Securities and Exchange Commission
                              Washington, D.C. 20549
                                     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, 1998

                                         OR

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

                          Commission File Number: 033-20022

                    MARRIOTT RESIDENCE INN LIMITED PARTNERSHIP

               (Exact name of registrant as specified in its charter)

                  Delaware                                      52-1558094
--------------------------------------------    --------------------------------
      (State or other jurisdiction of                         (IRS Employer
       incorporation or organization)                      Identification No.)

            10400 Fernwood Road
             Bethesda, Maryland                                   20817
--------------------------------------------    --------------------------------
  (Address of principal executive offices)                      (Zip Code)

        Registrant's telephone number, including area code: 301-380-2070

               Securities registered pursuant to Section 12(b) of
                                    the Act:
                                 Not Applicable

               Securities registered pursuant to Section 12(g) of
                                    the Act:
                      Units of Limited Partnership Interest
                                 Title of Class

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. Yes X No ____ Not applicable ______.

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. [] (Not Applicable)

                       Documents Incorporated by Reference
                                      None
================================================================================
================================================================================

<PAGE>


                   MARRIOTT RESIDENCE INN LIMITED PARTNERSHIP
================================================================================

                                TABLE OF CONTENTS

                                                                      PAGE NO.

                                                       PART I

Item 1.  Business........................................................1

Item 2.  Properties......................................................4

Item 3.  Legal Proceedings...............................................5

Item 4.  Submission of Matters to a Vote of Security Holders.............6


                                                 PART II

Item 5.  Market For The Partnership's Limited Partnership Units
         and Related Security Holder Matters.............................6

Item 6.  Selected Financial Data.........................................7

Item 7.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations.......................................8

Item 8.  Financial Statements and Supplementary Data....................16

Item 9.  Changes In and Disagreements With Accountants on Accounting
         and Financial Disclosure.......................................29


                                                PART III

Item 10. Directors and Executive Officers...............................29

Item 11. Management Remuneration and Transactions.......................30

Item 12. Security Ownership of Certain Beneficial Owners and Management.30

Item 13. Certain Relationships and Related Transactions.................30


                                                      PART IV

Item 14. Exhibits, Supplemental Financial Statement Schedules
         and Reports on Form 8-K........................................33


<PAGE>


7



<PAGE>


                                                         PART I

ITEM 1.  BUSINESS

Description of the Partnership

Marriott Residence Inn Limited Partnership,  a Delaware limited partnership (the
"Partnership"),  was formed on January 18,  1988 to acquire,  own and operate 15
Marriott  Residence Inn  properties  (the "Inns") and the land on which the Inns
are  located.  The Inns are located in seven states and contain a total of 2,129
suites as of December 31, 1998. The  Partnership  commenced  operations on March
29, 1988.

The  Partnership  is engaged  solely in the business of owning and operating the
Inns and therefore is engaged in one industry segment.  The principal offices of
the Partnership are located at 10400 Fernwood Road, Bethesda, Maryland 20817.

     The Inns are operated as part of the Residence  Inn by Marriott  system and
are managed by Residence Inn by Marriott,  Inc. (the "Manager"),  a wholly-owned
subsidiary of Marriott International, Inc. ("MII"), under a long-term management
agreement (the "Management Agreement"). The Management Agreement expires in 2007
with renewals at the option of the Manager for one or more of the Inns for up to
five successive terms of 10 years thereafter. See Item 13 "Certain Relationships
and Related Transactions."

The objective of the Residence Inn by Marriott system, including the Inns, is to
provide  consistently  superior  lodging  at a fair  price  with  an  appealing,
friendly and contemporary residential character.  Residence Inn by Marriott Inns
generally have fewer guest rooms than traditional  full-service  hotels, in most
cases  containing  approximately  120 guest suites,  as compared to full-service
Marriott hotels which typically contain 350 or more guest rooms.

The Inns are  extended-stay,  limited  service  hotels which cater  primarily to
business and family  travelers who stay more than five consecutive  nights.  The
Inns  typically  have 88 to 144 studio,  one bedroom,  two bedroom and two-story
penthouse suites. They are generally located in suburban settings throughout the
United  States  and  feature  a  series  of  residential  style  buildings  with
landscaped walkways, courtyards and recreational areas. See Item 2 "Properties."
Residence Inns do not have  restaurants,  but offer a complimentary  continental
breakfast.  In addition,  most of the Inns provide a  complimentary  hospitality
hour.  Each  suite  contains  a  fully-equipped  kitchen  and many  suites  have
woodburning fireplaces.

     The Partnership's  financing needs have been funded through loan agreements
with independent financial institutions. See "Debt Financing."

Organization of the Partnership

Between March 29, 1988 and April 22, 1988 (the "Closing  Date"),  65,600 limited
partnership interests (the "Units") were sold in a public offering. The offering
price per Unit was $1,000.  RIBM One Corporation  ("RIBM One"), the sole general
partner of the Partnership prior to December 22, 1998,  contributed $662,627 for
its 1% general  partnership  interest.  On the  Closing  Date,  the  Partnership
acquired the Inns and the land on which the Inns are located from Host  Marriott
for $178.8 million.  Of the total purchase price, $123 million was paid from the
proceeds of mortgage financing and the remainder from the sale of the Units.

On April 17, 1998,  Host  Marriott,  the parent of RIBM One,  announced that its
Board of Directors  authorized the company to reorganize its business operations
to qualify as a real estate  investment trust ("REIT") to become effective as of
January 1, 1999 (the "REIT  Conversion").  On December 29, 1998,  Host  Marriott
announced  that it had  completed  substantially  all  the  steps  necessary  to
complete  the REIT  Conversion  and  expected  to  qualify  as a REIT  under the
applicable federal income tax laws beginning January 1, 1999.  Subsequent to the
REIT  Conversion,  Host Marriott is referred to as Host REIT. In connection with
the REIT Conversion, Host REIT contributed substantially all of its hotel assets
to a newly-formed partnership Host Marriott LP ("Host LP").

Prior to December 22, 1998, the sole general partner of the Partnership,  with a
1%  interest,  was  RIBM  One,  a  wholly  owned  subsidiary  of  Host  Marriott
Corporation. In connection with Host Marriott Corporation's conversion to a real
estate investment trust, the following steps occurred. Host Marriott Corporation
formed RIBM One LLC, a Delaware single member limited liability company,  having
two classes of member interests (Class A - 1% economic interest, managing; Class
B - 99% economic interest,  non-managing).  RIBM One merged into RIBM One LLC on
December  22, 1998 and RIBM One ceased to exist.  On  December  28,  1998,  Host
Marriott  Corporation  contributed  its entire  interest in RIBM One LLC to Host
Marriott,  L.P. ("Host LP"), which is owned 78% by Host Marriott Corporation and
22% by outside partners. Finally on December 30, 1998, Host Marriott contributed
its 99% Class B interest in RIBM One LLC to  Rockledge  Hotel  Properties,  Inc.
("Rockledge"),  a Delaware  corporation  which is owned 95% by Host LP (economic
non-voting  interest)  and 5% by  Host  Marriott  Statutory/Charitable  Employee
Trust,  a Delaware  statutory  business  trust (100% of voting  interest).  As a
result,  the  sole  general  partner  of the  Partnership  is RIBM  One LLC (the
"General  Partner"),  with a Class A 1% managing economic interest owned by Host
LP and a Class B 99% non-managing economic interest owned by Rockledge.

Debt Financing

     The  Partnership's  debt  consists of a $100  million  senior  mortgage the
"Senior Mortgage") and a $30 million second mortgage (the "Second Mortgage").

The Senior  Mortgage of $100 million bears  interest at a fixed interest rate of
8.6%,  requires  monthly  amortization  of principal  on a 20 year  schedule and
matures on September 30, 2002. The Second Mortgage of $30 million bears interest
at a fixed interest rate of 15.25%,  requires monthly  amortization of principal
on a 20 year schedule and matures on September 30, 2002.

In addition to the required monthly principal  amortization,  during each of the
four years from 1996 through 1999, the Partnership is required to pay, on a cash
available basis, an additional $2 million annually toward principal amortization
on the Senior  Mortgage.  Additionally,  during the entire seven year term,  the
Partnership  has the  option to pay up to an  additional  $1  million  principal
payment  annually on the Second  Mortgage and up to another $1 million  optional
principal payment which would be applied in a 2:1 ratio to the Senior and Second
Mortgage, respectively.

The  terms of the  Senior  and  Second  Mortgages  include  requirements  of the
Partnership to maintain certain defined ratios of operating cash available after
debt  service  to total  debt  service.  In the event the  Partnership  fails to
maintain the required debt service ratios, all Inn operating cash flow, plus all
cash or other amounts to which the Partnership is entitled from any source, must
be paid directly to a cash  collateral  account until the ratios are restored to
their required  levels.  The  Partnership has met all required ratios during the
loan term.

Both the Senior and Second  Mortgages are secured by the Inns, the land on which
they are located,  a security interest in all personal property  associated with
the Inns  including  furniture  and  equipment,  inventory,  contracts and other
general  intangibles  and an  assignment of the  Partnership's  rights under the
Management Agreement, as defined below.

The weighted average interest rate on the Partnership's debt for the years ended
December 31, 1998 and 1997 was 10.13%.

Material Contracts

Management Agreement

The primary  provisions  of the  Management  Agreement are discussed in Item 13,
"Certain Relationships and Related Transactions."

Competition

The United States lodging industry generally is comprised of two broad segments:
full service hotels and limited  service hotels.  Full service hotels  generally
offer  restaurant and lounge  facilities and meeting  spaces,  as well as a wide
range of services,  typically  including bell service and room service.  Limited
service hotels  generally offer  accommodations  with limited or no services and
amenities. As extended-stay, the Inns compete effectively with both full service
and limited service hotels in their respective markets by providing  streamlined
services and  amenities  exceeding  those  provided by typical  limited  service
hotels at prices  that are  significantly  lower  than those  available  at full
service hotels.

The lodging industry in general, and the extended-stay segment in particular, is
highly  competitive,  but the degree of  competition  varies  from  location  to
location and time to time.  The Inns compete  with several  other major  lodging
brands.  Competition in the industry is based primarily on the level of service,
quality  of  accommodations,  convenience  of  locations  and  room  rates.  The
following  are key  participants  in the  extended-stay  segment of the  lodging
industry:  Residence Inn, Homewood Suites, Hawthorne Suites, Summerfield Suites,
Extended Stay America and AmeriSuites.

Conflicts of Interest

Because  Host LP, the  managing  member of the  General  Partner,  MII and their
affiliates own and/or operate hotels other than the  Partnership's  Inns and MII
and its  affiliates  license  others to operate  hotels under the various  brand
names owned by MII and its  affiliates,  potential  conflicts of interest exist.
With respect to these potential  conflicts of interest,  Host Marriott,  MII and
their  affiliates  retain a free right to compete with the  Partnership's  Inns,
including the right to develop, own, and operate competing hotels now and in the
future in markets in which the Inns are located,  in addition to those  existing
hotels which may currently compete directly or indirectly with the Inns.

Under Delaware law, the General  Partner has a fiduciary duty to the Partnership
and is  required to exercise  good faith and  loyalty in all its  dealings  with
respect to Partnership affairs.

Policies with Respect to Conflicts of Interest

It is the policy of the General Partner that the Partnership's relationship with
the General Partner,  any affiliate of the General Partner,  or persons employed
by the General  Partner or its affiliates be conducted on terms that are fair to
the  Partnership   and  that  are   commercially   reasonable.   Agreements  and
relationships   involving  the  General   Partner  or  its  affiliates  and  the
Partnership are on terms  consistent with the terms on which the General Partner
or its affiliates have dealt with unrelated parties.

The  Amended and  Restated  Agreement  of Limited  Partnership  as amended  (the
"Partnership   Agreement"),   provides   that  any   agreements,   contracts  or
arrangements  between  the  Partnership  and the  General  Partner or any of its
affiliates, except for rendering legal, tax, accounting, financial, engineering,
and procurement  services to the Partnership by employees of the General Partner
or its affiliates,  will be on commercially reasonable terms and will be subject
to the following additional conditions:

(i)    the General Partner or any such affiliate must have the ability to render
       such services or to sell or lease such goods;

(ii)   such  agreements,   contracts  or  arrangements   must  be  fair  to  the
       Partnership  and  reflect  commercially  reasonable  terms  and  must  be
       embodied in a written  contract  which  precisely  describes  the subject
       matter thereof and all compensation to be paid therefor;

(iii)  no rebates or give-ups may be received by the General Partner or any such
       affiliate,  nor may the General Partner or any such affiliate participate
       in any reciprocal  business  arrangements  which would have the effect of
       circumventing any of the provisions of the Partnership Agreement; and

(iv)   no such  agreement,  contract  or  arrangement  as to which  the  limited
       partners had previously given approval may be amended in such a manner as
       to increase the fees or other compensation  payable by the Partnership to
       the  General  Partner  or  any  of  its  affiliates  or to  decrease  the
       responsibilities  or duties of the General  Partner or any such affiliate
       in the absence of the consent of the holders of a majority in interest of
       the limited partners.

