FelCor LP's Consolidating Financial Information | FelCor LP’s Consolidating Financial Information Certain of FelCor LP’s 100% owned subsidiaries (FCH/PSH, L.P.; FelCor/CMB Buckhead Hotel, L.L.C.; FelCor/CMB Marlborough Hotel, L.L.C.; FelCor/CMB Orsouth Holdings, L.P.; FelCor/CMB SSF Holdings, L.P.; FelCor/CSS Holdings, L.P.; FelCor Dallas Love Field Owner, L.L.C.; FelCor Milpitas Owner, L.L.C.; FelCor TRS Borrower 4, L.L.C.; FelCor TRS Holdings, L.L.C.; FelCor Canada Co.; FelCor Hotel Asset Company, L.L.C.; FelCor St. Pete (SPE), L.L.C.; FelCor Esmeralda (SPE), L.L.C.; FelCor S-4 Hotels (SPE), L.L.C.; Madison 237 Hotel, L.L.C.; Myrtle Beach Owner, L.L.C.; and Royalton 44 Hotel, L.L.C., collectively, “Subsidiary Guarantors”), together with FelCor, guaranty, fully and unconditionally, except where subject to customary release provisions as described below, and jointly and severally, our senior debt. The guaranties by the Subsidiary Guarantors may be automatically and unconditionally released upon (i) the sale or other disposition of all of the capital stock of the Subsidiary Guarantor or the sale or disposition of all or substantially all of the assets of the Subsidiary Guarantor, if, in each case, as a result of such sale or disposition, such Subsidiary Guarantor ceases to be a subsidiary of FelCor LP, (ii) the consolidation or merger of any such Subsidiary Guarantor with any person other than FelCor LP, or a subsidiary of FelCor LP, if, as a result of such consolidation or merger, such Subsidiary Guarantor ceases to be a subsidiary of FelCor LP, (iii) a legal defeasance or covenant defeasance of the indenture, (iv) the unconditional and complete release of such Subsidiary Guarantor in accordance with the modification and waiver provisions of the indenture, or (v) the designation of a restricted subsidiary that is a Subsidiary Guarantor as an unrestricted subsidiary under and in compliance with the indenture. 16. FelCor LP’s Consolidating Financial Information — (continued) The following tables present consolidating information for the Subsidiary Guarantors. FELCOR LODGING LIMITED PARTNERSHIP CONDENSED CONSOLIDATING BALANCE SHEET June 30, 2016 (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Net investment in hotels $ — $ 610,161 $ 1,082,258 $ — $ 1,692,419 Equity investment in consolidated entities 1,215,589 — — (1,215,589 ) — Investment in unconsolidated entities 3,415 4,765 1,242 — 9,422 Cash and cash equivalents 16,670 39,473 2,045 — 58,188 Restricted cash — 18,982 4,724 — 23,706 Accounts receivable, net 2,116 34,582 1,952 — 38,650 Deferred expenses, net — — 5,464 — 5,464 Other assets 4,534 10,803 4,210 — 19,547 Total assets $ 1,242,324 $ 718,766 $ 1,101,895 $ (1,215,589 ) $ 1,847,396 Debt, net $ 984,985 $ — $ 488,154 $ (39,436 ) $ 1,433,703 Distributions payable 14,831 — 120 — 14,951 Accrued expenses and other liabilities 22,346 92,697 11,906 — 126,949 Total liabilities 1,022,162 92,697 500,180 (39,436 ) 1,575,603 Redeemable units, at redemption value 3,809 — — — 3,809 Preferred units 309,337 — — — 309,337 Common units (92,984 ) 626,886 549,267 (1,176,153 ) (92,984 ) Total FelCor LP partners’ capital 216,353 626,886 549,267 (1,176,153 ) 216,353 Noncontrolling interests — (817 ) 8,665 — 7,848 Preferred capital in consolidated joint venture — — 43,783 — 43,783 Total partners’ capital 216,353 