Securities and Exchange Commission
                            Washington, D.C. 20549
                                   Form 10-K


          X         Annual Report Pursuant to Section 13 or 15(d)
                    of the Securities Exchange Act of 1934
                  For the fiscal year ended December 31, 1996





                                      OR


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

                     Commission File Number:    333-2336



                            CBM FUNDING CORPORATION
                 -----------------------------------------------------

                  (Exact name of registrant as specified in its charter)

                   Delaware                              52-1955658
--------------------------------------  ----------------------------------------
(State or other jurisdiction                (I.R.S. Employer Identification No.)
   of incorporation or organization)

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


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


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).


                                            Shares outstanding as of
              Class                             December 31, 1996
-------------------------------------    -----------------------------------
Common Stock, $.01 par value per share                 1,000



------------------------------------------------------------------------------
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<PAGE>



         -----------------------------------------------------------------------
                                              CBM FUNDING CORPORATION
         -----------------------------------------------------------------------

                                                 TABLE OF CONTENTS

<TABLE>
                                                                                                          PAGE NO.

<CAPTION>
                                                        PART I
<S>               <C>                                                                                       <C>

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

Item 2.           Properties................................................................................1

Item 3.           Legal Proceedings.........................................................................1

Item 4.           Submission of Matters to a Vote of Security Holders.......................................1


                                                      PART II

Item 5.           Market For The Company's Common Equity and
                  Related Security Holder Matters............................................................2

Item 6.           Selected Financial Data....................................................................2

Item 7.           Management's Discussion and Analysis of Financial Condition
                  and Results of Operations..................................................................2

Item 8.           Financial Statements and Supplementary Data................................................5

Item 9.           Changes In and Disagreements With Accountants on Accounting
                  and Financial Disclosure..................................................................13


                                                     PART III

Item 10.          Directors and Executive Officers .........................................................13

Item 11.          Management Remuneration and Transactions..................................................14

Item 12.          Security Ownership of Certain Beneficial Owners and Management............................14

Item 13.          Certain Relationships and Related Transactions............................................14


                                                      PART IV

Item 14.          Exhibits, Supplemental Financial Statement Schedules
                  and Reports on Form 8-K...................................................................15
</TABLE>



<PAGE>



                                                       PART I



ITEM 1.        BUSINESS

CBM Funding Corporation, (the "Company") a Delaware corporation and wholly-owned
subsidiary of Courtyard II Associates,  L.P. (the "Mortgagor" and "Associates"),
which is a  subsidiary  of  Courtyard  by Marriott II Limited  Partnership  (the
"Partnership"),  was formed on December 28, 1995. The Company was formed for the
purpose  of (i) making the  single,  fixed  rate,  non-recourse  $410.2  million
mortgage loan (the  "Mortgage  Loan") to the  Mortgagor  and (ii)  conveying the
Mortgage Loan and other instruments  securing the Mortgage Loan including the 69
cross-defaulted and  cross-collaterized  mortgages,  representing first priority
liens on fee or  leasehold  interests in 69 Hotels (the  "Hotels")  owned by the
Mortgagor, fee interests in land leased from Marriott International, Inc. or its
affiliates on which 53 hotels are situated in, and related assets,  and a pledge
of the  Mortgagor's  membership  interests  in, and the related right to receive
distributions from, the entity that owns the hotel located in Chicago/Deerfield,
Illinois  ("Deerfield  LLC"), to the trustee (the  "Trustee")  under a Trust and
Servicing Agreement dated January 24, 1996 (the "Trust and Servicing Agreement")
in   exchange   for   Multiclass   Mortgage   Pass-Through   Certificates   (the
"Certificates")  which represent interests in the trust fund under the Trust and
Servicing   Agreement.   For  financial   accounting  purposes  the  assets  and
liabilities  of the Trustee  are  included in the  financial  statements  of the
Company.  However,  legally,  the Company  transferred  the Mortgage Loan to the
Trustee  without  recourse  and has no interest  in the  Mortgage  Loan,  has no
obligations with respect to the Certificates and does not control the Trustee.


ITEM 2.        PROPERTIES

None.


ITEM 3.        LEGAL PROCEEDINGS

None.


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

None.




                                                         1

<PAGE>



                                                       PART II


ITEM 5.        MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED
               STOCKHOLDER MATTERS

None.