Employees

Neither  the General  Partner nor the  Partnership  has any  employees.  Host LP
provides  the services of certain  employees  (including  the General  Partner's
executive  officers) of Host LP to the Partnership and the General Partner.  The
Partnership  and the  General  Partner  anticipate  that  each of the  executive
officers of the General  Partner will generally  devote a sufficient  portion of
his or her  time  to the  business  of the  Partnership.  However,  each of such
executive officers also will devote a significant  portion of his or her time to
the business of Host LP and its other  affiliates.  No officer or manager of the
General Partner or employee of Host LP devotes a significant  percentage of time
to Partnership matters. To the extent that any officer, manager or employee does
devote time to the  Partnership,  the General Partner or Host LP, as applicable,
is entitled to reimbursement  for the cost of providing such services.  See Item
11 "Management Remuneration and Transactions" for information regarding payments
made to Host LP or its  subsidiaries  for the cost of  providing  administrative
services to the Partnership.

Potential Transaction

The General  Partner  has  retained  Merrill  Lynch to explore  alternatives  to
provide  liquidity  for the  Partnership  and  maximize the value of the limited
partners' investment. However, there can be no assurance that a transaction will
result from these activities.

ITEM 2.  PROPERTIES

Introduction

The Inns consist of 15 Residence  Inn by Marriott  Inns as of December 31, 1998.
The  Inns,  which  range in age  between  11 and 14  years,  are  geographically
diversified  among seven states:  four in Ohio,  three in  California,  three in
Georgia, two in Missouri, and one in each of Illinois, Colorado and Michigan.

The  extended-stay   segment  of  the  lodging  industry  experienced  increased
competition  throughout  1998  as new  extended-stay  purpose-built  competitors
entered the market.  This trend is expected to continue in 1999.  In response to
this  increased  competition,   Residence  Inn  by  Marriott's  strategy  is  to
differentiate the brand on the basis of superior service offerings and delivery.
On a combined  basis,  competitive  forces  affecting  the Inns are not,  in the
opinion of the General Partner, more adverse than the overall competitive forces
affecting the lodging industry generally. See Item 1, "Business--Competition."


<PAGE>


Name and Location of Partnership Inns

                  Inn                 Number of Suites         Date Opened
-------------------------------   ------------------------- ------------------
California
     Costa Mesa                             144                   1986
     La Jolla                               287                   1986
     Long Beach                             216                   1987
Colorado
     Boulder                                128                   1986
Georgia
     Atlanta Buckhead                       136                   1987
     Atlanta Cumberland                     130                   1987
     Atlanta Dunwoody                       144                   1984
Illinois
     Chicago Lombard                        144                   1987
Michigan
     Southfield                             144                   1986
Missouri
     St. Louis Chesterfield                 104                   1986
     St. Louis Galleria                     152                   1986
Ohio
     Cincinnati North                       144                   1985
     Columbus North                           96                  1985
     Dayton North                             64                  1987
     Dayton South                             96                  1985
                                  =========================
                 TOTAL                    2,129
                                  =========================

ITEM 3.  LEGAL PROCEEDINGS

The   Partnership   and  the  Inns  are  involved  in  routine   litigation  and
administrative  proceedings arising in the ordinary course of business,  some of
which are expected to be covered by liability  insurance and which  collectively
are not expected to have a material  adverse  effect on the business,  financial
condition or results of operations of the Partnership.

On February 11, 1998, four individual limited partners in partnerships sponsored
by Host Marriott  Corporation  ("Host  Marriott")  filed a class action lawsuit,
styled Ruben,  et al. v. Host  Marriott  Corporation,  et al.,  Civil Action No.
16186,  in Delaware  State  Chancery Court against Host Marriott and the general
partners of Courtyard by Marriott Limited Partnership,  Courtyard by Marriott II
Limited  Partnership,  Marriott  Residence  Inn  Limited  Partnership,  Marriott
Residence Inn II Limited  Partnership,  and  Fairfield  Inn by Marriott  Limited
Partnership (collectively, the "Five Partnerships"). The plaintiffs alleged that
the proposed  merger of the Five  Partnerships  (the  "Merger") into an umbrella
partnership real estate  investment trust proposed by CRF Lodging Company,  L.P.
in a preliminary  registration  statement filed with the Securities and Exchange
Commission,  dated  December 22,  1997,  constituted  a breach of the  fiduciary
duties owed to the limited  partners of the Five  Partnerships  by Host Marriott
and the general partners of the Five Partnerships.  In addition,  the plaintiffs
alleged  that  the  Merger  breached  various  agreements  relating  to the Five
Partnerships.   The  plaintiffs  sought,  among  other  things,  the  following:
certification of a class;  injunctive relief to block consummation of the Merger
or, in the alternative,  rescission of the Merger; and damages.  The defendants,
in light of market conditions,  decided to abandon their efforts to complete the
Merger. As a result of this decision,  the plaintiffs  voluntarily dismissed the
lawsuit.



<PAGE>


On March 16, 1998,  limited partners in several  partnerships  sponsored by Host
Marriott  filed a lawsuit,  styled  Robert M. Haas,  Sr. and Irwin Randolf Joint
Tenants,  et al., v. Marriott  International Inc., et. al., Case No. 98-CI-04092
(the "Haas Case"),  in the 57th Judicial  District Court of Bexar County,  Texas
against Marriott International, Inc. ("Marriott International"),  Host Marriott,
various  of their  subsidiaries,  J.W.  Marriott,  Jr.,  Stephen  Rushmore,  and
Hospitality  Valuation  Services,  Inc.  (collectively,  the "Defendants").  The
lawsuit  relates to the following  limited  partnerships:  Courtyard by Marriott
Limited  Partnership,  Courtyard  by Marriott II Limited  Partnership,  Marriott
Residence   Inn  Limited   Partnership,   Marriott   Residence  Inn  II  Limited
Partnership,  Fairfield  Inn by Marriott  Limited  Partnership,  Desert  Springs
Marriott Limited  Partnership,  and Atlanta Marriott Marquis Limited Partnership
(collectively,  the  "Seven  Partnerships").  The  plaintiffs  allege  that  the
Defendants  conspired  to sell  hotels to the Seven  Partnerships  for  inflated
prices and that they charged the Seven Partnerships excessive management fees to
operate the Seven  Partnerships'  hotels. The plaintiffs  further allege,  among
other things,  that the Defendants  committed fraud,  breached fiduciary duties,
and violated the  provisions of various  contracts.  The  plaintiffs are seeking
unspecified   damages.   The   Defendants,   which  do  not  include  the  Seven
Partnerships,  believe that there is no truth to the plaintiffs' allegations and
that the lawsuit is totally devoid of merit. The Defendants intend to vigorously
defend against the claims asserted in the lawsuit.  They have filed an answer to
the  plaintiffs'  petition  and  asserted a number of  defenses.  A related case
concerning  Courtyard  by  Marriott  II  Limited  Partnership  was  filed by the
plaintiffs' lawyers in the same court,  involves similar allegations against the
Defendants, and has been certified as a class action. Trial in this related case
is presently scheduled for May 1999. Due to the prosecution of the related case,
there has been no  meaningful  activity  in the Haas  case.  Although  the Seven
Partnerships  have not been named as defendants in the lawsuit,  the partnership
agreements  relating to the Seven  Partnerships  include an indemnity  provision
which requires the Seven Partnerships, under certain circumstances, to indemnify
the general partners against losses, expenses and fees.


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

None


                                                        PART II


ITEM 5.  MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP UNITS AND  
                   RELATED SECURITY HOLDER MATTERS

There is currently no established  public trading market for the Units and it is
not anticipated that a public market for the Units will develop.  Assignments of
Units are  limited to the first date of each  fiscal  quarter and are subject to
approval  by the General  Partner.  As of December  31,  1998,  there were 3,944
holders of record of the 65,600 Units.

The  Partnership  generally  distributes  cash  available  for  distribution  as
follows:  (i) first,  99% to the limited partners and 1% to the General Partner,
until the partners have received,  with respect to such year, an amount equal to
10% of their  Invested  Capital,  defined  as the  excess  of  original  capital
contributions  over  cumulative  distributions  of  net  refinancing  and  sales
proceeds  ("Capital  Receipts")  (ii)  second,   remaining  cash  available  for
distribution will be distributed as follows,  depending on the amount of Capital
Receipts previously distributed:

(a)    99% to  the  limited  partners  and 1% to  the  General  Partner,  if the
       partners  have received  aggregate  cumulative  distributions  of Capital
       Receipts of less than 50% of their original capital contributions; or
(b)    85% to the  limited  partners  and  15% to the  General  Partner,  if the
       partners  have received  aggregate  cumulative  distributions  of Capital
       Receipts  equal  to or  greater  than  50% but  less  than  100% of their
       original capital contributions; or

(c)    70% to the  limited  partners  and  30% to the  General  Partner,  if the
       partners  have received  aggregate  cumulative  distributions  of Capital
       Receipts equal to 100% or more of their original capital contributions.

Cash available for distribution  means,  with respect to any fiscal period,  the
cash  revenues of the  Partnership  from all sources  during the fiscal  period,
other than Capital  Receipts less (i) all cash  expenditures  of the Partnership
during  such  fiscal  period,  including,   without  limitation,  debt  service,
repayment of advances made by the General Partner,  fees for management services
and administrative  expenses (excluding expenditures incurred by the Partnership
in connection with a transaction  resulting in Capital Receipts),  and (ii) such
reserves  as may  be  determined  by  the  General  Partner  in  its  reasonable
discretion  to be  necessary  to provide for the  foreseeable  cash needs of the
Partnership or for the maintenance, repair, or restoration of the Inns.

As of December 31, 1998, the  Partnership has distributed a total of $43,669,801
to the partners  ($659 per limited  partner unit) since  inception.  In February
1998,  $3,313,131  ($50 per  limited  partner  unit) was  distributed  from 1997
operations.  In February 1997, the Partnership  distributed $1,656,566 from 1996
operations ($25 per limited partner unit). In 1996,  $4,969,697 ($75 per limited
partner  unit)  was  distributed,  of this  amount,  $1,656,566  was  from  1996
operations ($25 per limited partner unit) and the remaining  $3,313,131 was from
1995  operations ($50 per limited  partner unit).  No  distributions  of Capital
Receipts have been made since inception.


ITEM 6.  SELECTED FINANCIAL DATA

The following selected financial data present historical  operating  information
for the  Partnership for each of the five years in the period ended December 31,
1998 presented in accordance with generally accepted accounting principles.


<TABLE>
                                                      1998          1997         1996         1995         1994
                                                   -----------  -----------  -----------  -----------   -----------
                                              

<S>                                                <C>          <C>          <C>          <C>           <C>    
Income Statement Data:(in thousands, except per unit amounts)
Revenues...........................................$    66,135  $    62,087  $    60,824  $    56,725   $    53,440
Operating profit...................................     16,775       17,364       16,151       14,400        11,662
Net income (loss)..................................      4,868        4,914        3,087        1,517        (1,588)
Net income (loss) per limited partner unit
   (65,600 Units)..................................         73           74           47           23           (24)

Balance Sheet Data:

Total assets.......................................$   148,353  $   151,971  $   151,658  $   157,061   $   155,640
Total liabilities..................................    138,219      143,392      146,337      149,858       149,092
Cash distributions per limited partner unit
   (65,600 Units)..................................         50           25           75           13            50



</TABLE>

<PAGE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         .........AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

Certain matters discussed in this form 10-K include  forward-looking  statements
and as such may involve known and unknown risks, uncertainties and other factors
which may cause the actual transactions, results, performance or achievements to
be materially  different from any future transactions,  results,  performance or
achievements  expressed  or  implied  by such  forward-looking  statements.  The
cautionary  statements  set forth in reports filed under the  Securities  Act of
1934 contain important factors with respect to such forward-looking  statements,
including:  (i) national and local economic and business  conditions  what will,
among other things, affect demand for hotels and other properties,  the level of
rates and occupancy that can be achieved by such properties and the availability
and terms of financing;  (ii) the ability to compete effectively;  (iii) changes
in  travel  patterns,  taxes  and  government  regulations;   (iv)  governmental
approvals,  actions  and  initiatives;  and (v) the  effects of tax  legislative
action.  Although the Partnership  believes the  expectations  reflected in such
forward-looking statements are based upon reasonable assumptions, it can give no
assurance that its expectations will be attained or that any deviations will not
be material.  The Partnership  undertakes no obligation to publicly  release the
result of any revisions to these forward-looking  statements that may be made to
reflect any future events or circumstances.

