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 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 the “Subsidiary Guarantors”), together with Rangers, guaranty, fully and unconditionally, except where subject to customary release provisions as described below, and jointly and severally, our senior notes 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 the Operating Partnership, (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. For the Predecessor period, FelCor TRS was a subsidiary guarantor in the condensed consolidating balance sheet, the condensed consolidating statements of operations and comprehensive income, and the condensed consolidating statements of cash flows. Pursuant to the terms of each of the indentures governing the Senior Notes, upon completion of the distribution of the equity interests in FelCor TRS, FelCor TRS' guarantee of the Senior Notes was automatically released and FelCor TRS Holdings, L.L.C. ceased being a subsidiary guarantor of the Senior Notes. Accordingly, FelCor TRS is not a subsidiary guarantor in the FelCor LP consolidating financial information for the Company. The following tables present the consolidating financial information for the Subsidiary Guarantors: FelCor Lodging Limited Partnership Condensed Consolidating Balance Sheet September 30, 2018 (Successor) (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Equity investment in consolidated entities $ 1,941,135 $ — $ — $ (1,941,135 ) $ — Investment in hotel properties, net — 657,176 1,465,278 — 2,122,454 Investment in unconsolidated joint ventures 15,807 — — — 15,807 Cash and cash equivalents 10,346 — 5,389 — 15,735 Restricted cash reserves 439 — 4,786 — 5,225 Related party rent receivable — 19,816 25,796 — 45,612 Intangible assets, net — 46,907 — — 46,907 Prepaid expense and other assets 2,004 657 2,440 — 5,101 Assets of hotel properties held for sale, net — 25,177 — — 25,177 Total assets $ 1,969,731 $ 749,733 $ 1,503,689 $ (1,941,135 ) $ 2,282,018 Debt, net $ 506,503 $ — $ 239,838 $ (32,709 ) $ 713,632 Accounts payable and other liabilities 9,902 16,091 21,049 — 47,042 Related party lease termination fee payable — 1,985 15,563 — 17,548 Accrued interest 9,588 — — — 9,588 Distributions payable — — 122 — 122 Total liabilities 525,993 18,076 276,572 (32,709 ) 787,932 Partnership interests 1,443,738 731,657 1,176,769 (1,908,426 ) 1,443,738 Total partners' capital, excluding noncontrolling interest 1,443,738 731,657 1,176,769 (1,908,426 ) 1,443,738 Noncontrolling interest in consolidated joint ventures — — 5,918 — 5,918 Preferred capital in a consolidated joint venture — — 44,430 — 44,430 Total partners’ capital 1,443,738 731,657 1,227,117 (1,908,426 ) 1,494,086 Total liabilities and partners’ capital $ 1,969,731 $ 749,733 $ 1,503,689 $ (1,941,135 ) $ 2,282,018 FelCor Lodging Limited Partnership Condensed Consolidating Balance Sheet December 31, 2017 (Successor) (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Equity investment in consolidated entities $ 2,384,094 $ — $ — $ (2,384,094 ) $ — Investment in hotel properties, net — 856,541 1,641,339 — 2,497,880 Investment in unconsolidated joint ventures 16,912 — — — 16,912 Cash and cash equivalents 9,202 — 5,526 — 14,728 Restricted cash reserves 436 — 2,867 — 3,303 Related party rent receivable — 32,200 47,890 — 80,090 Intangible assets, net — 48,846 69,324 — 118,170 Prepaid expense and other assets 4,405 3,292 4,994 — 12,691 Total assets $ 2,415,049 $ 940,879 $ 1,771,940 $ (2,384,094 ) $ 2,743,774 Debt, net $ 1,062,716 $ — $ 269,098 $ (32,709 ) $ 1,299,105 Accounts payable and other liabilities 20,018 13,605 20,568 — 54,191 Related party lease termination fee payable — — 7,707 — 7,707 Accrued interest 12,286 — — — 12,286 Distributions payable — — 126 — 126 Total liabilities 1,095,020 13,605 297,499 (32,709 ) 1,373,415 Partnership interests 1,320,029 927,274 1,424,111 (2,351,385 ) 1,320,029 Total partners' capital, excluding noncontrolling interest 1,320,029 927,274 1,424,111 (2,351,385 ) 1,320,029 Noncontrolling interest in consolidated joint ventures — — 5,900 — 5,900 Preferred capital in a consolidated joint venture — — 44,430 — 44,430 Total partners’ capital 1,320,029 927,274 1,474,441 (2,351,385 ) 1,370,359 Total liabilities and partners’ capital $ 2,415,049 $ 940,879 $ 1,771,940 $ (2,384,094 ) $ 2,743,774 FelCor Lodging Limited Partnership Condensed Consolidating Statement of Operations and Comprehensive Income For the Three Months Ended September 30, 2018 (Successor) (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Revenues Related party lease revenue $ — $ 27,360 $ 30,451 $ — $ 57,811 Total revenues — 27,360 30,451 — 57,811 Expenses Depreciation and amortization 115 8,017 11,160 — 19,292 Property tax, insurance and other (4 ) 7,598 6,353 — 13,947 General and administrative (491 ) 29 (102 ) — (564 ) Transaction costs (4 ) 261 (63 ) — 194 Total operating expenses (384 ) 15,905 17,348 — 32,869 Operating income 384 11,455 13,103 — 24,942 Other income 1 — — — 1 Interest income 285 — 15 (230 ) 70 Interest expense (5,955 ) — (2,742 ) 230 (8,467 ) Gain on sale of hotel properties, net — (9,971 ) 34,225 — 24,254 Loss on extinguishment of indebtedness (4 ) — (1,652 ) — (1,656 ) Income before equity in income from unconsolidated joint ventures (5,289 ) 1,484 42,949 — 39,144 Equity in income from consolidated entities 44,007 — — (44,007 ) — Equity in income from unconsolidated joint ventures 218 — — — 218 Net income and comprehensive income 38,936 1,484 42,949 (44,007 ) 39,362 Noncontrolling interest in consolidated joint ventures — — (52 ) — (52 ) Preferred distributions - consolidated joint venture — — (374 ) — (374 ) Net income and comprehensive income attributable to FelCor LP $ 38,936 $ 1,484 $ 42,523 $ (44,007 ) $ 38,936 FelCor Lodging Limited Partnership Condensed Consolidating Statement of Operations and Comprehensive Income For the Period of September 1, 2017 through September 30, 2017 (Successor) (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Revenues Related party lease revenue $ — $ 9,511 $ 11,343 $ — $ 20,854 Total revenues — 9,511 11,343 — 20,854 Expenses Depreciation and amortization 38 2,021 3,915 — 5,974 Property tax, insurance and other 8 2,821 1,620 — 4,449 General and administrative 191 — 1 — 192 Transaction costs 1,034 4 1 — 1,039 Total operating expenses 1,271 4,846 5,537 — 11,654 Operating income (1,271 ) 4,665 5,806 — 9,200 Interest income 27 — — (24 ) 3 Interest expense (3,980 ) — (825 ) 26 (4,779 ) Income before equity in income from unconsolidated joint ventures (5,224 ) 4,665 4,981 2 4,424 Equity in income from consolidated entities 9,641 — — (9,641 ) — Equity in income from unconsolidated joint ventures — — 115 — 115 Net income and comprehensive income 4,417 4,665 5,096 (9,639 ) 4,539 Noncontrolling interest in consolidated joint ventures (51 ) — — — (51 ) Preferred distributions - consolidated joint venture — — (122 ) — (122 ) Net income and comprehensive income