Securities and Exchange Commission
                             Washington, D.C. 20549
                                    Form 10-K
 
                  Annual Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934
                   For the fiscal year ended December 31, 1997

                                       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  ____ No ____  Not  applicable  X The
Partnership became subject to Section 13 reporting on January 28, 1998.

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

                                                          

                                     PART I

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

Item 2.      Properties...............................................5

Item 3.      Legal Proceedings........................................6

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......................7

Item 6.      Selected Financial Data..................................8

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

Item 8.      Financial Statements and Supplementary Data.............13

Item 9.      Changes In and Disagreements With Accountants on Accounting
             and Financial Disclosure................................26


                                    PART III

Item 10.     Directors and Executive Officers........................26

Item 11.     Management Remuneration and Transactions................27

Item 12.     Security Ownership of Certain Beneficial Owners 
             and Management..........................................27

Item 13.     Certain Relationships and Related Transactions..........27


                                     PART IV

Item 14.     Exhibits, Supplemental Financial Statement Schedules
             and Reports on Form 8-K.................................30

                                                       


                                      

<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, 1997. The  Partnership  commenced  operations on March
29, 1988.

On October 8, 1993,  Marriott  Corporation's  operations  were  divided into two
separate  companies:  Host Marriott  Corporation  ("Host Marriott") and Marriott
International, Inc. ("MII"). The sole general partner of the Partnership is RIBM
One Corporation,  a Delaware corporation (the "General Partner"), a wholly-owned
subsidiary of Host Marriott.

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,  which as
of December 31, 1997 includes 257 Inns worldwide in the extended-stay segment of
the US lodging industry. The Inns are managed by Residence Inn by Marriott, Inc.
(the "Manager"),  a wholly-owned subsidiary of 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
have  fewer  guest  rooms  than  traditional  full-service  hotels,   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 and through loans and advances made by Host
Marriott and its affiliates. See "Debt Financing."
<PAGE>

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. The General Partner  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.

Debt Financing

As  of  December  31,  1994,  the  Partnership  had  outstanding  bank  mortgage
indebtedness of $123 million (the "Term Loan").  The Term Loan carried  interest
at a fixed  rate of  10.4%  and  required  no  principal  amortization  prior to
maturity.  The Partnership also had $6 million  outstanding  under a $10 million
revolving  loan facility  (the  "Revolving  Loan") which  carried  interest at a
floating  rate  equal  to .5%  over the one,  two,  three  or six  month  London
Interbank  Offered Rate ("LIBOR") as elected by the  Partnership and required no
principal  amortization  prior to  maturity.  An  additional  $1.4  million  was
outstanding  on a note payable to Host  Marriott,  the proceeds  from which were
used for the  expansion of the St. Louis  Galleria Inn. The note payable to Host
Marriott  carried  interest at a fixed rate of 10.4% and  required no  principal
amortization prior to maturity.

The Term Loan, Revolving Loan and note payable to Host Marriott matured on April
24,  1995.  The Term Loan and  Revolving  Loan went into default on the maturity
date as the Partnership was unable to secure  replacement  financing.  Effective
April 25, 1995 through  August 31, 1995, the lender granted a forbearance on the
Term Loan and the Revolving Loan in which both loans began to accrue interest at
10.4%.  However,  effective  September 1, 1995,  pursuant to the loan documents,
both the Term Loan and  Revolving  Loan began to accrue  interest at the Default
Rate, as defined,  of prime plus 2.5 percentage points through October 11, 1995.
Host  Marriott  granted  the  Partnership  a six-month  forbearance  of the note
payable upon maturity on April 24, 1995 at the original interest rate.

Host  Marriott  had also  provided  the  Partnership  a $15 million debt service
guarantee (the "Limited  Guarantee") to the extent  necessary for payment of (i)
interest on the Term Loan,  (ii) interest on the Revolving  Loan,  and (iii) the
principal  amount of the Term Loan and the  Revolving  Loan.  Host  Marriott was
released from the Limited Guarantee on the date of the original debt maturity of
April 24, 1995.

Refinancing

On October 12, 1995 the Partnership completed a refinancing of the Partnership's
debt  through the  proceeds  of a $100  million  senior  mortgage  (the  "Senior
Mortgage") and a $30 million second  mortgage (the "Second  Mortgage").  The net
proceeds of the Senior and Second  Mortgages and existing  Partnership cash were
used as follows:  (i) to repay the Term Loan of $123 million,  (ii) to repay the
Revolving Loan of approximately $6 million, (iii) to repay the $1.4 million note
payable to Host Marriott and (iv) to pay certain costs of structuring the debt.
<PAGE>

The Senior  Mortgage of $100 million bears  interest at 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 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, 1997 and 1996 was 10.13%.  In 1995, the weighted  average  interest
rate on the Partnership's debt was 10.14%.

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.
<PAGE>

     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  Marriott,  the  parent  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  unlimited  liability  for the
obligations  of the  Partnership,  unless  those  obligations  are, by contract,
without recourse to the partners of the  Partnership.  Since the General Partner
is  entitled  to  manage  and  control  the  business  and   operations  of  the
Partnership,  and because  certain  actions taken by the General  Partner or the
Partnership  could expose the General Partner or its parent,  Host Marriott,  to
liability  that  is not  shared  by the  limited  partners  (for  example,  tort
liability and environmental liability),  this control could lead to conflicts of
interest.


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  (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;
<PAGE>

(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 Marriott
provides  the services of certain  employees  (including  the General  Partner's
executive officers) of Host Marriott 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 Marriott and its other  affiliates.  No officer or director
of the  General  Partner or  employee  of Host  Marriott  devotes a  significant
percentage  of time to  Partnership  matters.  To the extent  that any  officer,
director or employee does devote time to the Partnership, the General Partner or
Host  Marriott,  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 Marriott or its subsidiaries for
the cost of providing administrative services to the Partnership.