GENERAL

The following  discussion and analysis  addresses  results of operations for the
fiscal years ended December 31, 1998, 1997 and 1996. During the period from 1996
through 1998, Partnership sales grew from $60.8 million to $66.1 million. Growth
in suite sales,  and thus Inn sales, is primarily a function of combined average
occupancy and combined  average  daily suite rates.  During the period from 1996
through  1998,   the  Inns'   combined   average  daily  suite  rate   increased
approximately $8 from $88 to $96, while the combined average occupancy increased
just over one percentage point from 83.5% to 84.9%.

The  Partnership's  operating costs and expenses are, to a great extent,  fixed.
Therefore, the Partnership derives substantial operating leverage from increases
in revenue.  The variable expenses include (i) base management and Residence Inn
system fees under the Management Agreement,  which are 2% of gross sales, and 4%
of suite  sales,  respectively;  and (ii)  incentive  management  fees under the
Management Agreement equal to 15% of Operating Profit (20% when Operating Profit
equals or exceeds $23.5  million),  as defined,  payable out of 50% of available
cash flow as defined.

RESULTS OF OPERATIONS

Revenues  represent  the gross sales  generated by the  Partnership's  Inns.  On
November 20,  1997,  the Emerging  Issues Task Force  ("EITF") of the  Financial
Accounting  Standards  Board reached a consensus on EITF 97-2,  "Application  of
FASB  Statement No. 94 and APB Opinion No. 16 to Physician  Practice  Management
Entities and Certain Other Entities with Contractual  Management  Arrangements."
EITF 97-2 addresses the  circumstances in which a management  entity may include
the revenues and expenses of a managed entity in its financial statements.

The Partnership  considered the impact of EITF 97-2 on its financial  statements
and determined that EITF 97-2 requires the Partnership to include property-level
sales and  operating  expenses of its Inns in its  statements  of  revenues  and
expenses for the period during which the Partnership operated the Inns through a
management  agreement.  The  Partnership  has  given  retroactive  effect to the
adoption of EITF 97-2 in the  accompanying  statement of revenues and  expenses.
Application of EITF 97-2 to the financial  statements for the fiscal years ended
December 31, 1998, 1997 and 1996 increased both revenues and operating  expenses
by $31.8  million,  $29.0 million and $28.7  million,  respectively,  and had no
impact on operating profit or net income.

The following table shows selected combined  operating  statistics for the Inns.
Revenue per available room ("REVPAR")  represents the combination of the average
daily room rate charged and the average  occupancy  achieved,  and is a commonly
used indicator of hotel performance.

                             Year Ended December 31,
                                            1998           1997            1996

Combined average occupancy............      84.9%          83.4%           83.5%
Combined average daily suite rate.....$     96.15    $     91.44     $     88.02
REVPAR................................$     81.63    $     76.26     $     73.50

1998 Compared to 1997:

Revenues. Total 1998 Inn sales of $66.1 million represented a $4 million, or 6%,
increase over 1997  results.  This  increase was achieved  primarily  through an
increase in Inn revenue per available  room  ("REVPAR"),  which  represents  the
combination  of the combined  average  daily suite rate charged and the combined
average  occupancy  achieved,   and  is  a  commonly  used  indicator  of  hotel
performance.  REVPAR does not include other ancillary  revenues generated by the
Inns.  REVPAR  increased  $5 in 1998 as a result of a $5 increase in the average
suite rate from $91 in 1997 to $96 in 1998. Combined average occupancy increased
by  approximately  two percentage  points to 84.9%.  As a result,  1998 combined
average suite sales increased by $4 million,  or 7%, to $63.1 million from $59.1
million in 1997.

Operating Costs and Expenses.  Operating  costs and expenses  increased to $49.4
million  in 1998 from  $44.7  million in 1997  primarily  due to a $2.7  million
increase in  property-level  costs and expenses  and a $1.3 million  increase in
incentive  management fee expense.  Property-level  cost and expenses  increased
primarily  due to increase in salaries and wages at the Inns  necessary in order
to attract and retain quality  personnel.  Repairs and maintenance  expense also
increased as a result of efforts to standardize the landscaping and lawn care at
the Inns during 1998.  Finally,  property-level  cost and expenses were lower in
1997,compared  to 1998 due to the $800,000  adjustment to decrease the sales and
use tax liability in 1997. Incentive management fee is equal to 15% of Operating
Profit  as  defined  in the  Management  Agreement  (20% in any  year  in  which
Operating  Profit is equal to or  greater  than  $23.5  million).  In 1998,  the
incentive  management  fee was  calculated  as 20% of Operating  Profit equal to
$23.6 million.  In 1997,  the incentive  management fee was calculated as 15% of
Operating  Profit  equal  to  $22.6  million.  Thus the  increase  in  incentive
management  fee  was due to  improved  Operating  Profit  and  Operating  Profit
exceeding the $23.5 million  threshold in 1998. As a percentage of Inn revenues,
operating  costs and  expenses  represented  75% of revenues for 1998 and 72% in
1997.

Operating Profit. As a result of the changes in revenues and operating costs and
expenses discussed above,  operating profit decreased $600,000 to $16.8 million,
or 25% of total  revenues,  in 1998 from $17.4  million,  or 28% of  revenues in
1997.

Interest  Expense.  Interest  expense  decreased  4.6% to  $12.2 million in 1998
from  $12.8  million  in 1997 due to principal amortization of the Senior and 
Second Mortgages.

Net Income.  Net income decreased  $46,000 in 1998 to 7.4% of revenues from $4.9
million,  or 7.9% of total  revenues,  in 1997 due  primarily  to the changes in
revenues and expenses discussed above.


<PAGE>



1997 Compared to 1996:

Revenues.  Total 1997 Inn sales of $62.1 million  represented a $1.3 million, or
2%, increase over 1996 results.  This increase was achieved  primarily through a
$3  increase  in REVPAR  that was  primarily  the result of an  increase  in the
combined  average  daily  suite  rate from $88 in 1996 to $91 in 1997.  Combined
average  occupancy  remained  stable at  approximately  83%.  As a result,  1997
combined average suite sales increased by $1.1 million,  or 2%, to $59.1 million
from $58.0 million in 1996.

Operating Costs and Expenses.  Operating  costs and expenses  remained stable at
$44.7 million in 1997 compared to 1996. While suite expenses increased $847,000,
this was offset by a decrease in selling,  administrative  and other expenses of
$670,000.  As a  percentage  of  Inn  revenues,  operating  costs  and  expenses
represented 72% of revenues for 1997 and 73% in 1996.

Operating Profit. As a result of the changes in revenues and operating costs and
expenses  discussed  above,  operating  profit  increased  $1.2 million to $17.4
million,  or 28% of  total  revenues,  in 1997  from  $16.2  million,  or 27% of
revenues in 1996.

Interest  Expense.  Interest expense  decreased 5% to $12.8 million in 1997 from
$13.4  million in 1996 due to  principal  amortization  of the Senior and Second
Mortgages.

Net  Income.  Net income  increased  $1.8  million to $4.9  million,  or 7.9% of
revenues,  in 1997 from $3.1  million,  or 5.1% of total  revenues,  in 1996 due
primarily to the changes in revenues and expenses discussed above.

CAPITAL RESOURCES AND LIQUIDITY

The  Partnership's  financing needs have  historically  been funded through loan
agreements with independent financial institutions. The General Partner believes
that cash from Inn operations and  Partnership  reserves will be adequate in the
short term and is working with the Manager to address the long term  operational
and capital needs of the Partnership.

Principal Sources and Uses of Cash

The  Partnership's  principal  source  of  cash  is cash  from  operations.  Its
principal  uses of cash are to make debt  service  payments,  fund the  property
improvement fund, and to make distributions to the limited partners.

Cash provided by operating activities was $14.8 million, $12.7 million and $10.8
million for the years ended December 31, 1998, 1997 and 1996, respectively.  The
$2.1 million  increase in cash from  operations  in 1998 over 1997 was primarily
due to the $1.0 million increase in incentive management fee earned and deferred
compared to the prior year as well as an $800,000  decrease to the sales and use
tax  liability  in 1997 and a $421,000  increase  in rent  collections  from the
Manager. Cash from operations increased $1.9 million in 1997 over 1996 primarily
due to $1.1 million in increased rent  collections from the Manager as well as a
$638,000  decrease  in  mortgage  interest  expense  due to the  payment  of the
optional principal amortization on the debt. The Partnership paid $11.8 million,
$12.4  million  and  $13.0   million  in  interest  in  1998,   1997  and  1996,
respectively.

Cash used in  investing  activities  was $4.6  million,  $3.9  million  and $3.2
million,  respectively,  in 1998, 1997 and 1996. The Partnership's  cash used in
investing  activities  primarily  consists  of  contributions  to  the  property
improvement  fund  and  capital  expenditures  for  improvements  to  the  Inns.
Contributions to the property  improvement fund were $4.0 million,  $3.1 million
and $3.0 million for the years ended  December 31,  1998,  1997 and 1996,  while
capital  expenditures  were  $5.5  million,   $5.5  million  and  $3.6  million,
respectively,  during  these same time  periods.  Contributions  to the property
improvement  fund increased  $864,000 in 1998 due to the $4 million  increase in
revenues and the increase in the required property improvement fund contribution
to 6% of revenues in 1998 from 5% in 1997.

Cash used in  financing  activities  was $11.8  million,  $6.6 million and $11.5
million,  respectively,  in 1998, 1997 and 1996. The Partnership's  cash used in
financing activities primarily consists of capital distributions to partners and
the repayment of mortgage  debt.  During 1998,  1997 and 1996,  the  Partnership
repaid $8.5 million, $4.9 million and $6.3 million,  respectively,  of principal
on the  Senior  and  Second  Mortgages.  Optional  principal  repayments  on the
mortgage debt were $5 million, $2 million and $4 million in 1998, 1997 and 1996,
respectively.  Capital  distributions  to the partners were $3.3  million,  $1.7
million and $5.0 million, respectively, in 1998, 1997 and 1996. The $3.3 million
distributed  in 1998 was from 1997 cash flow from  operations.  The $1.7 million
distributed in 1997 was from 1996 cash flow from operations. Of the $5.0 million
distributed  in 1996,  $1.7 million was from 1996 cash flow from  operations and
$3.3 million was from 1995 cash flow from operations.

The General  Partner  believes  that cash from Inn  operations  and  Partnership
reserves  will be  adequate in the short and long term for the  operational  and
capital needs of the Partnership.

Debt Financing

The Partnership's mortgage debt is comprised of a $100 million note (the "Senior
Mortgage")  which bears  interest at a fixed rate of 8.6% and a $30 million note
(the "Second  Mortgage")  which bears  interest at a fixed rate of 15.25% for an
initial  blended  interest rate of 10.13%.  Both the Senior  Mortgage and Second
Mortgage  require monthly  amortization of principal and mature on September 30,
2002. In addition to the required monthly amortization,  during each of the four
years from 1996  through  1999,  the  Partnership  is required to pay, on a cash
available basis, an additional $2 million annually toward principal amortization
on the Senior  Mortgage.  Additionally,  during the entire seven year term,  the
Partnership  has the  option to pay up to an  additional  $1  million  principal
payment  annually on the Second  Mortgage and up to another $1 million  optional
principal payment which would be applied in a 2:1 ratio to the Senior and Second
Mortgage, respectively.

Both the Senior  Mortgage and the Second  Mortgage are secured by the Inns,  the
land on which they are located,  a security  interest in all  personal  property
associated with the Inns including furniture and equipment, inventory, contracts
and other general  intangibles  and an assignment  of the  Partnership's  rights
under the management agreement.

Operating  profit  from the Inns in excess of debt  service  on the  Senior  and
Second  Mortgages is distributed in the following order of priority:  (i) to pay
the Partnership its annual 10% priority  return,  (ii) to the Manager in payment
of deferred base management fees, (iii) 50% of the remaining operating profit is
paid to the Manager  for  incentive  management  fees and 50% is retained by the
Partnership  until the amount retained by each party,  separately,  equals 5% of
the Partnership's  invested capital,  and (iv) once the Partnership has retained
the additional 5% return,  75% of any remaining  operating profit is paid to the
Manager for incentive management fees and 25% is retained by the Partnership.

