |   |         |        |  |   |         |       
|Total operating revenues                                    |                                       |                                         | 41,915  |         |  |      | 86,876  |        |  |      | 156,297 |        |  |   | 144,236 |        |  |   | 127,053 |       
|                                                            |                                       |                                         |         |         |  |      |         |        |  |      |         |        |  |   |         |        |  |   |         |       
|Operating expenses:                                         |                                       |                                         |         |         |  |      |         |        |  |      |         |        |  |   |         |        |  |   |         |       
|                                                            | Rooms                                 |                                         |         | 7,136   |  |      |         | 14,652 |  |      |         | 25,417 |  |   |         | 25,493 |  |   |         | 22,162 | 
|                                                            | Food and beverage                     |                                         |         | 6,264   |  |      |         | 16,109 |  |      |         | 35,189 |  |   |         | 26,946 |  |   |         | 24,866 | 
|                                                            | Administrative, general and marketing |                                         |         | 5,845   |  |      |         | 11,700 |  |      |         | 18,886 |  |   |         | 19,857 |  |   |         | 18,022 | 
|                                                            | Management fees                       |                                         |         | 3,974   |  |      |         | 5,358  |  |      |         | 13,300 |  |   |         | 9,949  |  |   |         | 8,554  | 
|                                                            | Depreciation                          |                                         |         | 8,124   |  |      |         | 7,222  |  |      |         | 11,679 |  |   |         | 10,190 |  |   |         | 9,282  | 
|                                                            | Other                                 |                                         |         | 7,635   |  |      |         | 13,063 |  |      |         | 22,629 |  |   |         | 21,427 |  |   |         | 21,708 | 
|                                                            |                                       |                                         |         |         |  |      |         |        |  |      |         |        |  |   |         |        |  |   |         |       
|Total operating expenses                                    |                                       |                                         | 38,978  |         |  |      | 68,104  |        |  |      | 127,100 |        |  |   | 113,862 |        |  |   | 104,594 |       
|                                                            |                                       |                                         |         |         |  |      |         |        |  |      |         |        |  |   |         |        |  |   |         |       
|Operating profit                                            |                                       | $                                       | 2,937   |         |  | $    | 18,772  |        |  | $    | 29,197  |        |  | $ | 30,374  |        |  | $ | 22,459  |       
|                                                            |                                       |                                         |         |         |  |      |         |        |  |      |         |        |  |   |         |        |  |   |         |       
|Net income                                                  |                                       | $                                       | 559     |         |  | $    | 66,139  | (2)    |  | $    | 16,831  |        |  | $ | 17,933  |        |  | $ | 9,691   |       
|Net income per Unit                                         |                                       | $                                       | 4.12    |         |  | $    | 487.75  |        |  | $    | 124.12  |        |  | $ | 132.25  |        |  | $ | 71.47   |       
|Total assets                                                |                                       | $                                       | 106,585 |         |  | $    | 109,272 |        |  | $    | 295,834 |        |  | $ | 285,661 |        |  | $ | 269,785 |       
|Long-term obligations, net of current portion               |                                       | $                                       | 40,461  |         |  | $    | 40,322  |        |  | $    | 166,049 |        |  | $ | 165,050 |        |  | $ | 162,989 |       
|Deferred incentive management fees, net of
	current portion |                                       | $                                       | 7,544   |         |  | $    | 7,447   |        |  | $    | 29,532  |        |  | $ | 25,618  |        |  | $ | 22,281  |       
|Distributions paid per Unit                                 |                                       | $                                       | 26.88   |         |  | $    | 690.94  |        |  | $    | 95.00   |        |  | $ | 95.00   |        |  | $ | 95.00   |       



---



|    |                                                                       
|--- | ----------------------------------------------------------------------
|(1) | Includes St. Francis results through the sale
	date on April 26, 2000.
|   
|   
|(2) | Includes $52,606 gain on the St. Francis sale.                        




Item 7.     Managements
Discussion and Analysis of Financial Condition and Results of
Operations.

General

The Hotels primary market focus is on
business travelers, conventions and other groups. The
Hotels business activities generally follow national
economic trends. The level of tourist business is influenced by
the general global economic environment and political climate
and, to a lesser extent, by the strength of the U.S. dollar in
relation to foreign currencies. Due to the economic slowdown
exacerbated by the September 11 Attacks, the Chicago hotel
industry is not expected to experience significant growth in
2002. The Michigan Avenue continues to experience seasonal
trends, with the lowest occupancy levels occurring during the
first quarter, followed by higher occupancies during the last
three quarters of the year.

Results of Operations

This section analyzes significant fluctuations in
items affecting the consolidated statements of income for the
years ended December 31, 2001, 2000 and 1999.

10



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##### Table of Contents



2001 Compared with 2000

The Partnership.The Partnerships operating
revenues and operating profit of $41,915,000 and $2,937,000,
respectively, for the year ended December 31, 2001
decreased $44,961,000 and $15,835,000, respectively, over the
year ended December 31, 2000 due to the sale of the St.
Francis in April 2000, the general economic downturn and the
unprecedented declines in the hospitality industry experienced
after the September 11 Attacks. Net income decreased
$65,580,000 due primarily to the $52,606,000 gain on the sale of
the St. Francis recognized in 2000 and the economic
downturn in 2001 discussed above.

The Michigan Avenue.Due to the sale of the St. Francis
on April 26, 2000, the results of operations and key
statistics presented and discussed below are for the Michigan
Avenue only.

|                                              |                   |              |        |       |   |   |        |       |  
|--------------------------------------------- | ----------------- | ------------ | ------ | ----- | - | - | ------ | ----- | -
|                                              |                   |             
|                                              |                   | Year Ended  
|                                              |                   | December 31,
|                                              |                   |             
|                                              |                   | 2001         |        | 2000 
|                                              |                   |              |        |      
|REVPAR (revenue per available room)           |                   | $            | 110.13 |       |   | $ | 126.87 |      
|Operating profit as a percentage of revenues: |                   |              |        |       |   |   |        |      
|                                              | Rooms             |              |        | 76.36 | % |   |        | 76.71 | %
|                                              | Food and beverage |              |        | 17.69 | % |   |        | 19.78 | %
|EBITDA (in thousands)(1)                      |                   | $            | 11,725 |       |   | $ | 16,299 |      



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | EBITDA represents net earnings before interest
	expense, income tax expense, depreciation and amortization and
	minority interests. The General Partner considers EBITDA to be a
	measure of the Partnerships operating performance due to
	the significance of the Partnerships long-lived assets and
	because such data can be used to measure the Partnerships
	ability to service debt, fund capital expenditures and pay cash
	distributions. EBITDA is not intended to represent cash flow
	from operations as defined by accounting principles generally
	accepted in the United States and such information should not be
	considered as an alternative to net income, cash flow from
	operations or any other performance measure prescribed by
	accounting principles generally accepted in the United States.

The Michigan Avenue had net income of $1,052,000
for the year ended December 31, 2001, an 83.8% or
$5,433,000 decrease from 2000. EBITDA for the year of
$11,725,000 represents a 28.1% or $4,574,000 decrease from 2000.

The Michigan Avenues rooms revenue for the
year ended December 31, 2001 was $30,188,000, which
represents a 13.4% or $4,683,000 decrease over the prior year.
REVPAR for 2001 was $110.13 as compared to $126.87 in 2000. The
Michigan Avenue reported an average daily room rate of $166.33
and occupancy of 66.2% in the year ended December 31, 2001
as compared to $174.66 and 72.6%, respectively, in 2000. The
REVPAR and rooms revenue decreases are due to the general
economic downturn which was worsened by reduced travel and
cancellations experienced after the September 11 Attacks.
As the competitive set of hotels in the area dropped their daily
rates, the Hotel conformed to avoid losing customers. Also, the
mix of existing customers included more transient travelers in
2001, who usually pay lower average rates than the lost business
revenues. The Michigan Avenues rooms department profit
margin for 2001 was 76.36% as compared with 76.71% in 2000 due
to the reduction in revenues, offset by the close monitoring of
hotel spending and staffing costs, as well as the elimination of
several departmental management positions.

The Michigan Avenues food and beverage
revenue of $7,610,000 for 2001 represents a $1,487,000 or 16.3%
decrease compared to 2000. This decrease is due primarily to the
transfer of the Grill on the Alleys restaurant operations
to Grill Concepts in June 2000 under an operating lease as well
as lost banquet revenue associated with cancelled conventions,
lost catering revenues due to cancellations of corporate annual
holiday parties and reduced group bookings. As a result of the
operating lease, the Hotel reports restaurant lease revenue in
other operating departments revenue. The Michigan Avenues
food and beverage department profit margin for 2001 decreased
2.09 percentage points to 17.69% from 2000 due to the lost
high-margin banquet and catering services, which were a direct
result of the cancelled conventions and group bookings noted
above.

Other operating departments had revenue of
$4,117,000 for the year ended December 31, 2001, a $313,000
decrease from 2000, primarily resulting from decreased ancillary
revenues (such as telecommunica-

11



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##### Table of Contents



tions) experienced due to lower group bookings
and waiving of cancellation fees after the September 11
Attacks, partially offset by the additional lease revenues
discussed above.


The Michigan Avenues operating expenses for
2001 decreased 2.6% to $38,313,000. The decrease primarily
resulted from cost-containment efforts established immediately
after the September 11 Attacks, partially offset by
operating expense increases due to greater depreciation
resulting from the fiscal year 2000 and 2001 renovations and an
increase in management fees. Management fees for the year ended
December 31, 2001 increased 107.1% over 2000 to $3,902,000
due to improved Partnership Net Operating Cash Flow, as defined
in the Partnership Agreement, primarily resulting from lower
capital expenditures in 2001.

In addition to the operating expenses related to
the Michigan Avenue discussed above, the Partnership also
incurred costs for investor relations, professional services and
other fees which are included in the consolidated results of
operations.

2000 Compared with 1999

The Partnership.The Partnerships operating
revenues and operating profit of $86,900,000 and $18,800,000,
respectively, for the year ended December 31, 2000
decreased $69,400,000 and $10,400,000, respectively, over the
year ended December 31, 1999 due to the sale of the St.
Francis in April 2000, offset by the increases in the Michigan
Avenues operating revenue and operating profit discussed
below. Net income increased $49,300,000 due primarily to the
$52,606,000 gain on the sale of the St. Francis.