Proposed Transaction

The General Partner has  undertaken,  on behalf of the  Partnership,  to pursue,
subject to further  approval  of the  partners,  a  potential  transaction  (the
"Consolidation")  in which (i)  subsidiaries of CRF Lodging  Company,  L.P. (the
"Company"),  a newly formed Delaware limited  partnership,  would merge with and
into  the  Partnership  and up to five  other  limited  partnerships,  with  the
Partnership  and the other limited  partnerships  being the  surviving  entities
(each, a "Merger" and collectively,  the "Mergers"), subject to the satisfaction
or waiver of certain  conditions;  (ii) CRF Lodging Trust ("CRFLT"),  a Maryland
real estate  investment  trust,  the sole general partner of the Company,  would
offer its common shares of beneficial  interest,  par value $0.01 per share (the
"Common  Shares") to  investors  in an  underwritten  public  offering and would
invest the  proceeds of such  offering  in the Company in exchange  for units of
limited  partnership  interests in the company  ("CRFLT  Units");  and (iii) the
Partnership  would enter into a Lease for the  operation of its Inns pursuant to
which a Lessee  would pay rent to the  Partnership  based upon the  greater of a
fixed dollar  amount of base rent or specified  percentages  of gross sales,  as
specified  in the Lease.  If the  partners  approve  the  transaction  and other
conditions are satisfied,  the partners of the  Partnership  would receive CRFLT
Units in the  Merger in  exchange  for their  interests  in the  Partnership.  A
preliminary Prospectus/Consent  Solicitation was filed as part of a Registration
Statement  on Form S-4 with the  Securities  and Exchange  Commission  and which
describes the potential  transaction in greater detail. Any offer of CRFLT Units
in  connection  with  the   Consolidation   will  be  made  solely  by  a  final
Prospectus/Consent Solicitation.

<PAGE>

ITEM 2.          PROPERTIES

Introduction

The Inns consist of 15 Residence  Inn by Marriott  Inns as of December 31, 1997.
The  Inns,  which  range in age  between  10 and 13  years,  are  geographically
diversified  among seven states:  four in Ohio,  three in  California,  three in
Georgia, two in Missouri, and one in Illinois, Colorado and Michigan.

The  extended-stay   segment  of  the  lodging  industry  experienced  increased
competition  throughout  1997  as new  extended-stay  purpose-built  competitors
entered the market.  This trend is expected to continue in 1998.  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."

<TABLE>

Name and Location of Partnership Inns
           Inn                           Number of Suites       Date Opened
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>    <C>
-----------------------------          --------------------  -----------------
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
                                    =========================
</TABLE>
<PAGE>

The following table shows selected combined operating statistics for the Inns:
<TABLE>
                                                                     
                                                                
                                                 Year Ended December 31,           
                                                 -----------------------           
                                                 
                                           1997            1996            1995     
                                           ----            ----            ----     
<S>     <C>    <C>    <C>    <C>    <C>    <C>
 
Combined average occupancy.................83.4%           83.5%           85.8%
Combined average daily suite rate...$      91.44    $      88.02   $       81.14
REVPAR..............................$      76.26    $      73.50   $       69.62
</TABLE>

     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.


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 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  "Partnerships").  The plaintiffs allege that the merger of the 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,
constitutes a breach of the fiduciary duties owed to the limited partners of the
Partnerships by Host Marriott and the general partners of the  Partnerships.  In
addition,  the plaintiffs  allege that the Merger  breaches  various  agreements
relating to the  Partnerships.  The plaintiffs are seeking,  among other things,
the  following:   certification  of  a  class;  injunction  relief  to  prohibit
consummation of the Merger or, in the alternative, rescission of the Merger, and
damages. Host Marriott and the general partners of the Partnerships believe that
these  allegations  are totally  devoid of merit and they  intend to  vigorously
defend against such claims.  The  defendants  also maintain that this lawsuit is
premature  because  the  Merger  has not  been,  and may not be  consummated  as
proposed in the filings.
 

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

None

<PAGE>

                                    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,  1997,  there were 4,127
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, 1997, the  Partnership has distributed a total of $40,356,670
($609 per limited partner unit) since  inception.  In February 1997,  $1,656,566
($25 per limited partner unit) was distributed  from 1996  operations.  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). In
1995,  $861,414  ($13 per  limited  partner  unit)  was  distributed  from  1994
operations.  In February 1998, the Partnership  distributed $3,313,131 from 1997
operations ($50 per limited partner unit). No  distributions of Capital Receipts
have been made since inception.

<PAGE>

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,
1997 presented in accordance with generally accepted accounting principles.
                       
<TABLE>
                       1997         1996          1995         1994         1993    
                       ----         ----          ----         ----         ----    
                                (in thousands, except per unit amounts)
<S>     <C>    <C>    <C>    <C>    <C>    <C>

Revenues.......$   33,042   $    32,084  $    30,069   $   27,305   $    25,193
                   ======        ======       ======       ======        ======
Net income/
 (loss)        $   4,914    $     3,087  $     1,517   $   (1,588)  $    (2,891)
                   ======         ======       ======      =======       =======

Net income/ 
 (loss) per 
limited partner 
unit
(65,600 Units).$       74  $        47  $        23   $      (24)  $       (44)
                  ========     ========      ========      ========      ======= 
Total assets...$  151,971  $   151,658  $   157,061   $  155,640   $   157,602
                  ========     ========     ========     ========      =========   
Total 
liabilities....$  143,392   $   146,337  $   149,858   $  149,092   $   146,153
                  ========      ========     ========     ========      ========
Cash distributions per limited partner unit
(65,600 Units).$       25   $        75  $        13   $       50   $        49
                  ========      ========     ========     ========      ========            

</TABLE>


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


FORWARD-LOOKING STATEMENTS

Certain  matters  discussed  herein are  forward-looking  statements  within the
meaning of the  Private  Litigation  Reform Act of 1995 and as such may  involve
known and unknown  risks,  uncertainties,  and other factors which may cause the
actual  results,  performance or achievements of the Partnership to be different
from any future  results,  performance or  achievements  expressed or implied by
such   forward-looking   statements.   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.  These  risks  are  detailed  from  time to time in the  Partnership's
filings with the Securities and Exchange Commission.  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, 1997, 1996 and 1995. During the period from 1995
through  1997,  Partnership  revenues  (Inn sales less Inn  operating  costs and
expenses)  grew from $30.1  million to $33.0  million,  while the  Partnership's
total Inn sales grew from $56.7 million to $62.1 million. Growth in suite sales,
and thus Inn sales,  is primarily a function of combined  average  occupancy and
combined  average  suite rates.  During the period from 1995 through  1997,  the
Inns' combined average suite rate increased  approximately  $10 from $81 to $91,
while the combined average  occupancy  decreased over two percentage points from
85.8% to 83.4%.