Property Improvement Fund

The Management Agreement requires annual contributions to a property improvement
fund to ensure that the physical  condition and product  quality of the Inns are
maintained. Contributions to this fund are based on a percentage of annual total
Inn sales.  Based on current capital budgets,  the  Partnership's  FF&E reserves
were insufficient  beginning in 1998. The shortfall is primarily due to the need
to complete total suite refurbishments at the majority of the Partnership's Inns
in the next several years.  As a result of this expected future  shortfall,  the
General  Partner  established a reserve in 1996 for the future  capital needs of
the  Partnership's  Inns. 1996 cash  distributions  to partners were net of this
reserve. To minimize the shortfall,  the Partnership  increased the contribution
rate from 5% to 6% in 1998 and then will  reduce  the rate to 5.5% for 1999.  In
the first  quarter of 1999,  the  Partnership  provided  a loan to the  property
improvement  fund of $1,450,000  for 1998 that will earn interest at the rate of
Prime plus one percent and will be repaid over a five-year period from operating
cash  flow.  Under  the  terms  of the  loan,  the  debt  service  payments  are
subordinate  to the mortgage debt and are included as a deduction in determining
the incentive management fee paid to the Manager. An additional  $1,200,000 loan
will be provided for 1999 that will earn  interest at the rate of Prime plus one
percent and will be repaid from the property  improvement  fund.  The balance in
the property  improvement  fund totaled  $200,000 as of December 31, 1998. Total
capital expenditures for 1998, 1997 and 1996 were $5.5 million, $5.5 million and
$3.6 million, respectively.

Deferred Management Fees

The Manager  earns a base  management  fee equal to 2% of the Inns' gross sales.
Through 1990,  payment of the base  management fee was subordinate to qualifying
debt service  payments and retention by the Partnership of annual cash flow from
operations  of  $6,626,263.  Deferred  base  management  fees are  payable  from
operating  cash flow,  but only after the  payment of (i) debt  service,  (ii) a
priority return to the Partnership and (iii) certain other priorities as defined
in the Management Agreement.  Beginning in 1991 and thereafter,  base management
fees are paid currently.  Pursuant to the terms of the Management Agreement, the
Partnership  paid  deferred  base  management  fees of  $872,000,  $627,000  and
$515,000 for fiscal years ended December 31, 1998, 1997 and 1996,  respectively.
Deferred base management fees do not accrue  interest.  As of December 31, 1998,
there were no deferred base management fees. As of December 31, 1997, cumulative
deferred base management fees totaled $872,000.

In addition, the Manager is entitled to an incentive management fee equal to 15%
of Operating Profit, as defined in the Management  Agreement (20% in any year in
which Operating Profit is equal to or greater than $23.5 million). The incentive
management  fee is  payable  out of 50% of cash flow from  operations  remaining
after  payments of qualifying  debt  service,  retention by the  Partnership  of
annual cash flow from  operations of $6,626,263 and the deferred base management
fee. Of this amount,  the  Partnership  retains an additional  50% of the excess
cash  flow,  up  to  5% of  its  invested  capital.  Thereafter,  the  incentive
management fee is payable out of 75% of the remaining cash flow from operations.
Through  1989,  the  Manager  was not  entitled  to accrue any unpaid  incentive
management fees.  Incentive management fees earned after 1989 are payable in the
future from operating cash flow, as defined.  Unpaid  incentive  management fees
are paid  from cash flow  available  for  incentive  management  fees  following
payment  of the then  current  incentive  management  fees.  For the year  ended
December 31, 1998,  $4.7 million in  incentive  management  fees was earned,  of
which  $400,000  was paid.  In each of the years  ended  December  31,  1997 and
December 31, 1996,  $3.4  million in incentive  management  fees were earned and
deferred.  As of December 31, 1998 and 1997, deferred incentive  management fees
were $27.0 million and $22.7 million, respectively.

Competition

The  extended-stay  lodging  segment  continues  to be  highly  competitive.  An
increase in supply growth began in 1996 with the introduction of a number of new
national  brands.  In 1999,  it is expected  that  Residence  Inn will  continue
outperforming  both national and local  competitors.  The brand is continuing to
carefully  monitor the  introduction of new  extended-stay  brands and growth of
existing brands including Homewood Suites, Hawthorne Suites, Summerfield Suites,
Staybridge by Holiday Inn and Hilton Residential Suites.

Inflation

The rate of  inflation  has been  relatively  low in the past  four  years.  The
Manager is generally able to pass through  increased costs to customers  through
higher room rates and prices.  In 1998,  the increase in average  suite rates of
Residence Inns exceeded inflationary costs.

Seasonality

Demand,  and thus room  occupancy,  is affected by normally  recurring  seasonal
patterns. For most of the Inns, demand is higher in the spring and summer months
(March through October) than during the remainder of the year.

Year 2000 Issues

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

Host  Marriott has adopted the  compliance  program  because it  recognizes  the
importance of minimizing the number and seriousness of any disruptions  that may
occur as a result of the Year 2000 issue.  Host  Marriott's  compliance  program
includes an assessment of Host Marriott's hardware and software computer systems
and embedded systems,  as well as an assessment of the Year 2000 issues relating
to third parties with which Host Marriott has a material  relationship  or whose
systems  are  material  to the  operations  of the  Partnership's  Hotels.  Host
Marriott's  efforts to ensure that its computer  systems are Year 2000 compliant
have been segregated into two separate phases:  in-house systems and third-party
systems.

In-House  Systems.   Host  Marriott  has  invested  in  the  implementation  and
maintenance of accounting and reporting  systems and equipment that are intended
to  enable  the  Partnership  to  provide  adequately  for its  information  and
reporting  needs and which are also Year 2000  compliant.  Substantially  all of
Host  Marriott's  in-house  systems  have  already  been  certified as Year 2000
compliant  through  testing  and other  mechanisms,  and Host  Marriott  has not
delayed any systems projects due to the Year 2000 issue. Host Marriott is in the
process of engaging a third party to review its Year 2000  in-house  compliance.
Host Marriott  believes that future costs  associated  with Year 2000 issues for
its  in-house  systems  will be  insignificant  and,  therefore,  not impact the
Partnership's  business,  financial  condition and results of  operations.  Host
Marriott has not developed, and does not plan to develop, a separate contingency
plan for its in-house systems due to their current Year 2000 compliance.

Third-Party  Systems.  The  Partnership  relies upon  operational and accounting
systems provided by third parties, primarily the Manager of its Inns, to provide
the appropriate  property-specific  operating  systems  (including  reservation,
phone,  elevator,  security,  HVAC and other  systems)  and to  provide  it with
financial  information.  Based on  discussions  with the third  parties that are
critical to the Partnership's business,  including the Manager of its Inns, Host
Marriott  believes  that these  parties  are in the  process of  studying  their
systems and the systems of their respective  vendors and service  providers and,
in many cases,  have begun to  implement  changes,  to ensure that they are Year
2000  compliant.  However,  Host  Marriott  has not received any oral or written
assurances  that these third parties will be Year 2000 compliant on time. To the
extent these changes  impact  property-level  systems,  the  Partnership  may be
required to fund capital  expenditures for upgraded equipment and software.  The
Partnership  does not expect these  charges to be material,  but is committed to
making these investments as required. To the extent that these changes relate to
the  Manager's   centralized   systems  (including   reservations,   accounting,
purchasing,   inventory,   personnel  and  other  systems),   the  Partnership's
Management  Agreement  generally  provides  for these costs to be charged to the
Partnership's properties. Host Marriott expects that the Manager will incur Year
2000  costs  for its  centralized  systems  in lieu of costs  related  to system
projects that otherwise would have been pursued and therefore, its overall level
of  centralized  systems  charges  allocated  to the Inns  will  not  materially
increase as a result of the Year 2000 compliance effort.  Host Marriott believes
that this deferral of certain system projects will not have a material impact on
its future  results of  operations,  although it may delay certain  productivity
enhancements at the Partnership's Hotels. Host Marriott will continue to monitor
the efforts of these third  parties to become Year 2000  compliant and will take
appropriate steps to address any non-compliance issues. The Partnership believes
that in the event of material Year 2000 non-compliance caused by a breach of the
Manager's  duties,  the Partnership will have the right to seek recourse against
the Manager under its Management  Agreement.  The Management Agreement generally
does not specifically  address the Year 2000 compliance  issue.  Therefore,  the
amount of any recovery in the event of Year 2000  non-compliance  at a property,
if any, is not determinable at this time.

Host  Marriott  will work  with the third  parties  to ensure  that  appropriate
contingency  plans will be developed to address the most reasonably likely worst
case  Year  2000  scenarios,  which  may not  have  been  identified  fully.  In
particular,  Host Marriott has had extensive discussions regarding the Year 2000
problem with MII, the parent of the Manager of the Partnership's  Hotels. Due to
the significance of MII to the Partnership's business, a detailed description of
MII's state of readiness follows.

MII has adopted an eight-step process toward Year 2000 readiness,  consisting of
the following: (i) Awareness: fostering understanding of, and commitment to, the
problem and its  potential  risks;  (ii)  Inventory:  identifying  and  locating
systems  and  technology  components  that may be  affected;  (iii)  Assessment:
reviewing these components for Year 2000 compliance,  and assessing the scope of
Year 2000 issues; (iv) Planning:  defining the technical solutions and labor and
work plans necessary for each particular  system;  (v)  Remediation/Replacement:
completing  the  programming  to renovate  or replace  the  problem  software or
hardware; (vi) Testing and Compliance Validation:  conducting testing,  followed
by  independent  validation  by a separate  internal  verification  team;  (vii)
Implementation:  placing  the  corrected  systems and  technology  back into the
business environment; and (viii) Quality Assurance:  utilizing a dedicated audit
team to review and test significant  projects for adherence to quality standards
and program methodology.

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

MII measures the  completion  of each phase based on documented  and  quantified
results, weighted for System Criticality. As of December 31, 1998, the Awareness
and Inventory  phases were complete for IT Applications  and nearly complete for
BIS and Building  Systems.  For IT  Applications,  the Assessment,  Planning and
Remediation/Replacement  and Testing phases were each over 95 percent  complete,
and  Compliance  Validation  had been  completed for nearly half of key systems,
with most of the remaining  work in its final stage.  BIS and Building  Systems,
Assessment and Planning are nearly complete. Remediation/Replacement and Testing
are 20% complete for BIS, and MII is on track for completion of initial  Testing
of Building Systems by the end of first quarter 1999.  Compliance  Validation is
in  progress  of both BIS and  Building  Systems.  MII  remains  on  target  for
substantial  completion  of  Remediation/Replacement   and  Testing  for  System
Critical BIS and Building Systems by June 1999 and September 1999, respectively.
Quality Assurance is in progress for IT Applications, BIS and Building Systems.



<PAGE>


Year  2000  compliance   communications   with  MII's  significant  third  party
suppliers, vendors and business partners, including its franchisees are ongoing.
MII's efforts are focused on the connections most critical to customer  service,
core business processes and revenues, including those third parties that support
the most critical  enterprise-wide IT Applications,  franchisees  generating the
most revenues,  suppliers of the most widely used Building  Systems and BIS, the
top  100  suppliers,  by  dollar  volume,  of  non-IT  products,  and  financial
institutions providing the most critical payment processing functions. Responses
have been  received  from a majority of the firms in this  group.  A majority of
these respondents have either given assurances of timely Year 2000 compliance or
have  identified  the  necessary  actions  to be taken by them or MII to achieve
timely Year 2000 compliance for their products.

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

Risks.  There can be no assurances that Year 2000 remediation by the Partnership
or third  parties  will be properly and timely  completed,  and failure to do so
could have a material  adverse effect on the  Partnership,  its business and its
financial condition.  The Partnership cannot predict the actual effects to it of
the Year 2000  issue,  which  depends  on  numerous  uncertainties  such as: (i)
whether  significant  third  parties,  properly and timely address the Year 2000
issue;  and (ii) whether  broad-based or systemic  economic  failures may occur.
Host  Marriott is also unable to predict the  severity  and duration of any such
failures,  which  could  include  disruptions  in  passenger  transportation  or
transportation  systems  generally,  loss of utility  and/or  telecommunications
services,  the loss or  distortion  of hotel  reservations  made on  centralized
reservations systems and errors or failures in financial transactions or payment
processing systems such as credit cards. Due to the general uncertainty inherent
in the Year 2000 issue and the  Partnership's  dependence on third parties,  the
Partnership is unable to determine at this time whether the consequences of Year
2000 failures will have a material  impact on the  Partnership.  Host Marriott's
Year 2000 compliance  program is expected to  significantly  reduce the level of
uncertainty  about  the Year  2000  issue and Host  Marriott  believes  that the
possibility of significant interruptions of normal operations should be reduced.