ITEM 6.        SELECTED FINANCIAL DATA

The following selected financial data presents historical operating  information
of the Company for the year ended  December  31, 1996,  presented in  accordance
with generally accepted accounting principles (in thousands, except common share
amounts). The Company had no operating activities prior to January 24, 1996.

                                                          1996
                                                         -------

       Revenues......................................$   29,365
                                                      ==========

        Net loss......................................$    1,027
                                                      ==========

        Net loss per common share.....................$    1,027
                                                      ==========

        Total assets..................................$  411,128
                                                      ==========

        Total liabilities.............................$  398,891
                                                      ==========


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


CAPITAL RESOURCES AND LIQUIDITY

Principal Sources and Uses of Cash

CBM  Funding  Corporation's  (the  "Company")  principal  source of cash is from
collections on the mortgage loan and from  additional  paid-in  capital from the
issuance of stock.  During 1996,  collections  on the mortgage loan were used to
repay principal on the certificates of $11.3 million. In addition,  during 1996,
additional  capital  contributions  from the  issuance  of stock was used to pay
financing costs of $13.3 million.


                                                         2

<PAGE>



Certificates

The Certificates,  as defined in Item 1-Business, in an initial principal amount
of $410.2  million  were issued by the  Trustee.  Proceeds  from the sale of the
Certificates  were  utilized  by the  Company  to  provide  a  Mortgage  Loan to
Associates.  The Certificates and Mortgage Loan each require monthly payments of
principal and interest based on a 17-year  amortization  schedule.  The Mortgage
Loan matures on January 28, 2008. However, the maturity date of the Certificates
and the  Mortgage  Loan each may be  extended  until  January  28, 2013 with the
consent  of 66 2/3% of the  holders  of the  outstanding  Certificates  affected
thereby.  The Certificates were issued in the following classes and pass-through
rates of interest.

                                   Initial Certificate       Pass-Through
                  Class                  Balance                 Rate

                Class A-1         $         45,500,000           7.550%
                Class A-2         $         50,000,000           6.880%
             Class A-3P & I       $        129,500,000           7.080%
               Class A-3IO        Not Applicable                 0.933%
                 Class B          $         75,000,000           7.480%
                 Class C          $        100,000,000           7.860%
                 Class D          $         10,200,000           8.645%

The Class  A-3IO  Certificates  receive  payments  of  interest  only based on a
notional balance equal to the Class A-3P & I Certificates balance.

The  balance of the  Certificates  was  $398.9  million at  December  31,  1996.
Principal  amortization of $11.3 million of the Class A-1  Certificates was made
during 1996.

The Certificates/Mortgage Loan maturities are as follows (in thousands):

                  1997            $     13,298
                  1998                  14,331
                  1999                  15,443
                  2000                  16,642
                  2001                  17,934
               Thereafter              321,205
                                  ------------
                                  $    398,853
                                  ============

The   Mortgage   Loan  is   secured   primarily   by  69   cross-defaulted   and
cross-collateralized mortgages representing first priority mortgage liens on (i)
the fee or leasehold interest in the 69 Hotels, related furniture,  fixtures and
equipment and the property  improvement  fund, (ii) the fee interest in the land
leased from Marriott  International,  Inc. or its  affiliates on which 53 Hotels
are located,  (iii) a pledge of the Mortgagor's  membership  interest in and the
related right to receive distributions from Deerfield LLC and (iv) an assignment
of the restated management  agreement.  The Mortgage Loan is non-recourse to the
Mortgagor, the Partnership and its partners.


                                                         3

<PAGE>



Operating  profit  from the  Hotels  and the  Deerfield  Hotel in excess of debt
service on the Mortgage Loan is available to be distributed to the  Partnership.
Amounts  distributed to the Partnership are used for the following,  in order of
priority: (i) to pay debt service on the $127.4 million of senior notes ("Senior
Notes") issued in a concurrent  offering by the Partnership and its wholly-owned
subsidiary,  Courtyard  II Finance  Company,  (ii) to fund a  supplemental  debt
service  reserve,  if  necessary,  (iii) to offer to  purchase  a portion of the
Senior Notes at par, if necessary,  (iv) for working capital as discussed in the
working  capital  agreement  with  Marriott  International,  Inc.  and  (v)  for
distributions to the partners of the Partnership.