The  Partnership's  operating costs and expenses are, to a great extent,  fixed.
Therefore, the Partnership derives substantial operating leverage from increases
in revenue.  This  operating  leverage  is offset in part by variable  expenses,
including (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.
<PAGE>

RESULTS OF OPERATIONS

1997 Compared to 1996:

Revenues.  Revenues  increased  by $1.0 million in 1997,  to $33  million,  a 3%
increase when compared to 1996. This increase in revenues was achieved primarily
through  an  increase  in Inn  revenue  per  available  room  ("REVPAR"),  which
represents the  combination of the combined  average daily room rate charged and
the combined  average  occupancy  achieved,  and is a commonly used indicator of
hotel performance.  REVPAR does not include food and beverage or other ancillary
revenues generated by the property. REVPAR grew nearly 4% in 1997 as a result of
an increase in average suite rates, as discussed  below. A $798,000  decrease in
other Inn operating expenses due to an adjustment to the Partnership's sales and
use tax liability also  contributed  to the increase in Inn revenues.  The sales
and use tax liability was reduced pursuant to a review of the aggregate exposure
of the Inns.

Inn sales. 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
increases in the combined average suite rate from $88 in 1996 to $91 in 1997. 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.  Combined average  occupancy  remained
stable at approximately 83.4%. Ten of the Partnership's 15 Inns posted occupancy
rates exceeding 80% for 1997.

Operating Costs and Expenses.  Operating  costs and expenses  decreased to $15.7
million in 1997 from $15.9  million in 1996.  As a percentage  of Inn  revenues,
operating  costs and  expenses  represented  47% of revenues for 1997 and 50% 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 53% of  total  revenues,  in 1997  from  $16.2  million,  or 50% 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 15% of
revenues,  in 1997  from $3.1  million,  or 10% of total  revenues,  in 1996 due
primarily to the changes in revenues and expenses discussed above.

1996 Compared to 1995:

Revenues.  Revenues (Inn sales less Inn operating costs and expenses)  increased
$2.0 million in 1996 to $32.1 million, a 7% increase when compared to 1995. This
increase in revenues  was  achieved  primarily  through a 6% increase in REVPAR,
that was primarily the result of an increase in the combined average suite rate,
as discussed below.

Inn sales. Total 1996 Inn sales of $60.8 million  represented a $4.1 million, or
7%,  increase over 1995 results.  This increase was achieved  primarily  through
increases in the combined average suite rate from $81 in 1995 to $88 in 1996. As
a result,  1996 suite sales  increased by $4.1 million,  or 8%, to $58.0 million
from $53.9 million in 1995,  despite a 2.3 percentage point decrease in combined
average occupancy from approximately 86% to 84%, during these periods. Eleven of
the Partnership's 15 Inns posted occupancy rates exceeding 80% for 1996.
<PAGE>

Operating Costs and Expenses.  Operating  costs and expenses  increased to $15.9
million, or 50% of revenues,  in 1996 from $15.7 million, or 52% of revenues, in
1995.

Operating Profit.  Operating profit increased $1.8 million to $16.2 million,  or
50% of revenues,  in 1996 from $14.4 million, or 48% of revenues, in 1995 due to
the changes in revenues and operating costs discussed above.

Interest Expense.  Interest expense remained stable at $13.4 million.

Net  Income.  Net  income  increased  $1.6  million to $3.1  million,  or 10% of
revenues,  in 1996  from  $1.5  million,  or 5% of total  revenues,  in 1995 due
primarily to improved lodging results.


CAPITAL RESOURCES AND LIQUIDITY

General

The General  Partner  believes  that cash from Inn  operations  and  Partnership
reserves  will  provide  adequate  funds in the short term and long term for the
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 from  operations was $12.7 million,  $10.8 million and $9.4 million for
the years ended December 31, 1997, 1996 and 1995, respectively. The $1.9 million
increase in cash from operations in 1997 over 1996 was primarily due to the $1.0
million in increased rent collections  from the Manager.  The improved cash from
operations  was also a result of the  $638,000  decrease  in  mortgage  interest
payments due to the payment of the optional principal  amortization on the debt.
Cash from operations  increased $1.4 million in 1996 over 1995 primarily because
of the $2.0  million  increase in Inn  revenues  during this time  period.  This
increase in revenues was offset by the $244,000  increase in base management and
Residence  Inn system fees which  increased as a result of improved  sales.  The
Partnership  paid $12.4 million,  $13.0 million and $14.5 million in interest in
1997, 1996 and 1995, respectively.

Cash used in  investing  activities  was $3.9  million,  $3.2  million  and $3.0
million,  respectively, in 1997, 1996 and 1995. The Partnership's cash investing
activities  consist primarily of contributions to the property  improvement fund
and capital expenditures for improvements to existing Inns. Contributions to the
property  improvement fund were $3.1 million,  $3.0 million and $2.8 million for
the years ended  December 31, 1997,  1996 and 1995,  while capital  expenditures
were $5.5  million,  $3.6 million and $3.1 million,  respectively,  during these
same time  periods.  The  increase in capital  expenditures  reflects  increased
spending for suite refurbishments and structural improvements at the Inns.

Cash used in  financing  activities  was $6.6  million,  $11.5  million and $4.5
million,  respectively, in 1997, 1996 and 1995. The Partnership's cash financing
activities  consist  primarily of repayments of debt,  capital  distributions to
partners, payment of debt financing costs and debt refinancing. In October 1995,
the Partnership  refinanced debt of $130.4 million with the proceeds from a $100
million  senior  mortgage  loan  ("Senior  Mortgage")  and a $30 million  second
mortgage  loan  ("Second  Mortgage").  The  Partnership  paid  $207,000 and $3.1
million in 1996 and 1995,  respectively,  for refinancing  costs associated with
this  transaction.   See  "Refinancing"  below.  During  1997,  1996  and  1995,
respectively,  the Partnership repaid $4.9 million, $6.3 million and $177,000 of
principal  on the Senior  and Second  Mortgages.  Capital  distributions  to the
partners were $1.7 million,  $5.0 million and $861,000,  respectively,  in 1997,
1996 and 1995. The $1.7 million distributed in 1997 was from 1996 operations. Of
the $5.0 million  distributed in 1996, $1.7 million was from 1996 operations and
$3.3 million was from 1995 operations. The $861,000 distributed in 1995 was from
1994 operations. In February 1998, the Partnership distributed $3.3 million from
1997 earnings.
<PAGE>

Refinancing
 
The Partnership's debt was refinanced on October 12, 1995 at which time the Term
Loan,  Revolving  Loan and note payable to Host  Marriott were fully repaid with
the  proceeds  from a $130  million  nonrecourse  mortgage  loan (the  "Mortgage
Debt").  The  Mortgage  Debt is  comprised  of a $100  million note (the "Senior
Mortgage")  which bears  interest at 8.6% and a $30  million  note (the  "Second
Mortgage")  which bears interest at 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.