The Michigan Avenue.Due to the sale of the St. Francis
on April 26, 2000, the results of operations and key
statistics presented and discussed below are for the Michigan
Avenue only.

|                                              |                   |              |        |       |   |   |        |       |  
|--------------------------------------------- | ----------------- | ------------ | ------ | ----- | - | - | ------ | ----- | -
|                                              |                   |             
|                                              |                   | Year Ended  
|                                              |                   | December 31,
|                                              |                   |             
|                                              |                   | 2000         |        | 1999 
|                                              |                   |              |        |      
|REVPAR                                        |                   | $            | 126.87 |       |   | $ | 113.70 |      
|Operating profit as a percentage of revenues: |                   |              |        |       |   |   |        |      
|                                              | Rooms             |              |        | 76.71 | % |   |        | 76.87 | %
|                                              | Food and beverage |              |        | 19.78 | % |   |        | 15.18 | %
|EBITDA (in thousands)                         |                   | $            | 16,299 |       |   | $ | 11,539 |      

The Michigan Avenue had net income of $6,500,000
for the year ended December 31, 2000, a 25.0% or $1,300,000
increase from 1999. EBITDA for the year of $16,300,000
represents a 41.3% increase over 1999.

The Michigan Avenues rooms revenue for the
year ended December 31, 2000 was $34,900,000, which
represents an 11.9% or $3,700,000 increase over the prior year.
REVPAR for 2000 reached $126.87, an 11.6% increase over 1999.
This REVPAR increase was due to increases in average room rates
in all segments due to completion of the room renovations in the
second quarter of 2000 and increased transient demand. The
Michigan Avenue reported an increase in average room rate of
12.0% to $174.66, and its occupancy rate decreased 0.3
percentage points to 72.6% due primarily to the cancellation of
one airline contract. The Michigan Avenues rooms
department profit margin for 2000 remained relatively consistent
with the previous year due to the increase in average daily room
rate which is offset by a slight decrease in occupancy
percentage and increased room costs.

The Michigan Avenues food and beverage
revenue of $9,100,000 for 2000 represents a $1,000,000 or 9.9%
decrease compared to 1999. This decrease is due primarily to the
transfer of the Grill on the Alleys restaurant operations
to Grill Concepts in June 2000 under an operating lease. The
Hotel reports restaurant lease revenue in other operating
departments revenue. The Michigan Avenues food and
beverage department profit margin for 2000 increased 4.6
percentage points to 19.78% from 1999, primarily as a result of
the lease of the restaurant operations discussed above.

Other operating departments had revenue of
$4,400,000 for the year ended December 31, 2000, a $100,000
increase over 1999, primarily resulting from additional rental
revenue discussed above.

12



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##### Table of Contents



The Michigan Avenues operating expenses for
2000 increased 1.8% to $39,300,000. The most significant
operating expense increases were due to greater depreciation
resulting from renovations and an increase in management fees.
Management fees increased 18.2% over 1999 to $1,900,000 due to
improved Partnership Net Operating Cash Flow, as defined in the
Partnership Agreement.

In addition to the operating expenses related to
the Michigan Avenue discussed above, the Partnership also
incurred costs for investor relations, professional services and
other fees which are included in the consolidated results of
operations.

Liquidity and Capital Resources

As of December 31, 2001, the Partnership had
cash and cash equivalents of approximately $31,927,000, a
$1,931,000 increase from December 31, 2000. This increase
is primarily due to cost-containment efforts established
immediately after the September 11 Attacks, timing of
payment of operating expenses and a scaling-back of capital
expenditures. During 2001, total net cash provided by operating
activities was $11,164,000.

In 2001, a total of $2,958,000 was deposited into
the Furniture, Fixtures and Equipment (FF&E)
Reserve Account as required by the Restructuring Agreement. The
beginning balance, deposits, plus interest of $144,000, less
account administration fees are included in restricted cash in
the accompanying consolidated balance sheet. In 2001, a total of
$3,657,000 was deposited into the Tax Escrow Account for payment
of real and personal property taxes as required by the
Restructuring Agreement. The beginning balance, deposits, plus
interest of $229,000, less payments of $1,944,000, for real and
personal property taxes, are restricted and included in cash and
cash equivalents in the accompanying consolidated balance sheet.

A total of $1,987,000 was spent for capital
improvements in 2001 for the Michigan Avenue. Of this amount,
$493,000 was spent on the renovation of the main building rooms
and guest rooms; $103,000 on the renovation of food and beverage
facilities; and the remaining $1,391,000 on various other
projects, such as computer equipment modernization, engineering
equipment upgrades and a telephone switch upgrade.

Capital improvements in 2002 are expected to
total approximately $7,139,000. Approximately $2,189,000 is
expected to be spent on lobby, garage and entrance renovations,
$1,970,000 for renovation of the guest corridors and foyers,
$2,645,000 for engineering and computer enhancements and
$335,000 for food and beverage equipment. All capital projects
are subject to approval by the Lender and the General Partner.

The Michigan Avenue mortgage loan, as
restructured, provides for scheduled principal and interest
payments of $3,093,000 in 2002.

The cash distribution to Unitholders for 1999
amounted to $95.00 per Unit and was paid in quarterly
installments of $23.75 per Unit. The 2000 distribution amounted
to $690.94 per Unit and was paid as follows: $23.75, $630.00,
$23.75, $6.72 and $6.72 per Unit on March 14, May 24,
June 14, September 14 and December 14,
respectively. The $630.00 distribution reflects the payout of
the net cash proceeds received from the St. Francis sale in
accordance with the terms of the Partnership Agreement. The 2001
distribution amounted to $26.88 per Unit and was paid in
quarterly installments of $6.72 per Unit on March 15,
June 14, September 13 and December 14,
respectively.

At this time, the General Partner anticipates
that the cash on hand and cash flow from operations will provide
adequate funding for payments on the remaining mortgage loan and
2002 capital expenditures. In addition, barring any unforeseen
adverse occurrence, the General Partner anticipates that the
Partnership will be in a position to continue regular
distributions to the limited partners at an annual level of
$26.88 per Unit in 2002. Future distributions will be based on
available Net Cash Flow and are dependent upon the Net Cash Flow
generated by the Hotel and the adequacy of cash reserves. The
amount of each distribution will be determined by the General
Partner at the end of each calendar quarter according to the
terms of the Partnership Agreement and will be distributed to
the limited partners within 75 days of the end of the
quarter.

The Partnership Agreement required that the
General Partner use its best efforts to sell or refinance the
Hotels by the end of 2001. On April 26, 2000, after
obtaining the approval of a majority of the limited

13



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##### Table of Contents



partners, the General Partner sold the St.
Francis to a third party. In February 2001, the Partnership
retained JLL to market the Michigan Avenue for sale. In April
2001, formal marketing materials were distributed and
discussions with several potential purchasers subsequently
commenced. After the occurrence of the September 11
Attacks, certain of the most qualified potential purchasers
indicated they would expect significant discounts on their
preliminary offers made prior to the attacks. Based on the
unstable and depressed hotel real estate market, the General
Partner does not feel that it is in the best interest of the
limited partners to sell the Michigan Avenue at this time.


While the General Partner continues to explore a
sale of the property, it has engaged JLL to assist in exploring
a refinancing of the Partnerships mortgage debt. At this
time, it is too early for the General Partner to fully evaluate
the feasibility or benefits of a refinancing. The General
Partner will continue to make efforts to pursue a sale or
refinancing transaction that it believes is in the best interest
of the limited partners. The ultimate sale of the property is
subject to the customary conditions and the consent of the
majority of the limited partners of the Partnership.




Item 7A.     Quantitative
and Qualitative Disclosures about Market Risk.

The Partnership is exposed to market risk on its
financial instruments from changes in interest rates. The
Partnership does not use financial instruments for trading or
speculative purposes or to manage interest rate risk. A
hypothetical 1% change in interest rates would result in an
increase or decrease in interest expense of approximately
$98,000.

The Partnerships financial instruments
consist primarily of variable rate notes and fixed rate debt.
The Partnerships debt at December 31, 2001 consisted
of notes payable to the General Partner and a mortgage loan.




Item 8.     Financial
Statements and Supplementary Data.

The following documents are filed as part of this
report:

|                                                        |  |      |       | 
|------------------------------------------------------- |  | ---- | ----- | 
|Document                                                |  | Page
|                                                        |  |     
|Report of Independent Public Accountants                |  |      | 15    | 
|Consolidated Balance Sheets                             |  |      | 16    | 
|Consolidated Statements of Income                       |  |      | 17    | 
|Consolidated Statements of Partners Capital
	(Deficit) |  |      | 18    | 
|Consolidated Statements of Cash Flows                   |  |      | 19    | 
|Notes to Consolidated Financial Statements              |  |      | 20-26 | 

Financial statement schedules are omitted for the
reason that they are not required, are insignificant or because
the required information is shown in the consolidated financial
statements or notes thereto.




Item 9.     Changes
in and Disagreements with Accountants on Accounting and
Financial Disclosure.

Not applicable.

14



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##### Table of Contents



REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS

To Westin Hotels Limited Partnership:

We have audited the accompanying consolidated
balance sheets of the Westin Hotels Limited Partnership and
subsidiaries (the Partnership) (a Delaware limited
partnership) as of December 31, 2001 and 2000, and the
related consolidated statements of income, partners
capital (deficit) and cash flows for each of the three
years in the period ended December 31, 2001. These
financial statements are the responsibility of the
Partnerships management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with
auditing standards generally accepted in the United States.
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred
to above present fairly, in all material respects, the financial
position of the Westin Hotels Limited Partnership and
subsidiaries as of December 31, 2001 and 2000, and the
results of their operations and their cash flows for each of the
three years in the period ended December 31, 2001 in
conformity with accounting principles generally accepted in the
United States.



