UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q



(Mark One)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2011



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 333-39595-01

FelCor Lodging Limited Partnership

(Exact name of registrant as specified in its charter)



	Delaware		75-2544994
	(State or other jurisdiction of incorporation or organization		(I.R.S. Employer Identification No.)
			(I.R.S. Employer Identification No.)



	545 E. John Carpenter Freeway, Suite 1300, Irving, Texas		75062
	(Address of principal executive offices)		(Zip Code)

(972) 444-4900

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. xYes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).o Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer o		Accelerated filer o
Non-accelerated filer x (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes x No

FELCOR LODGING LIMITED PARTNERSHIP

INDEX



			Page
		PART I − FINANCIAL INFORMATION

Item 1.	Financial Statements		3
		Consolidated Balance Sheets June 30, 2011 and December 31, 2010 (unaudited)	3
		Consolidated Statements of Operations – For the Three and Six Months Ended June 30, 2011 and 2010 (unaudited)	4
		Consolidated Statements of Comprehensive Income (Loss) – For the Three and Six Months Ended June 30, 2011 and 2010 (unaudited)	5
		Consolidated Statements of Partners' Capital – For the Six Months Ended June 30, 2011 and 2010 (unaudited)	6
		Consolidated Statements of Cash Flows – For the Six Months Ended June 30, 2011 and 2010 (unaudited)	7
		Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		27
		General	27
		Results of Operations	28
		Non-GAAP Financial Measures	30
		Pro Rata Share of Rooms Owned	37
		Hotel Portfolio Composition	38
		Hotel Operating Statistics	39
		Hotel Portfolio	41
		Liquidity and Capital Resources	43
		Inflation	45
		Seasonality	46
		Disclosure Regarding Forward-Looking Statements	46
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		47
Item 4.	Controls and Procedures		47

		PART II − OTHER INFORMATION

Item 6.	Exhibits		48

SIGNATURE			50

PART I -- FINANCIAL INFORMATION


Item 1.	Financial Statements.

FELCOR LODGING LIMITED PARTNERSHIP

CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)



	June 30,		December 31,
	2011		2010
Assets
Investment in hotels, net of accumulated depreciation of $964,606 and $982,564 at June 30, 2011 and December 31, 2010, respectively	$	1,998,232	$	1,985,779
Investment in unconsolidated entities	72,733		75,920
Hotels held for sale	43,846		—
Cash and cash equivalents	231,049		200,972
Restricted cash	41,609		16,702
Accounts receivable, net of allowance for doubtful accounts of $344 and $696 at June 30, 2011 and December 31, 2010, respectively	39,266		27,851
Deferred expenses, net of accumulated amortization of $11,850 and $17,892 at June 30, 2011 and December 31, 2010, respectively	31,811		19,940
Other assets	34,281		32,271
Total assets	$	2,492,827	$	2,359,435
Liabilities and Partners' Capital
Debt, net of discount of $36,740 and $53,193 at June 30, 2011 and December 31, 2010, respectively	$	1,612,106	$	1,548,309
Distributions payable	76,293		76,293
Accrued expenses and other liabilities	142,967		144,451
Total liabilities	1,831,366		1,769,053
Commitments and contingencies
Redeemable units, 640 and 285 units issued and outstanding at June 30, 2011 and December 31, 2010, respectively	3,887		2,004
Capital:
Preferred units:
Series A Cumulative Convertible Preferred Units, 12,880 units issued and outstanding at June 30, 2011 and December 31, 2010	309,362		309,362
Series C Cumulative Redeemable Preferred Units, 68 units issued and outstanding at June 30, 2011 and December 31, 2010	169,412		169,412
Common units, 124,569 and 101,038 units issued at June 30, 2011 and December 31, 2010, respectively	130,718		63,235
Accumulated other comprehensive income	28,052		26,574
Total FelCor LP partners' capital	637,544		568,583
Noncontrolling interests	20,030		19,795
Total partners' capital	657,574		588,378
Total liabilities and partners' capital	$	2,492,827	$	2,359,435

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

FELCOR LODGING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three and Six Months Ended June 30, 2011 and 2010

(unaudited, in thousands, except for per unit data)



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
Revenues:
Hotel operating revenue	$	256,355		$	227,704		$	481,848		$	435,764
Other revenue	1,011			1,007			1,236			1,372
Total revenues	257,366			228,711			483,084			437,136
Expenses:
Hotel departmental expenses	90,618			78,987			172,874			153,698
Other property related costs	67,646			61,222			133,946			120,862
Management and franchise fees	11,849			10,970			22,332			20,699
Taxes, insurance and lease expense	23,563			23,595			43,621			45,245
Corporate expenses	6,910			6,510			16,447			16,357
Depreciation and amortization	34,011			34,158			67,861			68,639
Impairment loss	11,706			—			11,706			—
Other expenses	1,616			801			2,247			1,362
Total operating expenses	247,919			216,243			471,034			426,862

Operating income	9,447			12,468			12,050			10,274
Interest expense, net	(34,875		)	(35,856		)	(68,348		)	(70,582		)
Debt extinguishment	(23,660		)	46,186			(23,905		)	46,186
Gain on involuntary conversion, net	21			—			171			—
Income (loss) before equity in income (loss) from unconsolidated entities	(49,067		)	22,798			(80,032		)	(14,122		)
Equity in income (loss) from unconsolidated entities	31			286			(1,552		)	(1,188		)
Income (loss) from continuing operations	(49,036		)	23,084			(81,584		)	(15,310		)
Discontinued operations	6,639			(1,094		)	7,461			(25,642		)
Net income (loss)	(42,397		)	21,990			(74,123		)	(40,952		)
Net income attributable to noncontrolling interests	(51		)	(325		)	(109		)	(96		)
Net income (loss) attributable to FelCor LP	(42,448		)	21,665			(74,232		)	(41,048		)
Preferred distributions	(9,678		)	(9,678		)	(19,356		)	(19,356		)
Net income (loss) attributable to FelCor LP common unitholders	$	(52,126	)	$	11,987		$	(93,588	)	$	(60,404	)
Basic and diluted per common unit data:
Income (loss) from continuing operations	$	(0.48	)	$	0.19		$	(0.92	)	$	(0.53	)
Net income (loss)	$	(0.42	)	$	0.17		$	(0.85	)	$	(0.92	)
Basic and diluted weighted average common units outstanding	123,425			66,826			109,608			65,309