Host  Marriott  was  released  from  its  $15  million  debt  service  guarantee
obligation  on the date of the  original  debt  maturity of April 24,  1995.  No
amounts were advanced under this obligation.

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 as follows, in 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,  currently  equal  to 5%.  Based on  current  capital  budgets,  the
Partnership's FF&E reserves are forecasted to be insufficient  beginning in 1998
through 2002. 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.  The current
shortfall  estimate  for 1998 of $2.1  million is  projected  to be funded  from
operating  cash  reserved  in  prior  years.   It  is   anticipated   that  1998
distributions will be net of an additional  capital reserve.  The balance in the
property  improvement  fund totaled $1.2 million as of December 31, 1997.  Total
capital expenditures for 1997, 1996 and 1995 were $5.5 million, $3.6 million and
$3.1 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  $627,000,  $515,000  and
$491,000 for fiscal years ended December 31, 1997, 1996 and 1995,  respectively.
Deferred base  management fees do not accrue  interest.  As of December 31, 1997
and December 31, 1996, cumulative deferred base management fees totaled $872,000
and $1.5 million, respectively.
<PAGE>

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.  In each of the years
ended  December  31, 1997 and  December  31,  1996,  $3.4  million in  incentive
management  fees were earned and  deferred.  In 1995,  $3.1 million in incentive
management  fees were  earned  and  deferred.  Through  December  31,  1997,  no
incentive  management  fees  have  been paid to the  Manager  and  approximately
$545,000 is expected to be paid during 1998.  As of December 31, 1997,  1996 and
1995, deferred incentive  management fees were $22.7 million,  $19.3 million and
$16.0 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. For 1998, the outlook continues to be positive.  Residence Inns
continue  to command a premium  share of the market in which they are located in
spite of the  growth of new  chains.  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, Extended Stay America and AmeriSuites.

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 1997,  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.

<PAGE>

ITEM 8.          FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index
                                                                           Page

Marriott Residence Inn Limited Partnership Financial Statements:

      Report of Independent Public Accountants............................   14

      Statement of Operations.............................................   15

      Balance Sheet.......................................................   16

      Statement of Changes in Partners' Capital...........................   17

      Statement of Cash Flows.............................................   18

      Notes to Financial Statements.......................................   19

<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, 1997 and 1996,
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, 1997.  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, 1997 and 1996, and the results of its operations
and its cash flows for each of the three years in the period ended  December 31,
1997, in conformity with generally accepted accounting principles.

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 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 17, 1998
<PAGE>


                             Statement of Operations
                   Marriott Residence Inn Limited Partnership
              For the Years Ended December 31, 1997, 1996 and 1995
                     (in thousands, except per Unit amounts)

<TABLE>


                                            1997           1996           1995    
                                            ----           ----           ----    
<S>            <C>                    <C>            <C>           <C>         
REVENUES (Note 3).....................$    33,042    $    32,084   $     30,069

OPERATING COSTS AND EXPENSES
   Depreciation and amortization......      5,328          5,620          5,976
   Incentive management fee............     3,383          3,366          3,130
   Residence Inn system fee............     2,363          2,321          2,158
   Property taxes......................     2,213          2,229          2,235
   Base management fee.................     1,242          1,216          1,135
   Equipment rent and other............     1,149          1,181          1,035
                                            -----          -----          -----

                                           15,678         15,933         15,669
                                           ------         ------         ------

OPERATING PROFIT.......................    17,364         16,151         14,400
   Interest expense....................   (12,788)       (13,411)       (13,405)
   Interest income.....................       338            347            522
                                          -------          ------        ------

NET INCOME...........................$      4,914    $     3,087   $      1,517
                                          =======         ======         ======
ALLOCATION OF NET INCOME
   General Partner...................$         49    $        31   $         15
   Limited Partners..................       4,865          3,056          1,502
                                           ------          ------         -----

                                     $      4,914    $     3,087   $      1,517
                                          =======         ======         ======
NET INCOME PER LIMITED PARTNER UNIT
  (65,600 Units).....................$         74    $        47   $         23
                                          =======        =======        =======








   The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>

                                  Balance Sheet
                   Marriott Residence Inn Limited Partnership
                           December 31, 1997 and 1996
                                 (in thousands)
<TABLE>

                                                         1997            1996     
                                                         ----            ----     
                                                  

<S>     <C>    <C>    <C>    <C>    <C>    <C>              

                                     ASSETS

   Property and equipment, net....................$    140,448    $     140,272
   Due from Residence Inn by Marriott, Inc........       2,462            2,462
   Property improvement fund......................       1,160            2,767
   Deferred financing costs, net of 
     accumulated amortization.....................       2,251            2,728
   Cash and cash equivalents......................       5,650            3,429
                                                       -------          -------
                                                  $    151,971    $     151,658
                                                       =======          =======
                        LIABILITIES AND PARTNERS' CAPITAL
   LIABILITIES
     Mortgage debt................................$    118,576    $     123,519
     Incentive management fee due
        to Residence Inn by Marriott, Inc.........      22,709           19,326
     Base management fee due to Residence Inn by 
        Marriott, Inc.............................         872            1,499
     Accounts payable and accrued expenses........       1,235            1,993
                                                       -------          -------
        Total Liabilities.........................     143,392          146,337
                                                       -------          -------
   PARTNERS' CAPITAL
     General Partner
        Capital contribution.......................        663              663
        Capital distributions......................       (403)            (387)
        Cumulative net losses......................        (98)            (147)
                                                       --------         -------
                                                           162              129
     Limited Partners
        Capital contribution, net of offering 
          costs of $7,550.........................      58,050           58,050
        Capital distributions.....................     (39,953)         (38,313)
        Cumulative net losses.....................      (9,680)         (14,545)
                                                       --------         -------
                                                         8,417            5,192
                                                       --------         -------
        Total Partners' Capital...................       8,579            5,321
                                                       --------         -------
                                                 $     151,971    $     151,658
                                                       ========         =======