Prepayments  of the Mortgage  Loan are  permitted  with the payment of a premium
(the  "Prepayment  Premium"),  subject to  certain  exceptions.  The  Prepayment
Premium is equal to the  greater of (i) one percent of the  Mortgage  Loan being
prepaid  or (ii) a yield  maintenance  amount  based on a spread of .25% or .55%
over the U.S. treasury rate, as defined.

On June 30, 1996, the Company  completed an exchange  offer of the  Certificates
with an  outstanding  principal  balance of $406.2  million at that time, for an
equal amount of Multiclass Mortgage  Pass-Through  Certificates,  Series 1996-1B
("New   Certificates").   The  form  and  terms  of  the  New  Certificates  are
substantially  identical to the form and terms of the Certificates,  except that
the New Certificates are registered under the Securities Act of 1933, as amended
and their transfers are not restricted.

General

The Company  believes  that  collections  from the  Mortgage  Loan will  provide
adequate funds for short term and long term operational needs of the Company.

RESULTS OF OPERATIONS

For the year ended December 31, 1996, the Company reported revenues and interest
expense of $29.4 million each.  Amortization of deferred financing costs for
1996 was $1.0 million.  The Company reported a net loss of $1.0 million for
1996.


                                                         4

<PAGE>



ITEM 8.        FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


<TABLE>

      Index                                                                                         Page


<CAPTION>
<S>                                                                                                <C>
      Report of Independent Public Accountants........................................................ 6

      Statement of Operations......................................................................... 7

      Balance Sheet................................................................................... 8

      Statement of Cash Flows......................................................................... 9

      Notes to Financial Statements...................................................................10

</TABLE>
                                                         5

<PAGE>


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









REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS







TO CBM FUNDING CORPORATION:

We have audited the  accompanying  balance sheet of CBM Funding  Corporation  (a
Delaware  limited  partnership  and a  wholly-owned  subsidiary  of Courtyard II
Associates  Limited  Partnership)  as of  December  31,  1996 and 1995,  and the
related  statement of operations  and cash flows for the year ended December 31,
1996.  These  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements 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 CBM Funding  Corporation as of
December 31, 1996 and 1995, and the results of its operations and its cash flows
for the year ended  December 31, 1996, in  conformity  with  generally  accepted
accounting principles.




                                                     ARTHUR ANDERSEN LLP

Washington, D.C.
March 13, 1997


                                                             6

<PAGE>


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


<TABLE>
<CAPTION>

STATEMENT OF OPERATIONS






CBM Funding Corporation
For the Year Ended December 31, 1996
(in thousands, except per common share amount)


                                                                                                                 1996
<S>                                                                                                        <C>
INTEREST INCOME.............................................................................................$       29,365

EXPENSES
   Interest expense.........................................................................................        29,365
   Amortization of deferred financing costs as interest.....................................................         1,023
   Administrative expense...................................................................................             4
                                                                                                            --------------

         ...................................................................................................        30,392
                                                                                                            --------------

NET LOSS ...................................................................................................$       (1,027)
                                                                                                            ==============

NET LOSS PER COMMON SHARE...................................................................................$       (1,027)
                                                                                                            ==============


</TABLE>



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

                                                             7

<PAGE>


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




<TABLE>
<CAPTION>

BALANCE SHEET






CBM Funding Corporation
December 31, 1996 and 1995
(in thousands)

<S>                                                                                             <C>           <C>
                                                                                                    1996          1995

                                                                                                -----------    -------
ASSETS

   Mortgage Loan to Associates..................................................................$   398,853    $       --
   Deferred financing costs, net of accumulated amortization ....................................    12,273            --
   Cash and cash equivalents....................................................................          2             1
                                                                                                -----------    ----------

      Total Assets..............................................................................$   411,128    $        1
                                                                                                ===========    ==========


LIABILITIES AND SHAREHOLDER'S EQUITY

LIABILITIES
   Certificates payable.........................................................................$   398,853    $       --
   Accrued liabilities..........................................................................         38            --
                                                                                                -----------    ----------

      Total Liabilities.........................................................................    398,891            --
                                                                                                -----------    ----------

SHAREHOLDER'S EQUITY
   Common stock (1,000 shares of .01 par value stock issued and outstanding)....................         --            --
   Additional paid-in capital...................................................................     13,264             1
   Accumulated deficit..........................................................................     (1,027)           --
                                                                                                -----------    ----------