626,069 601,715 (1,176,153 ) 267,984 Total liabilities and partners’ capital $ 1,242,324 $ 718,766 $ 1,101,895 $ (1,215,589 ) $ 1,847,396 16. FelCor LP’s Consolidating Financial Information — (continued) FELCOR LODGING LIMITED PARTNERSHIP CONDENSED CONSOLIDATING BALANCE SHEET December 31, 2015 (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Net investment in hotels $ — $ 625,835 $ 1,103,696 $ — $ 1,729,531 Equity investment in consolidated entities 1,260,779 — — (1,260,779 ) — Investment in unconsolidated entities 4,440 3,871 1,264 — 9,575 Cash and cash equivalents 21,219 34,294 4,273 — 59,786 Restricted cash — 15,442 2,260 — 17,702 Accounts receivable, net 644 25,575 1,917 — 28,136 Deferred expenses, net — — 6,390 — 6,390 Other assets 3,587 8,786 2,419 — 14,792 Total assets $ 1,290,669 $ 713,803 $ 1,122,219 $ (1,260,779 ) $ 1,865,912 Debt, net $ 984,226 $ — $ 465,099 $ (39,436 ) $ 1,409,889 Distributions payable 15,016 — 124 — 15,140 Accrued expenses and other liabilities 26,810 83,787 14,677 — 125,274 Total liabilities 1,026,052 83,787 479,900 (39,436 ) 1,550,303 Redeemable units, at redemption value 4,464 — — — 4,464 Preferred units 309,337 — — — 309,337 Common units (49,184 ) 630,833 590,510 (1,221,343 ) (49,184 ) Total FelCor LP partners’ capital 260,153 630,833 590,510 (1,221,343 ) 260,153 Noncontrolling interests — (817 ) 8,623 — 7,806 Preferred capital in consolidated joint venture — — 43,186 — 43,186 Total partners’ capital 260,153 630,016 642,319 (1,221,343 ) 311,145 Total liabilities and partners’ capital $ 1,290,669 $ 713,803 $ 1,122,219 $ (1,260,779 ) $ 1,865,912 . FelCor LP’s Consolidating Financial Information — (continued) FELCOR LODGING LIMITED PARTNERSHIP CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME For the Three Months Ended June 30, 2016 (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Revenues: Hotel operating revenue $ — $ 236,761 $ — $ — $ 236,761 Percentage lease revenue — — 46,953 (46,953 ) — Other revenue 1 1,022 122 — 1,145 Total revenues 1 237,783 47,075 (46,953 ) 237,906 Expenses: Hotel operating expenses — 145,887 — — 145,887 Taxes, insurance and lease expense 26 56,112 5,679 (46,953 ) 14,864 Corporate expenses — 3,360 2,687 — 6,047 Depreciation and amortization 93 12,030 17,054 — 29,177 Impairment — 6,333 — — 6,333 Other expenses 187 1,661 294 — 2,142 Total operating expenses 306 225,383 25,714 (46,953 ) 204,450 Operating income (305 ) 12,400 21,361 — 33,456 Interest expense, net (14,601 ) 9 (5,315 ) — (19,907 ) Other gains, net — — 100 — 100 Income before equity in income from unconsolidated entities (14,906 ) 12,409 16,146 — 13,649 Equity in income from consolidated entities 27,974 — — (27,974 ) — Equity in income from unconsolidated entities 652 85 (11 ) — 726 Income from continuing operations before income tax 13,720 12,494 16,135 (27,974 ) 14,375 Income tax (48 ) 73 — — 25 Income from continuing operations before loss on sale of hotels 13,672 12,567 16,135 (27,974 ) 14,400 Loss on sale of hotels, net (250 ) (300 ) (80 ) — (630 ) Net income and comprehensive income 13,422 12,267 16,055 (27,974 ) 13,770 Loss attributable to noncontrolling interests — (57 ) 73 — 16 Preferred distributions - consolidated joint venture — — (364 ) — (364 ) Net income and comprehensive income attributable to FelCor LP 13,422 12,210 15,764 (27,974 ) 13,422 