   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, 1997, 1996 and 1995
                                 (in thousands)


<TABLE>

                                     General           Limited
                                     Partner           Partners           Total    
                                     -------           --------           -----    
<S>     <C>    <C>    <C>    <C>    <C>    <C>

Balance, December 31, 1994.....$         141    $        6,407    $       6,548

     Capital distributions.....           (8)             (854)            (862)

     Net income................           15             1,502            1,517
                                      --------         --------        --------
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
                                      ========          ========       ========














   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, 1997, 1996 and 1995
                                 (in thousands)
<TABLE>

                                                1997         1996        1995   
                                                ----         ----        ----   
<S>     <C>    <C>    <C>    <C>    <C>    <C>

OPERATING ACTIVITIES
  Net income................................$   4,914   $   3,087   $    1,517
  Noncash items:
     Depreciation and amortization...........   5,328       5,620        5,976
     Incentive management fee due to 
       Residence Inn by Marriott, Inc........   3,383       3,366        3,130
     Amortization of deferred financing costs
       as interest...........................     472         473          191
     (Gain) loss on dispositions of 
       property and equipment................      --         (10)         (18)
  Changes in operating accounts:
     Due from Residence Inn by Marriott, Inc.      --      (1,133)         417
     Accounts payable and accrued expenses...    (753)        (68)      (1,334)
     Repayment of deferred base management fee
       due to Residence Inn by Marriott, Inc.    (627)       (515)        (491)
                                               --------    --------    --------
       Cash provided by operations...........  12,717      10,820        9,388
                                               --------    --------    --------
INVESTING ACTIVITIES
  Additions to property and equipment, net...  (5,504)     (3,561)      (3,095)
  Change in property improvement fund........   1,607         379          102
                                               --------    --------    --------
       Cash used in investing activities.....  (3,897)     (3,182)      (2,993)
                                               --------    --------    --------
FINANCING ACTIVITIES
  Proceeds from mortgage loan................      --          --       130,000
  Repayment of mortgage debt.................      --          --     (128,967)
  Payment of note payable to Host Marriott 
     Corporation.............................      --          --       (1,395)
  Principal payments on mortgage debt........  (4,943)     (6,304)        (177)
  Capital distributions to partners..........  (1,656)     (4,969)        (862)
  Payment of financing costs.................      --        (207)      (3,096)
                                              --------     --------    --------
       Cash used in financing activities.....  (6,599)    (11,480)      (4,497)
                                              --------     --------    --------
INCREASE (DECREASE) IN CASH AND 
      AND CASH EQUIVALENTS...................   2,221      (3,842)       1,898
    
CASH AND CASH EQUIVALENTS at beginning of year  3,429       7,271        5,373 
                                              --------     --------    --------
CASH AND CASH EQUIVALENTS at end of year......$ 5,650   $   3,429   $    7,271
                                              ========     ========    ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
      Cash paid for mortgage interest........ $12,354   $  12,992   $   14,547
                                              ========     ========    ========





   The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>

                          Notes to Financial Statements
                   Marriott Residence Inn Limited Partnership
                           December 31, 1997 and 1996


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
Illinois,  Colorado and Michigan,  and as of December 31, 1997,  have a total of
2,129 suites.  The sole general partner of the Partnership,  with a 1% interest,
is RIBM One  Corporation  (the "General  Partner"),  a Delaware  corporation and
wholly-owned subsidiary of Host Marriott.

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. The General Partner 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.

The General Partner has  undertaken,  on behalf of the  Partnership,  to pursue,
subject to further  approval  of the  partners,  a  potential  transaction  (the
"Consolidation")  in which (i)  subsidiaries of CRF Lodging  Company,  L.P. (the
"Company"),  a newly formed Delaware limited  partnership,  would merge with and
into  the  Partnership  and up to five  other  limited  partnerships,  with  the
Partnership  and the other limited  partnerships  being the  surviving  entities
(each, a "Merger" and collectively,  the "Mergers"), subject to the satisfaction
or waiver of certain  conditions;  (ii) CRF Lodging Trust ("CRFLT"),  a Maryland
real estate  investment  trust,  the sole general partner of the Company,  would
offer its common shares of beneficial  interest,  par value $0.01 per share (the
"Common  Shares") to  investors  in an  underwritten  public  offering and would
invest the  proceeds of such  offering  in the Company in exchange  for units of
limited  partnership  interests in the company  ("CRFLT  Units");  and (iii) the
Partnership  would enter into a lease for the  operation of its Inns pursuant to
which a lessee  would pay rent to the  Partnership  based upon the  greater of a
fixed dollar  amount of base rent or specified  percentages  of gross sales,  as
specified  in the lease.  If the  partners  approve  the  transaction  and other
conditions are satisfied,  the partners of the  Partnership  would receive CRFLT
Units in the Merger in exchange for their interests in the Partnership.

A  preliminary   Prospectus/Consent   Solicitation   was  filed  as  part  of  a
Registration  Statement on Form S-4 with the Securities and Exchange  Commission
and which describes the potential  transaction in greater  detail.  Any offer of
CRFLT Units in connection with the Consolidation  will be made solely by a final
Prospectus/Consent Solicitation.

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:
<PAGE>

(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 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.

<PAGE>

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  represent  house  profit  of the  Inns  because  the  Partnership  has
delegated substantially all of the operating decisions related to the generation
of house profit of the Inns to the Manager.  House profit reflects Inn operating
results which flow to the Partnership as property owner and represents gross Inn
sales less  property-level  expenses,  excluding  depreciation and amortization,
base,  Residence  Inn system and  incentive  management  fees,  property  taxes,
equipment  rent  and  other  costs,  which  are  disclosed   separately  in  the
accompanying statement of operations.

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 is assessing the impact of EITF 97-2 on its policy of excluding
the  property-level  revenues  and  operating  expenses  of its  Inns  from  its
statement of operations  (see Note 3). If the  Partnership  concludes  that EITF
97-2 should be applied to its Inns, it would include  operating results of those
managed operations in its financial statements.  Application of EITF 97-2 to the
financial  statements as of and for the year ended December 31, 1997, would have
increased both revenues and operating  expenses by approximately $29 million and
would have 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 6.