<PAGE>


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index
Page

Marriott Residence Inn Limited Partnership Financial Statements:

     Report of Independent Public Accountants.......................  18

     Statement of Operations........................................  19

     Balance Sheet..................................................  20

     Statement of Changes in Partners' Capital......................  21

     Statement of Cash Flows........................................  22

     Notes to Financial Statements..................................  23




<PAGE>


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



TO THE PARTNERS OF MARRIOTT RESIDENCE INN LIMITED PARTNERSHIP:

We have audited the accompanying balance sheet of Marriott Residence Inn Limited
Partnership (a Delaware  limited  partnership) as of December 31, 1998 and 1997,
and the related statements of operations,  changes in partners' capital and cash
flows for each of the three years in the period ended  December 31, 1998.  These
financial  statements  and  schedule  are  the  responsibility  of  the  General
Partner's  management.  Our  responsibility  is to  express  an opinion on these
financial statements and schedule based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards  require that we plan and perform an 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 Marriott Residence Inn Limited
Partnership  as of December 31, 1998 and 1997, and the results of its operations
and its cash flows for each of the three years in the period ended  December 31,
1998 in conformity with generally accepted accounting principles.

As discussed in Note 2 to the financial  statements,  the  Partnership has given
retroactive effect to the change to include  property-level  sales and operating
expenses of its Inns in the statement of operations.

     Our  audits  were made for the  purpose  of forming an opinion on the basic
financial  statements taken as a whole. The schedule listed in the index at Item
14(a)(2) is  presented  for the purpose of  complying  with the  Securities  and
Exchange  Commission's  rules and is not a required part of the basic  financial
statements.  This schedule has been subjected to the auditing procedures applied
in the audit of the basic  financial  statements  and,  in our  opinion,  fairly
states in all material  respects  the  financial  data  required to be set forth
therein in relation to the basic financial statements taken as a whole.






                               ARTHUR ANDERSEN LLP



Washington, D.C.
February 26, 1999



<PAGE>


                             STATEMENT OF OPERATIONS
                   Marriott Residence Inn Limited Partnership
              For the Years Ended December 31, 1998, 1997 and 1996
                     (in thousands, except per Unit amounts)


<TABLE>

                                                        1998           1997            1996
                                                    -----------     -----------    --------
<S>                                                 <C>             <C>            <C> 
REVENUES
   Suites...........................................$    63,105     $    59,082    $    58,019
   Other operating departments......................      3,030           3,005          2,805
                                                    -----------     -----------    -----------
       Total Inn Revenues...........................     66,135          62,087         60,824
                                                    -----------     -----------    -----------

OPERATING COSTS AND EXPENSES
   Inn property-level costs and expenses
     Suites.........................................     13,543          12,603         11,756
     Other department costs and expenses............      1,447           1,152          1,024
     Selling, administrative and other..............     16,802          15,290         15,960
                                                    -----------     -----------    -----------
       Total Inn property-level costs and expenses..     31,792          29,045         28,740
   Depreciation.....................................      5,703           5,328          5,620
   Incentive management fee.........................      4,720           3,383          3,366
   Residence Inn system fee.........................      2,524           2,363          2,321
   Property taxes...................................      2,274           2,213          2,229
   Base management fee..............................      1,323           1,242          1,216
   Equipment rent and other.........................      1,024           1,149          1,181
                                                    -----------     -----------    -----------

                                                         49,360          44,723         44,673
                                                    -----------     -----------    -----------

OPERATING PROFIT....................................     16,775          17,364         16,151
   Interest expense.................................    (12,200)        (12,788)       (13,411)
   Interest income..................................        293             338            347
                                                    -----------     -----------    -----------

NET INCOME..........................................$     4,868     $     4,914    $     3,087
                                                    ===========     ===========    ===========

ALLOCATION OF NET INCOME
   General Partner..................................$        49     $        49    $        31
   Limited Partners.................................      4,819           4,865          3,056
                                                    -----------     -----------    -----------

                                                    $     4,868     $     4,914    $     3,087
                                                    ===========     ===========    ===========

NET INCOME PER LIMITED PARTNER UNIT
   (65,600 Units)...................................$        73     $        74    $        47
                                                    ===========     ===========    ===========
   The  accompanying  notes  are an  integral  part of these
financial statements.
</TABLE>




                    


<PAGE>


                                 BALANCE SHEET
                   Marriott Residence Inn Limited Partnership
                           December 31, 1998 and 1997
                                 (in thousands)


<TABLE>

                                                                                             1998             1997
                                                                                        -------------     --------
                                     ASSETS
<S>                                                                                  <C>               <C>               
Property and equipment, net..........................................................$     140,283     $     140,448
Due from Residence Inn by Marriott, Inc..............................................        2,041             2,462
Property improvement fund............................................................          223             1,160
Deferred financing costs, net of accumulated amortization............................        1,779             2,251
Cash and cash equivalents............................................................        4,027             5,650
                                                                                     -------------     -------------

                                                                                     $     148,353     $     151,971
                                                                                     =============     =============

                                           LIABILITIES AND PARTNERS' CAPITAL
   LIABILITIES

Mortgage debt......................................................................$     110,084     $     118,576
Incentive management fee due to Residence Inn by Marriott, Inc.....................       27,029            22,709
Base management fee due to Residence Inn by Marriott, Inc..........................           --               872
Accounts payable and accrued expenses..............................................        1,106             1,235
                                                                                   -------------     -------------

    Total Liabilities..............................................................      138,219           143,392
                                                                                   -------------     -------------

   PARTNERS' CAPITAL
General Partner
  Capital contribution.............................................................          663               663
  Capital distributions............................................................         (436)             (403)
  Cumulative net losses............................................................          (49)              (98)
                                                                                   -------------     -------------

                                                                                             178               162
                                                                                   -------------     -------------
Limited Partners
  Capital contribution, net of offering costs of $7,550............................       58,050            58,050
  Capital distributions............................................................      (43,233)          (39,953)
  Cumulative net losses............................................................       (4,861)           (9,680)
                                                                                   -------------     -------------

                                                                                           9,956             8,417
                                                                                    -------------     -------------

         Total Partners' Capital...................................................       10,134             8,579
                                                                                     -------------     -------------

                                                                                     $     148,353     $     151,971
                                                                                      =============     =============

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

</TABLE>
              

<PAGE>


                    STATEMENT OF CHANGES IN PARTNERS' CAPITAL
                   Marriott Residence Inn Limited Partnership
              For the Years Ended December 31, 1998, 1997 and 1996
                                 (in thousands)

<TABLE>


                                                                          General           Limited
                                                                          Partner          Partners           Total

<S>                                                                    <C>              <C>               <C>  
Balance, December 31, 1995.............................................$         148    $       7,055     $       7,203

     Capital distributions.............................................          (50)          (4,919)           (4,969)

     Net income........................................................           31            3,056             3,087
                                                                       -------------    -------------     -------------

Balance, December 31, 1996.............................................          129            5,192             5,321

     Capital distributions.............................................          (16)          (1,640)           (1,656)

     Net income........................................................           49            4,865             4,914
                                                                       -------------    -------------     -------------

Balance, December 31, 1997.............................................          162            8,417             8,579

     Capital distributions.............................................          (33)          (3,280)           (3,313)

     Net income........................................................           49            4,819             4,868
                                                                       -------------    -------------     -------------

Balance, December 31, 1998.............................................$         178    $       9,956     $      10,134
                                                                       =============    =============     =============
The accompanying notes are an integral part of these
                             financial statements.


</TABLE>
















              


<PAGE>


                             STATEMENT OF CASH FLOWS
                   Marriott Residence Inn Limited Partnership
              For the Years Ended December 31, 1998, 1997 and 1996
                                 (in thousands)

<TABLE>


                                                                                 1998           1997            1996
                                                                             -----------     -----------    -----------
<S>                                                                          <C>             <C>            <C>    
OPERATING ACTIVITIES
   Net income................................................................$     4,868     $     4,914    $     3,087
   Noncash items:
     Depreciation............................................................      5,703           5,328          5,620
     Incentive management fee due to Residence Inn by Marriott, Inc..........      4,320           3,383          3,366
     Amortization of deferred financing costs as interest....................        472             472            473
     Gain on dispositions of property and equipment..........................         --              --            (10)
   Changes in operating accounts:
     Due to (from) Residence Inn by Marriott, Inc............................        421              --         (1,133)
     Accounts payable and accrued expenses...................................       (129)           (753)           (68)
     Repayment of base management fee due to
       Residence Inn by Marriott, Inc........................................       (872)           (627)          (515)
                                                                             -----------     -----------    -----------

           Cash provided by operating activities.............................     14,783          12,717         10,820
                                                                             -----------     -----------    -----------

INVESTING ACTIVITIES
   Additions to property and equipment.......................................     (5,538)         (5,504)        (3,561)
   Change in property improvement fund.......................................        937           1,607            379
                                                                             -----------     -----------    -----------

           Cash used in investing activities.................................     (4,601)         (3,897)        (3,182)
                                                                             -----------     -----------    -----------

FINANCING ACTIVITIES
   Principal payments on mortgage debt.......................................     (8,492)         (4,943)        (6,304)
   Capital distributions to partners.........................................     (3,313)         (1,656)        (4,969)
   Payment of financing costs................................................         --              --           (207)
                                                                             -----------     -----------    -----------

           Cash used in financing activities.................................    (11,805)         (6,599)       (11,480)
                                                                             -----------     -----------    -----------

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS.............................     (1,623)          2,221         (3,842)

CASH AND CASH EQUIVALENTS at beginning of year...............................      5,650           3,429          7,271
                                                                             -----------     -----------    -----------

CASH AND CASH EQUIVALENTS at end of year.....................................$     4,027     $     5,650    $     3,429
                                                                             ===========     ===========    ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
           Cash paid for interest............................................$    11,805     $    12,354    $    12,992
                                                                             ===========     ===========    ===========
The accompanying notes are an integral part of these
                             financial statements.
</TABLE>





              


<PAGE>


                          NOTES TO FINANCIAL STATEMENTS
                   Marriott Residence Inn Limited Partnership
                           December 31, 1998 and 1997


NOTE 1.  THE PARTNERSHIP

Description of the Partnership

Marriott  Residence  Inn Limited  Partnership  (the  "Partnership"),  a Delaware
limited  partnership,  was formed March 29, 1988 to acquire,  own and operate 15
Residence Inn by Marriott hotels (the "Inns") and the land on which the Inns are
located.  The Inns are  located in seven  states in the United  States:  four in
Ohio, three in California,  three in Georgia, two in Missouri and one in each of
Illinois,  Colorado and Michigan,  and as of December 31, 1998,  have a total of
2,129 suites.

On April 17, 1998,  Host  Marriott,  the parent of RIBM One  Corporation  ("RIBM
One"),  the sole general partner of the Partnership  prior to December 22, 1998,
announced  that its Board of Directors  authorized the company to reorganize its
business  operations to qualify as a real estate  investment  trust  ("REIT") to
become effective as of January 1, 1999 (the "REIT Conversion").  On December 29,
1998, Host Marriott announced that it had completed  substantially all the steps
necessary  to complete  the REIT  Conversion  and  expected to qualify as a REIT
under  the  applicable  federal  income  tax laws  beginning  January  1,  1999.
Subsequent to the REIT Conversion, Host Marriott is referred to as Host REIT. In
connection with the REIT Conversion,  Host REIT contributed substantially all of
its hotel assets to a newly-formed partnership Host Marriott LP ("Host LP").

     Prior to December 22, 1998,  the sole general  partner of the  Partnership,
with a 1% interest,  was RIBM One, a wholly owned  subsidiary  of Host  Marriott
Corporation.  In  connection  with Host Marriott  Corporation's  conversion to a
REIT, the following steps occurred.  Host Marriott  Corporation  formed RIBM One
LLC, a Delaware single member limited liability  company,  having two classes of
member  interests  (Class  A - 1%  economic  interest,  managing;  Class B - 99%
economic interest,  non-managing). RIBM One merged into RIBM One LLC on December
22,  1998 and RIBM One ceased to exist.  On December  28,  1998,  Host  Marriott
Corporation contributed its entire interest in RIBM One LLC to Host LP, which is
owned 78% by Host Marriott  Corporation and 22% by outside partners.  Finally on
December 30, 1998,  Host Marriott  contributed  its 99% Class B interest in RIBM
One  LLC  to  Rockledge  Hotel  Properties,   Inc.  ("Rockledge"),   a  Delaware
corporation which is owned 95% by Host LP (economic  non-voting interest) and 5%
by Host  Marriott  Statutory/Charitable  Employee  Trust,  a Delaware  statutory
business trust (100% of voting interest).  As a result, the sole general partner
of the  Partnership is RIBM One LLC (the "General  Partner"),  with a Class A 1%
managing  economic  interest  owned  by Host  LP and a Class B 99%  non-managing
economic interest owned by Rockledge.