| |                    
| | -------------------
| | ARTHUR ANDERSEN LLP

Phoenix, Arizona

March 1, 2002


15



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##### Table of Contents



WESTIN HOTELS LIMITED PARTNERSHIP

CONSOLIDATED BALANCE SHEETS

(In thousands, except Units)


|                                                               |                                                                              |                                |                           |              |        |        |         |        |        |        | 
|-------------------------------------------------------------- | ---------------------------------------------------------------------------- | ------------------------------ | ------------------------- | ------------ | ------ | ------ | ------- | ------ | ------ | ------ | 
|                                                               |                                                                              | December 31,                   |                           | December 31,
|                                                               |                                                                              | 2001                           |                           | 2000        
|                                                               |                                                                              |                                |                           |             
|ASSETS                                                        
|Current assets:                                                |                                                                              |                                |                           |              |        |        |         |       
|                                                               | Cash and cash equivalents, including restricted
	cash of $5,951 and $4,009   |                                | $                         | 31,927       |        |        | $       | 29,996 |       
|                                                               | Accounts receivable, net of allowance for
	doubtful accounts of $28 and $128 |                                |                           | 1,661        |        |        |         | 3,264  |       
|                                                               | Inventories                                                                  |                                |                           | 282          |        |        |         | 316    |       
|                                                               | Prepaid expenses and other current assets                                    |                                |                           | 407          |        |        |         | 293    |       
|                                                               |                                                                              |                                |                           |              |        |        |         |       
|                                                               |                                                                              | Total current assets           |                           |              | 34,277 |        |         |        | 33,869 |       
|                                                               |                                                                              |                                |                           |              |        |        |         |       
|Property and equipment, at cost:                               |                                                                              |                                |                           |              |        |        |         |       
|                                                               | Buildings and improvements                                                   |                                |                           | 54,538       |        |        |         | 54,538 |       
|                                                               | Furniture, fixtures and equipment                                            |                                |                           | 60,515       |        |        |         | 58,528 |       
|                                                               | Expendable supplies                                                          |                                |                           | 555          |        |        |         | 555    |       
|                                                               |                                                                              |                                |                           |              |        |        |         |       
|                                                               |                                                                              |                                | 115,608                   |              |        |        | 113,621 |       
|                                                               | Less accumulated depreciation                                                |                                |                           | 58,034       |        |        |         | 49,910 |       
|                                                               |                                                                              |                                |                           |              |        |        |         |       
|                                                               |                                                                              |                                | 57,574                    |              |        |        | 63,711  |       
|                                                               | Land                                                                         |                                |                           | 8,835        |        |        |         | 8,835  |       
|                                                               |                                                                              |                                |                           |              |        |        |         |       
|Land, property and equipment, net                              |                                                                              |                                | 66,409                    |              |        |        | 72,546  |       
|                                                               |                                                                              |                                |                           |              |        |        |         |       
|Other assets, including restricted cash of $5,438
	and $2,339  |                                                                              |                                | 5,899                     |              |        |        | 2,857   |       
|                                                               |                                                                              |                                |                           |              |        |        |         |       
|                                                               |                                                                              | $                              | 106,585                   |              |        | $      | 109,272 |       
|                                                               |                                                                              |                                |                           |              |        |        |         |       
|LIABILITIES AND PARTNERS CAPITAL
	(DEFICIT)                  
|Current liabilities:                                           |                                                                              |                                |                           |              |        |        |         |       
|                                                               | Accounts payable                                                            |                                |                           |              |        |        |         |        |       
|                                                               |                                                                              | Trade and other                |                           | $            | 411    |        |         | $      | 333    |       
|                                                               |                                                                              | General Partner and affiliates |                           |              | 3,142  |        |         |        | 2,664  |       
|                                                               |                                                                              |                                |                           |              |        |        |         |       
|                                                               |                                                                              |                                | Total accounts payable    |              |        | 3,553  |         |        |        | 2,997  | 
|                                                               | Current maturities of long-term obligations                                  |                                |                           | 594          |        |        |         | 549    |       
|                                                               | Accrued expenses                                                             |                                |                           | 6,007        |        |        |         | 6,525  |       
|                                                               | Other current liabilities                                                    |                                |                           | 417          |        |        |         | 386    |       
|                                                               |                                                                              |                                |                           |              |        |        |         |       
|                                                               |                                                                              |                                | Total current liabilities |              |        | 10,571 |         |        |        | 10,457 | 
|Long-term obligations                                          |                                                                              |                                | 30,629                    |              |        |        | 31,224  |       
|Long-term obligation to General Partner                        |                                                                              |                                | 9,832                     |              |        |        | 9,098   |       
|Deferred incentive management fees payable to
	General Partner |                                                                              |                                | 7,544                     |              |        |        | 7,447   |       
|                                                               |                                                                              |                                |                           |              |        |        |         |       
|                                                               |                                                                              |                                | Total liabilities         |              |        | 58,576 |         |        |        | 58,226 | 
|                                                               |                                                                              |                                |                           |              |        |        |         |       
|Minority interests                                             |                                                                              |                                | 4,458                     |              |        |        | 4,409   |       
|                                                               |                                                                              |                                |                           |              |        |        |         |       
|Commitments and contingencies                                  |                                                                              |                                |                           |              |        |        |         |       
|Partners capital (deficit):                                   |                                                                              |                                |                           |              |        |        |         |       
|                                                               | General Partner                                                              |                                |                           | (430         | )      |        |         | (131   | )     
|                                                               | Limited Partners (135,600 Units issued and
	outstanding)                     |                                |                           | 43,981       |        |        |         | 46,768 |       
|                                                               |                                                                              |                                |                           |              |        |        |         |       
|                                                               |                                                                              | Total Partners capital        |                           |              | 43,551 |        |         |        | 46,637 |       
|                                                               |                                                                              |                                |                           |              |        |        |         |       
|                                                               |                                                                              | $                              | 106,585                   |              |        | $      | 109,272 |       
|                                                               |                                                                              |                                |                           |              |        |        |         |       

The accompanying notes are an integral part of
these consolidated financial statements.

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##### Table of Contents



WESTIN HOTELS LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except Unit data)


|                                                            |                                                                      |                         |        |        |   |      |        |        |   |   |         |         |  
|----------------------------------------------------------- | -------------------------------------------------------------------- | ----------------------- | ------ | ------ | - | ---- | ------ | ------ | - | - | ------- | ------- | -
|                                                            |                                                                      |                        
|                                                            |                                                                      | Year Ended December 31,
|                                                            |                                                                      |                        
|                                                            |                                                                      | 2001                    |        | 2000   |   | 1999
|                                                            |                                                                      |                         |        |        |   |     
|Operating revenues:                                         |                                                                      |                         |        |        |   |      |        |        |   |   |         |        
|                                                            | Rooms                                                                |                         | $      | 30,188 |   |      | $      | 58,232 |   |   | $       | 97,973  |  
|                                                            | Food and beverage                                                    |                         |        | 7,610  |   |      |        | 20,771 |   |   |         | 45,277  |  
|                                                            | Other operating departments                                          |                         |        | 4,117  |   |      |        | 7,873  |   |   |         | 13,047  |  
|                                                            |                                                                      |                         |        |        |   |      |        |        |   |   |         |        
|Total operating revenues                                    |                                                                      |                         | 41,915 |        |   |      | 86,876 |        |   |   | 156,297 |        
|                                                            |                                                                      |                         |        |        |   |      |        |        |   |   |         |        
|Operating expenses:                                         |                                                                      |                         |        |        |   |      |        |        |   |   |         |        
|                                                            | Rooms                                                                |                         |        | 7,136  |   |      |        | 14,652 |   |   |         | 25,417  |  
|                                                            | Food and beverage                                                    |                         |        | 6,264  |   |      |        | 16,109 |   |   |         | 35,189  |  
|                                                            | Other operating departments                                          |                         |        | 713    |   |      |        | 2,177  |   |   |         | 3,902   |  
|                                                            | Administrative and general                                           |                         |        | 3,360  |   |      |        | 6,290  |   |   |         | 9,363   |  
|                                                            | Related party management fees                                        |                         |        | 3,974  |   |      |        | 5,358  |   |   |         | 13,300  |  
|                                                            | Advertising and business promotion                                   |                         |        | 2,485  |   |      |        | 5,410  |   |   |         | 9,523   |  
|                                                            | Property maintenance and energy                                      |                         |        | 2,609  |   |      |        | 4,848  |   |   |         | 8,776   |  
|                                                            | Local taxes and insurance                                            |                         |        | 4,077  |   |      |        | 5,677  |   |   |         | 9,344   |  
|                                                            | Rent                                                                 |                         |        | 236    |   |      |        | 361    |   |   |         | 607     |  
|                                                            | Depreciation                                                         |                         |        | 8,124  |   |      |        | 7,222  |   |   |         | 11,679  |  
|                                                            |                                                                      |                         |        |        |   |      |        |        |   |   |         |        
|Total operating expenses                                    |                                                                      |                         | 38,978 |        |   |      | 68,104 |        |   |   | 127,100 |        
|                                                            |                                                                      |                         |        |        |   |      |        |        |   |   |         |        
|Operating profit                                            |                                                                      |                         | 2,937  |        |   |      | 18,772 |        |   |   | 29,197  |        
|                                                            |                                                                      |                         |        |        |   |      |        |        |   |   |         |        
|Other income (expense):                                     |                                                                      |                         |        |        |   |      |        |        |   |   |         |        
|                                                            | Interest expense, net of interest income of $954,
	$1,882 and $1,582 |                         |        | (2,329 | ) |      |        | (5,048 | ) |   |         | (12,129 | )
|                                                            | Gain on sale of the St. Francis                                      |                         |        |       |   |      |        | 52,606 |   |   |         |        |  
|                                                            |                                                                      |                         |        |        |   |      |        |        |   |   |         |        
|Net other income (expense)                                  |                                                                      |                         | (2,329 | )      |   |      | 47,558 |        |   |   | (12,129 | )      
|                                                            |                                                                      |                         |        |        |   |      |        |        |   |   |         |        
|Income before minority interests                            |                                                                      |                         | 608    |        |   |      | 66,330 |        |   |   | 17,068  |        
|Minority interests in net income                            |                                                                      |                         | (49    | )      |   |      | (191   | )      |   |   | (237    | )      
|                                                            |                                                                      |                         |        |        |   |      |        |        |   |   |         |        
|Net income                                                  |                                                                      | $                       | 559    |        |   | $    | 66,139 |        |   | $ | 16,831  |        
|                                                            |                                                                      |                         |        |        |   |      |        |        |   |   |         |        
|Net income per Unit (135,600 Units issued and
	outstanding) |                                                                      | $                       | 4.12   |        |   | $    | 487.75 |        |   | $ | 124.12  |        
|                                                            |                                                                      |                         |        |        |   |      |        |        |   |   |         |        

The accompanying notes are an integral part of
these consolidated financial statements.

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##### Table of Contents



WESTIN HOTELS LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF PARTNERS
CAPITAL (DEFICIT)

(In thousands)


|                             |                    |         |        |          |   |       |        |         |   |   |        |         |  
|---------------------------- | ------------------ | ------- | ------ | -------- | - | ----- | ------ | ------- | - | - | ------ | ------- | -
|                             |                    | General |        | Limited  |   |      
|                             |                    | Partner |        | Partners |   | Total
|                             |                    |         |        |          |   |      
|Balance at December 31, 1998 |                    | $       | (2,563 | )        |   | $     | 72,804 |         |   | $ | 70,241 |        
|                             | Cash distributions |         |        |         |   |       |        | (12,882 | ) |   |        | (12,882 | )
|                             | Net income (loss)  |         |        | (363     | ) |       |        | 17,194  |   |   |        | 16,831  |  
|                             |                    |         |        |          |   |       |        |         |   |   |        |        
|Balance at December 31, 1999 |                    |         | (2,926 | )        |   |       | 77,116 |         |   |   | 74,190 |        
|                             | Cash distributions |         |        |         |   |       |        | (93,692 | ) |   |        | (93,692 | )
|                             | Net income         |         |        | 2,795    |   |       |        | 63,344  |   |   |        | 66,139  |  
|                             |                    |         |        |          |   |       |        |         |   |   |        |        
|Balance at December 31, 2000 |                    |         | (131   | )        |   |       | 46,768 |         |   |   | 46,637 |        
|                             | Cash distributions |         |        |         |   |       |        | (3,645  | ) |   |        | (3,645  | )
|                             | Net income (loss)  |         |        | (299     | ) |       |        | 858     |   |   |        | 559     |  
|                             |                    |         |        |          |   |       |        |         |   |   |        |        
|Balance at December 31, 2001 |                    | $       | (430   | )        |   | $     | 43,981 |         |   | $ | 43,551 |        
|                             |                    |         |        |          |   |       |        |         |   |   |        |        

The accompanying notes are an integral part of
these consolidated financial statements.