attributable to FelCor LP $ 4,366 $ 4,665 $ 4,974 $ (9,639 ) $ 4,366 FelCor Lodging Limited Partnership Condensed Consolidating Statement of Operations and Comprehensive Loss For the Period of July 1, 2017 through August 31, 2017 (Predecessor) (in thousands FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Revenues Room revenue $ — $ 111,977 $ — $ — $ 111,977 Food and beverage revenue — 20,577 — — 20,577 Related party lease revenue — — (20 ) 20 — Other revenue 2 10,281 134 — 10,417 Total revenues 2 142,835 114 20 142,971 Expenses Room expense — 28,652 — — 28,652 Food and beverage expense — 17,325 — — 17,325 Management and franchise fee expense — 4,625 — — 4,625 Other operating expense — 37,272 — — 37,272 Total property operating expenses — 87,874 — — 87,874 Depreciation and amortization 78 6,494 11,127 — 17,699 Property tax, insurance and other 815 7,286 4,526 20 12,647 General and administrative — 1,889 896 — 2,785 Transaction costs 61,932 — — — 61,932 Total operating expenses 62,825 103,543 16,549 20 182,937 Operating loss (62,823 ) 39,292 (16,435 ) — (39,966 ) Intercompany interest income (expense) 56 — (56 ) — — Interest income 23 23 — — 46 Interest expense (9,637 ) — (3,271 ) — (12,908 ) Loss on sale of hotel properties, net 2 (913 ) 20 — (891 ) Loss on extinguishment of indebtedness — — (3,278 ) — (3,278 ) Loss before equity in income from unconsolidated joint ventures (72,379 ) 38,402 (23,020 ) — (56,997 ) Equity in income from consolidated entities 16,160 — — (16,160 ) — Equity in income from unconsolidated joint ventures 165 399 (8 ) — 556 Loss before income tax benefit (56,054 ) 38,801 (23,028 ) (16,160 ) (56,441 ) Income tax benefit 20 531 — — 551 Loss from continuing operations (56,034 ) 39,332 (23,028 ) (16,160 ) (55,890 ) Loss from discontinued operations (3,415 ) — — — (3,415 ) Net loss and comprehensive loss (59,449 ) 39,332 (23,028 ) (16,160 ) (59,305 ) Noncontrolling interest in consolidated joint ventures — 76 32 — 108 Preferred distributions - consolidated joint venture — — (252 ) — (252 ) Net loss and comprehensive loss attributable to FelCor LP (59,449 ) 39,408 (23,248 ) (16,160 ) (59,449 ) Preferred distributions (4,186 ) — — — (4,186 ) Net loss and comprehensive loss attributable to FelCor LP common unitholders $ (63,635 ) $ 39,408 $ (23,248 ) $ (16,160 ) $ (63,635 ) FelCor Lodging Limited Partnership Condensed Consolidating Statement of Operations and Comprehensive Income For the Nine Months Ended September 30, 2018 (Successor) (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Revenues Related party lease revenue $ — $ 70,046 $ 101,965 $ — $ 172,011 Total revenues — 70,046 101,965 — 172,011 Expenses Depreciation and amortization 343 25,129 35,024 — 60,496 Property tax, insurance and other 99 22,310 20,425 — 42,834 General and administrative 482 84 29 — 595 Transaction costs 1,979 361 29 — 2,369 Total operating expenses 2,903 47,884 55,507 — 106,294 Operating income (2,903 ) 22,162 46,458 — 65,717 Other income 10 — 101 — 111 Interest income 524 — 15 (386 ) 153 Interest expense (22,485 ) — (8,122 ) 386 (30,221 ) Gain on sale of hotel properties, net — (19,386 ) 34,316 — 14,930 Gain on extinguishment of indebtedness, net 12,932 — (1,652 ) — 11,280 Income before equity in income from unconsolidated joint ventures (11,922 ) 2,776 71,116 — 61,970 Equity in income from consolidated entities 72,765 — — (72,765 ) — Equity in income from unconsolidated joint ventures 945 — — — 945 Net income and comprehensive