Host Marriott May Form New REIT for Hotels

Host Marriott Corp. said it might form a new real estate investment trust that would own 219 of the 340 hotels in which it has an interest.

Host Marriott, a Bethesda, Md.-based real estate investment trust, said it filed a plan with the Securities and Exchange Commission to combine six limited partnership subsidiaries into a REIT that would own and acquire limited-service and extended-stay hotels.

If the plan is approved by all the partnerships, the combined entity would own 219 Courtyard by Marriott, Residence Inn by Marriott and Fairfield Inn by Marriott hotels.

Host Marriott owns 96 upscale and luxury full-service hotels operated under the Marriott and Ritz-Carlton brand names. It also is the general partner and holds minority interests in partnerships that own 244 hotels. It also owns 29 senior living communities.

The proposed REIT would have management separate from Host Marriott and would be listed on the New York Stock Exchange. The plan is intended to offer liquidity to the limited partners, the company said.

Host Marriott said current limited partners would receive limited partnership units in a new operating partnership. Those units would be redeemed for REIT shares or their cash equivalent after a year.

The REIT’s assets would be leased to subsidiaries of Host Marriott to satisfy certain tax requirements related to the nature of the income received by the REIT, Host Marriott said.

All the hotels would continue to be managed by Marriott International.

Host Marriott said the partnerships that are expected to be part of the consolidation are Courtyard by Marriott, Courtyard by Marriott II, Marriott Residence Inn, Marriott Residence Inn IIP, Marriott Residence Inn USA and Fairfield Inn by Marriott.

The plan wouldn’t be completed until mid-1998, Host Marriott said.