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##### Table of Contents



WESTIN HOTELS LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH
FLOWS

(In thousands)


|                                                                                   |                                                                |                                                      |        |       |        |      |          |         |          |   |         |        |         |  
|---------------------------------------------------------------------------------- | -------------------------------------------------------------- | ---------------------------------------------------- | ------ | ----- | ------ | ---- | -------- | ------- | -------- | - | ------- | ------ | ------- | -
|                                                                                   |                                                                |                                                     
|                                                                                   |                                                                | Year Ended December 31,                             
|                                                                                   |                                                                |                                                     
|                                                                                   |                                                                | 2001                                                 |        | 2000  |        | 1999
|                                                                                   |                                                                |                                                      |        |       |        |     
|Operating Activities                                                               |                                                                |                                                      |        |       |        |      |          |         |          |   |         |       
|Net income                                                                         |                                                                | $                                                    | 559    |       |        | $    | 66,139   |         |          | $ | 16,831  |       
|Adjustments to reconcile net income to net cash
	provided by operating activities: |                                                                |                                                      |        |       |        |      |          |         |          |   |         |       
|                                                                                   | Gain on sale of the St. Francis                                |                                                      |        |      |        |      |          | (52,606 | )        |   |         |       |        
|                                                                                   | Depreciation                                                   |                                                      |        | 8,124 |        |      |          | 7,222   |          |   |         | 11,679 |        
|                                                                                   | Amortization of deferred loan fees                             |                                                      |        | 9     |        |      |          | 38      |          |   |         | 58     |        
|                                                                                   | Interest expense on long-term obligation to
	General Partner   |                                                      |        | 734   |        |      |          | 1,862   |          |   |         | 3,217  |        
|                                                                                   | Minority interests in net income                               |                                                      |        | 49    |        |      |          | 191     |          |   |         | 237    |        
|Increase (decrease) in cash resulting from
	changes in:                            |                                                                |                                                      |        |       |        |      |          |         |          |   |         |       
|                                                                                   | Accounts receivable                                            |                                                      |        | 1,603 |        |      |          | 607     |          |   |         | 105    |        
|                                                                                   | Inventories                                                    |                                                      |        | 34    |        |      |          | (30     | )        |   |         | (107   | )      
|                                                                                   | Prepaid expenses and other current assets                      |                                                      |        | (114  | )      |      |          | 139     |          |   |         | (1,113 | )      
|                                                                                   | Trade and other accounts payable                               |                                                      |        | 78    |        |      |          | (180    | )        |   |         | 222    |        
|                                                                                   | Accounts payable  General Partner and
	affiliates             |                                                      |        | 478   |        |      |          | (1,686  | )        |   |         | (1,751 | )      
|                                                                                   | Accrued expenses and other current liabilities                 |                                                      |        | (487  | )      |      |          | 804     |          |   |         | 469    |        
|                                                                                   | Deferred incentive management fees payable to
	General Partner |                                                      |        | 97    |        |      |          | (22,085 | )        |   |         | 4,565  |        
|                                                                                   |                                                                |                                                      |        |       |        |      |          |         |          |   |         |       
|                                                                                   |                                                                | Net cash provided by operating activities            |        |       | 11,164 |      |          |         | 415      |   |         |        | 34,412  |  
|                                                                                   |                                                                |                                                      |        |       |        |      |          |         |          |   |         |       
|Investing Activities                                                               |                                                                |                                                      |        |       |        |      |          |         |          |   |         |       
|Additions to property and equipment                                                |                                                                |                                                      | (1,987 | )     |        |      | (18,437  | )       |          |   | (11,356 | )     
|Net proceeds from sale of the St. Francis                                          |                                                                |                                                      |       |       |        |      | 232,981  |         |          |   |        |       
|Decrease (increase) in long-term restricted cash                                   |                                                                |                                                      | (3,099 | )     |        |      | 2,846    |         |          |   | (1,295  | )     
|Decrease (increase) in other assets                                                |                                                                |                                                      | 48     |       |        |      | (211     | )       |          |   | (43     | )     
|                                                                                   |                                                                |                                                      |        |       |        |      |          |         |          |   |         |       
|                                                                                   |                                                                | Net cash provided by (used in) investing
	activities |        |       | (5,038 | )    |          |         | 217,179  |   |         |        | (12,694 | )
|                                                                                   |                                                                |                                                      |        |       |        |      |          |         |          |   |         |       
|Financing Activities                                                               |                                                                |                                                      |        |       |        |      |          |         |          |   |         |       
|Cash distributions                                                                 |                                                                |                                                      | (3,645 | )     |        |      | (93,692  | )       |          |   | (12,882 | )     
|Repayment of long-term obligations                                                 |                                                                |                                                      | (550   | )     |        |      | (133,531 | )       |          |   | (735    | )     
|                                                                                   |                                                                |                                                      |        |       |        |      |          |         |          |   |         |       
|                                                                                   |                                                                | Net cash used in financing activities                |        |       | (4,195 | )    |          |         | (227,223 | ) |         |        | (13,617 | )
|                                                                                   |                                                                |                                                      |        |       |        |      |          |         |          |   |         |       
|Net increase (decrease) in cash and cash
	equivalents                              |                                                                |                                                      | 1,931  |       |        |      | (9,629   | )       |          |   | 8,101   |       
|Cash and cash equivalents at beginning of year                                     |                                                                |                                                      | 29,996 |       |        |      | 39,625   |         |          |   | 31,524  |       
|                                                                                   |                                                                |                                                      |        |       |        |      |          |         |          |   |         |       
|Cash and cash equivalents at end of year                                           |                                                                | $                                                    | 31,927 |       |        | $    | 29,996   |         |          | $ | 39,625  |       
|                                                                                   |                                                                |                                                      |        |       |        |      |          |         |          |   |         |       
|Supplemental Disclosures of Cash Flow
	Information                                 |                                                                |                                                      |        |       |        |      |          |         |          |   |         |       
|Cash paid during the year for interest                                             |                                                                | $                                                    | 2,544  |       |        | $    | 18,701   |         |          | $ | 10,438  |       
|                                                                                   |                                                                |                                                      |        |       |        |      |          |         |          |   |         |       

The accompanying notes are an integral part of
these consolidated financial statements.

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##### Table of Contents



WESTIN HOTELS LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Note 1.     Summary
of Significant Accounting Policies

Basis of Presentation.The accompanying consolidated
financial statements include the accounts of Westin Hotels
Limited Partnership, a Delaware limited partnership (the
Partnership), and its subsidiary limited
partnerships, The Westin St. Francis Limited Partnership
(the St. Francis Partnership) and The Westin
Chicago Limited Partnership (the Chicago
Partnership) (collectively the Hotel
Partnerships). The St. Francis Partnership owned and
operated The Westin St. Francis in downtown San Francisco,
California (the St. Francis) through
April 26, 2000, and the Chicago Partnership owns and
operates The Westin Michigan Avenue, Chicago (formerly The
Westin Hotel, Chicago) in downtown Chicago, Illinois (the
Michigan Avenue) (individually a Hotel,
collectively the Hotels). All significant
intercompany transactions and accounts have been eliminated.

In February 2001, the Partnership retained Jones
Lang LaSalle Hotels, a nationally recognized broker
(JLL), to market the Michigan Avenue for sale. In
April 2001, formal marketing materials were distributed and
discussions with several potential purchasers subsequently
commenced. After the occurrence of the September 11
Attacks, certain of the most qualified potential purchasers
indicated they would expect significant discounts on their
preliminary offers made prior to the attacks. Based on the
unstable and depressed hotel real estate market, the General
Partner (as defined below) does not feel that it is in the best
interest of the limited partners to sell the Michigan Avenue at
this time.

While the General Partner continues to explore a
sale of the property, it has engaged JLL to assist in exploring
a refinancing. At this time, it is too early for the General
Partner to fully evaluate the feasibility or benefits of a
refinancing. The General Partner will continue to make efforts
to pursue a sale or refinancing transaction that it believes is
in the best interest of the limited partners. The ultimate sale
of the property is subject to the customary conditions and the
consent of the majority of the limited partners of the
Partnership.

Use of Estimates.The preparation of financial
statements in conformity with accounting principles generally
accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could materially differ from
those estimates.

Cash and Cash Equivalents and Restricted
Cash.Cash and cash equivalents
consist of short-term investments purchased with original
maturities of three months or less. Restricted cash consists of
amounts deposited in interest-bearing money market accounts
restricted by a Partnership lender (see Note 5). The
Partnerships carrying amount approximates the fair value
of cash and cash equivalents and restricted cash due to the
short-term nature of these instruments.

Inventories.Inventories, principally food and
beverage, are valued at the lower of cost (first-in, first-out)
or market value.

Property and Equipment.Depreciation of property and
equipment is provided on the straight-line method over the
assets estimated useful lives as follows:

|                                  |  |                           
|--------------------------------- |  | --------------------------
|Buildings                         |  | 40 years                  
|Building improvements             |  | Remaining life of building
|Furniture, fixtures and equipment |  | 3 to 12 years             

Depreciation of property and equipment under
capital leases is provided on the straight-line method over the
lesser of the assets estimated useful lives or the lease
terms.

Expendable supplies (linens, china, silverware
and glassware) have been depreciated to 50% of the cost of
initial stock. Replacements are expensed when purchased.

20



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##### Table of Contents



WESTIN HOTELS LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Maintenance and repairs, including the cost of
minor replacements, are charged to property maintenance expense
accounts. Costs of additions and improvements to property are
capitalized in property and equipment accounts.

In the event that facts and circumstances
indicate that the cost of property and equipment may be
impaired, an evaluation of recoverability would be performed.
This evaluation would include the comparison of the future
estimated undiscounted cash flows associated with the assets to
the carrying amount of these assets to determine if a write-down
to market value using discounted cash flows is required.