      Total Shareholder's Equity................................................................     12,237             1
                                                                                                -----------    ----------


                                                                                                $   411,128    $        1
                                                                                                ===========     ==========
</TABLE>




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

                                                             8

<PAGE>


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

<TABLE>
<CAPTION>



STATEMENT OF CASH FLOWS



CBM Funding Corporation
For the Year Ended December 31, 1996
(in thousands)

<S>                                                                                                        <C>

                                                                                                                 1996
OPERATING ACTIVITIES
   Net loss.................................................................................................$       (1,027)
   Noncash items:
   Amortization of deferred financing costs as interest.....................................................         1,023
                                                                                                            --------------

         Cash used in operations............................................................................            (4)
                                                                                                            --------------

INVESTING ACTIVITIES
   Mortgage loan to associates..............................................................................      (410,200)
   Mortgage loan collections................................................................................        11,347
                                                                                                            --------------

         Cash used in investing activities..................................................................      (398,853)
                                                                                                            --------------

FINANCING ACTIVITIES
   Proceeds from certificates...............................................................................       410,200
   Capital contribution.....................................................................................        13,263
   Payment of financing costs...............................................................................       (13,258)
   Principal repayments on certificates.....................................................................       (11,347)
                                                                                                            --------------

         Cash provided by financing activities..............................................................       398,858
                                                                                                            --------------

INCREASE IN CASH AND CASH EQUIVALENTS.......................................................................$            1

CASH AND CASH EQUIVALENTS at beginning of year..............................................................             1
                                                                                                            --------------

CASH AND CASH EQUIVALENTS at end of year....................................................................$            2
                                                                                                            ==============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
      Cash paid as interest on certificates.................................................................$       29,365
                                                                                                            ==============
</TABLE>



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

                                                             9

<PAGE>


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




NOTES TO FINANCIAL STATEMENTS



CBM Funding Corporation
December 31, 1996 and 1995

NOTE 1.                    THE COMPANY

CBM Funding Corporation, (the "Company") a Delaware corporation and wholly-owned
subsidiary of Courtyard II Associates,  L.P. (the "Mortgagor" and "Associates"),
which is a  subsidiary  of  Courtyard  by Marriott II Limited  Partnership  (the
"Partnership"),  was formed on December 28, 1995. The Company was formed for the
purpose  of (i) making the  single,  fixed  rate,  non-recourse  $410.2  million
mortgage loan (the  "Mortgage  Loan") to the  Mortgagor  and (ii)  conveying the
Mortgage Loan and other instruments  securing the Mortgage Loan including the 69
cross-defaulted and  cross-collaterized  mortgages,  representing first priority
liens on fee or  leasehold  interests in 69 Hotels (the  "Hotels")  owned by the
Mortgagor, fee interests in land leased from Marriott International, Inc. or its
affiliates on which 53 hotels are situated in, and related assets,  and a pledge
of the  Mortgagor's  membership  interests  in, and the related right to receive
distributions from, the entity that owns the hotel located in Chicago/Deerfield,
Illinois  ("Deerfield  LLC"), to the trustee (the  "Trustee")  under a Trust and
Servicing Agreement dated January 24, 1996 (the "Trust and Servicing Agreement")
in   exchange   for   Multiclass   Mortgage   Pass-Through   Certificates   (the
"Certificates")  which represent interests in the trust fund under the Trust and
Servicing   Agreement.   For  financial   accounting  purposes  the  assets  and
liabilities  of the Trustee  are  included in the  financial  statements  of the
Company.  However,  legally,  the Company  transferred  the Mortgage Loan to the
Trustee  without  recourse  and has no interest  in the  Mortgage  Loan,  has no
obligations with respect to the Certificates and does not control the Trustee.

The  Company  had no  operating  activities  prior  to  January  24,  1996,  and
therefore, has not presented statements of operations or cash flows for the year
ended December 31, 1995.


NOTE 2.             SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

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

Deferred Financing Costs

Deferred financing costs consist of costs incurred in connection with making the
Mortgage  Loan  to  Associates.   Financing   costs  are  amortized   using  the
straight-line  method,  which  approximates the effective  interest rate method,
over the life of the Mortgage Loan. During 1996, the Company paid $13,258,000 in
financing  costs.  At December 31, 1996,  accumulated  amortization of financing
costs was $1,023,000.