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

FELCOR LODGING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

For the Three and Six Months Ended June 30, 2011 and 2010

(unaudited, in thousands)



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
Net income (loss)	$	(42,397	)	$	21,990		$	(74,123	)	$	(40,952	)
Foreign currency translation adjustment	186			(2,731		)	1,478			(652		)
Comprehensive income (loss )	(42,211		)	19,259			(72,645		)	(41,604		)
Comprehensive income attributable to noncontrolling interests	(51		)	(325		)	(109		)	(96		)
Comprehensive income (loss) attributable to FelCor LP	$	(42,262	)	$	18,934		$	(72,754	)	$	(41,700	)

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

FELCOR LODGING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

For the Six Months Ended June 30, 2011 and 2010

(unaudited, in thousands)



	Preferred Units		Common Units			Accumulated Other Comprehensive Income			Noncontrolling Interests			Comprehensive Loss			Total Partners’ Capital
Balance at December 31, 2009	$	478,774	$	157,705		$	23,637		$	22,583					$	682,699
Issuance of common units	—		166,572			—			—						166,572
FelCor restricted stock compensation	—		2,098			—			—						2,098
Contributions	—		—			—			15						15
Distributions	—		(19,356		)	—			(980		)				(20,336		)
Allocation to redeemable units	—		(410		)	—			—						(410		)
Other	—		(1,126		)	—			116						(1,010		)
Comprehensive income (loss):
Foreign exchange translation						(652		)				$	(652	)
Net loss			(41,048		)				96			(40,952		)
Comprehensive loss												$	(41,604	)	(41,604		)
Balance at June 30, 2010	$	478,774	$	264,435		$	22,985		$	21,830					$	788,024

Balance at December 31, 2010	$	478,774	$	63,235		$	26,574		$	19,795					$	588,378
Issuance of common units	—		158,476			—			—						158,476
FelCor restricted stock compensation	—		2,048			—			—						2,048
Contributions	—		—			—			796						796
Distributions	—		(19,356		)	—			(670		)				(20,026		)
Allocation to redeemable units	—		617			—			—						617
Other	—		(70		)	—			—						(70		)
Comprehensive income (loss):
Foreign exchange translation						1,478						$	1,478
Net loss			(74,232		)				109			(74,123		)
Comprehensive loss												$	(72,645	)	(72,645		)
Balance at June 30, 2011	$	478,774	$	130,718		$	28,052		$	20,030					$	657,574

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

FELCOR LODGING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30, 2011 and 2010

(unaudited, in thousands)



	Six Months Ended June 30,
	2011			2010
Cash flows from operating activities:
Net loss	$	(74,123	)	$	(40,952	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	70,854			74,567
Gain on sale of hotels, net	(6,660		)	—
Gain on involuntary conversion, net	(171		)	—
Amortization of deferred financing fees and debt discount	9,351			8,608
Amortization of unearned officers’ and directors’ compensation	3,577			3,257
Equity in loss from unconsolidated entities	1,552			1,188
Distributions of income from unconsolidated entities	810			1,110
Debt extinguishment	23,961			(46,060		)
Impairment loss	12,303			21,060
Changes in assets and liabilities:
Accounts receivable	(11,449		)	(5,469		)
Restricted cash – operations	2,005			4,066
Other assets	(12,604		)	(4,059		)
Accrued expenses and other liabilities	(4,880		)	23,924
Net cash flow provided by operating activities	14,526			41,240
Cash flows from investing activities:
Acquisition of hotels	(137,985		)	—
Improvements and additions to hotels	(35,244		)	(18,393		)
Additions to condominium project	(318		)	(162		)
Proceeds from asset dispositions	52,093			—
Change in restricted cash – investing	(412		)	(2,646		)
Insurance proceeds	282			—
Distributions from unconsolidated entities	825			559
Contributions to unconsolidated entities	—			(25,122		)
Net cash flow used in investing activities	(120,759		)	(45,764		)
Cash flows from financing activities:
Proceeds from borrowings	1,087,267			212,121
Repayment of borrowings	(1,050,566		)	(347,692		)
Payment of deferred financing fees	(18,230		)	(6,615		)
Change in restricted cash – financing	(24,000		)	—
Acquisition of noncontrolling interest	—			(1,000		)
Distributions paid to noncontrolling interests	(670		)	(980		)
Contributions from noncontrolling interests	796			15
Distributions paid to preferred unitholders	(19,356		)	—
Net proceeds from common unit issuance	158,476			166,704
Proceeds from redeemable unit issuance	2,500			—
Net cash flow provided by financing activities	136,217			22,553
Effect of exchange rate changes on cash	93			(86		)
Net change in cash and cash equivalents	30,077			17,943
Cash and cash equivalents at beginning of periods	200,972			263,531
Cash and cash equivalents at end of periods	$	231,049		$	281,474

Supplemental cash flow information – interest paid	$	59,344		$	64,490

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

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.	Organization

FelCor Lodging Limited Partnership, or FelCor LP, held ownership interests in (i) 78 hotels in continuing operations with approximately 22,000 rooms and (ii) three hotels designated as held for sale at June 30, 2011. The sole general partner of FelCor LP is FelCor Lodging Trust Incorporated (NYSE: FCH), or FelCor, a Maryland corporation operating as a real estate investment trust, or REIT. All of FelCor's operations are conducted solely through FelCor LP, and at June 30, 2011, FelCor owned a greater than 99% partnership interest in FelCor LP. At June 30, 2011, we had 125,208,961 redeemable and common units of FelCor LP outstanding.

We lease all but one of our hotels to our taxable REIT subsidiaries (or TRS). These subsidiaries (our operating lessees) have engaged independent third-party management companies to manage the hotels.

Of the 78 hotels included in continuing operations, we owned a 100% interest in 60 hotels, a 90% interest in entities owning three hotels, an 82% interest in an entity owning one hotel, a 60% interest in an entity owning one hotel and a 50% interest in entities owning 13 hotels. We consolidate our real estate interests in the 65 hotels in which we held greater than 50% ownership interests, and we record the real estate interests of the 13 hotels in which we held 50% ownership interests using the equity method.