Preferred distributions (6,279 ) — — — (6,279 ) Net income attributable to FelCor LP common unitholders $ 7,143 $ 12,210 $ 15,764 $ (27,974 ) $ 7,143 16. FelCor LP’s Consolidating Financial Information — (continued) FELCOR LODGING LIMITED PARTNERSHIP CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS For the Three Months Ended June 30, 2015 (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Revenues: Hotel operating revenue $ — $ 236,049 $ — $ — $ 236,049 Percentage lease revenue — — 46,687 (46,687 ) — Other revenue 107 4,800 147 — 5,054 Total revenues 107 240,849 46,834 (46,687 ) 241,103 Expenses: Hotel operating expenses — 147,025 — — 147,025 Taxes, insurance and lease expense 437 56,412 6,248 (46,687 ) 16,410 Corporate expenses (138 ) 3,687 2,981 — 6,530 Depreciation and amortization 47 12,729 15,974 — 28,750 Other expenses 3 1,463 (55 ) — 1,411 Total operating expenses 349 221,316 25,148 (46,687 ) 200,126 Operating income (242 ) 19,533 21,686 — 40,977 Interest expense, net (14,572 ) 3 (5,709 ) — (20,278 ) Debt extinguishment (28,446 ) — (2,377 ) — (30,823 ) Other gains, net — — 166 — 166 Loss before equity in income from unconsolidated entities (43,260 ) 19,536 13,766 — (9,958 ) Equity in income from consolidated entities 32,380 — — (32,380 ) — Equity in income from unconsolidated entities 7,297 227 (11 ) — 7,513 Loss from continuing operations before income tax (3,583 ) 19,763 13,755 (32,380 ) (2,445 ) Income tax 332 (501 ) — — (169 ) Loss from continuing operations (3,251 ) 19,262 13,755 (32,380 ) (2,614 ) Loss from discontinued operations — — (83 ) — (83 ) Loss before loss on sale of hotels (3,251 ) 19,262 13,672 (32,380 ) (2,697 ) Loss on sale of hotels, net (108 ) (3 ) (439 ) — (550 ) Net loss and comprehensive loss (3,359 ) 19,259 13,233 (32,380 ) (3,247 ) Loss attributable to noncontrolling interests — 251 (4 ) — 247 Preferred distributions - consolidated joint venture — — (359 ) — (359 ) Net loss and comprehensive loss attributable to FelCor LP (3,359 ) 19,510 12,870 (32,380 ) (3,359 ) Preferred distributions (7,903 ) — — — (7,903 ) Redemption of preferred units (6,096 ) — — — (6,096 ) Net loss attributable to FelCor LP common unitholders $ (17,358 ) $ 19,510 $ 12,870 $ (32,380 ) $ (17,358 ) 16. FelCor LP’s Consolidating Financial Information — (continued) FELCOR LODGING LIMITED PARTNERSHIP CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME For the Six Months Ended June 30, 2016 (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Revenues: Hotel operating revenue $ — $ 446,218 $ — $ — $ 446,218 Percentage lease revenue — — 90,498 (90,498 ) — Other revenue 187 1,454 191 — 1,832 Total revenues 187 447,672 90,689 (90,498 ) 448,050 Expenses: Hotel operating expenses — 288,116 — — 288,116 Taxes, insurance and lease expense 53 107,595 11,296 (90,498 ) 28,446 Corporate expenses — 7,695 6,752 — 14,447 Depreciation and amortization 144 24,027 34,189 — 58,360 Impairment — 6,333 — — 6,333 Other expenses 419 2,213 338 — 2,970 Total operating expenses 616 435,979 52,575 (90,498 ) 398,672 Operating income (429 ) 11,693 38,114 — 49,378 Interest expense, net (29,262 ) 18 (10,383 ) — (39,627 ) Other gains, net — — 100 — 100 Income before equity in income from unconsolidated entities (29,691 ) 11,711 27,831 — 9,851 Equity in income from consolidated entities 37,841 — — (37,841 ) — Equity