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.
<PAGE>

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
fee expenses.  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,  1997 and 1996 by  $17,448,000  and  $15,689,000,
respectively.

Deferred Financing Costs

Deferred  financing  costs  represent the costs incurred in connection  with the
mortgage debt refinancing totaling  $3,303,000.  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, 1997 and 1996,
accumulated  amortization  of deferred  financing  costs totaled  $1,047,000 and
$575,000, 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.

New Statements of Financial Accounting Standards

In 1996, the Partnership  adopted  Statement of Financial  Accounting  Standards
("SFAS") No. 121  "Accounting  for the  Impairment of Long-Lived  Assets and for
Long-Lived  Assets to Be Disposed  Of." Adoption of SFAS No. 121 did not have an
effect on its financial statements.

Reclassifications

Certain  reclassifications  were  made to prior  year  financial  statements  to
conform to the 1997 presentation.


NOTE 3.        REVENUES

Partnership  revenues consist of Inn operating results for the three years ended
December 31 (in thousands):
<TABLE>

                                          1997           1996             1995     
                                          ----           ----             ----     
<S>     <C>    <C>    <C>    <C>    <C>    <C>
INN SALES
   Suites........................$      59,082   $      58,019   $       53,945
   Other operating departments...        3,005           2,805            2,780
                                         -----           -----            -----
                                        62,087          60,824           56,725
                                        
INN EXPENSES
   Departmental direct costs
     Suites.......................      12,603          11,756           10,839
     Other operating departments..       1,152           1,024            1,013
   Other Inn operating expenses...      15,290          15,960           14,804
                                        ------          ------           ------
                                        29,045          28,740           26,656
                                        ------          ------           ------

REVENUES.........................$      33,042   $      32,084   $       30,069
                                        ======          ======           ======

</TABLE>
<PAGE>

NOTE 4.        PROPERTY AND EQUIPMENT

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

                                                       1997             1996     
                                                       ----             ----     
<S>     <C>    <C>    <C>    <C>    <C>    <C>

Land and improvements..........................$      46,441   $       46,441
Buildings and improvements.....................      114,458          112,592
Furniture and equipment........................       39,540           35,902
                                                     --------         --------
                                                     200,439          194,935

Less accumulated depreciation..................      (59,991)         (54,663)
                                                     --------         --------

                                               $     140,448   $      140,272
                                                     ========         ========    
</TABLE>                                             


NOTE 5.        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):

                       As of December 31, 1997         As of December 31, 1996 
                       -----------------------         ----------------------- 
                                     Estimated                        Estimated
                       Carrying        Fair          Carrying           Fair
                       Amount         Value          Amount            Value   
                       ------         -----          ------            -----   

Mortgage debt....$     118,576   $     124,500    $     123,519   $     126,900
Incentive management 
  fee due to Residence
  Inn by 
  Marriott, Inc  $      22,709   $       2,200    $      19,326   $       4,100
Base management
 fee due to Residence
  Inn by
 Marriott, Inc...$         872   $         700    $       1,499   $       1,500

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 6.        MORTGAGE DEBT

As of December 31, 1994,  the  Partnership's  debt  consisted of a  $123,000,000
nonrecourse  mortgage loan (the "Term Loan"),  $5,967,000  borrowed  under a $10
million  revolving credit facility (the "Revolving  Loan") and a $1,395,000 note
payable to Host  Marriott for an expansion at the St. Louis  Galleria  Inn. Both
the Term Loan and the note payable to Host Marriott  carried interest at a fixed
rate of 10.4% and required no  principal  amortization  prior to  maturity.  The
Revolving Loan was available to provide  interest  payments on up to $19 million
of the  principal  amount of the Term Loan.  Borrowings  carried  interest  at a
floating  rate  equal  to .5%  over the one,  two,  three  or  six-month  London
Interbank  Offered Rate ("LIBOR") as elected by the  Partnership and required no
principal  amortization prior to maturity.  The Partnership did not borrow under
the Revolving Loan in 1995.
<PAGE>
The Term Loan,  Revolving  Loan and note payable  matured on April 24, 1995. The
Term Loan and  Revolving  Loan went into  default  on the  maturity  date as the
Partnership was unable to secure replacement financing. Effective April 25, 1995
through  August 31, 1995,  the lender granted a forbearance on the Term loan and
the  Revolving  Loan in which  both  loans  began to accrue  interest  at 10.4%.
However,  effective September 1, 1995, pursuant to the loan documents,  both the
Term Loan and  Revolving  Loan began to accrue  interest at the Default Rate, as
defined,  of prime plus 2.5  percentage  points through  October 11, 1995.  Host
Marriott  granted the  Partnership a six-month  forbearance  of the note payable
upon  maturity  on April 24,  1995 at the  original  interest  rate.  During the
forbearance  period,  the  Partnership was required to make monthly debt service
payments  of interest  only on the Term Loan and  Revolving  Loan and  quarterly
payments of interest only on the note payable.

The Partnership's debt was refinanced on October 12, 1995 at which time the Term
Loan,  Revolving  Loan and note payable to Host  Marriott were fully repaid with
the  proceeds  from a $130  million  nonrecourse  mortgage  loan (the  "Mortgage
Debt").  The  Mortgage  Debt is  comprised  of a $100  million note (the "Senior
Mortgage")  which bears  interest at 8.6% and a $30  million  note (the  "Second
Mortgage") which bears interest at 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, 1997 and 1996
was 10.13%.  During 1997 and 1996, the  Partnership  made payments of $4,431,000
and $4,719,000 on the Senior  Mortgage and $512,000 and $1,585,000 on the Second
Mortgage,  respectively. At December 31, 1997, the outstanding principal balance
of the Senior Mortgage and the Second Mortgage was $90,692,000 and  $27,884,000,
respectively.

Host  Marriott  was  released  from  its  $15  million  debt  service  guarantee
obligation  on the date of the  original  debt  maturity of April 24,  1995.  No
amounts were advanced under this obligation.

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, 1997
is as follows (in thousands):

                           1998......................$       5,423
                           1999......................        5,952
                           2000......................        4,508
                           2001......................        4,972
                           2002......................       97,721
                                                            ------
                                                     $     118,576
                                                           =======

<PAGE>

NOTE 7.        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 $627,000,  $515,000 and $491,000 for the
fiscal years ended December 31, 1997, 1996 and 1995, 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, 1997, no incentive  management
fees have been paid to the Manager and approximately  $545,000 is expected to be
paid during 1998.