At June 30, 2011, 77 of the 78 hotels were leased to operating lessees, and one 50%-owned hotel was operated without a lease. We held majority interests and had direct or indirect controlling interests in all of the operating lessees. Because we owned controlling interests in these lessees (including lessees of 12 of the 13 hotels in which we owned 50% of the real estate interests), we consolidated our lessee interests in these hotels (we refer to these 77 hotels as our Consolidated Hotels) and reflect 100% of those hotels’ revenues and expenses on our statement of operations. Of our Consolidated Hotels, we owned 50% of the real estate interests in each of 12 hotels (we accounted for the ownership in our real estate interests of these hotels by the equity method) and majority real estate interests in each of the remaining 65 hotels (we consolidate our real estate interest in these hotels).

The following table illustrates the distribution of our 77 Consolidated Hotels among our brands at June 30, 2011:



Brand	Hotels	Rooms
Embassy Suites Hotels^®	41	10,718
Holiday Inn^®	15	5,154
Sheraton^®and Westin^®	7	2,478
Doubletree^®and Hilton^®	8	1,856
Marriott^®and Renaissance^®	3	1,321
Fairmont^®	1	383
Morgans Hotel Group	2	282
Total	77	22,192

At June 30, 2011, our Consolidated Hotels were located in the United States (75 hotels in 22 states) and Canada (two hotels in Ontario), with concentrations in California (15 hotels), Florida (11 hotels) and Texas (9 hotels). Approximately 50% of our hotel room revenues were generated from hotels in these three states during the first six months of 2011.

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.	Organization — (continued)

At June 30, 2011, of our 77 Consolidated Hotels: (i) subsidiaries of Hilton Hotels Corporation, or Hilton, managed 48 hotels, (ii) subsidiaries of InterContinental Hotels Group, or IHG, managed 15 hotels, (iii) subsidiaries of Starwood Hotels & Resorts Worldwide Inc., or Starwood, managed seven hotels, (iv) subsidiaries of Marriott International Inc., or Marriott, managed three hotels, (v) a subsidiary of Fairmont Hotels and Resorts, or Fairmont, managed one hotel, (vi) a subsidiary of Morgans Hotel Group Corp. managed two hotels, and (vii) an independent management company managed one hotel.

Our hotels managed by Marriott are accounted for on a fiscal year comprised of 52 or 53 weeks ending on the Friday closest to December 31. Our three-month periods ending June 30, 2011 and 2010 includes the results of operations for our Marriott-managed hotels for the 12-week periods ending June 17, 2011 and June 18, 2010, respectively.

The information in our consolidated financial statements for the three and six months ended June 30, 2011 and 2010 is unaudited. Preparing financial statements in conformity with accounting principles generally accepted in the United States of America, or GAAP, requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The accompanying financial statements for the three and six months ended June 30, 2011 and 2010, include adjustments based on management's estimates (consisting of normal and recurring accruals), which we consider necessary for a fair presentation of the results for the periods. The financial information should be read in conjunction with the consolidated financial statements for the year ended December 31, 2010, included in our Annual Report on Form 10-K. Operating results for the three and six months ended June 30, 2011 are not necessarily indicative of actual operating results for the entire year.


2.	Hotel Acquisitions

In May 2011, we acquired two midtown Manhattan hotels, Royalton and Morgans, which have a total of 282 guest rooms. The fair values of the assets acquired and liabilities assumed at the date of acquisition were consistent with the purchase price and were allocated based on third-party appraisals. We expensed acquisition costs (such as, broker, legal and accounting fees) of $915,000, which are not included in the fair value estimates of the net assets acquired. The following table summarizes the fair values of assets acquired and liabilities assumed in our acquisition (in thousands):



Assets
Investment in hotels^(a)	$	136,035
Restricted cash	2,500
Accounts receivable	635
Other assets	322
Total assets acquired	139,492

Liabilities
Accrued expenses and other liabilities	1,507
Net assets acquired	$	137,985

(a) Investment in hotels was allocated to land ($48.7 million), building and improvements ($78.3 million) and furniture, fixtures and equipment ($9.0 million).

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


2.	Hotel Acquisitions — (continued)

The following consolidated unaudited pro forma results of operations for FelCor LP for the three and six months ended June 30, 2011 and 2010 assume this acquisition occurred on January 1, 2010. The pro forma information includes revenues, operating expenses, depreciation and amortization. The unaudited pro forma results of operations are not necessarily indicative of the results of operations if the acquisition had been completed on the assumed date. The unaudited pro forma results of operations are as follows (in thousands, except per share data):



	Three Months Ended June 30,					Six Months Ended June 30,
	2011			2010		2011			2010
Total revenues	$	262,141		$	236,729	$	494,430		$	451,972
Net income (loss)	$	(42,142	)	$	22,020	$	(75,321	)	$	(42,087	)
Earnings per unit - basic and diluted	$	(0.42	)	$	0.17	$	(0.86	)	$	(0.94	)

For the three and six months ended June 30, 2011, we have included $3.3 million of revenues and $319,000 of net income in our consolidated statements of operations related to the operations of these hotels.


3.	Change in Accounting Estimate

Effective January 1, 2011, we reclassified certain inventory (such as, china, glass, silver, and linen) aggregating $10.3 million to investment in hotels from other assets. We believe this classification to be preferable to its prior classification because we receive long-term benefits (approximately three years) from these inventories, similar to other long-term physical assets, which are classified as investment in hotels. This change was considered a change in accounting estimate inseparable from a change in accounting policy, and will result in changes to our depreciation expense prospectively. As a result, existing inventories will be amortized over a three-year period. Prospectively, significant additions in conjunction with major renovations, expansions or changes in brand standards for these inventories will be capitalized at acquisition, and depreciated over a three year estimated useful life. Minor replacement or replenishment of inventory will be expensed when purchased.

4. Investment in Unconsolidated Entities

We owned 50% interests in joint ventures that owned 13 hotels at June 30, 2011 and December 31, 2010. We also own a 50% interest in entities that own real estate in Myrtle Beach, South Carolina and provide condominium management services. We account for our investments in these unconsolidated entities under the equity method. We do not have any majority-owned subsidiaries that are not consolidated in our financial statements. We make adjustments to our equity in income from unconsolidated entities related to the difference between our basis in investment in unconsolidated entities compared to the historical basis of the assets recorded by the joint ventures.