Revenue Recognition.The Partnerships revenues
are primarily derived from hotel operations, including the
rental of rooms and food and beverage sales. Generally, revenues
are recognized when the services have been rendered.

Income Taxes.The Partnership does not record
any provision for federal and state income taxes in its
consolidated financial statements. All items of income, gain,
loss, deduction or credit for federal and state income tax
purposes are allocated to the partners of the Partnership for
inclusion in their individual income tax returns. The reported
amounts of the Partnerships net assets and liabilities
exceeded the related tax bases by approximately $18,692,000 and
$18,274,000 at December 31, 2001 and 2000, respectively.

Concentration of Credit Risk.Financial instruments which
potentially subject the Hotel to a concentration of credit risk
consist principally of accounts receivable. Concentration of
credit risk with respect to accounts receivable is limited due
to the wide variety of customers and industries to which the
Hotels services are sold, as well as the dispersion of
customers across many geographic areas. Additionally, the Hotel
performs ongoing credit evaluations of their customers
financial condition and maintains allowances for potential
credit losses.

Impact of Recently Issued Accounting
Standards.In August 2001, the
Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 144,
Accounting for the Impairment or Disposal of Long-Lived
Assets. The new rules apply to the classification and
impairment analysis conducted on long-lived assets other than
intangible assets and became effective January 1, 2002. The
new rules provide a single accounting treatment for the
impairment of long-lived assets and implementation guidance
regarding impairment calculations. The adoption of SFAS
No. 144 is not anticipated to have a material impact on the
Partnership.

Note
2.     Organization

The Partnership was formed on April 25, 1986
to invest in hotel properties by acquiring limited partnership
interests in the Hotel Partnerships. The Partnership will
continue until December 31, 2036, unless terminated sooner
under the provisions of the Partnership Agreement.

Westin Realty Corp. (Westin Realty),
formerly a wholly owned subsidiary of Westin Hotel Company
(Westin), now a wholly owned subsidiary of Starwood
Hotels & Resorts Worldwide, Inc. (Starwood), is
the sole general partner of the Partnership (the General
Partner) and subject to the Partnership Agreement. On
August 28, 1986, Westin Realty acquired all of the limited
partnership interests in the Hotel Partnerships (which
represented 91.62% of the then fair value of the Hotel
Partnerships net assets) and contributed these interests,
valued at $135,600,000, to the Partnership in exchange for all
of the limited partnership interests in the Partnership. Westin
Realty then sold these limited partnership interests in a public
offering. The remaining 8.38% interest in the Hotel Partnerships
was retained by the predecessor owners, subsidiaries of Westin.

On January 2, 1998, Starwood completed the
merger of Westin Hotels & Resorts Worldwide, Inc.
(Westin Worldwide). Pursuant to the transaction
agreement, Westin Worldwide, including its wholly owned
subsidiary Westin, was merged with and into Starwood Hotels
& Resorts (the Trust) and the separate corporate
existence of Westin Worldwide and Westin thereupon ceased. On
January 6, 1999, the

21



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##### Table of Contents



WESTIN HOTELS LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Trust became a wholly owned subsidiary of
Starwood as a result of Starwoods reorganization (the
Reorganization). Westin Realty, St. Francis Hotel
Corporation (St. Francis Corp.) and
909 North Michigan Avenue Corporation
(909 Corp.), each formerly wholly owned
subsidiaries of Westin, are now wholly owned subsidiaries of
Starwood. The merger and the Reorganization did not change the
structure of the general partners and limited
partners ownership interest in either the Partnership or
the Hotel Partnerships.

The Hotel Partnerships profits and losses,
subject to certain contractual adjustments, are generally
allocated 99% to the Hotel Partnership and 1% to minority
interests. Partnership profits and losses are further allocated
99% to the limited partners and 1% to the General Partner, with
the exception of depreciation expense, which is allocated 92.55%
to the limited partners and 7.45% to the General Partner.
Because of the allocation of depreciation expense, the General
Partners share of profits and losses since inception is a
net loss, resulting in a deficit balance in the General Partner
capital account. The Partnership Agreement specifies that if a
deficit balance exists after liquidation of both of the Hotel
Partnerships assets, the General Partner would be
obligated to contribute cash to the Partnership equal to the
lesser of (i) the deficit balance in such capital account,
or (ii) 1.01% of the capital contributions of the limited
partners reduced by all capital contributions of the General
Partner. On April 26, 2000, in connection with the gain on
sale of the St. Francis, the General Partners deficit
balance was restored to zero, as required by the terms of the
Partnership Agreement.

Except for the following restrictions outlined in
the mortgage loan restructuring agreement completed in June 1994
(hereinafter this agreement and any amendments to it are
referred to as the Restructuring Agreement), Net
Cash Flow of the Partnership, as defined in the Partnership
Agreement, is distributed first to the limited partners until
certain preferential distributions are achieved and then
allocated to both the general partners and limited partners
depending on factors related to the source of the Net Cash Flow
and cash distributions as specified in the Partnership
Agreement. The Restructuring Agreement permitted distributions
beginning in 1997 once the Hotels had achieved certain
performance levels in the three years prior to 1997. A
distribution of $3,645,000, $93,692,000 and $12,882,000 was made
to the limited partners in each of the years ended
December 31, 2001, 2000 and 1999, respectively. The fiscal
year 2000 distribution of $93,692,000 included $85,428,000
relating to the net cash proceeds from the sale of the
St. Francis.

Note 3.     The
St. Francis Sale

On April 26, 2000, upon obtaining consent of
a majority of the limited partners, the sale of the
St. Francis was completed for gross proceeds of
$243,000,000, resulting in a gain of $52,606,000 after
transaction costs. In accordance with the Partnership Agreement,
$159,000,000 of the proceeds were used to repay the
St. Francis portion of the mortgage loans, which was
secured by the St. Francis; the St. Francis portion of
the subordinated note due to the General Partner; deferred
incentive management fees related to the St. Francis; and costs
and expenses related to the sale. The remaining proceeds of
$84,000,000 and additional Partnership cash of approximately
$1,500,000 were distributed to the limited partners.

22



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##### Table of Contents



WESTIN HOTELS LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The following unaudited pro forma results reflect
the sale of the St. Francis as if it had been sold at the
beginning of each period presented and do not purport to present
what actual results would have been had the sale, in fact,
occurred at the beginning of each period presented:

|                    |  |                       |        |      |  |   |        | 
|------------------- |  | --------------------- | ------ | ---- |  | - | ------ | 
|                    |  |                      
|                    |  | Year Ended           
|                    |  | December 31,         
|                    |  |                      
|                    |  | 2000                  |        | 1999
|                    |  |                       |        |     
|                    |  |                      
|                    |  | (In thousands, except
|                    |  | per Unit amounts)    
|Operating revenues  |  | $                     | 48,397 |      |  | $ | 45,537 | 
|Operating profit    |  |                       | 8,381  |      |  |   | 6,206  | 
|Net income          |  |                       | 6,657  |      |  |   | 4,460  | 
|Net income per Unit |  |                       | 49.09  |      |  |   | 32.89  | 

Note 4.     Accrued
Expenses

Accrued expenses include the following at
December 31:

|                                           |       |                |       |       |  |   |       |       | 
|------------------------------------------ | ----- | -------------- | ----- | ----- |  | - | ----- | ----- | 
|                                           |       | 2001           |       | 2000 
|                                           |       |                |       |      
|                                           |       |               
|                                           |       | (In thousands)
|Salaries, wages and other related benefits |       | $              | 908   |       |  | $ | 1,451 |      
|Estimated property and other taxes         |       |                | 4,038 |       |  |   | 3,902 |      
|Other                                      |       |                | 1,061 |       |  |   | 1,172 |      
|                                           |       |                |       |       |  |   |       |      
|                                           | Total |                | $     | 6,007 |  |   | $     | 6,525 | 
|                                           |       |                |       |       |  |   |       |      

Note 5.     Long-Term
Obligations

Long-term obligations include the following at
December 31:

|                                                                                                                   |       |                |        |        |  |   |        |        | 
|------------------------------------------------------------------------------------------------------------------ | ----- | -------------- | ------ | ------ |  | - | ------ | ------ | 
|                                                                                                                   |       | 2001           |        | 2000  
|                                                                                                                   |       |                |        |       
|                                                                                                                   |       |               
|                                                                                                                   |       | (In thousands)
|Mortgage loans bearing effective interest at 8.06%                                                                 |       | $              | 31,223 |        |  | $ | 31,773 |       
|Less current maturities                                                                                            |       |                | 594    |        |  |   | 549    |       
|                                                                                                                   |       |                |        |        |  |   |        |       
|                                                                                                                   | Total |                | $      | 30,629 |  |   | $      | 31,224 | 
|                                                                                                                   |       |                |        |        |  |   |        |       
|Note payable to the General Partner, bearing
	interest at prime plus 1% (5.75% at December 31, 2001) (see
	Note 9) |       | $              | 9,832  |        |  | $ | 9,098  |       
|                                                                                                                   |       |                |        |        |  |   |        |       

On May 27, 1997, existing mortgage loans on
the Hotels were restructured pursuant to the Restructuring
Agreement between The Teacher Retirement System of Texas, the
Partnership, the Hotel Partnerships, St. Francis Corp.
(general partner of the St. Francis Partnership),
909 Corp. (general partner of the Chicago Partnership) and
Westin Realty.

The Restructuring Agreement provided for an
extension of the maturity date for each of the Hotels
existing mortgage loans from August 31, 2001 to
November 30, 2006. The restructuring resulted in a decrease
in the effective interest rate on the mortgage loans from 8.55%
per annum to 8.06% per annum from the date of the Restructuring
Agreement through maturity.

Through November 30, 1999, the restructured
loans required the payment of interest only each quarter in
arrears. From December 1, 1999 to November 30, 2006,
the loans require combined payments of principal and interest
each quarter in arrears, in such amount necessary to repay the
principal balance of each note (together with interest at the
fixed interest rate) on the basis of a 25-year amortization
schedule. Annual payments of

23



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##### Table of Contents



WESTIN HOTELS LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

principal and interest on the remaining Michigan
Avenue mortgage loan are $3,093,000, payable quarterly through
December 1, 2006, at which time the remaining outstanding
principal balance plus all accrued and unpaid interest is due
and payable.

As required by the Restructuring Agreement,
deposits to the Furniture, Fixtures and Equipment Reserve
Accounts (FF&E Escrow Accounts) for 2001 and
2000 totaled $2,958,000 and $11,641,000, respectively. FF&E
Escrow Accounts are included in restricted cash in the
accompanying balance sheets. Interest earned on the FF&E
Escrow Accounts was $144,000, $284,000 and $224,000 for the
years ended December 31, 2001, 2000 and 1999, respectively.