income 61,788 2,776 71,116 (72,765 ) 62,915 Noncontrolling interest in consolidated joint ventures — — (18 ) — (18 ) Preferred distributions - consolidated joint venture — — (1,109 ) — (1,109 ) Net income and comprehensive income attributable to FelCor LP $ 61,788 $ 2,776 $ 69,989 $ (72,765 ) $ 61,788 FelCor Lodging Limited Partnership Condensed Consolidating Statement of Operations and Comprehensive Loss For the Period of January 1, 2017 through August 31, 2017 (Predecessor) (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Revenues Room revenue $ — $ 425,682 $ — $ — $ 425,682 Food and beverage revenue — 90,572 — — 90,572 Related party lease revenue — — 84,509 (84,509 ) — Other revenue 41 34,883 337 — 35,261 Total revenues 41 551,137 84,846 (84,509 ) 551,515 Expenses Room expense — 112,813 — — 112,813 Food and beverage expense — 71,828 — — 71,828 Management and franchise fee expense — 19,901 — — 19,901 Other operating expense — 147,827 — — 147,827 Total property operating expenses — 352,369 — — 352,369 Depreciation and amortization 309 28,064 44,692 — 73,065 Impairment loss — 35,109 — — 35,109 Property tax, insurance and other 921 111,020 16,846 (84,509 ) 44,278 General and administrative — 8,914 7,092 — 16,006 Transaction costs 68,248 — — — 68,248 Total operating expenses 69,478 535,476 68,630 (84,509 ) 589,075 Operating loss (69,437 ) 15,661 16,216 — (37,560 ) Other income — — 100 — 100 Intercompany interest income (expense) 241 — (241 ) — — Interest income 66 59 1 — 126 Interest expense (38,722 ) — (12,968 ) — (51,690 ) Loss on sale of hotel properties, net 2 (1,565 ) (201 ) — (1,764 ) Loss on extinguishment of indebtedness — — (3,278 ) — (3,278 ) Loss before equity in income from unconsolidated joint ventures (107,850 ) 14,155 (371 ) — (94,066 ) Equity in income from consolidated entities 12,779 — — (12,779 ) — Equity in income from unconsolidated joint ventures 1,181 (77 ) (30 ) — 1,074 Loss before income tax expense (93,890 ) 14,078 (401 ) (12,779 ) (92,992 ) Income tax expense (35 ) (464 ) — — (499 ) Loss from continuing operations (93,925 ) 13,614 (401 ) (12,779 ) (93,491 ) Loss from discontinued operations (3,415 ) — — — (3,415 ) Net loss and comprehensive loss (97,340 ) 13,614 (401 ) (12,779 ) (96,906 ) Noncontrolling interest in consolidated joint ventures — 336 209 — 545 Preferred distributions - consolidated joint venture — — (979 ) — (979 ) Net loss and comprehensive loss attributable to FelCor LP (97,340 ) 13,950 (1,171 ) (12,779 ) (97,340 ) Preferred distributions (16,744 ) — — — (16,744 ) Net loss and comprehensive loss attributable to FelCor LP common unitholders $ (114,084 ) $ 13,950 $ (1,171 ) $ (12,779 ) $ (114,084 ) FelCor Lodging Limited Partnership Condensed Consolidating Statement of Cash Flows For the Nine Months Ended September 30, 2018 (Successor) (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Operating activities: Cash flows from operating activities $ (38,965 ) $ 66,876 $ 105,305 $ — $ 133,216 Investing activities: Proceeds from the sale of hotel properties, net — 151,466 282,895 — 434,361 Improvements and additions to hotel properties — (21,751 ) (36,458 ) — (58,209 ) Additions to property and equipment (4 ) — — — (4 ) Intercompany financing 515,209 — — (515,209 ) — Cash flows from investing activities 515,205 129,715 246,437 (515,209 ) 376,148 Financing activities: Repayments of borrowings (538,813 ) — (30,220 ) — (569,033 ) Contributions from partners 673,853 — — — 673,853 Distributions to