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


4.	Investment in Unconsolidated Entities — (continued)

The following table summarizes combined balance sheet information for our unconsolidated entities (in thousands)



	June 30,		December 31,
	2011		2010
Investment in hotels, net of accumulated depreciation	$	181,769	$	192,584
Total assets	$	205,326	$	209,742
Debt	$	152,893	$	154,590
Total liabilities	$	159,268	$	159,170
Equity	$	46,058	$	50,572

Our unconsolidated entities’ debt at June 30, 2011 and December 31, 2010 consisted entirely of non-recourse mortgage debt.

In December 2010, we sold our 50% interest in the Sheraton Premier at Tysons Corner.

The following table sets forth summarized combined statement of operations information for our unconsolidated entities (in thousands):



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
Total revenues	$	18,328		$	19,648		$	30,016		$	32,387
Net income (loss)	$	992		$	1,022		$	(1,243	)	$	(2,114	)

Net income (loss) attributable to FelCor LP	$	496		$	751		$	(622	)	$	(817	)
Gain on joint venture liquidation	—			—			—			559
Depreciation of cost in excess of book value	(465		)	(465		)	(930		)	(930		)
Equity in income (loss) from unconsolidated entities	$	31		$	286		$	(1,552	)	$	(1,188	)

The following table summarizes the components of our investment in unconsolidated entities (in thousands):



	June 30,		December 31,
	2011		2010
Hotel-related investments	$	14,104	$	15,736
Cost in excess of book value of hotel investments	49,704		50,634
Land and condominium investments	8,925		9,550
	$	72,733	$	75,920

The following table summarizes the components of our equity in loss from unconsolidated entities (in thousands):



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
Hotel investments	$	34		$	292		$	(928	)	$	(613	)
Other investments	(3		)	(6		)	(624		)	(575		)
Equity in income (loss) from unconsolidated entities	$	31		$	286		$	(1,552	)	$	(1,188	)

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. Debt

Consolidated debt consisted of the following (dollars in thousands):



	Encumbered Hotels		Interest Rate (%)		Maturity Date	June 30, 2011		December 31, 2010
Line of credit^(a)	11 hotels		L + 4.50		August 2014^(b)	$	—	$	—
Mortgage debt
Mortgage debt^(c)	10 hotels		L + 0.93	^(d)	November 2011	204,714		250,000
Mortgage debt^(e)	9 hotels		L + 5.10	^(f)	April 2015	211,968		212,000
Mortgage debt	7 hotels		9.02		April 2014	110,973		113,220
Mortgage debt	5 hotels	^(g)	6.66		June - August 2014	68,300		69,206
Mortgage debt^(h)	1 hotel		L + 1.50		June 2012	24,000		27,770
Mortgage debt	1 hotel		5.81		July 2016	11,100		11,321
Other	—		4.25		August 2011	791		524
Senior notes
Senior secured notes	6 hotels		6.75		June 2019	525,000		—
Senior secured notes⁽ⁱ⁾	14 hotels		10.00		October 2014	455,260		582,821
Retired debt	—		—		—	—		281,447
Total	64 hotels					$	1,612,106	$	1,548,309


(a)	We currently have full availability under our $225 million line of credit.


(b)	The line of credit can be extended for one year (to 2015), subject to satisfying certain conditions.


(c)	$26.5 million was repaid on this note after June 30, 2011 from proceeds of a hotel sale.


(d)	We purchased an interest rate cap ($250 million notional amount) that caps LIBOR at 7.8% and expires November 2011.


(e)	$8.6 million was repaid on this note after June 30, 2011 from proceeds of a hotel sale.


(f)	LIBOR (for this loan) is subject to a 3% floor. We purchased an interest rate cap ($212 million notional amount) that caps LIBOR at 5.0% and expires May 2012.


(g)	The hotels securing this debt are subject to separate loan agreements and are not cross-collateralized.


(h)	This note was repaid after June 30, 2011.


(i)	$492 million in aggregate principal outstanding (after redemption of $144 million in aggregate principal in June 2011) and were initially sold at a discount that provided an effective yield of 12.875% before transaction costs.

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


5.	Debt — (continued)

In March 2011, we established a $225 million secured line of credit with a group of seven banks. At the same time, we repaid a $198.3 million secured loan and a $28.8 million secured loan with a combination of $52.1 million of cash on hand and funds drawn under our new line of credit (all of which has subsequently been repaid). The repaid loans would have matured in 2013 and 2012 (including extensions), respectively, and were secured by mortgages on 11 hotels. Those same hotels secure repayment of amounts outstanding under the line of credit. The credit facility bears interest at LIBOR, plus 4.5%, with no LIBOR floor.

In May 2011, our wholly-owned subsidiary issued $525.0 million in aggregate principal amount of its 6.75% senior secured notes due 2019. Net proceeds after initial purchasers' discount and expenses were approximately $511 million, a portion of which was used to purchase Royalton and Morgans for $140.0 million, with the remainder available for general corporate purposes.

In May 2011, we repaid loans aggregating $45.3 million secured by two hotels, when we sold the hotels.

In June 2011, we repaid (at maturity) a $7.3 million loan that was secured by one hotel.

In June 2011, we obtained a $24.0 million loan to refinance a loan secured by one hotel. The old loan balance was $27.8 million and provided that, upon refinancing, $3.8 million of the loan would be forgiven. We recognized a $3.7 million net gain from extinguishment of debt in connection with the refinancing.

In June 2011, we repaid the remaining outstanding $46.4 million of our 9% senior notes when they matured.

In June 2011, we redeemed $144 million in aggregate principal amount of our 10% senior notes using $158 million of net proceeds of our recent equity offering. Under the terms of the indenture governing the redeemed notes, the redemption price was 110% of the principal amount of the redeemed notes, together with accrued and unpaid interest thereon to the redemption date. We recognized a $27.4 million debt extinguishment charge related to the prepayment premium and the write-off of a pro rata portion of the related debt discount and deferred loan costs.

We reported $34.9 million and $35.9 million of interest expense for the three months ended June 30, 2011 and 2010, respectively, which is net of: (i) interest income of $53,000 and $96,000 and (ii) capitalized interest of $312,000 and $138,000, respectively. We reported $68.3 million and $70.6 million of interest expense for the six months ended June 30, 2011 and 2010, respectively, which is net of: (i) interest income of $94,000 and $201,000 and (ii) capitalized interest of $510,000 and $283,000, respectively.