As required by the Restructuring Agreement,
$3,657,000 and $3,606,000 were deposited to tax escrow accounts
in 2001 and 2000, respectively. These accounts are used to pay
real and personal property taxes as they become due. The tax
escrow accounts are included in cash and cash equivalents in the
accompanying consolidated balance sheets.

Scheduled principal payments on the mortgage loan
are $594,000 in 2002, $644,000 in 2003, $697,000 in 2004,
$755,000 in 2005 and $28,533,000 in 2006.

For debt based on prime rates, fair value
approximates carrying value due to the variable nature of
interest rates. For fixed rate debt, fair value is determined
based on discounted cash flows for the debt at a rate deemed
reasonable for the type of debt and prevailing market conditions
and, if appropriate, the length to maturity for the debt. The
carrying values of the Partnerships mortgage loan and
subordinated note approximate fair values, due to the interest
rates being based on prime or in line with market rates.

Note 6.     Employee
Benefit Plan

The Hotel Partnerships participate in 401(k)
plans (the Plans), sponsored by Starwood, an
affiliate of the General Partner. The Plans allow for voluntary
contributions by employees that meet certain age and service
requirements. Each participant may contribute on a pretax basis
between 1% and 18% of his or her compensation to the Plans. The
Plans also contain additional provisions for matching and/or
profit sharing contributions, both of which are based on a
portion of a participants eligible compensation. The
amount of expense for matching contributions totaled $66,000 in
2001, $106,000 in 2000 and $223,000 in 1999.

Note 7.     Operating
Leases

The Hotel rents various property and equipment
under operating leases. Minimum annual rental expense under the
operating leases in effect at December 31, 2001 are $54,000 for
2002 and $23,000 for 2003.

Rental expense for operating leases, including
short-term leases, was $158,000, $285,000 and $607,000 for the
years ended December 31, 2001, 2000 and 1999, respectively.

The Hotel also rents restaurant, gift shop and
retail space to third-party vendors under operating leases.
Minimum annual rental income under the operating leases in
effect at December 31, 2001 are as follows (in thousands):

|           |  |   |       | 
|---------- |  | - | ----- | 
|2002       |  | $ | 957   | 
|2003       |  |   | 1,007 | 
|2004       |  |   | 1,028 | 
|2005       |  |   | 1,064 | 
|2006       |  |   | 1,116 | 
|Thereafter |  |   | 4,032 | 

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##### Table of Contents



WESTIN HOTELS LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Rental income from operating leases, including
contingent rental income, was $1,767,000, $1,230,000 and
$761,000 for the years ended December 31, 2001, 2000 and
1999, respectively.

Note
8.     Commitments and
Contingencies

Because of the nature of the hotel business, the
Hotel Partnerships are subject to various claims and legal
actions incidental to the ordinary course of their operations,
including such matters as contract and lease disputes and
complaints alleging personal injury, property damage and
employment discrimination. The General Partner believes that the
outcome of any such pending claims, individually or in the
aggregate, will not have a material adverse effect upon the
business, financial condition or results of operations of the
Partnership.

Note 9.     Related
Party Transactions

Westin Realty is responsible for the management
and administration of the Partnership. In accordance with the
Partnership Agreement, the Partnership reimburses Westin Realty
for expenses in connection with such services, which totaled
approximately $725,000 in 2001, $668,000 in 2000 and $616,000 in
1999.

Subsidiaries of Starwood, an affiliate of the
General Partner, manage the Hotels under long-term management
agreements which expire in December 2026. As the managers, prior
to the sale of the St. Francis on April 26, 2000,
subsidiaries of Starwood receive base management fees from the
Partnership. Base management fees totaled approximately
$1,467,000 in 2001, $3,134,000 in 2000 and $5,474,000 in 1999.
The managers also earn incentive management fees of 20% of
annual Net Operating Cash Flow, as defined in the management
agreement. Earned incentive management fees, including the
incentive management fees earned prior to the sale of the St.
Francis on April 26, 2000, totaled approximately $2,507,000
in 2001, $2,224,000 in 2000 and $7,826,000 in 1999. The portion
of the 2000 incentive management fees earned attributable to the
St. Francis, $1,910,000, was paid from the proceeds of the
sale of the St. Francis. Incentive management fee payments
are subordinate to the limited partners receiving certain
preferential returns. As a result, approximately $2,723,000 of
previous years incentive management fees were deferred for
payment until the first quarter of 2002. Deferred incentive
management fees bear no interest and are payable from the
proceeds of a sale or refinancing of the Hotel or available Net
Cash Flow, as defined. Determining the fair value of the
deferred incentive management fee liability is not practicable
due to uncertainty as to when the liability will be paid;
however, the fair value of the liability does not exceed the
carrying amount.

The Partnership paid marketing fees to Starwood
and affiliates totaling approximately $629,000 in 2001,
$1,650,000 in 2000 and $2,945,000 in 1999. Additionally, the
Hotels paid approximately $1,852,000, $6,370,000 and $7,497,000
in 2001, 2000 and 1999, respectively, to the General Partner for
services provided by the General Partner and in connection with
certain other transactions such as property and workers
compensation insurance, systems support, reservations and
advertising.

As disclosed in Note 5, at December 31,
2001, the subordinated loan from Westin Realty to the
Partnership totaled $9,832,000, which includes $4,832,000 of
accrued interest. At December 31, 2000, the balance was
$9,098,000 and included $4,098,000 of accrued interest. Interest
expense on this loan was $734,000, $1,862,000 and $3,217,000 for
the years ended December 31, 2001, 2000 and 1999,
respectively. Payments on the subordinated loan are due on the
fifteenth anniversary of each advance with the first payment due
in June 2009. Upon the sale of the St. Francis, the portion
of the loan attributable to the St. Francis ($32,900,000)
was paid in full.

In June 2000, the Michigan Avenue transferred the
operations of its restaurant, The Grill on the Alley, to Grill
Concepts of California (Grill Concepts), an
affiliate of Starwood. Starwood owns 27.4% of the outstanding
common stock of Grill Concepts including percentage rights to
acquire additional shares of Grill Concepts pursuant to a
subscription agreement. An employee of Starwood also serves on
the Board of

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##### Table of Contents



WESTIN HOTELS LIMITED PARTNERSHIP


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Directors of Grill Concepts. Rental revenues from
Grill Concepts of $242,000 and $175,000 for 2001 and 2000,
respectively, are included in other operating departments
revenue in the accompanying consolidated financial statements.

Note
10.     Summarized Quarterly Financial
Data (Unaudited)

Summarized quarterly financial data is as follows:

|                           |  |                                         |        |        |  |       |        |        |  |       |        |  |  |   |        |  |  |   |        | 
|-------------------------- |  | --------------------------------------- | ------ | ------ |  | ----- | ------ | ------ |  | ----- | ------ |  |  | - | ------ |  |  | - | ------ | 
|                           |  | First                                   |        | Second |  | Third |        | Fourth |  | Total
|                           |  |                                         |        |        |  |       |        |        |  |      
|                           |  |                                        
|                           |  | (In thousands, except per Unit amounts)
|2001 Quarters              |  |                                         |        |        |  |       |        |        |  |       |        |  |  |   |        |  |  |   |        | 
|Operating revenues         |  | $                                       | 7,650  |        |  | $     | 13,129 |        |  | $     | 10,833 |  |  | $ | 10,303 |  |  | $ | 41,915 | 
|Operating profit (loss)    |  |                                         | (1,739 | )      |  |       | 2,245  |        |  |       | 1,232  |  |  |   | 1,199  |  |  |   | 2,937  | 
|Net income (loss)          |  |                                         | (2,246 | )      |  |       | 1,625  |        |  |       | 615    |  |  |   | 565    |  |  |   | 559    | 
|Net income (loss) per Unit |  |                                         | (16.56 | )      |  |       | 11.98  |        |  |       | 4.54   |  |  |   | 4.16   |  |  |   | 4.12   | 
|2000 Quarters              |  |                                         |        |        |  |       |        |        |  |       |        |  |  |   |        |  |  |   |        | 
|Operating revenues         |  |                                         | 36,388 |        |  |       | 22,930 |        |  |       | 14,597 |  |  |   | 12,961 |  |  |   | 86,876 | 
|Operating profit           |  |                                         | 7,204  |        |  |       | 6,400  |        |  |       | 4,791  |  |  |   | 377    |  |  |   | 18,772 | 
|Net income                 |  |                                         | 4,056  |        |  |       | 56,615 |        |  |       | 4,164  |  |  |   | 1,304  |  |  |   | 66,139 | 
|Net income per Unit        |  |                                         | 29.91  |        |  |       | 417.52 |        |  |       | 30.71  |  |  |   | 9.61   |  |  |   | 487.75 | 

26



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##### Table of Contents






PART III






|         |                                                     
|-------- | ----------------------------------------------------
|Item 10. | Directors and Executive Officers of the
	Registrant.

The Hotel Partnerships have no directors or
officers. Business policy-making functions of the Hotel
Partnerships are carried out through the directors and officers
of the general partners.

Westin Realtys directors and officers and
their current positions are as follows:

|                    |  |                                                                
|------------------- |  | ---------------------------------------------------------------
|Theodore W. Darnall |  | President, Assistant Secretary and Principal
	Executive Officer
|Alan M. Schnaid     |  | Vice President, Principal Accounting Officer and
	Director     
|Joseph D. Long      |  | Vice President                                                 
|Tom Smith           |  | Director                                                       

Theodore W. Darnall and Alan M. Schnaid
assumed their current positions in September 1998.
Joseph D. Long and Tom Smith assumed their current
positions in July 1999 and October 2001, respectively.

Theodore W. Darnall currently serves as the
President, Assistant Secretary and Principal Executive Officer.
Since March 1998, Mr. Darnall has been the Executive Vice
President, Hotel Operations, North America, of Starwood, a hotel
operating company. From April 1996 to March 1998, he served as
the Executive Vice President and Chief Operating Officer of
Starwood. Prior to joining Starwood, he served as the Senior
Vice President, Operations, of Interstate Hotel Company from
August 1995 to April 1996.

Alan M. Schnaid currently serves as a Vice
President, Principal Accounting Officer and Director.
Mr. Schnaid is the Senior Vice President and Corporate
Controller of Starwood. Mr. Schnaid has been with Starwood
since August 1994 and has served as Assistant Corporate
Controller and Vice President and Corporate Controller.

Joseph D. Long currently serves as a Vice
President. Mr. Long is the Senior Vice President,
Acquisitions and Development, of Starwood. Mr. Long has
been with Starwood since August 1996. Prior to joining Starwood,
he was with LaSalle Partners as a Vice President from July 1993
to August 1996.