Between March 29, 1988 and April 22, 1988 (the "Closing  Date"),  65,600 limited
partnership interests (the "Units") were sold in a public offering. The offering
price per Unit was  $1,000.  RIBM One  contributed  $662,627  for its 1% general
partnership  interest.  The Inns are managed by Residence Inn by Marriott,  Inc.
(the  "Manager"),  a  wholly-owned  subsidiary of Marriott  International,  Inc.
("MII"), as part of the Residence Inn by Marriott hotel system.

Partnership Allocations and Distributions

Net profits for Federal  income tax  purposes  are  generally  allocated  to the
partners in proportion to the  distributions of cash available for distribution.
The  Partnership  generally  distributes  cash  available  for  distribution  as
follows:  (i) first,  99% to the limited partners and 1% to the General Partner,
until the partners have received,  with respect to such year, an amount equal to
10% of their Net Capital  Investment,  defined as the excess of original capital
contributions  over  cumulative  distributions  of  net  refinancing  and  sales
proceeds  ("Capital  Receipts");  (ii)  second,  remaining  cash  available  for
distribution will be distributed as follows,  depending on the amount of Capital
Receipts previously distributed:

(a)    99% to  the  limited  partners  and 1% to  the  General  Partner,  if the
       partners  have received  aggregate  cumulative  distributions  of Capital
       Receipts of less than 50% of their original capital contributions; or

(b)    85% to the  limited  partners  and  15% to the  General  Partner,  if the
       partners  have received  aggregate  cumulative  distributions  of Capital
       Receipts  equal  to or  greater  than  50% but  less  than  100% of their
       original capital contributions; or

(c)    70% to the  limited  partners  and  30% to the  General  Partner,  if the
       partners  have received  aggregate  cumulative  distributions  of Capital
       Receipts equal to 100% or more of their original capital contributions.

Losses and net losses are  allocated  99% to the limited  partners and 1% to the
General Partner.

     Capital  Receipts  not  retained  by  the  Partnership  will  generally  be
distributed (i) first, 99% to the limited partners and 1% to the General Partner
until the partners have received cumulative distributions from all sources equal
to a cumulative simple return of 12% per annum on their Net Capital  Investment,
as defined, and an amount equal to their contributed capital,  payable only from
Capital  Receipts;  (ii) next, if the Capital  Receipts are from a sale, 100% to
the General  Partner  until it has  received 2% of the gross  proceeds  from the
sale; and (iii)  thereafter,  70% to the limited partners and 30% to the General
Partner.

Gains will  generally be allocated (i) first,  to those  partners  whose capital
accounts have  negative  balances  until such  negative  balances are brought to
zero; (ii) second,  to all partners in amounts  necessary to bring each of their
respective capital account balances equal to their Invested Capital, as defined,
plus a 12% return on such Invested  Capital;  (iii) next, to the General Partner
in an amount necessary to bring the General Partner's capital account balance to
an amount  which is equal to 2% of the gross  proceeds  from the sale;  and (iv)
thereafter, 70% to the limited partners and 30% to the General Partner.

Proceeds  from the sale of  substantially  all of the assets of the  Partnership
will be  distributed  to the partners in accordance  with their capital  account
balances as adjusted to take into account the gain or loss  resulting  from such
sale.

For financial  reporting  purposes,  profits and losses are allocated  among the
partners based upon their stated interests in cash available for distribution.


NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The Partnership's  records are maintained on the accrual basis of accounting and
its fiscal year coincides with the calendar year.

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles 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 financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

Revenues and Expenses

     Revenues primarily represent the gross sales generated by the Partnership's
Inns.

On November 20, 1997,  the Emerging  Issues Task Force ("EITF") of the Financial
Accounting  Standards  Board reached a consensus on EITF 97-2,  "Application  of
FASB  Statement No. 94 and APB Opinion No. 16 to Physician  Practice  Management
Entities and Certain Other Entities with Contractual  Management  Arrangements."
EITF 97-2 addresses the  circumstances in which a management  entity may include
the revenues and expenses of a managed entity in its financial statements.

The  Partnership  has  considered  the  impact  of EITF  97-2  on its  financial
statements  and  determined  that EITF 97-2 requires the  Partnership to include
property-level  sales and  operating  expenses of its Inns in its  statement  of
operations. The Partnership has given retroactive effect to the adoption of EITF
97-2 in the  accompanying  statement of operations.  Application of EITF 97-2 to
the financial  statements for the fiscal years ended December 31, 1998, 1997 and
1996  increased  both revenues and  operating  expenses by  approximately  $31.8
million,  $29.0 million and $28.7  million,  respectively,  and had no impact on
operating profit or net income.

Property and Equipment

Property and equipment are recorded at cost.  Depreciation is computed using the
straight-line method over the estimated useful lives of the assets as follows:

                  Land and improvements                        40 years
                  Buildings and improvements                   40 years
                  Furniture and equipment                 3 to 10 years

All  property  and  equipment  is  pledged as  security  for the  mortgage  debt
described in Note 5.

The  Partnership  assesses  impairment  of its real estate  properties  based on
whether  estimated  undiscounted  future cash flows from such  properties  on an
individual  property basis will be less than their net book value. If a property
is impaired,  its basis is adjusted to fair market value. No such adjustment was
needed as of December 31, 1998 or December 31, 1997.

Income Taxes

Provision  for  Federal  and  state  income  taxes  has  not  been  made  in the
accompanying  financial  statements  since the  Partnership  does not pay income
taxes but rather  allocates its profits and losses to the partners.  Significant
differences  exist  between  the net  income  or loss  for  financial  reporting
purposes and the net income or loss  reported in the  Partnership's  tax return.
These  differences  are due  primarily to the use, for income tax  purposes,  of
accelerated depreciation methods and shorter depreciable lives of the assets and
differences in the timing of the  recognition  of base and incentive  management
fees. As a result of these differences, the Partnership's net assets reported in
the accompanying financial statements exceed the tax basis of such net assets at
December 31, 1998 and 1997 by $20,443,702 and $17,448,000, respectively.

Deferred Financing Costs

Deferred  financing  costs  represent the costs incurred in connection  with the
mortgage debt refinancing totaling  $3,298,000.  These costs are being amortized
using the  straight-line  method,  which  approximates  the  effective  interest
method,  over the seven year term of the loan.  At  December  31, 1998 and 1997,
accumulated  amortization  of deferred  financing  costs totaled  $1,519,000 and
$1,047,000, respectively.

Cash and Cash Equivalents

The Partnership considers all highly liquid investments with a maturity of three
months or less at date of purchase to be cash equivalents.

Reclassifications

Certain  reclassifications  were  made to prior  year  financial  statements  to
conform to the 1998 presentation.


<PAGE>


NOTE 3.  PROPERTY AND EQUIPMENT

Property  and  equipment  consists  of  the  following  as of  December  31  (in
thousands):

                                            1998              1997
                                      -------------    --------------

Land and improvements.................$      46,441    $       46,441
Buildings and improvements............      115,892           114,458
Furniture and equipment...............       42,409            39,540
Construction in progress..............        1,235                --
                                      -------------    --------------
                                            205,977           200,439

Less accumulated depreciation.........      (65,694)          (59,991)
                                      -------------    --------------

                                      $     140,283    $      140,448
                                      =============    ==============


NOTE 4.  ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

The  estimated  fair value of financial  instruments  are shown below.  The fair
value of financial  instruments  not included in this table are  estimated to be
equal to their carrying amounts (in thousands):
<TABLE>
                                                      As of December 31, 1998          As of December 31, 1997

                                                   -----------------------------    --------------------------
                                                                     Estimated                        Estimated
                                                     Carrying          Fair           Carrying          Fair
                                                      Amount           Value           Amount           Value

<S>                                                <C>            <C>               <C>            <C>   
Mortgage debt......................................$     110,084  $      117,500    $     118,576  $     124,500
Incentive management fee due to Residence
   Inn by Marriott, Inc............................$      27,029  $        2,980    $      22,709  $       2,200
Base management fee due to Residence
   Inn by Marriott, Inc............................$          --  $           --    $         872  $         700
</TABLE>

The estimated  fair value of debt  obligations  is based on the expected  future
debt service  payments  discounted  at risk adjusted  rates.  Base and incentive
management  fees payable are valued based on the expected  future  payments from
operating cash flow discounted at risk adjusted rates.


NOTE 5.  MORTGAGE DEBT

The Partnership's mortgage debt is comprised of a $100 million note (the "Senior
Mortgage")  which bears  interest at a fixed rate of 8.6% and a $30 million note
(the  "Second  Mortgage")  which bears  interest at a fixed rate of 15.25% for a
blended  interest rate of 10.13%.  Both the Senior  Mortgage and Second Mortgage
require  monthly  amortization of principal and mature on September 30, 2002. In
addition to the  required  monthly  amortization,  during each of the four years
from 1996 through 1999, the  Partnership is required to pay, on a cash available
basis, an additional $2 million  annually toward  principal  amortization on the
Senior  Mortgage.   Additionally,   during  the  entire  seven  year  term,  the
Partnership  has the  option to pay up to an  additional  $1  million  principal
payment  annually on the Second  Mortgage and up to another $1 million  optional
principal payment which would be applied in a 2:1 ratio to the Senior and Second
Mortgage,  respectively.  The weighted-average interest rate for the years ended
December  31, 1998 and 1997 was 10.13%.  During 1998 and 1997,  the  Partnership
made payments of $5,538,000 and $4,431,000 on the Senior Mortgage and $2,954,000
and $512,000 on the Second  Mortgage,  respectively.  At December 31, 1998,  the
outstanding  principal  balance of the Senior  Mortgage was  $85,154,000 and the
outstanding  principal  balance  of the  Second  Mortgage  was  $24,930,000.  At
December 31, 1997, the outstanding  principal balance of the Senior Mortgage was
$90,692,000  and the  outstanding  principal  balance of the Second Mortgage was
$27,884,000.

/Both the Senior  Mortgage and the Second  Mortgage are secured by the Inns, the
land on which they are located,  a security  interest in all  personal  property
associated with the Inns including furniture and equipment, inventory, contracts
and other general  intangibles  and an assignment  of the  Partnership's  rights
under the management agreement.

Principal  amortization of the Senior and Second  Mortgages at December 31, 1998
is as follows (in thousands):

                           1999......................$       6,402
                           2000......................        5,026
                           2001......................        5,569
                           2002......................       93,087
                                                     -------------
                                                     $     110,084


NOTE 6.  MANAGEMENT AGREEMENT

The Manager operates the Inns pursuant to a long-term  management agreement with
an initial term expiring December 28, 2007. The Manager has the option to extend
the  agreement  on one or more of the Inns  for up to five  10-year  terms.  The
Manager earns a base  management  fee equal to 2% of gross sales.  Through 1990,
payment of the base  management fee was  subordinated to qualifying debt service
payments and retention by the Partnership of annual cash flow from operations of
$6,626,263.  Deferred base management fees are payable from operating cash flow,
as defined.  Beginning in 1991 and  thereafter,  base  management  fees are paid
currently.  Pursuant to the terms of the management  agreement,  the Partnership
paid deferred base  management  fees of $872,000,  $627,000 and $515,000 for the
fiscal years ended December 31, 1998, 1997 and 1996, respectively.

In addition, the Manager is entitled to an incentive management fee equal to 15%
of operating  profit,  as defined (20% in any year in which operating  profit is
equal to or greater than $23.5 million). The incentive management fee is payable
out of 50% of cash flow from  operations  remaining after payments of qualifying
debt service,  retention by the  Partnership of annual cash flow from operations
of $6,626,263 and the deferred base  management  fee. After the  Partnership has
retained an additional 5% return, the incentive management fee is payable out of
75% of the remaining  cash flow from  operations.  Through 1989, the Manager was
not  entitled  to  accrue  any  unpaid  incentive   management  fees.  Incentive
management  fees earned after 1989 are payable in the future from operating cash
flow,  as  defined.  Unpaid  incentive  management  fees are paid from cash flow
available for incentive  management  fees following  payment of the then current
incentive  management  fees.  Through  December 31, 1998,  $400,000 in incentive
management fees have been paid to the Manager.