6. FelCor Common Stock Offering

In April 2011, FelCor sold 27.6 million shares of its common stock at $6.00 per share in a public offering. The net proceeds from the offering were $158 million and were contributed to us in exchange for a like number of common units. Net proceeds from this offering (after underwriting discounts and commissions) were used to redeem $144 million of our 10% senior notes.

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. Hotel Operating Revenue, Departmental Expenses, and Other Property Operating Costs

Hotel operating revenue from continuing operations was comprised of the following (in thousands):



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2011		2010		2011		2010
Room revenue	$	199,188	$	179,004	$	375,168	$	341,835
Food and beverage revenue	42,576		34,756		79,711		67,411
Other operating departments	14,591		13,944		26,969		26,518
Total hotel operating revenue	$	256,355	$	227,704	$	481,848	$	435,764

Nearly all of our revenue is comprised of hotel operating revenue, which includes room revenue, food and beverage revenue, and revenue from other hotel operating departments (such as telephones, parking and business centers). These revenues are recorded net of any sales or occupancy taxes collected from our guests. All rebates or discounts are recorded, when allowed, as a reduction in revenue, and there are no material contingent obligations with respect to rebates or discounts offered by us. All revenues are recorded on an accrual basis, as earned. Appropriate allowances are made for doubtful accounts, which are recorded as a bad debt expense. The remainder of our revenue was derived from other sources.

Hotel departmental expenses from continuing operations were comprised of the following (in thousands):



	Three Months Ended June 30,
	2011				2010
	Amount		% of Total Hotel Operating Revenue		Amount		% of Total Hotel Operating Revenue
Room	$	52,433	20.5	%	$	46,308	20.3	%
Food and beverage	31,534		12.3		26,488		11.6
Other operating departments	6,651		2.5		6,191		2.8
Total hotel departmental expenses	$	90,618	35.3	%	$	78,987	34.7	%



	Six Months Ended June 30,
	2011				2010
	Amount		% of Total Hotel Operating Revenue		Amount		% of Total Hotel Operating Revenue
Room	$	99,633	20.7	%	$	89,689	20.6	%
Food and beverage	60,692		12.6		52,013		11.9
Other operating departments	12,549		2.6		11,996		2.8
Total hotel departmental expenses	$	172,874	35.9	%	$	153,698	35.3	%

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. Hotel Operating Revenue, Departmental Expenses, and Other Property Operating Costs — (continued)

Other property operating costs from continuing operations were comprised of the following

(in thousands):



	Three Months Ended June 30,
	2011				2010
	Amount		% of Total Hotel Operating Revenue		Amount		% of Total Hotel Operating Revenue
Hotel general and administrative expense	$	22,328	8.7	%	$	19,878	8.7	%
Marketing	20,910		8.2		19,014		8.4
Repair and maintenance	12,739		5.0		11,594		5.1
Utilities	11,669		4.5		10,736		4.7
Total other property operating costs	$	67,646	26.4	%	$	61,222	26.9	%



	Six Months Ended June 30,
	2011				2010
	Amount		% of Total Hotel Operating Revenue		Amount		% of Total Hotel Operating Revenue
Hotel general and administrative expense	$	44,404	9.2	%	$	39,181	9.0	%
Marketing	41,184		8.5		36,730		8.4
Repair and maintenance	25,244		5.2		23,316		5.4
Utilities	23,114		4.9		21,635		4.9
Total other property operating costs	$	133,946	27.8	%	$	120,862	27.7	%

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. Taxes, Insurance and Lease Expense

Taxes, insurance and lease expense from continuing operations were comprised of the following (in thousands):



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2011		2010		2011		2010
Hotel lease expense^(a)	$	10,497	$	10,015	$	18,801	$	17,773
Land lease expense^(b)	2,725		2,550		4,960		4,704
Real estate and other taxes	8,047		8,387		14,946		16,777
Property insurance, general liability insurance and other	2,294		2,643		4,914		5,991
Total taxes, insurance and lease expense	$	23,563	$	23,595	$	43,621	$	45,245

(a)

Hotel lease expense is recorded by the consolidated operating lessees of 12 hotels owned by unconsolidated entities, and is partially (generally 49%) offset through noncontrolling interests in other partnerships. Our 50% share of the corresponding lease income is recorded through equity in income from unconsolidated entities. Hotel lease expense includes percentage rent of $5.1 million and $4.7 million for the three months ended June 30, 2011 and 2010, respectively, and $8.0 million and $7.1 million for the six months ended June 30, 2011 and 2010, respectively.


(b)	Land lease expense includes percentage rent of $1.2 million and $1.0 million for the three months ended June 30, 2011 and 2010, respectively, and $1.9 million and $1.6 million for the six months ended June 30, 2011 and 2010, respectively.

9. Impairment

Our hotels comprise operations and cash flows that can clearly be distinguished, operationally and for financial reporting purposes, from the remainder of our operations. Accordingly, we consider our hotels to be components for purposes of determining impairment charges and reporting discontinued operations.

During the quarter ended June 30, 2011, we recorded $12.3 million of impairment charges ($11.7 million related to three hotels in continuing operations and $598,000 related to one hotel in discontinued operations). The impairment charge related to continuing operations was based on revised estimated fair market values obtained through the marketing process that were lower than the net book values for these hotels. The inputs used to determine the fair values of these hotels are classified as Level 2 under authoritative guidance for fair value measurements. The impairment charge relating to discontinued operations is primarily related to estimated selling costs with respect to one hotel held for sale at June 30, 2011.

During the quarter ended March 31, 2010, we recorded a $21.1 million impairment charge with regard to two hotels that were subsequently transferred to their lenders in full satisfaction of the related debt. This impairment charge is reflected in discontinued operations. For these impairment charges, we estimated the hotels’ fair value by using estimated future cash flows, terminal values based on the projected cash flows and capitalization rates in the range of what is reported in industry publications for operationally similar assets and other available market information. The cash flows used for determining the fair values were discounted using market-based discounts generally used for operationally and

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. Impairment — (continued)

geographically similar assets. The inputs used to determine the fair values of these hotels are classified as Level 3 under the authoritative guidance for fair value measurements.

We may record additional impairment charges if operating results of individual hotels are materially different from our forecasts, or the economy and/or lodging industry weakens, or if we shorten our contemplated holding period for additional hotels.