Cash and Cash Equivalents

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




                                                            10

<PAGE>


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







NOTE 3.             ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair values of financial instruments are shown below.

                                          As of December 31, 1996
                                              (in thousands)

                                                          Estimated
                                         Carrying           Fair
                                          Amount            Value
                                      --------------   -------------
Mortgage Loan to Associates...........$    398,853     $    405,695

Certificates Payable..................$    398,853     $    405,695

The 1996 estimated  fair value of mortgage loan to Associates  and  certificates
payable was based on quoted market prices at December 31, 1996.


NOTE 4.             CERTIFICATES/MORTGAGE LOAN

The Certificates in an initial principal amount of $410.2 million were issued by
the Trustee.  Proceeds  from the sale of the  Certificates  were utilized by the
Company to provide a Mortgage Loan to Associates.  The Certificates and Mortgage
Loan each require monthly  payments of principal and interest based on a 17-year
amortization  schedule.  The Mortgage Loan matures on January 28, 2008. However,
the maturity date of the Certificates and the Mortgage Loan each may be extended
until  January  28,  2013  with the  consent  of 66 2/3% of the  holders  of the
outstanding  Certificates  affected thereby. The Certificates were issued in the
following classes and pass-through rates of interest.

                                      Initial Certificate        Pass-Through
                      Class                 Balance                  Rate

                    Class A-1         $        45,500,000           7.550%
                    Class A-2         $        50,000,000           6.880%
                 Class A-3P & I       $       129,500,000           7.080%
                   Class A-3IO             Not Applicable           0.933%
                     Class B          $        75,000,000           7.480%
                     Class C          $       100,000,000           7.860%
                     Class D          $        10,200,000           8.645%

The Class  A-3IO  Certificates  receive  payments  of  interest  only based on a
notional balance equal to the Class A-3P & I Certificates balance.

The  balance of the  Certificates  was  $398.9  million at  December  31,  1996.
Principal  amortization of $11.3 million of the Class A-1  Certificates was made
during 1996.


                                                            11

<PAGE>


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




The Certificates/Mortgage Loan maturities are as follows (in thousands):

                      1997            $     13,298
                      1998                  14,331
                      1999                  15,443
                      2000                  16,642
                      2001                  17,934
                   Thereafter              321,205
                                      ------------
                                      $    398,853
                                      ============

The   Mortgage   Loan  is   secured   primarily   by  69   cross-defaulted   and
cross-collateralized mortgages representing first priority mortgage liens on (i)
the fee or leasehold interest in the 69 Hotels, related furniture,  fixtures and
equipment and the property  improvement  fund, (ii) the fee interest in the land
leased from Marriott  International,  Inc. or its  affiliates on which 53 Hotels
are located,  (iii) a pledge of the Mortgagor's  membership  interest in and the
related right to receive distributions from Deerfield LLC and (iv) an assignment
of the restated management  agreement.  The Mortgage Loan is non-recourse to the
Mortgagor, the Partnership and its partners.

Operating  profit  from the  Hotels  and the  Deerfield  Hotel in excess of debt
service on the Mortgage Loan is available to be distributed to the  Partnership.
Amounts  distributed to the Partnership are used for the following,  in order of
priority: (i) to pay debt service on the $127.4 million of senior notes ("Senior
Notes") issued in a concurrent  offering by the Partnership and its wholly owned
subsidiary,  Courtyard  II Finance  Company,  (ii) to fund a  supplemental  debt
service  reserve,  if  necessary,  (iii) to offer to  purchase  a portion of the
Senior Notes at par, if necessary,  (iv) for working capital as discussed in the
working  capital  agreement  with  Marriott  International,  Inc.  and  (v)  for
distributions to the partners of the Partnership.

Prepayments  of the Mortgage  Loan are  permitted  with the payment of a premium
(the  "Prepayment  Premium"),  subject to  certain  exceptions.  The  Prepayment
Premium is equal to the  greater of (i) one percent of the  Mortgage  Loan being
prepaid  or (ii) a yield  maintenance  amount  based on a spread of .25% or .55%
over the U.S. treasury rate, as defined.

On June 30, 1996, the Company  completed an exchange  offer of the  Certificates
with an  outstanding  principal  balance of $406.2  million at that time, for an
equal amount of Multiclass Mortgage  Pass-Through  Certificates,  Series 1996-1B
("New   Certificates").   The  form  and  terms  of  the  New  Certificates  are
substantially  identical to the form and terms of the Certificates,  except that
the New Certificates are registered under the Securities Act of 1933, as amended
and their transfers are not restricted.