     The management agreement also provides for a Residence Inn system fee equal
to 4% of suite sales. In addition,  the Manager is reimbursed for each Inn's pro
rata share of the actual costs and expenses incurred by the Manager in providing
certain services ("Chain Services") on a central or regional basis to all hotels
operated by the Manager.  As franchiser of the Residence Inn by Marriott system,
the Manager  maintains a marketing fund to pay the costs associated with certain
system-wide  advertising,   promotional,  and  public  relations  materials  and
programs,  and operating a toll-free  reservation  system.  Each Inn contributes
2.5% of suite sales to the  marketing  fund.  For the years ended  December  31,
1998,  1997 and  1996,  the  Partnership  paid a  Residence  Inn  system  fee of
$2,524,000,  $2,363,000 and $2,321,000,  respectively reimbursed the Manager for
$1,318,000,  $1,051,000  and  $1,031,000,  respectively  of Chain  Services  and
contributed  $1,578,000,  $1,477,000  and  $1,450,000  to  the  marketing  fund,
respectively.  In addition,  the Inns  participate in MII's  Marriott's  Rewards
Program ("MRP"). Residence Inns began participating in MRP in 1998. The costs of
this  program are charged to all hotels in the  full-service.  Residence  Inn by
Marriott, Courtyard by Marriott and Fairfield Inn by Marriott systems based upon
the MRP sales at each  hotel.  MRP costs  charged to the  Partnership  under the
Management Agreement were $117,000 in 1998.

The  Partnership is required to provide the Manager with working capital to meet
the  operating  needs of the Inns.  The Manager  converts  cash  advanced by the
Partnership  into  other  forms  of  working  capital  consisting  primarily  of
operating  cash,  inventories,  and trade  receivables  and  payables  which are
maintained  and  controlled by the Manager.  Upon  termination of the management
agreement,  the  working  capital  will  be  returned  to the  Partnership.  The
individual  components  of working  capital  controlled  by the  Manager are not
reflected in the Partnership's  balance sheet. As of December 31, 1998 and 1997,
$775,000 has been advanced to the Manager for working capital.



<PAGE>


     The  management  agreement  provides  for the  establishment  of a property
improvement  fund for the Inns which provides for the  replacement of furniture,
fixtures and equipment ("FF&E").  Contributions to the property improvement fund
are equal to 6% of gross  revenues  of each Inn in 1998 and 5% in 1997 and 1996.
Contributions  to the  property  improvement  fund for 1998,  1997 and 1996 were
$3,968,000,  $3,104,000 and $3,041,000,  respectively. Based on capital budgets,
the  Partnership's  property  improvement fund was forecasted to be insufficient
beginning in 1998.  The shortfall is primarily due to the need to complete total
suite refurbishments at the majority of the Inns in the next several years. As a
result of this expected  future  shortfall,  the General  Partner  established a
reserve  in  1996  for  the  future  capital  needs  of  the  Inns.   1996  cash
distributions  to the  partners  were  net of  this  reserve.  To  minimize  the
shortfall, the Partnership increased the contribution rate from 5% to 6% in 1998
and then reduced the rate to 5.5% for 1999.  In the first  quarter of 1999,  the
Partnership  provided a loan to the property  improvement fund of $1,450,000 for
1998 that will earn  interest  at the rate of Prime plus one percent and will be
repaid over a five-year  period from operating cash flow. Under the terms of the
loan agreement,  the debt service  payments are subordinate to the mortgage debt
and are included as a deduction in determining the incentive management fee paid
to the Manager.  An  additional  $1,200,000  loan will be provided for 1999 that
will earn interest at the rate of Prime plus one percent and will be repaid from
the property  improvement  fund. The General Partner believes that cash from Inn
operations  and  Partnership  reserves will be adequate in the short term and is
working with the Manager to address the long term  operational and capital needs
of the Partnership.




<PAGE>


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING  AND 
                             FINANCIAL DISCLOSURE.

None.


                                                        PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS

The  Partnership  has no managers or officers.  The  business and policy  making
functions of the  Partnership are carried out through the managers and executive
officers of RIBM One LLC, the General Partner, who are listed below:

                                                                        Age at
Name                      Current Position                     December 31, 1998

Robert E. Parsons         President and Manager                               43
Christopher G. Townsend   Executive Vice President, Secretary and Manager     51
W. Edward Walter          Treasurer                                           43
Earla L. Stowe            Vice President                                      37

Business Experience

     Robert E. Parsons,  Jr. joined Host Marriott's Corporate Financial Planning
staff in 1981 and was made Assistant Treasurer in 1988. In 1993, Mr. Parsons was
elected Senior Vice  President and Treasurer of Host  Marriott,  and in 1995, he
was  elected  Executive  Vice  President  and Chief  Financial  Officer  of Host
Marriott.  He also  serves as a director,  manager and officer of numerous  Host
Marriott subsidiaries.

Christopher  G.  Townsend  joined Host  Marriott's  Law  Department in 1982 as a
Senior Attorney.  In 1984 he was made Assistant  Secretary of Host Marriott.  In
1986  he was  made  an  Assistant  General  Counsel.  He was  made  Senior  Vice
President,  Corporate  Secretary and Deputy General  Counsel of Host Marriott in
1993.  In January 1997, he was made General  Counsel of Host  Marriott.  He also
serves  as a  director,  manager  and  an  officer  of  numerous  Host  Marriott
subsidiaries.

W.  Edward  Walter  joined  Host  Marriott  in 1996  as  Senior  Vice  President
-Acquisitions and in 1998 was made Treasurer of Host Marriott. He also serves as
a director, manager and officer of numerous Host Marriott subsidiaries. Prior to
joining Host  Marriott,  Mr. Walter was a partner at Trammell  Crow  Residential
Company and President of Bailey Capital Corporation, a real estate firm focusing
on tax exempt real estate investments.

Earla L. Stowe joined Host  Marriott in 1982 and held  various  positions in the
tax department until 1988. She joined the Partnership  Services department as an
accountant  in 1988 and in 1989 she  became  an  Assistant  Manager--Partnership
Services.  She was  promoted  to  Manager--Partnership  Services  in 1991 and to
Director--Asset Management in 1996. Ms.
Stowe was promoted to Senior Director - Corporate Accounting in 1998.




<PAGE>


ITEM 11. MANAGEMENT REMUNERATION AND TRANSACTIONS

As noted in Item 10 above,  the Partnership has no managers or officers nor does
it have any employees.  Under the Partnership  Agreement,  however,  the General
Partner  has the  exclusive  right to conduct  the  business  and affairs of the
Partnership  subject only to the management  agreement  described in Items 1 and
13. The General  Partner is required to devote to the  Partnership  such time as
may be necessary for the proper  performance of its duties, but the officers and
managers of the General  Partner are not  required to devote  their full time to
the  performance  of such duties.  No officer or manager of the General  Partner
devotes a significant  percentage of time to Partnership  matters. To the extent
that any officer or manager  does devote  time to the  Partnership,  the General
Partner or Host LP, as applicable,  is entitled to reimbursement for the cost of
providing such services. For the fiscal years ending December 31, 1998, 1997 and
1996, the  Partnership  reimbursed Host Marriott or its  subsidiaries  $229,000,
$157,000  and   $218,000,   respectively,   for  the  cost  of   providing   all
administrative and other services as General Partner. For information  regarding
all payments made by the Partnership to Host Marriott and subsidiaries, see Item
13, "Certain Relationships and Related Transactions."


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENT

As of December 31,  1998,  no person  owned of record,  or to the  Partnership's
knowledge  owned  beneficially,  more  than 5% of the total  number  of  limited
partnership  Units.  The General  Partner  does not own any limited  partnership
interest in the Partnership.

The  executive  officers and managers of the General  Partner,  Host LP, MII and
their respective  affiliates own 80 limited partnership units as of December 31,
1998.

The  Partnership  is not aware of any  arrangements  which may, at a  subsequent
date, result in a change in control of the Partnership.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Management Agreement

Term

The Management  Agreement has an initial term expiring on December 28, 2007. The
Manager may renew the term, as to one or more of the Inns, at its option, for up
to five  successive  terms of 10 years each. The  Partnership  may terminate the
Management  Agreement  if,  during  any  three  consecutive  years  after  1992,
specified minimum operating results are not achieved.  However,  the Manager may
prevent termination by paying to the Partnership the amount by which the minimum
operating results were not achieved.

Management Fees

The Management Agreement provides for annual payments of (i) the base management
fee equal to 2% of gross sales from the Inns,  (ii) the Residence Inn system fee
equal to 4% of gross  suite  sales  from  the  Inns,  and  (iii)  the  incentive
management fee equal to 15% of operating  profit, as defined (20% in any year in
which operating profit is equal to or greater than $23.5 million).  During 1998,
1997 and 1996, respectively,  the Partnership paid a Residence Inn system fee of
$2,524,000,   $2,363,000  and  $2,321,000.   See  "Deferral  Provisions"  for  a
discussion  of the  payment  of base and  incentive  management  fees.  Deferral
Provisions

Through 1990,  payment of the base management fee was subordinated to qualifying
debt service  payments and retention by the Partnership of annual cash flow from
operations  of  $6,626,263.  Deferred  base  management  fees are  payable  from
operating cash flow, as defined,  but only after payment of debt service and the
Partnership's  10%  priority  return.  Beginning  in 1991 and  thereafter,  base
management fees are paid currently.  For the years ended December 31, 1998, 1997
and 1996,  respectively,  the  Partnership  paid current base management fees of
$1,323,000,  $1,242,000 and $1,216,000.  During 1998,  1997 and 1996,  $872,000,
$627,000 and  $515,000,  respectively,  of deferred  base  management  fees were
repaid.  Deferred base  management  fees as of December 31, 1997 were  $872,000.
There were no deferred base management fees at December 31, 1998.

The incentive  management fee is payable out of 50% of cash flow from operations
remaining  after  payments  of  qualifying   debt  service,   retention  by  the
Partnership  of annual cash flow from  operations of $6,626,263 and the deferred
base management fee. After the cash flow retained by the Partnership  reaches 5%
of invested  capital plus any owner funded capital  improvements,  the incentive
management fee is payable out of 75% of the remaining cash flow from operations.
Through  1989,  the  Manager  was not  entitled  to accrue any unpaid  incentive
management fees.  Incentive management fees earned after 1989 are payable in the
future from operating cash flow, as defined.  Unpaid  incentive  management fees
are paid  from cash flow  available  for  incentive  management  fees  following
payment of the then current  incentive  management  fees.  Through  December 31,
1998,  $400,000 in incentive  management  fees were paid to the Manager.  During
1998,  incentive  management  fees were $4.7  million of which $4.3 million were
deferred.  During 1997 and 1996, $3.4 million of incentive  management fees were
deferred.  Deferred  incentive  management  fees were  $27.0  million  and $22.7
million as of December 31, 1998 and 1997, respectively.

Chain Services, Marketing Fund and Marriott's Rewards Program

The Manager is reimbursed  for each Inn's pro rata share of the actual costs and
expenses   incurred  by  the  Manager  in  providing  certain  services  ("Chain
Services") on a central or regional basis to all hotels operated by the Manager.
As franchiser of the Residence Inn by Marriott system,  the Manager  maintains a
marketing fund to pay the costs associated with certain system-wide advertising,
promotional,  and public  relations  materials  and  programs,  and  operating a
toll-free  reservation system. Each Inn contributes 2.5% of gross suite sales to
the marketing  fund. For the years ended  December 31, 1998,  1997 and 1996, the
Partnership reimbursed the Manager for $1,318,000,  $1,051,000 and $1,031,000 of
Chain  Services and  contributed  $1,578,000,  $1,477,000  and $1,450,000 to the
marketing  fund,  respectively.  In  addition,  the  Inns  participate  in MII's
Marriott's Rewards Program ("MRP).  Residence Inns began participating in MRP in
1998.  The costs of this program are charged to all hotels in the  full-service,
Residence  Inn by Marriott,  Courtyard by Marriott and Fairfield Inn by Marriott
systems  based  upon the MRP  sales at each  hotel.  MRP  costs  charged  to the
Partnership  under  the  Management  Agreement  were  $117,000  in  1998.  Chain
Services,  contributions  to the  marketing  fund and MRP costs are  included in
selling,  administrative  and  other  expenses  detailed  in  the  Statement  of
Operations.

Working Capital

The  Partnership is required to provide the Manager with working capital to meet
the  operating  needs of the Inns.  The Manager  converts  cash  advanced by the
Partnership  into  other  forms  of  working  capital  consisting  primarily  of
inventories,  trade receivables and payables which are maintained and controlled
by the  Manager.  Upon  termination  of the  management  agreement,  the working
capital  will be returned  to the  Partnership.  The  individual  components  of
working capital controlled by the Manager are not reflected in the Partnership's
balance sheet.  As of December 31, 1998 and 1997,  $775,000 has been advanced to
the Manager for working  capital which is included in Due from  Residence Inn by
Marriott, Inc. in the accompanying balance sheet (see Item 8).