10. Discontinued Operations

We had three hotels held for sale at June 30, 2011. We consider a sale to be probable within the next twelve months (for purposes of determining whether a hotel is held for sale) when a buyer completes its due diligence review of the asset, we have an executed contract for sale, and we have received a substantial non-refundable deposit.

Discontinued operations include results of operations for three hotels designated as held for sale at June 30, 2011, three hotels sold during the quarter ended June 30, 2011, and three hotels disposed in 2010. The following table summarizes the condensed financial information for those hotels (in thousands):



	Three Months Ended							Six Months Ended
	June 30,							June 30,
	2011				2010			2011				2010
Hotel operating revenue	$	8,811			$	21,633		$	20,665			$	39,619
Operating expenses	(8,447		)	^(a)	(21,283		)	(19,098		)	^(a)	(62,303		)	^(b)
Operating income (loss) from discontinued operations	$	364			$	350		$	1,567			$	(22,684	)
Interest expense, net	(335		)		(1,318		)	(709		)		(2,832		)
Debt extinguishment	(50		)		(126		)	(57		)		(126		)
Gain on sale of hotels, net	6,660				—			6,660				—
Income (loss) from discontinued operations	$	6,639			$	(1,094	)	$	7,461			$	(25,642	)


(a)	Includes an impairment charge of $598,000.


(b)	Includes an impairment charge of $21.1 million.

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. Income (Loss) Per Unit

The following table sets forth the computation of basic and diluted income (loss) per unit (in thousands, except per unit data):



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
Numerator:
Net income (loss) attributable to FelCor LP	$	(42,448	)	$	21,665		$	(74,232	)	$	(41,048	)
Discontinued operations attributable to FelCor LP	(6,639		)	1,094			(7,461		)	25,642
Income (loss) from continuing operations attributable to FelCor LP	(49,087		)	22,759			(81,693		)	(15,406		)
Less: Preferred distributions	(9,678		)	(9,678		)	(19,356		)	(19,356		)
Less: Undistributed earnings allocated to unvested FelCor restricted stock	—			(352		)	—			—
Numerator for continuing operations attributable to FelCor LP common unitholders	(58,765		)	12,729			(101,049		)	(34,762		)
Discontinued operations attributable to FelCor LP	6,639			(1,094		)	7,461			(25,642		)
Numerator for basic and diluted income (loss) attributable to FelCor LP common unitholders	$	(52,126	)	$	11,635		$	(93,588	)	$	(60,404	)
Denominator:
Denominator for basic and diluted income (loss) per unit	123,425			66,826			109,608			65,309
Basic and diluted income (loss) per unit data:
Income (loss) from continuing operations	$	(0.48	)	$	0.19		$	(0.92	)	$	(0.53	)
Discontinued operations	$	0.05		$	(0.02	)	$	0.07		$	(0.39	)
Net income (loss)	$	(0.42	)	$	0.17		$	(0.85	)	$	(0.92	)

Securities that could potentially dilute earnings per unit in the future that were not included in the computation of diluted income (loss) per unit, because they would have been antidilutive for the periods presented, are as follows (in thousands):



	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2011	2010	2011	2010
Series A convertible preferred units	9,985	9,985	9,985	9,985

Series A preferred distributions that would be excluded from net income (loss) attributable to FelCor LP common unitholders, if these Series A preferred units were dilutive, were $6.3 million for the three months ended June 30, 2011 and 2010, and $12.6 million for the six months ended June 30, 2011 and 2010.

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12. Distributions

In January 2011, we reinstated our current quarterly preferred distribution and paid current quarterly preferred distributions in January, May and August 2011. We are restricted from paying any common distributions unless and until all accrued and current preferred distributions are paid. FelCor's Board of Directors will determine whether and when to declare future distributions (including the accrued but unpaid preferred distributions) based upon various factors, including operating results, economic conditions, other operation trends, our financial condition and capital requirements, as well as FelCor's minimum REIT distribution requirements. We had $76.3 million of aggregate accrued distributions payable to holders of Series A and Series C preferred units at June 30, 2011 and December 31, 2010.

13. Fair Value of Financial Instruments

Disclosures about fair value of our financial instruments are based on pertinent information available to management as of June 30, 2011. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that we could realize on disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on estimated fair value amounts.

Our estimates of the fair value of (i) accounts receivable, accounts payable and accrued expenses approximate carrying value due to the relatively short maturity of these instruments; (ii) our publicly-traded debt is based on observable market data; and (iii) our debt that is not traded publicly is based on estimated effective borrowing rates for debt with similar terms, loan to estimated fair value and remaining maturities (the estimated fair value of all our debt was $1.7 billion at June 30, 2011 and December 31, 2010).

14. Subsequent Events

In July 2011, we sold three hotels that were classified as held for sale and recorded in discontinued operations at June 30, 2011 for combined gross proceeds of $46 million.


15.	Consolidating Financial Information

Certain of our wholly-owned subsidiaries (FelCor/CSS Holdings, L.P.; FelCor Lodging Holding Company, L.L.C.; FelCor TRS Borrower 1, L.P.; FelCor TRS Borrower 4, L.L.C.; FelCor TRS Holdings, L.L.C.; FelCor Canada Co.; FelCor/St. Paul Holdings, L.P.; FelCor Hotel Asset Company, L.L.C.; FelCor Copley Plaza, L.L.C.; FelCor St. Pete (SPE), L.L.C.; FelCor Esmeralda (SPE), L.L.C.; Los Angeles International Airport Hotel Associates, a Texas L.P.; Madison 237 Hotel, L.L.C.; and Royalton 44 Hotel, L.L.C., collectively, “Subsidiary Guarantors”), together with FelCor, guarantee, fully and unconditionally, and jointly and severally, our senior debt. The following tables present consolidating information for the Subsidiary Guarantors.