partners (610,132 ) — — — (610,132 ) Payments of deferred financing costs — — (10 ) — (10 ) Preferred distributions - consolidated joint venture — — (1,113 ) — (1,113 ) Intercompany financing — (196,591 ) (318,618 ) 515,209 — Cash flows from financing activities (475,092 ) (196,591 ) (349,961 ) 515,209 (506,435 ) Net change in cash, cash equivalents, and restricted cash reserves 1,148 — 1,781 — 2,929 Cash, cash equivalents, and restricted cash reserves, beginning of year 9,637 — 8,394 — 18,031 Cash, cash equivalents, and restricted cash reserves, end of period $ 10,785 $ — $ 10,175 $ — $ 20,960 FelCor Lodging Limited Partnership Condensed Consolidating Statement of Cash Flows For the Period of September 1, 2017 through September 30, 2017 (Successor) (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Operating activities: Cash flows from operating activities $ (8,078 ) $ (1,666 ) $ (1,418 ) $ — $ (11,162 ) Investing activities: Improvements and additions to hotel properties — (16 ) (39 ) — (55 ) Intercompany financing (6,879 ) — — 6,879 — Cash flows from investing activities (6,879 ) (16 ) (39 ) 6,879 (55 ) Financing activities: Repayment of borrowings — — (471 ) — (471 ) Contributions from partners 35,545 — — — 35,545 Distributions to partners (19,123 ) — — — (19,123 ) Distribution of FelCor TRS — (51,867 ) — — (51,867 ) Preferred distributions - consolidated joint venture — — (126 ) — (126 ) Intercompany financing — 5,056 1,823 (6,879 ) — Cash flows from financing activities 16,422 (46,811 ) 1,226 (6,879 ) (36,042 ) Net change in cash, cash equivalents, and restricted cash reserves 1,465 (48,493 ) (231 ) — (47,259 ) Cash, cash equivalents, and restricted cash reserves, beginning of period 7,965 48,507 7,962 — 64,434 Cash, cash equivalents, and restricted cash reserves, end of period $ 9,430 $ 14 $ 7,731 $ — $ 17,175 FelCor Lodging Limited Partnership Condensed Consolidating Statement of Cash Flows For the Period of January 1, 2017 through August 31, 2017 (Predecessor) (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Operating activities: Cash flows from operating activities $ (40,773 ) $ 85,899 $ 54,214 $ — $ 99,340 Investing activities: Proceeds from the sale of hotel properties, net (696 ) 74,281 (169 ) — 73,416 Improvements and additions to hotel properties 1 (16,727 ) (47,076 ) — (63,802 ) Distributions from unconsolidated joint ventures in excess of earnings 840 — — — 840 Intercompany financing 91,391 — — (91,391 ) — Cash flows from investing activities 91,536 57,554 (47,245 ) (91,391 ) 10,454 Financing activities: Proceeds from borrowings — — 66,000 — 66,000 Repayments of borrowings — — (121,691 ) — (121,691 ) Distributions to preferred unitholders (18,836 ) — — — (18,836 ) Distributions to common unitholders (30,926 ) — — — (30,926 ) Distributions to noncontrolling interests — — (150 ) — (150 ) Contributions from noncontrolling interests — 333 — — 333 Net proceeds from the issuance of preferred capital in a consolidated joint venture — — 647 — 647 Intercompany financing — (140,853 ) 49,462 91,391 — Other (6,568 ) — (977 ) — (7,545 ) Cash flows from financing activities (56,330 ) (140,520 ) (6,709 ) 91,391 (112,168 ) Net change in cash, cash equivalents, and restricted cash reserves (5,567 ) 2,933 260 — (2,374 ) Cash, cash equivalents, and restricted cash reserves, beginning of year 13,532 45,574 7,702 — 66,808 Cash, cash equivalents, and restricted cash reserves, end of period $ 7,965 $ 48,507 $ 7,962 $ — $ 64,434 |