Property Improvement Fund

The  Management   Agreement   provides  for  the  establishment  of  a  property
improvement  fund for the Inns which provides for the  replacement of furniture,
fixtures and equipment.  For the year ended December 31, 1998,  contributions to
the property  improvement  fund were equal to 6% of gross sales of each Inn. For
the years  ended  December  31,  1997 and 1996,  contributions  to the  property
improvement  fund were equal to 5% of gross sales of each Inn.  Contributions to
the property  improvement  fund during the fiscal years ended December 31, 1998,
1997 and 1996 were $3,968,000, $3,104,000 and $3,041,000, respectively.

Payments to MII and Subsidiaries

The following table sets forth the amount paid to MII and its subsidiaries under
the Management  Agreement for the years ended  December 31, 1998,  1997 and 1996
(in thousands):

                                       1998            1997           1996
                                    -----------    -----------    --------
Residence Inn system fee............$     2,524    $     2,363    $     2,321
Marketing fund contribution.........      1,578          1,477          1,450
Base management fee.................      1,323          1,242          1,216
Chain services......................      1,318          1,051          1,031
Deferred base management fee........        872            627            515
Incentive management fee............        400             --             --
MRP costs...........................        117             --             --
                                    -----------    -----------    -----------

                                    $     8,132    $     6,760    $     6,533
                                    ===========    ===========    ============

Payments to Host Marriott and Subsidiaries

The following  sets forth amounts paid by the  Partnership  to Host Marriott and
its  subsidiaries,  including the General Partner,  for the years ended December
31, 1998, 1997 and 1996 (in thousands):

                                           1998            1997           1996
                                        -----------    -----------    ----------
Administrative expenses reimbursed......$       229    $       157    $    218
Cash distributions......................         33             16          50
                                        -----------    -----------    ----------
                                        $       262    $       173    $    268
                                        ===========    ===========    ==========


<PAGE>


                                                         PART IV


ITEM 14.          EXHIBITS, SUPPLEMENTAL FINANCIAL STATEMENT SCHEDULES, AND  
                               REPORTS ON FORM 8-K

         (a)      List of Documents Filed as Part of This Report

                  (1)    Financial Statements
                         All financial statements of the registrant as set forth
                         under Item 8 of this Report on Form 10-K.

                  (2)    Financial Statement Schedules
                         The following  financial  information is filed herewith
                         on the pages indicated.

                         Schedule III - Real Estate and Accumulated Depreciation

All other  schedules are omitted because they are not applicable or the required
information is included in the financial statements or notes thereto.

                  (3)    Exhibits

                            Exhibit
 Number                               Description                         Page
-----------      ------------------------------------------------------ --------

  * 3.1          Amended and Restated Agreement of Limited  Partnership   N/A
                 of Marriott  Residence Inn Limited  Partnership by and
                 among   RIBM  One   Corporation   (General   Partner),
                 Christopher   G.  Townsend   (Organizational   Limited
                 Partner), and Limited Partners dated March 29, 1988.

   3.2           First  Amendment to Amended and Restated  Agreement of    39
                 Limited  Partnership of Marriott Residence Inn Limited
                 Partnership, dated December 28, 1998.


  *10.1          First  Amendment  to  Loan  Agreement  by and  between   N/A
                 Marriott Residence Inn Limited Partnership  (Borrower)
                 and  German  American  Capital  Corporation  (Lender),
                 dated April 23, 1996.

  *10.2          Loan Agreement by and between  Marriott  Residence Inn   N/A
                 Limited  Partnership  (Borrower)  and German  American
                 Capital Corporation (Lender), dated October 10, 1995.

  *10.3          Indemnity  Agreement by Marriott Residence Inn Limited   N/A
                 Partnership   (Borrower)  and  RIBM  One   Corporation
                 (collectively,  the  Indemnitors)  in favor of  German
                 American Capital Corporation  (Lender),  dated October
                 10, 1995.

  *10.4          Four Party  Agreement by and among Marriott  Residence   N/A
                 Inn Limited  Partnership  (Borrower),  German American
                 Capital   Corporation   (Senior   Lender),    Starwood
                 Mezzanine  Investors,  L.P.  (Subordinate  Lender) and
                 Residence  Inn  by  Marriott,  Inc.  (Manager),  dated
                 October 10, 1995.

  *10.5          Loan Agreement by and between  Marriott  Residence Inn   N/A
                 Limited Partnership  (Borrower) and Starwood Mezzanine
                 Investors, L.P. (Lender), dated October 10, 1995.

  *10.6          Loan Agreement by and between  Marriott  Residence Inn   N/A
                 Limited Partnership and The Sanwa Bank Limited,  dated
                 as of April 20, 1988.

  *10.7          Revolving  Credit  Agreement  by and between  Marriott   N/A
                 Residence Inn Limited  Partnership  and The Sanwa Bank
                 Limited, dated as of April 20, 1988.

  *10.8          Manager's  Letter Agreement  between  Residence Inn by   N/A
                 Marriott,  Inc.  and  Marriott  Residence  Inn Limited
                 Partnership, dated October 10, 1995.

  *10.9          Management   Agreement  by  Marriott   Residence   Inn   N/A
                 Limited  Partnership  (Owner)  and  Residence  Inn  by
                 Marriott, Inc. (Manager), dated March 29, 1988.


-------------------------------

                *     Incorporated by reference to the Partnership's  previously
                      filed documents.




<PAGE>


              (b)   Reports on Form 8-K

                    A Form  8-k was  filed  with  the  Securities  and  Exchange
                    Commission  ("SEC") on October 9, 1998.  This  filing,  Item
                    5-Other  Events,  discloses that the General  Partner sent a
                    letter dated October 1, 1998 to inform the limited  partners
                    that the proposed  Consolidation  to form a new REIT focused
                    on limited  service  hotels is no longer being  pursued.  In
                    addition,  the letter informs the limited  partners that, to
                    date,  there  have  been no  acceptable  offers  from  third
                    parties to purchase the Partnership's  hotels. A copy of the
                    letter was  included  as an  Item7-Exhibit  in this Form 8-K
                    filing.

                    A Form  8-K was  filed  with  the  Securities  and  Exchange
                    Commission  on November  30,1998.  In this filing,  Item 5 -
                    Other Events  discloses  that on June 11,  1998,  August 24,
                    1998 and November  24, 1998 the General  Partner sent to the
                    Limited   Partners   of  the   Partnership   a  letter  that
                    accompanied  the  Partnership's  Quarterly  Reports  on Form
                    10-Q. Each letter disclosed the quarterly  activities of the
                    Partnership. Copies of these letters were included as Item 7
                    - Exhibits in this Form 8-K filing.



<PAGE>



                                       40


                                  SCHEDULE III
                                   Page 1 of 2
                   MARRIOTT RESIDENCE INN LIMITED PARTNERSHIP
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                                December 31, 1998
                                 (in thousands)



<TABLE>

                                            Initial Costs                       
                                      ------------------------                  
                                          Land                     Subsequent   
                                           and     Building and        Costs    
 
     Description           Debt       Improvements   Improvements  Capitalized  
--------------------     ---------    -------------  ------------ --------------
<S>                      <C>          <C>          <C>             <C>  
La Jolla                 $  19,376    $    11,579  $    14,462     $   1,156    
Long Beach                  10,679          7,167       11,455           677    
St. Louis Galleria           9,247          1,989        5,010         1,730    
Boulder                      8,587          1,451        6,686           512    
Costa Mesa                   8,146          3,678        6,955           441    
Atlanta Buckhead             7,706          3,894        5,519           668    
Atlanta Cumberland           7,045          4,099        4,627           381    
Atlanta Dunwoody             7,045          2,116        7,387           670    
Chicago Lombard              6,825          3,665        5,746           372    
Southfield                   6,715          2,031        8,195           723    
Cincinnati North             4,844          1,183        9,587           584    
St. Louis Chesterfield       4,624          1,539        5,372           614    
Other properties, each
   less than 5% of total     9,245          2,007       14,553         1,853    
                          ---------    -----------  -----------     ---------   

                         $ 110,084    $    46,398  $   105,554     $  10,381    
                         =========    ===========  ===========     =========    


</TABLE>


<TABLE>
                            Gross Amount at December 31, 1998                                         
                         ------------------------------------                                         
                                Land                                            Date of               
                                 and      Building and             Accumulated  Completion of  Date   
                                                                                                      
                         Improvements     Improvements  Total      Depreciation                         Depreciation
                               -------------                                     Construction  Acquired     Life    
<S>                      <C>            <C>           <C>       <C>                <C>         <C>       <C>
La Jolla                 $    11,580    $    15,617    $27,197  $     4,479        1986        1988      40 years   
Long Beach                     7,234         12,065     19,299        3,318        1987        1988      40 years   
St. Louis Galleria             2,014          6,715      8,729        1,851        1986        1988      40 years   
Boulder                        1,451          7,198      8,649        1,978        1986        1988      40 years   
Costa Mesa                     3,678          7,396     11,074        2,055        1986        1988      40 years   
Atlanta Buckhead               3,903          6,178     10,081        1,821        1987        1988      40 years   
Atlanta Cumberland             4,099          5,008      9,107        1,477        1987        1988      40 years   
Atlanta Dunwoody               2,116          8,057     10,173        2,291        1984        1988      40 years   
Chicago Lombard                3,665          6,118      9,783        1,762        1987        1988      40 years   
Southfield                     2,031          8,918     10,949        2,582        1986        1988      40 years   
Cincinnati North               1,183         10,171     11,354        2,866        1985        1988      40 years   
St. Louis Chesterfield         1,543          5,982      7,525       1,662        1986        1988      40 years   
Other properties, each                                                                                              
   less than 5% of total       1,944         16,469     18,413       5,091      1985-1987     1988      40 years   
                          -----------    -----------     ------  -----------                                        
                                                                                                                    
                         $    46,441    $   115,892   $162,333 $   $33,233                                         
                         ===========    ===========     ========  =========                                         
</TABLE>
                         







<PAGE>

                                  SCHEDULE III
                                   Page 2 of 2
                   MARRIOTT RESIDENCE INN LIMITED PARTNERSHIP
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                                December 31, 1998
                                 (in thousands)

<TABLE>

Notes:                                           
                                                      1996           1997           1998
                                                  -----------    -----------     -------
<S>                                               <C>            <C>             <C>
(a)  Reconciliation of Real Estate:
     Balance at beginning of year.................$   158,281    $   159,033     $   160,899
     Capital Expenditures.........................        752          1,866           1,434
     Dispositions.................................         --             --              --
                                                  -----------    -----------     -----------
     Balance at end of year.......................$   159,033    $   160,899     $   162,333
                                                  ===========    ===========     ===========

(b)  Reconciliation of Accumulated Depreciation:
     Balance at beginning of year.................$    22,544    $    26,140     $    29,640
     Depreciation.................................      3,596          3,500           3,593
                                                  -----------    -----------     -----------
     Balance at end of year.......................$    26,140    $    29,640     $    33,233
                                                  ===========    ===========     ===========

(c)  The aggregate cost of land,  buildings and  improvements for Federal income
     tax purposes is approximately $160.6 million at December 31, 1998.

(d)  The debt  balance is $110.1  million as of December  31, 1998 and  includes
     $85.2 million of Senior  Mortgage Debt and $24.9 million of Second Mortgage
     Debt.

</TABLE>

<PAGE>


                                   SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant has duly caused this Form 10-K to be signed on its
behalf by the  undersigned,  thereunto duly  authorized,  on this 31st of March,
1999.


                                                     MARRIOTT RESIDENCE INN
                                                     LIMITED PARTNERSHIP

                                                     By:      RIBM ONE LLC
                                                              General Partner




                                                              /s/ Earla L. Stowe
                                                              Earla L. Stowe
                                                              Vice President



Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
the capacities and on the date indicated above.

Signature                        Title
                                 (RIBM ONE LLC)

/s/ Robert E. Parsons, Jr.       President and Manager
Robert E. Parsons, Jr.


/s/ Christopher G. Townsend      Executive Vice President, Secretary and Manager
Christopher G. Townsend


/s/ W. Edward Walter             Treasurer
W. Edward Walter


/s/ Earla L. Stowe               Vice President
Earla L. Stowe





<PAGE>


                                   SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant has duly caused this Form 10-K to be signed on its
behalf by the  undersigned,  thereunto duly  authorized,  on this 31st of March,
1999.


                                                     MARRIOTT RESIDENCE INN
                                                     LIMITED PARTNERSHIP

                                                     By:      RIBM ONE LLC
                                                              General Partner




                  
                                                              Earla L. Stowe
                                                              Vice President



Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
the capacities and on the date indicated above.

Signature                                                     Title
                                                              (RIBM ONE LLC)

                                                                 
Robert E. Parsons, Jr.President and Manager


                 
Christopher G. TownsendExecutive Vice President, Secretary and Manager


                                                              
W. Edward WalterTreasurer


                                                              
Earla L. StoweVice President