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


15.	Consolidating Financial Information

CONDENSED CONSOLIDATING BALANCE SHEET

June 30, 2011

(in thousands)



	FelCor LP		Subsidiary Guarantors			Non-Guarantor Subsidiaries		Eliminations			Total Consolidated
Net investment in hotel properties	$	62,059	$	844,727		$	1,091,446	$	—		$	1,998,232
Equity investment in consolidated entities	1,370,598		—			—		(1,370,598		)	—
Investment in unconsolidated entities	59,034		12,229			1,470		—			72,733
Hotel held for sale	13,228		273			30,345		—			43,846
Cash and cash equivalents	180,388		48,697			1,964		—			231,049
Restricted cash	—		8,325			33,284		—			41,609
Accounts receivable, net	351		38,856			59		—			39,266
Deferred expenses, net	26,186		—			5,625		—			31,811
Other assets	14,792		13,910			5,579		—			34,281

Total assets	$	1,726,636	$	967,017		$	1,169,772	$	(1,370,598	)	$	2,492,827

Debt, net	$	980,260	$	—		$	631,846	$	—		$	1,612,106
Distributions payable	76,293		—			—		—			76,293
Accrued expenses and other liabilities	28,652		104,738			9,577		—			142,967

Total liabilities	1,085,205		104,738			641,423		—			1,831,366

Redeemable units	3,887		—			—		—			3,887

Preferred units	478,774		—			—		—			478,774
Common units	158,770		835,390			507,156		(1,370,598		)	130,718
Accumulated other comprehensive income	—		28,052			—		—			28,052
Total FelCor LP partners’ capital	637,544		863,442			507,156		(1,370,598		)	637,544
Noncontrolling interests	—		(1,163		)	21,193		—			20,030
Total partners' capital	637,544		862,279			528,349		(1,370,598		)	657,574
Total liabilities and partners' capital	$	1,726,636	$	967,017		$	1,169,772	$	(1,370,598	)	$	2,492,827

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


15.	Consolidating Financial Information – (continued)

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2010

(in thousands)



	FelCor LP		Subsidiary Guarantors			Non-Guarantor Subsidiaries		Eliminations			Total Consolidated
Net investment in hotel properties	$	76,763	$	720,093		$	1,188,923	$	—		$	1,985,779
Equity investment in consolidated entities	1,025,818		—			—		(1,025,818		)	—
Investment in unconsolidated entities	61,833		12,594			1,493		—			75,920
Cash and cash equivalents	155,350		43,647			1,975		—			200,972
Restricted cash	—		6,347			10,355		—			16,702
Accounts receivable, net	642		27,190			19		—			27,851
Deferred expenses, net	11,366		—			8,574		—			19,940
Other assets	7,112		20,325			4,834		—			32,271

Total assets	$	1,338,884	$	830,196		$	1,216,173	$	(1,025,818	)	$	2,359,435

Debt, net	$	658,168	$	—		$	890,141	$	—		$	1,548,309
Distributions payable	76,293		—			—		—			76,293
Accrued expenses and other liabilities	33,836		100,007			10,608		—			144,451

Total liabilities	768,297		100,007			900,749		—			1,769,053

Redeemable units	2,004		—			—		—			2,004

Preferred units	478,774		—			—		—			478,774
Common units	89,809		704,117			295,127		(1,025,818		)	63,235
Accumulated other comprehensive income	—		26,574			—		—			26,574
Total FelCor LP partners’ capital	568,583		730,691			295,127		(1,025,818		)	568,583
Noncontrolling interests	—		(502		)	20,297		—			19,795
Total partners' capital	568,583		730,189			315,424		(1,025,818		)	588,378
Total liabilities and partners' capital	$	1,338,884	$	830,196		$	1,216,173	$	(1,025,818	)	$	2,359,435

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


15.	Consolidating Financial Information – (continued)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Three Months Ended June 30, 2011

(in thousands)



	FelCor LP			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Revenues:
Hotel operating revenue	$	—		$	256,355		$	—		$	—		$	256,355
Percentage lease revenue	1,629			—			47,387			(49,016		)	—
Other revenue	2			904			105			—			1,011
Total revenues	1,631			257,259			47,492			(49,016		)	257,366

Expenses:
Hotel operating expenses	—			170,113			—			—			170,113
Taxes, insurance and lease expense	537			66,205			5,837			(49,016		)	23,563
Corporate expenses	127			3,790			2,993			—			6,910
Depreciation and amortization	1,154			12,496			20,361			—			34,011
Impairment loss	—			9,018			2,688			—			11,706
Other expenses	(92		)	1,641			67			—			1,616
Total operating expenses	1,726			263,263			31,946			(49,016		)	247,919
Operating income (loss)	(95		)	(6,004		)	15,546			—			9,447
Interest expense, net	(24,121		)	(608		)	(10,146		)	—			(34,875		)
Debt extinguishment	(27,354		)	—			3,694			—			(23,660		)
Gain on involuntary conversion, net	(21		)	57			(15		)	—			21
Income (loss) before equity in income (loss) from unconsolidated entities	(51,591		)	(6,555		)	9,079			—			(49,067		)
Equity in income from consolidated entities	9,272			—			—			(9,272		)	—
Equity in income (loss) from unconsolidated entities	(112		)	154			(11		)	—			31
Income (loss) from continuing operations	(42,431		)	(6,401		)	9,068			(9,272		)	(49,036		)
Discontinued operations	(17		)	(478		)	7,134			—			6,639
Net income (loss)	(42,448		)	(6,879		)	16,202			(9,272		)	(42,397		)
Net loss (income) attributable to noncontrolling interests	—			(75		)	24			—			(51		)
Net income (loss) attributable to FelCor LP	(42,448		)	(6,954		)	16,226			(9,272		)	(42,448		)
Preferred distributions	(9,678		)	—			—			—			(9,678		)
Net income (loss) attributable to FelCor LP common unitholders	$	(52,126	)	$	(6,954	)	$	16,226		$	(9,272	)	$	(52,126	)

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


15.	Consolidating Financial Information – (continued)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Three Months Ended June 30, 2010

(in thousands)



	FelCor LP			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Revenues:
Hotel operating revenue	$	—		$	227,704		$	—		$	—		$	227,704
Percentage lease revenue	2,329			—			43,411			(45,740		)	—
Other revenue	—			912			95			—			1,007
Total revenues	2,329			228,616			43,506			(45,740		)	228,711