Tom Smith currently serves as a Director. He is
Senior Vice President, Portfolio Management, of Starwood.
Mr. Smith has held various positions with Starwood since
July 1998. Before joining Starwood, he was a Managing Director
of CIGNA Real Estate Investment Corporation for eleven years.

The following persons are directors and/or
officers of the general partners of both Hotel Partnerships as
indicated:

|                    |  |                                                                
|------------------- |  | ---------------------------------------------------------------
|Theodore W. Darnall |  | President, Assistant Secretary and Principal
	Executive Officer
|Alan M. Schnaid     |  | Vice President, Principal Accounting Officer and
	Director     
|Joseph D. Long      |  | Vice President                                                 
|Tom Smith           |  | Director                                                       






|         |                        
|-------- | -----------------------
|Item 11. | Executive Compensation.

As noted in Item 10 above, the Hotel
Partnerships have no directors, officers or other employees.
However, under the respective Limited Partnership Agreements for
the Hotel Partnerships, Westin Realty, as General Partner of the
Partnership, is responsible for the administration and
management of the Partnership, and St. Francis Corp. and 909
Corp., as general partners of the Hotel Partnerships, are
responsible for the administration and management of the Hotel
Partnerships. The general partners, however, receive no fees for
providing these services to the Partnership. Moreover, neither
the Partnership nor the Hotel Partnerships are directly
responsible for the payment of any executive compensation to the
officers of the general partners.






|         |                                                                 
|-------- | ----------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial
	Owners and Management.

As of the date of this filing, Kalmia Investors,
LLC (Kalmia) owned 8.9% of the total number of Units
of record. There are no pending Unit transfers to Kalmia as of
the date of this filing.

27



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##### Table of Contents






Item 13.     Certain
Relationships and Related Transactions.

Theodore W. Darnall, Alan M. Schnaid,
Joseph D. Long and Tom Smith serve as officers and/or
directors of Westin Realty and as principal officers of
Starwood. The Partnership has engaged various subsidiaries of
Starwood to provide services to the Hotels. See Note 9 of
the Notes to Consolidated Financial Statements included under
Item 8, Financial Statements and Supplementary
Data.




PART IV




Item 14.     Exhibits,
Financial Statements, Financial Statement Schedules and Reports
on Form 8-K.

(a) 1.     Financial
Statements.

The following documents are filed as part of this
report:

|                                                        |  |      |       | 
|------------------------------------------------------- |  | ---- | ----- | 
|Document                                                |  | Page
|                                                        |  |     
|Report of Independent Public Accountants                |  |      | 15    | 
|Consolidated Balance Sheets                             |  |      | 16    | 
|Consolidated Statements of Operations                   |  |      | 17    | 
|Consolidated Statements of Partners Capital
	(Deficit) |  |      | 18    | 
|Consolidated Statements of Cash Flows                   |  |      | 19    | 
|Notes to Consolidated Financial Statements              |  |      | 20-26 | 

(a) 2.     Financial
Statement Schedules.

Financial statement schedules are omitted for the
reason that they are not required, are insignificant or because
the required information is shown in the consolidated financial
statements or notes thereto.

(a) 3.     Exhibits.

|                                                          |      |  |  |                                                                                                                                                                                                                                               
|--------------------------------------------------------- | ---- |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.  Instruments defining the rights of
	security holders.
|                                                          | 4.1  |  |  | Amended and Restated Agreement of Limited
	Partnership of Westin Hotels Limited Partnership.(1)                                                                                                                                               
|                                                          | 4.2  |  |  | Amended and Restated Agreement of Limited
	Partnership of The Westin St. Francis Limited
	Partnership.(1)                                                                                                                                     
|                                                          | 4.3  |  |  | First Amendment to Amended and Restated Agreement
	of Limited Partnership of The Westin St. Francis Limited
	Partnership. (3)                                                                                                                 
|                                                          | 4.4  |  |  | Amended and Restated Agreement of Limited
	Partnership of The Westin Chicago Limited
	Partnership.(1)                                                                                                                                         
|                                                          | 4.5  |  |  | First Amendment to Amended and Restated Agreement
	of Limited Partnership of The Westin Chicago Limited
	Partnership.(3)                                                                                                                      
|10.  Material contracts.                                 
|                                                          | 10.1 |  |  | Restructuring Agreement dated as of June 2,
	1994.(3)                                                                                                                                                                                         
|                                                          | 10.2 |  |  | Second Restructuring Agreement dated as of
	May 27, 1997. (4)                                                                                                                                                                                 
|                                                          | 10.3 |  |  | Amended and Restated Management Agreements
	between The Westin St. Francis Limited Partnership and Westin
	Hotel Company, and between The Westin Chicago Limited
	Partnership and Westin Hotel Company, for property management
	services. (2)
|                                                          | 10.4 |  |  | First Amendments to Amended and Restated
	Management Agreements of The Westin St. Francis Limited
	Partnership and of The Westin Chicago Limited
	Partnership.(3)                                                                             
|                                                          | 10.5 |  |  | Assignment and Assumption of Agreements between
	Westin Hotel Company and St. Francis Hotel
	Corporation.(6)                                                                                                                                  
|                                                          | 10.6 |  |  | Assignment and Assumption of Agreements between
	Westin Hotel Company and North Michigan Avenue
	Corporation.(6)                                                                                                                              

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##### Table of Contents



|                          |       |  |  |                                                                                                                                                                                                                                                                                                      
|------------------------- | ----- |  |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                          | 10.7  |  |  | Contribution Agreement between St. Francis Hotel
	Corporation and The Westin St. Francis Limited Partnership,
	and between 909 North Michigan Avenue Corporation and The Westin
	Chicago Limited Partnership, for contribution of Hotel assets
	and the transfer of limited partnership interests.(2)
|                          | 10.8  |  |  | Promissory Note of St. Francis Hotel
	Corporation dated August 21, 1986 to Teacher Retirement System
	of Texas.(1)                                                                                                                                                                                   
|                          | 10.9  |  |  | First Amendment to Promissory Note of
	St. Francis Hotel Corporation dated as of June 2,
	1994.(3)                                                                                                                                                                                                   
|                          | 10.10 |  |  | Second Amendment to Promissory Note of
	St. Francis Hotel Corporation dated as of May 27,
	1997.(5)                                                                                                                                                                                                  
|                          | 10.11 |  |  | Deed of Trust, Financing Statement, Security
	Agreement and Fixture Filing dated August 21, 1986
	respecting The Westin St. Francis.(1)                                                                                                                                                              
|                          | 10.12 |  |  | First Amendment to Deed of Trust, Financing
	Statement, Security Agreement and Fixture Filing dated as of
	June 2, 1994.(3)                                                                                                                                                                          
|                          | 10.13 |  |  | Second Amendment to Deed of Trust, Financing
	Statement, Security Agreement and Fixture Filing (With
	Assignment of Rents and Leases) dated as of May 27,
	1997.(5)                                                                                                                                  
|                          | 10.14 |  |  | Promissory Note of 909 North Michigan Avenue
	Corporation dated August 21, 1986 to Teacher Retirement
	System of Texas.(1)                                                                                                                                                                           
|                          | 10.15 |  |  | First Amendment to Promissory Note of 909 North
	Michigan Avenue Corporation dated as of June 2,
	1994.(3)                                                                                                                                                                                           
|                          | 10.16 |  |  | Second Amendment to Promissory Note of 909 North
	Michigan Avenue Corporation dated as of May 27,
	1997.(5)                                                                                                                                                                                          
|                          | 10.17 |  |  | Mortgage and Security Agreement dated
	August 21, 1986 for The Westin Hotel, Chicago.(1)                                                                                                                                                                                                             
|                          | 10.18 |  |  | First Amendment to Mortgage and Security
	Agreement dated as of June 2, 1994.(3)                                                                                                                                                                                                                     
|                          | 10.19 |  |  | Second Amendment to Mortgage and Security
	Agreement dated as of May 27, 1997.(5)                                                                                                                                                                                                                    
|                          | 10.20 |  |  | St. Francis FF&E Escrow Agreement dated as of
	June 2, 1994.(3)                                                                                                                                                                                                                                      
|                          | 10.21 |  |  | Chicago FF&E Escrow Agreement dated as of
	June 2, 1994. (3)                                                                                                                                                                                                                                         
|                          | 10.22 |  |  | Promissory Note dated June 2, 1994 in favor
	of Westin Realty Corp. by Westin Hotels Limited
	Partnership.(3)                                                                                                                                                                                        
|                          | 10.23 |  |  | Loan Agreement dated as of June 2, 1994
	between Westin Hotels Limited Partnership and Westin Realty
	Corp.(3)                                                                                                                                                                                       
|                          | 10.24 |  |  | Second Amendment to Amended and Restated
	Management Agreement of The Westin St. Francis Limited
	Partnership. (7)                                                                                                                                                                                   
|                          | 10.25 |  |  | Second Amendment to Amended and Restated
	Management Agreement of The Westin Chicago Limited
	Partnership.(7)                                                                                                                                                                                        
|                          | 10.26 |  |  | Third Amendment to Amended and Restated
	Management Agreement of The Westin Chicago Limited
	Partnership.(9)                                                                                                                                                                                         
|                          | 10.27 |  |  | Purchase and Sale Agreement, dated
	January 18, 2000, between The Westin St. Francis Limited
	Partnership and BRE/ St. Francis L.L.C.(8)                                                                                                                                                             
|99.  Additional exhibits.
|                          | 99.1  |  |  | Letter from Westin Hotels Limited Partnership
	related to Arthur Andersen LLP.(9)                                                                                                                                                                                                                    



---



|    |                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Incorporated by reference to Exhibits 4.1,
	4.2, 4.3, 10.3, 10.4, 10.5 and 10.6, respectively, to the
	Partnerships 1986 Annual Report on Form 10-K.                                                                                  
|   
|(2) | Incorporated by reference to Exhibits 10.1
	and 10.2, respectively, of the Partnerships Registration
	Statement on Form S-11 (No. 33-3918).                                                                                           
|   
|(3) | Incorporated by reference to Exhibits 4.3,
	4.5, 10.1, 10.3, 10.6, 10.8, 10.10, 10.12, 10.13, 10.14, 10.15
	and 10.16, respectively, to the Partnerships Quarterly
	Report on Form 10-Q for the quarterly period ended
	June 30, 1994.
|   
|(4) | Incorporated by reference to Exhibit 10. to
	the Partnerships Current Report on Form 8-K dated
	May 27, 1997.                                                                                                                         

29



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##### Table of Contents





|    |                                                                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(5) | Incorporated by reference to Exhibits 10.8,
	10.11, 10.14 and 10.17, respectively, to the Partnerships
	Quarterly Report on Form 10-Q for the quarterly period
	ended June 30, 1997.
|   
|(6) | Incorporated by reference to Exhibits 10.5 and
	10.6, respectively, to the Partnerships 1997 Annual Report
	on Form 10-K.                                                           
|   
|(7) | Incorporated by reference to Exhibits 10.1 and
	10.2, respectively, to the Partnerships Quarterly Report
	on Form 10-Q for the quarterly period ended
	September 30, 1999.          
|   
|(8) | Incorporated by reference to Exhibit 10.1 to
	the Partnerships Current Report on Form 8-K dated
	January 18, 2000.                                                                  
|   
|(9) | Filed herewith.                                                                                                                                                                      

(b) Reports on Form 8-K.