                                                            12

<PAGE>



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

None.


                                                      PART III


ITEM 10.           DIRECTORS AND EXECUTIVE OFFICERS

The Company's director's and executive officer's are as follows:
                                                                    Age at
               Name        Current Position                 December 31, 1996

  Bruce F. Stemerman   President and Director                         41
  Earla L. Stowe       Vice President and Chief Accounting Officer    35
  Anna Mary Coburn     Secretary                                      41
  Bruce Wardinski      Treasurer                                      36

Business Experience

Bruce F.  Stemerman  was  elected  President  and  Director  in  1995.  Mr.
Stemerman  joined Host Marriott  Corporation  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
Corporation, Mr. Stemerman spent ten years with Price Waterhouse. He also serves
as a director and an officer of numerous Host Marriott subsidiaries.

Earla L. Stowe was appointed to Vice President and Chief  Accounting  Officer in
October  1996.  Ms.  Stowe  joined Host  Marriott  Corporation  in 1982 and held
various  positions in the tax department  until 1988. She joined the Partnership
Services department as an accountant in 1988 and in 1989 she became an Assistant
Manager--Partnership Services. She was promoted to Manager--Partnership Services
in 1991 and to Director--Asset Management in June 1996.

Anna Mary Coburn joined Host Marriott Corporation as an Attorney in 1988, became
Assistant  General  Counsel in 1993,  and was elected  Corporate  Secretary  and
Associate  General Counsel in 1997. Prior to joining Host Marriott  Corporation,
Ms.  Coburn was an Attorney for the law firm of Shawe & Rosenthal  and was a law
clerk for the United States Court of Appeals for the Fourth Circuit.

Bruce Wardinski  joined Host Marriott  Corporation 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  Corporation.  Prior to
joining Host Marriott,  Mr. Wardinski was with the public  accounting firm Price
Waterhouse.

                                                         13

<PAGE>



ITEM 11.           MANAGEMENT REMUNERATION AND TRANSACTIONS

The Company is a subsidiary of the Courtyard by Marriott II Limited  Partnership
(the "Partnership").  The Company's officers and directors are employees of Host
Marriott  Corporation,  the  parent  company  of  the  general  partner  of  the
Partnership.  Therefore,  no  officer  or  director  of the  Company  devotes  a
significant percentage of time to Company matters.


ITEM 12.           SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                   MANAGEMENT

As of December 31,  1996,  Courtyard II  Associates,  L.P., a subsidiary  of the
Partnership,  owned 100% of the Company's outstanding shares of stock. There are
no arrangements  which may, at a subsequent date,  result in a change in control
of the Company.


ITEM 13.           CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.


                                                         14

<PAGE>



                                                       PART IV


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

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

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

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

                   (3)      EXHIBITS
<S>                      <C>                                                                                              <C>
 Exhibit
 Number                                                        Description                                                Page
------------------     ----------------------------------------------------------------------------------------------------  -------

      3.6                Agreement of Limited Partnership of Courtyard II Associates, L.P. ("Associates")                  N/A
                                      (Incorporated by reference herein to Exhibit 3.1 to Associates Form S-4
                                      filed with the Commission on March 14, 1996.)

      3.7                Certificate of Limited Partnership of Associates (Incorporated by reference herein to             N/A
                                         Exhibit 3.2 to Associates Form S-4 filed with the Commission on March
                                    14, 1996.)

      3.8              Amended and Restated Certificate of Incorporation of CBM Funding Corporation                        N/A
                                    ("Funding") (Incorporated by reference herein to Exhibit 3.3 to Associates
                                    Form S-4 filed with the Commission on March 14, 1996.)

      3.9              By-laws of Funding (Incorporated by reference herein to Exhibit 3.4 to Associates               N/A
                                    Form S-4 filed with the Commission on March 14, 1996.)

      *4.4             Intercreditor Agreement dated as of January 24, 1996 among IBJ Schroder Bank &                  N/A
                                    Trust Company, Bankers Trust Company, Marine Midland Bank (the
                                    "CMBS Trustee"), the Partnership and Finance, Associates, Courtyard II
                                    Associates Management Corporation (the "Managing General Partner")
                                    and Funding

      *4.5             Trust and Servicing Agreement dated as of January 1, 1996 among Funding, Bankers                N/A
                                  Trust Company and the CMBS Trustee

      *4.6             Exchange   and   Registration    Rights
                       Agreement  dated as of January 24, 1996
                       among the N/A Partnership,  Associates,
                       Funding and Lehman Brothers Inc.