Expenses:
Hotel operating expenses	—			151,179			—			—			151,179
Taxes, insurance and lease expense	481			62,831			6,023			(45,740		)	23,595
Corporate expenses	(323		)	3,691			3,142			—			6,510
Depreciation and amortization	1,587			11,316			21,255			—			34,158
Other expenses	16			1,058			(273		)	—			801
Total operating expenses	1,761			230,075			30,147			(45,740		)	216,243
Operating income (loss)	568			(1,459		)	13,359			—			12,468
Interest expense, net	(20,509		)	(1,592		)	(13,755		)	—			(35,856		)
Debt extinguishment	—			46,600			(414		)	—			46,186
Income (loss) before equity in income from unconsolidated entities	(19,941		)	43,549			(810		)	—			22,798
Equity in income from consolidated entities	41,690			—			—			(41,690		)	—
Equity in income from unconsolidated entities	32			32			222			—			286
Income (loss) from continuing operations	21,781			43,581			(588		)	(41,690		)	23,084
Discontinued operations	(116		)	(511		)	(467		)	—			(1,094		)
Net income (loss)	21,665			43,070			(1,055		)	(41,690		)	21,990
Net income attributable to noncontrolling interests	—			(195		)	(130		)	—			(325		)
Net income (loss) attributable to FelCor LP	21,665			42,875			(1,185		)	(41,690		)	21,665
Preferred distributions	(9,678		)	—			—			—			(9,678		)
Net income (loss) attributable to FelCor LP common unitholders	$	11,987		$	42,875		$	(1,185	)	$	(41,690	)	$	11,987

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


15.	Consolidating Financial Information – (continued)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Six Months Ended June 30, 2011

(in thousands)



	FelCor LP			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Revenues:
Hotel operating revenue	$	—		$	481,848		$	—		$	—		$	481,848
Percentage lease revenue	2,875			—			91,848			(94,723		)	—
Other revenue	9			1,092			135			—			1,236
Total revenues	2,884			482,940			91,983			(94,723		)	483,084

Expenses:
Hotel operating expenses	—			329,152			—			—			329,152
Taxes, insurance and lease expense	816			125,650			11,878			(94,723		)	43,621
Corporate expenses	295			8,950			7,202			—			16,447
Depreciation and amortization	2,319			24,749			40,793			—			67,861
Impairment loss	—			9,018			2,688			—			11,706
Other expenses	23			2,124			100			—			2,247
Total operating expenses	3,453			499,643			62,661			(94,723		)	471,034
Operating income (loss)	(569		)	(16,703		)	29,322			—			12,050
Interest expense, net	(43,965		)	(1,293		)	(23,090		)	—			(68,348		)
Debt extinguishment	(27,354		)	—			3,449			—			(23,905		)
Gain on involuntary conversion, net	(21		)	207			(15		)	—			171
Income (loss) before equity in loss from unconsolidated entities	(71,909		)	(17,789		)	9,666			—			(80,032		)
Equity in loss from consolidated entities	(1,259		)	—			—			1,259			—
Equity in loss from unconsolidated entities	(1,264		)	(265		)	(23		)	—			(1,552		)
Income (loss) from continuing operations	(74,432		)	(18,054		)	9,643			1,259			(81,584		)
Discontinued operations	200			(1,545		)	8,806			—			7,461
Net income (loss)	(74,232		)	(19,599		)	18,449			1,259			(74,123		)
Net loss (income) attributable to noncontrolling interests	—			153			(262		)	—			(109		)
Net income (loss) attributable to FelCor LP	(74,232		)	(19,446		)	18,187			1,259			(74,232		)
Preferred distributions	(19,356		)	—			—			—			(19,356		)
Net income (loss) attributable to FelCor LP common unitholders	$	(93,588	)	$	(19,446	)	$	18,187		$	1,259		$	(93,588	)

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


15.	Consolidating Financial Information – (continued)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Six Months Ended June 30, 2010

(in thousands)



	FelCor LP			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Revenues:
Hotel operating revenue	$	—		$	435,764		$	—		$	—		$	435,764
Percentage lease revenue	4,090			—			85,761			(89,851		)	—
Other revenue	—			1,233			139			—			1,372
Total revenues	4,090			436,997			85,900			(89,851		)	437,136

Expenses:
Hotel operating expenses	—			295,259			—			—			295,259
Taxes, insurance and lease expense	933			121,778			12,385			(89,851		)	45,245
Corporate expenses	377			8,573			7,407			—			16,357
Depreciation and amortization	3,175			22,647			42,817			—			68,639
Other expenses	16			1,582			(236		)	—			1,362
Total operating expenses	4,501			449,839			62,373			(89,851		)	426,862
Operating income (loss)	(411		)	(12,842		)	23,527			—			10,274
Interest expense, net	(40,838		)	(3,275		)	(26,469		)	—			(70,582		)
Debt extinguishment	—			46,600			(414		)				46,186
Income (loss) before equity in income (loss) from unconsolidated entities	(41,249		)	30,483			(3,356		)	—			(14,122		)
Equity in income from consolidated entities	1,344			—			—			(1,344		)	—
Equity in income (loss) from unconsolidated entities	(967		)	(425		)	204			—			(1,188		)
Income (loss) from continuing operations	(40,872		)	30,058			(3,152		)	(1,344		)	(15,310		)
Discontinued operations	(176		)	(3,107		)	(22,359		)	—			(25,642		)
Net income (loss)	(41,048		)	26,951			(25,511		)	(1,344		)	(40,952		)
Net loss (income) attributable to noncontrolling interests	—			(109		)	13			—			(96		)
Net income (loss) attributable to FelCor LP	(41,048		)	26,842			(25,498		)	(1,344		)	(41,048		)
Preferred distributions	(19,356		)	—			—			—			(19,356		)
Net income (loss) attributable to FelCor LP common unitholders	$	(60,404	)	$	26,842		$	(25,498	)	$	(1,344	)	$	(60,404	)

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


15.	Consolidating Financial Information – (continued)

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Six Months Ended June 30, 2011

(in thousands)



	FelCor LP			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Total Consolidated
Cash flows from (used in) operating activities	$	(49,446	)	$	4,892		$	59,080		$	14,526
Cash flows from (used in) investing activities	406			(151,109		)	29,944			(120,759		)
Cash flows from (used in) financing activities	74,078			151,174			(89,035		)	136,217
Effect of exchange rates changes on cash	—			93			—			93
Change in cash and cash equivalents	25,038			5,050			(11		)	30,077
Cash and cash equivalents at beginning of period	155,350			43,647			1,975			200,972
Cash and equivalents at end of period	$	180,388		$	48,697		$	1,964		$	231,049

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Six Months Ended June 30, 2010

(in thousands)

FelCor Lodging LP 10-Q