in income from unconsolidated entities 716 (121 ) (23 ) — 572 Income from continuing operations before income tax 8,866 11,590 27,808 (37,841 ) 10,423 Income tax (164 ) (226 ) — — (390 ) Income before loss on sale of hotels 8,702 11,364 27,808 (37,841 ) 10,033 Loss on sale of hotels, net (250 ) (757 ) (337 ) — (1,344 ) Net income and comprehensive income 8,452 10,607 27,471 (37,841 ) 8,689 Loss attributable to noncontrolling interests — 313 174 — 487 Preferred distributions - consolidated joint venture — — (724 ) — (724 ) Net income and comprehensive income attributable to FelCor LP 8,452 10,920 26,921 (37,841 ) 8,452 Preferred distributions (12,558 ) — — — (12,558 ) Net loss attributable to FelCor LP common unitholders $ (4,106 ) $ 10,920 $ 26,921 $ (37,841 ) $ (4,106 ) 16. FelCor LP’s Consolidating Financial Information — (continued) FELCOR LODGING LIMITED PARTNERSHIP CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME For the Six Months Ended June 30, 2015 (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Revenues: Hotel operating revenue $ — $ 449,334 $ — $ — $ 449,334 Percentage lease revenue — — 85,874 (85,874 ) — Other revenue 108 5,147 209 — 5,464 Total revenues 108 454,481 86,083 (85,874 ) 454,798 Expenses: Hotel operating expenses — 290,661 — — 290,661 Taxes, insurance and lease expense (191 ) 105,911 11,371 (85,874 ) 31,217 Corporate expenses — 8,292 6,811 — 15,103 Depreciation and amortization 89 25,894 30,539 — 56,522 Other expenses 3 5,509 127 — 5,639 Total operating expenses (99 ) 436,267 48,848 (85,874 ) 399,142 Operating income 207 18,214 37,235 — 55,656 Interest expense, net (28,312 ) 6 (11,453 ) — (39,759 ) Debt extinguishment (28,446 ) — (2,450 ) — (30,896 ) Other gains, net — — 166 — 166 Loss before equity in income from unconsolidated entities (56,551 ) 18,220 23,498 — (14,833 ) Equity in income from consolidated entities 52,738 — — (52,738 ) — Equity in income from unconsolidated entities 7,644 41 (23 ) — 7,662 Loss from continuing operations before income tax 3,831 18,261 23,475 (52,738 ) (7,171 ) Income tax (142 ) (196 ) — — (338 ) Loss from continuing operations 3,689 18,065 23,475 (52,738 ) (7,509 ) Loss from discontinued operations — 4 (83 ) — (79 ) Loss before gain on sale of hotels 3,689 18,069 23,392 (52,738 ) (7,588 ) Gain on sale of hotels, net (279 ) (12 ) 16,628 — 16,337 Net income and comprehensive income 3,410 18,057 40,020 (52,738 ) 8,749 Income attributable to noncontrolling interests — 510 (5,142 ) — (4,632 ) Preferred distributions - consolidated joint venture — — (707 ) — (707 ) Net income and comprehensive income attributable to FelCor LP 3,410 18,567 34,171 (52,738 ) 3,410 Preferred distributions (17,581 ) — — — (17,581 ) Redemption of preferred units (6,096 ) — — — — (6,096 ) Net loss attributable to FelCor LP common unitholders $ (20,267 ) $ 18,567 $ 34,171 $ (52,738 ) $ (20,267 ) 16. FelCor LP’s Consolidating Financial Information — (continued) FELCOR LODGING LIMITED PARTNERSHIP CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS For the Six Months Ended June 30, 2016 (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Operating activities: Cash flows from operating activities $ (34,655 ) $ 41,661 $ 64,559 $ — $ 71,565 Investing activities: Improvements and additions to hotels (7 ) (15,093 ) (16,809 ) — (31,909 ) Net proceeds from