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,
1997,  1996 and  1995,  the  Partnership  paid a  Residence  Inn  system  fee of
$2,363,000,  $2,321,000 and  $2,158,000,  reimbursed the Manager for $1,051,000,
$1,031,000 and $988,000 of Chain Services and contributed $1,477,000, $1,450,000
and  $1,349,000  to  the  marketing  fund,  respectively.   Chain  Services  and
contributions to the marketing fund are included in other Inn operating expenses
in Note 3.

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, 1997 and 1996,
$775,000 has been advanced to the Manager for working capital.

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 5% of gross  revenues of each Inn.  Contributions  to the  property
improvement  fund as of  December  31,  1997,  1996  and 1995  were  $3,104,000,
$3,041,000 and $2,836,000,  respectively.  Based on current capital budgets, the
Partnership's FF&E reserves are forecasted to be insufficient  beginning in 1998
through 2002. 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 and it is expected that
1998  distributions  will be net of an additional  capital reserve.  The current
shortfall  estimate  for 1998 of $2.1  million is  projected  to be funded  from
operating cash reserved in prior years.  The  Partnership  will continue to work
with the Manager in better utilizing the property improvement fund.
<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 directors or officers.  The business and policy  making
functions of the Partnership are carried out through the directors and executive
officers of RIBM One Corporation, the General Partner, who are listed below:

                                                                    Age at
    Name                      Current Position              December 31, 1997 
    ----                      ----------------              ----------------- 

Bruce F. Stemerman        President and Director                       42
Christopher G. Townsend   Vice President, Secretary and Director       50
Patricia K. Brady         Vice President and Chief Accounting Officer  36
Bruce Wardinski           Treasurer                                    37

Business Experience

Bruce  F.  Stemerman  joined  Host  Marriott  in 1989  as  Director--Partnership
Services.  He became  Vice  President--Lodging  Partnerships  in 1994 and became
Senior Vice President--Asset Management in 1996. Prior to joining Host Marriott,
Mr.  Stemerman  spent ten  years  with  Price  Waterhouse.  He also  serves as a
director and an 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 and an officer of numerous Host Marriott subsidiaries.

Patricia K. Brady was appointed to Vice President and Chief  Accounting  Officer
of the General  Partner on October 10, 1996.  Ms. Brady joined Host  Marriott in
1989 as Assistant  Manager--Partnership Services. She was promoted to Manager in
1990 and to Director--Asset Management in June 1996. Ms. Brady also serves as an
officer of numerous Host Marriott subsidiaries.

Bruce Wardinski  joined Host Marriott in 1987 as a Senior  Financial  Analyst of
Financial  Planning  &  Analysis  and was named  Manager  in June  1988.  He was
appointed  Director,  Financial Planning & Analysis in 1989, Director of Project
Finance in January 1990,  Senior  Director of Project Finance in June 1993, Vice
President--Project   Finance  in  June  1994,   and  Senior  Vice  President  of
International Development in October 1995. In June 1996, Mr. Wardinski was named
Senior Vice  President  and  Treasurer of Host  Marriott.  Prior to joining Host
Marriott, Mr. Wardinski was with the public accounting firm Price Waterhouse.



ITEM 11.         MANAGEMENT REMUNERATION AND TRANSACTIONS

As noted in Item 10 above, the Partnership has no directors 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
directors  of the General  Partner are not required to devote their full time to
the  performance of such duties.  No officer or director of the General  Partner
devotes a significant  percentage of time to Partnership  matters. To the extent
that any officer or director  does devote time to the  Partnership,  the General
Partner or Host Marriott,  as applicable,  is entitled to reimbursement  for the
cost of providing such services.  For the fiscal years ending December 31, 1997,
1996 and 1995,  the  Partnership  reimbursed  Host Marriott or its  subsidiaries
$157,000,  $218,000 and  $151,000,  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."

<PAGE>

ITEM 12.         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                 MANAGEMENT

As of December 31,  1997,  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 directors of the General Partner, Host Marriott,  MII
and their respective  affiliates own 80 limited partnership units as of December
31, 1997.

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 1997,
1996 and 1995, respectively,  the Partnership paid a Residence Inn system fee of
$2,363,000,   $2,321,000  and  $2,158,000.   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, 1997, 1996
and 1995,  respectively,  the  Partnership  paid current base management fees of
$1,242,000,  $1,216,000 and $1,135,000.  During 1997,  1996 and 1995,  $627,000,
$515,000 and  $491,000,  respectively,  of deferred  base  management  fees were
repaid.  Deferred  base  management  fees as of December  31, 1997 and 1996 were
$872,000 and $1.5 million, respectively.

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,
1997,  no  incentive   management  fees  have  been  paid  to  the  Manager  and
approximately $545,000 is expected to be paid during 1998. During 1997 and 1996,
$3.4 million of  incentive  management  fees were  deferred.  During 1995,  $3.1
million  of  incentive   management  fees  were  deferred.   Deferred  incentive
management  fees  were  approximately  $22.7  million  and $19.3  million  as of
December 31, 1997 and 1996, respectively.
<PAGE>

Chain Services and Marketing Fund

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, 1997,  1996 and 1995, the
Partnership  reimbursed the Manager for  $1,051,000,  $1,031,000 and $988,000 of
Chain  Services and  contributed  $1,477,000,  $1,450,000  and $1,349,000 to the
marketing fund, respectively.

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, 1997 and 1996,  $775,000 has been advanced to
the Manager for working capital.

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. Contributions to the property improvement fund are equal
to 5% of gross sales of each Inn. Contributions to the property improvement fund
as of  December  31,  1997,  1996  and  1995  were  $3,104,000,  $3,041,000  and
$2,836,000, 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, 1997,  1996 and 1995
(in thousands):

                                       1997             1996              1995 
                                       ----             ----              ---- 
Residence Inn system fee.......$       2,363    $       2,321     $       2,158
Marketing fund contribution....        1,477            1,450             1,349
Base management fee............        1,242            1,216             1,135
Chain services.................        1,051            1,031               988
Deferred base management fees..          627              515               491
                                       -----            -----             -----
                               $       6,760    $       6,533     $       6,121
                                       =====            =====             =====

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, 1997, 1996 and 1995 (in thousands):

                                             1997           1996           1995 
                                             ----           ----           ---- 
Principal and interest on 
   Host Marriott loan.................$        --   $         --   $      1,507
Administrative expenses reimbursed....        157            218            151
Cash distributions....................         16             50              8
                                             -----          -----         -----
                                      $       173   $        268   $      1,666
                                             =====          =====         =====

                                     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.
<PAGE>

<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>


 (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.