***10.13          Contribution Agreement dated as of January 24, 1996 among the                                        N/A
                               Partnership, the Managing General Partner and Associates

***10.14          Bill of Sale and Assignment and Assumption Agreement dated as of                                     N/A
                               January 24, 1996 by the Partnership to Associates



       15

<PAGE>




*10.15            Assignment and Assumption of Management Agreement dated as of                                        N/A
                               January 24, 1996 by the Partnership to Associates

***10.16          Contribution Agreement dated as of January 24, 1996 among the                                        N/A
                               Partnership, the Managing General Partner and Courtyard II
                               Associates LLC ("Deerfield LLC")

***10.17          Bill of Sale and Assignment and Assumption Agreement dated as of                                     N/A
                               January 24, 1996 by the Partnership to Deerfield LLC

*10.18            Deed to the Courtyard by Marriott Hotel in Chicago/Deerfield,                                        N/A
                               Illinois dated as of January 24, 1996 by the Partnership to
                               Deerfield LLC

*10.19            Assignment and Assumption of Management Agreement dated as of                                        N/A
                               January 24, 1996 by the Partnership to Deerfield LLC

*10.20            Loan Agreement dated as of January 24, 1996 by and between                                           N/A
                               Associates and Funding

*10.21            Mortgage Note, dated as of January 24, 1996, in the principal                                        N/A
                               amount of $410,200,000 by Associates to Funding

*10.22            Security Agreement dated as of January 24, 1996 by and between                                       N/A
                               Associates and Funding

*10.23            Pledge Agreement dated as of January 24, 1996 by and between                                         N/A
                               Associates and Funding

*10.24            Collateral Assignment of Management Agreement and Subordination                                      N/A
                               Agreement dated as of January 24, 1996, by and among
                               Associates, the Manager and Funding

*10.26            Environmental Indemnity Agreement dated as of January 24, 1996                                       N/A
                               by Associates and the Managing General Partner for the
                               benefit of Funding

*10.27            Associates, as mortgagor, and Funding, as mortgagee, entered into                                    N/A
                               53 fee and leasehold mortgages, each dated as of January 24,
                               1996.  The 53 mortgages are identical in all material respects
                               except as to the underlying property to which they relate and,
                               in certain instances, additional parties thereto.  The schedule
                               below sets forth the terms of each mortgage not filed which
                               differ from the copy of the example mortgage
                               (Birmingham/Hoover, AL) which is filed herewith.


                      Property                   State              Additional Party
                      --------                   -----              ----------------
                      Birmingham/Hoover            AL                     Essex
                      Huntsville                   AL                      MII
                      Phoenix/Mesa                 AZ                      MII
                      Phoenix/Metrocenter          AZ                      MII
                      Tucson Airport               AZ                      MII
                      Little Rock                  AR                      MII
                      Bakersfield                  CA                      MII
                      Foster City                  CA                      MII


              16

<PAGE>




                      Hacienda Heights             CA                      MII
                      Marin/Larkspur Landing       CA                      MII
                      Palm Springs                 CA                      MII
                      Torrance                     CA                      MII
                      Boulder                      CO                      MII
                      Denver/Southeast             CO                     Essex
                      Wallingford                  CT                      MII
                      Ft. Myers                    FL                      MII
                      Ft. Lauderdale/Plantatio     FL                      MII
                      St. Petersburg               FL                      MII
                      West Palm Beach              FL                      MII
                      Atlanta/Gwinnett Mall        GA                      MII
                      Atlanta/Perimeter Center     GA                     Essex
                      Chicago/Glenview             IL                      MII
                      Chicago/Highland Park        IL                      MII
                      Chicago/Waukegan             IL                      MII
                      Chicago/Wood Dale            IL                      MII
                      Indianapolis/Castleton       IN                     Essex
                      Kansas City/Overland Par     KS                      MII
                      Lexington/North              KY                     Essex
                      Annapolis                    MD  Essex and the Partnership
                      Silver Spring                MD   MII and the Partnership
                      Boston/Andover               MA                      MII
                      Detroit Airport              MI                      MII
                      Detroit/Livonia              MI                      MII
                      Minneapolis Airport          MN                     Essex
                      St. Louis/Creve Couer        MN                     Essex
                      St. Louis/Westport           MO                      MII
                      Lincroft/Red Bank            NJ                      MII
                      Rye                          NY                     Essex
                      Raleigh/Cary                 NC                      MII
                      Dayton Mall                  OH                      MII
                      Toledo                       OH                      MII
                      Oklahoma City Airport        OK                      MII
                      Portland/Beaverton           OR                      MII
                      Columbia                     SC                      MII
                      Greenville                   SC                     Essex
                      Memphis Airport              TN                     Essex
                      Nashville Airport            TN                     Essex
                      Dallas/Northeast             TX                      MII
                      Dallas/Stemmons              TX                     Essex
                      San Antonio/Downtown         TX                     Essex
                      Charlottesville              VA                      MII
                      Manassas                     VA                      MII
                      Seattle/Southcenter          WA                      MII