asset sales (723 ) (533 ) (205 ) — (1,461 ) Insurance proceeds — — 94 — 94 Change in restricted cash - investing — (3,540 ) (2,464 ) — (6,004 ) Distributions from unconsolidated entities 386 — — — 386 Intercompany financing 87,950 — — (87,950 ) — Cash flows from investing activities 87,606 (19,166 ) (19,384 ) (87,950 ) (38,894 ) Financing activities: Proceeds from borrowings — — 50,000 — 50,000 Repayment of borrowings — — (27,145 ) — (27,145 ) Payment of deferred financing fees — — (12 ) — (12 ) Distributions paid to noncontrolling interests — — (1 ) — (1 ) Contributions from noncontrolling interests — 313 217 — 530 Repurchase of common units (27,427 ) — — — (27,427 ) Distributions paid to preferred unitholders (12,558 ) — — — (12,558 ) Distributions paid to common unitholders (16,848 ) — — — (16,848 ) Net proceeds from issuance of preferred capital - consolidated joint venture — — 597 — 597 Intercompany financing — (17,620 ) (70,330 ) 87,950 — Other (667 ) — (729 ) — (1,396 ) Cash flows from financing activities (57,500 ) (17,307 ) (47,403 ) 87,950 (34,260 ) Effect of exchange rate changes on cash — (9 ) — — (9 ) Change in cash and cash equivalents (4,549 ) 5,179 (2,228 ) — (1,598 ) Cash and cash equivalents at beginning of period 21,219 34,294 4,273 — 59,786 Cash and cash equivalents at end of period $ 16,670 $ 39,473 $ 2,045 $ — $ 58,188 16. FelCor LP’s Consolidating Financial Information — (continued) FELCOR LODGING LIMITED PARTNERSHIP CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS For the Six Months Ended June 30, 2015 (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Operating activities: Cash flows from operating activities $ (27,492 ) $ 35,690 $ 60,750 $ — $ 68,948 Investing activities: Improvements and additions to hotels (129 ) (15,483 ) (10,145 ) — (25,757 ) Hotel development — — (21,637 ) — (21,637 ) Net proceeds from asset sales (306 ) 10 134,174 — 133,878 Insurance proceeds 274 — — — 274 Change in restricted cash - investing — (1,350 ) (1,714 ) — (3,064 ) Distributions from unconsolidated entities 6,303 — — — 6,303 Intercompany financing 167,009 — — (167,009 ) — Cash flows from investing activities 173,151 (16,823 ) 100,678 (167,009 ) 89,997 Financing activities: Proceeds from borrowings 475,000 — 504,000 — 979,000 Repayment of borrowings (545,440 ) — (504,616 ) — (1,050,056 ) Payment of deferred financing fees (8,261 ) — (5,661 ) — (13,922 ) Distributions paid to preferred unitholders (19,847 ) — — — (19,847 ) Distributions paid to common unitholders (10,765 ) — — — (10,765 ) Net proceeds from common unit issuance 198,720 — — — 198,720 Distributions paid to noncontrolling interests — (85 ) (15,893 ) — (15,978 ) Contributions from noncontrolling interests — 483 1,425 — 1,908 Redemption of preferred units (169,986 ) — — — (169,986 ) Net proceeds from issuance of preferred capital- consolidated joint venture — — 1,746 — 1,746 Intercompany financing — (18,229 ) (148,780 ) 167,009 — Other (55 ) — (707 ) — (762 ) Cash flows from financing activities (80,634 ) (17,831 ) (168,486 ) 167,009 (99,942 ) Effect of exchange rate changes on cash — (43 ) — — (43 ) Change in cash and cash equivalents 65,025 993 (7,058 ) — 58,960 Cash and cash equivalents at beginning of period 5,717 32,923 8,507 — 47,147 Cash and cash equivalents at end of period $ 70,742 $ 33,916 $ 1,449 $ — $ 106,107 |