*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.




             (b)   Reports on Form 8-K

                   No reports on Form 8-K were filed during 1997.

                                    

</TABLE>
<PAGE>


                                             


                                  SCHEDULE III
                                   Page 1 of 2
                   MARRIOTT RESIDENCE INN LIMITED PARTNERSHIP
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                                December 31, 1997
                                 (in thousands)


<TABLE>


                                                 Initial Costs                           
                                  ----------------------------------------
                                      Land                     Subsequent                                                         
                                      and      Building and        Costs                        
Description            Debt       Improvements Improvements   Capitalized        
-----------            ----       ------------ ------------   -----------        
<S>                  <C>           <C>          <C>            <C>              
La Jolla             $ 20,870      $    11,579  $    14,462    $     811        
Long Beach             11,503            7,167       11,455          574              
St. Louis Galleria      9,960            1,989        5,010        1,618           
Boulder                 9,249            1,451        6,686          405                 
Costa Mesa              8,775            3,678        6,955          412                
Atlanta Buckhead        8,300            3,894        5,519          572               
Atlanta Cumberland      7,589            4,099        4,627          326          
Atlanta Dunwoody        7,589            2,116        7,387          526          
Chicago Lombard         7,352            3,665        5,746          327          
Southfield              7,233            2,031        8,195          811          
Cincinnati North        5,217            1,183        9,587          541          
St. Louis Chesterfied   4,980            1,539        5,372          415          
Other properties, each
less than 5% of total  9,959            2,007       14,553        1,609          
                      -------            -----       ------        -----          
                     $118,576      $    46,398  $   105,554    $   8,947     
                      =======           ======      =======        =====        
</TABLE>


<TABLE>
<S>                      <C> <C>                
<PAGE>

        Gross Amount at December 31, 1997               
------------------------------------------------
Land                                                     Date of
and          Building and             Accumulated    Completion of   Date       Depreciation  
Improvements  Improvements   Total   Depreciation    Construction  Acquired        Life
------------  ------------   ----- -------------- -----------------  --------      ----
<C>        <C>             <C>        <C>               <C>          <C>        <C>     
$11,580    $    15,272     $26,852    $    4,022        1986         1988       40 years
  7,234         11,962      19,196         2,969        1987         1988       40 years
  2,014          6,603       8,617         1,647        1986         1988       40 years
  1,451          7,091       8,542         1,764        1986         1988       40 years
  3,678          7,367      11,045         1,845        1986         1988       40 years
  3,903          6,082       9,985         1,600        1987         1988       40 years
  4,099          4,953       9,052         1,311        1987         1988       40 years
  2,116          7,913      10,029         1,990        1984         1988       40 years
  3,665          6,073       9,738         1,581        1987         1988       40 years
  2,031          9,006      11,037         2,286        1986         1988       40 years
  1,183         10,128      11,311         2,564        1985         1988       40 years
  1,543          5,783       7,326         1,476        1986         1988       40 years

  1,944         16,225      18,169         4,585      1985-1987      1988       40 years
  -----         ------      ------         -----      

$46,441    $   114,458     $160,899   $   29,640
 ======        =======      =======       ======
</TABLE>
<PAGE>

                                                                         
                                  SCHEDULE III
                                   Page 2 of 2
                   MARRIOTT RESIDENCE INN LIMITED PARTNERSHIP
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                                December 31, 1997
                                 (in thousands)

<TABLE>

Notes:
                                        1995             1996             1997    
                                        ----             ----             ----    
<S>     <C>    <C>    <C>    <C>    <C>    <C>
(a)  Reconciliation of Real Estate:
     Balance at beginning of year.$   157,008    $     158,281    $    159,033
     Capital Expenditures..........     1,273              752           1,866
     Dispositions..................        --               --              --
                                      -------          -------         -------
     Balance at end of year.......$   158,281    $     159,033    $    160,899
                                      =======          =======         =======
(b)  Reconciliation of Accumulated Depreciation:
     Balance at beginning of year.$      19,200  $      22,544    $     26,140
     Depreciation.................        3,344          3,596           3,500
                                         ------         ------          ------
     Balance at end of year.......$      22,544  $      26,140    $     29,640
                                         ======         ======          ======

(c)  The aggregate cost of land, buildings and
     improvements for Federal income tax purposes
     is approximately $159.7 million at December 31, 1997.

(d)  The debt balance is $118.6 million as of December 31, 1997
     and includes $90.7 million of Senior Mortgage Debt and
     $27.9 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, 1998.

                                                MARRIOTT RESIDENCE INN
                                                LIMITED PARTNERSHIP

                                                By:      RIBM ONE CORPORATION
                                                         General Partner



                                                /s/ Patricia K. Brady   
                                                ---------------------   
                                                Patricia K. Brady
                                                Vice President and Chief
                                                Accounting Officer


                                       



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 CORPORATION)
                                                          
/s/ Bruce F. Stemerman               President and Director
---------------------------
Bruce F. Stemerman                   (Principal Executive Officer)


/s/ Christopher G. Townsend          Vice President, Secretary and Director
---------------------------
Christopher G. Townsend


/s/ Patricia K. Brady                Vice President and Chief Accounting Officer
---------------------------
Patricia K. Brady


/s/ Bruce Wardinski                  Treasurer
---------------------------
Bruce Wardinski
<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 day of March,
1998.

                                               MARRIOTT RESIDENCE INN
                                               LIMITED PARTNERSHIP

                                               By:      RIBM ONE CORPORATION
                                                        General Partner



                                                        ----------------------- 
                                                        Patricia K. Brady
                                                        Vice President and 
                                                        Chief Accounting Officer



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 CORPORATION)

-----------------------              President and Director
Bruce F. Stemerman                   (Principal Executive Officer)


-----------------------              Vice President, Secretary and Director
Christopher G. Townsend


-----------------------              Vice President and Chief Accounting Officer
Patricia K. Brady


-----------------------              Treasurer
Bruce Wardinski


<PAGE>