No reports on Form 8-K were filed during the
fourth quarter of 2001.

30



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##### Table of Contents



SIGNATURES

Pursuant to the requirements of Section 13
or 15(d) 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 on March 28, 2002.



| |                                  
| | ---------------------------------
| | WESTIN HOTELS LIMITED PARTNERSHIP
| | (a Delaware limited partnership) 



| |     |                     
| | --- | --------------------
| | By: | WESTIN REALTY CORP.,

| |                         
| | ------------------------
| | Its sole General Partner



| |     |                    
| | --- | -------------------
| | By: | /s/ ALAN M. SCHNAID

| |                
| | ---------------
| |                
| | Alan M. Schnaid
| | Vice President 

Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed by the
following persons on behalf of the Registrant and in the
capacities and on the dates indicated:

|                                           |  |                                                                 |  |               
|------------------------------------------ |  | --------------------------------------------------------------- |  | --------------
|Signature                                  |  | Title                                                           |  | Date          
|                                           |  |                                                                 |  |               
|/s/ THEODORE W. DARNALLTheodore W. Darnall |  | President, Assistant Secretary and Principal
	Executive Officer |  | March 28, 2002
|                                          
|/s/ ALAN M. SCHNAIDAlan M. Schnaid         |  | Vice President, Principal Accounting Officer and
	Director      |  | March 28, 2002
|                                          
|/s/ JOSEPH D. LONGJoseph D. Long           |  | Vice President                                                  |  | March 28, 2002
|                                          
|/s/ TOM SMITHTom Smith                     |  | Director                                                        |  | March 28, 2002

31



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##### Table of Contents



EXHIBIT INDEX

|                                                          |       |             |  |                                                                                                                                                                                                                                                                                                       
|--------------------------------------------------------- | ----- | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit                                                   |       |            
|No.                                                       |       | Description
|                                                          |       |            
|4.  Instruments defining the rights of
	security holders.
|                                                          | 4.1   |             |  | Amended and Restated Agreement of Limited
	Partnership of Westin Hotels Limited Partnership.(1)                                                                                                                                                                                                       
|                                                          | 4.2   |             |  | Amended and Restated Agreement of Limited
	Partnership of The Westin St. Francis Limited
	Partnership.(1)                                                                                                                                                                                             
|                                                          | 4.3   |             |  | First Amendment to Amended and Restated Agreement
	of Limited Partnership of The Westin St. Francis Limited
	Partnership. (3)                                                                                                                                                                         
|                                                          | 4.4   |             |  | Amended and Restated Agreement of Limited
	Partnership of The Westin Chicago Limited
	Partnership.(1)                                                                                                                                                                                                 
|                                                          | 4.5   |             |  | First Amendment to Amended and Restated Agreement
	of Limited Partnership of The Westin Chicago Limited
	Partnership.(3)                                                                                                                                                                              
|10.  Material contracts.                                 
|                                                          | 10.1  |             |  | Restructuring Agreement dated as of June 2,
	1994.(3)                                                                                                                                                                                                                                                 
|                                                          | 10.2  |             |  | Second Restructuring Agreement dated as of
	May 27, 1997. (4)                                                                                                                                                                                                                                         
|                                                          | 10.3  |             |  | Amended and Restated Management Agreements
	between The Westin St. Francis Limited Partnership and
	Westin Hotel Company, and between The Westin Chicago Limited
	Partnership and Westin Hotel Company, for property management
	services. (2)                                                        
|                                                          | 10.4  |             |  | First Amendments to Amended and Restated
	Management Agreements of The Westin St. Francis Limited
	Partnership and of The Westin Chicago Limited
	Partnership.(3)                                                                                                                                     
|                                                          | 10.5  |             |  | Assignment and Assumption of Agreements between
	Westin Hotel Company and St. Francis Hotel
	Corporation.(6)                                                                                                                                                                                          
|                                                          | 10.6  |             |  | Assignment and Assumption of Agreements between
	Westin Hotel Company and North Michigan Avenue
	Corporation.(6)                                                                                                                                                                                      
|                                                          | 10.7  |             |  | Contribution Agreement between St. Francis
	Hotel Corporation and The Westin St. Francis Limited
	Partnership, and between 909 North Michigan Avenue Corporation
	and The Westin Chicago Limited Partnership, for contribution of
	Hotel assets and the transfer of limited partnership
	interests.(2)
|                                                          | 10.8  |             |  | Promissory Note of St. Francis Hotel
	Corporation dated August 21, 1986 to Teacher Retirement
	System of Texas.(1)                                                                                                                                                                                    
|                                                          | 10.9  |             |  | First Amendment to Promissory Note of
	St. Francis Hotel Corporation dated as of June 2,
	1994.(3)                                                                                                                                                                                                    
|                                                          | 10.10 |             |  | Second Amendment to Promissory Note of
	St. Francis Hotel Corporation dated as of May 27,
	1997.(5)                                                                                                                                                                                                   
|                                                          | 10.11 |             |  | Deed of Trust, Financing Statement, Security
	Agreement and Fixture Filing dated August 21, 1986
	respecting The Westin St. Francis.(1)                                                                                                                                                               
|                                                          | 10.12 |             |  | First Amendment to Deed of Trust, Financing
	Statement, Security Agreement and Fixture Filing dated as of
	June 2, 1994.(3)                                                                                                                                                                           
|                                                          | 10.13 |             |  | Second Amendment to Deed of Trust, Financing
	Statement, Security Agreement and Fixture Filing (With
	Assignment of Rents and Leases) dated as of May 27,
	1997.(5)                                                                                                                                   
|                                                          | 10.14 |             |  | Promissory Note of 909 North Michigan Avenue
	Corporation dated August 21, 1986 to Teacher Retirement
	System of Texas.(1)                                                                                                                                                                            
|                                                          | 10.15 |             |  | First Amendment to Promissory Note of 909 North
	Michigan Avenue Corporation dated as of June 2,
	1994.(3)                                                                                                                                                                                            
|                                                          | 10.16 |             |  | Second Amendment to Promissory Note of 909 North
	Michigan Avenue Corporation dated as of May 27,
	1997.(5)                                                                                                                                                                                           
|                                                          | 10.17 |             |  | Mortgage and Security Agreement dated
	August 21, 1986 for The Westin Hotel, Chicago.(1)                                                                                                                                                                                                              
|                                                          | 10.18 |             |  | First Amendment to Mortgage and Security
	Agreement dated as of June 2, 1994.(3)                                                                                                                                                                                                                      
|                                                          | 10.19 |             |  | Second Amendment to Mortgage and Security
	Agreement dated as of May 27, 1997.(5)                                                                                                                                                                                                                     



---



##### Table of Contents



|                          |       |             |  |                                                                                                                                         
|------------------------- | ----- | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------
|Exhibit                   |       |            
|No.                       |       | Description
|                          |       |            
|                          | 10.20 |             |  | St. Francis FF&E Escrow Agreement dated as of
	June 2, 1994.(3)                                                                         
|                          | 10.21 |             |  | Chicago FF&E Escrow Agreement dated as of
	June 2, 1994. (3)                                                                            
|                          | 10.22 |             |  | Promissory Note dated June 2, 1994 in favor
	of Westin Realty Corp. by Westin Hotels Limited
	Partnership.(3)                           
|                          | 10.23 |             |  | Loan Agreement dated as of June 2, 1994
	between Westin Hotels Limited Partnership and Westin Realty
	Corp.(3)                          
|                          | 10.24 |             |  | Second Amendment to Amended and Restated
	Management Agreement of The Westin St. Francis Limited
	Partnership. (7)                      
|                          | 10.25 |             |  | Second Amendment to Amended and Restated
	Management Agreement of The Westin Chicago Limited
	Partnership.(7)                           
|                          | 10.26 |             |  | Third Amendment to Amended and Restated
	Management Agreement of The Westin Chicago Limited
	Partnership.(9)                            
|                          | 10.27 |             |  | Purchase and Sale Agreement, dated
	January 18, 2000, between The Westin St. Francis
	Limited Partnership and BRE/ St. Francis L.L.C.(8)
|99.  Additional exhibits.
|                          | 99.1  |             |  | Letter from Westin Hotels Limited Partnership
	related to Arthur Andersen LLP.(9)                                                       



---



|    |                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Incorporated by reference to Exhibits 4.1,
	4.2, 4.3, 10.3, 10.4, 10.5 and 10.6, respectively, to the
	Partnerships 1986 Annual Report on Form 10-K.                                                                                  
|   
|(2) | Incorporated by reference to Exhibits 10.1
	and 10.2, respectively, of the Partnerships Registration
	Statement on Form S-11 (No. 33-3918).                                                                                           
|   
|(3) | Incorporated by reference to Exhibits 4.3,
	4.5, 10.1, 10.3, 10.6, 10.8, 10.10, 10.12, 10.13, 10.14, 10.15
	and 10.16, respectively, to the Partnerships Quarterly
	Report on Form 10-Q for the quarterly period ended
	June 30, 1994.
|   
|(4) | Incorporated by reference to Exhibit 10. to
	the Partnerships Current Report on Form 8-K dated
	May 27, 1997.                                                                                                                         
|   
|(5) | Incorporated by reference to Exhibits 10.8,
	10.11, 10.14 and 10.17, respectively, to the Partnerships
	Quarterly Report on Form 10-Q for the quarterly period
	ended June 30, 1997.                                                  
|   
|(6) | Incorporated by reference to Exhibits 10.5 and
	10.6, respectively, to the Partnerships 1997 Annual Report
	on Form 10-K.                                                                                                             
|   
|(7) | Incorporated by reference to Exhibits 10.1 and
	10.2, respectively, to the Partnerships Quarterly Report
	on Form 10-Q for the quarterly period ended
	September 30, 1999.                                                            
|   
|(8) | Incorporated by reference to Exhibit 10.1 to
	the Partnerships Current Report on Form 8-K dated
	January 18, 2000.                                                                                                                    
|   
|(9) | Filed herewith.