*10.28              Associates, as mortgager, and Funding, as mortgagee, entered into 16                              N/A
                                 fee leasehold mortgages, each dated as of January 24, 1996.
                                 The 16 mortgages are identical in all material respects except as
                                 to the underlying property to which they relate.  The schedule
                                 below sets forth the terms of each mortgage not filed which
                                 differ from the copy of the example mortgage
                                 (Birmingham/Homewood, AL) which is filed herewith.




                                                    17

<PAGE>



                    Property                                   State
                    --------                                   -----
                    Birmingham/Homewood                        AL
                    Cupertino                                  CA
                    Fresno                                     CA
                    Denver Airport                             CO
                    Norwalk                                    CT
                    Tampa/Westshore                            FL
                    Atlanta Airport South                      GA
                    Atlanta/Roswell                            GA
                    Arlington Heights South                    IL
                    Chicago/Lincolnshire                       IL
                    Chicago/Oakbrook Terrace                   IL
                    Rockford                                   IL
                    Poughkeepsie                               NY
                    Charlotte/South Park                       NC
                    Philadelphia/Devon                         PA
                    Dallas/Plano                               TX


*10.29              Assignment of Loan Documents dated as of January                                               N/A
                                 24, 1996 by Funding to the CMBS Trustee

10.30               Assignment and Assumption of Management Agreement dated as of                                  N/A
                                 January 24, 1996 by the Partnership to Associates with
                                 attached Management Agreement (Incorporated by
                                 reference herein to Exhibit 10.1 to Associates Form S-4
                                 filed with the Commission on March 14, 1996.)

10.31               Working Capital Maintenance Agreement dated as of                                              N/A
                                 January 24, 1996, by and among the Partnership,
                                 Associates, and the Manager.  (Incorporated by reference
                                 to the exhibit previously filed as exhibit number 10.23 in
                                 Amendment No. 1 to Form S-4 Exchange Offer filed by
                                 CBM Funding and Associates with the Commission in
                                 May 10, 1996.)

*21.1               Subsidiaries of the Partnership                                                                N/A
</TABLE>




*      Incorporated  herein by  reference  to the same  numbered  exhibit in the
       Partnership's  and  Finance's  Registration  Statement on Form S-4 for 10
       3/4% Series B Senior  Secured Notes due 2008,  previously  filed with the
       Commission on March 7, 1996.

***    Incorporated by reference to the same numbered exhibit Amendment No. 1 to
       the Form S-4 Registration  Statement previously filed with the Commission
       by the Partnership on April 25, 1996.


             (b)   REPORTS ON FORM 8-K

                   No reports were filed on Form 8-K during 1996.

                                                         18

<PAGE>


                                                      SIGNATURE


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 March 31, 1997.

                                                     CBM FUNDING CORPORATION

                                                 By: /s/ Bruce F. Stemerman
                                                     ----------------------
                                                     Bruce F. Stemerman
                                                     President and Director


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
                                     (CBM FUNDING CORPORATION)



 /s/ Earla L. Stowe
-------------------------------------Vice Pesident and Chief Accounting Officer
Earla L. Stowe


 /s/ Anna Mary Coburn
-------------------------------------Secretary
Anna Mary Coburn


 /s/ Bruce D. Wardinski
-------------------------------------Treasurer
Bruce D. Wardinski




                                                         19

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