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. 17. 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 September 30, 2016 (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Net investment in hotels $ — $ 492,022 $ 1,080,060 $ — $ 1,572,082 Equity investment in consolidated entities 1,204,612 — — (1,204,612 ) — Investment in unconsolidated entities 2,962 5,213 1,230 — 9,405 Cash and cash equivalents 18,989 30,623 738 — 50,350 Restricted cash — 16,897 5,233 — 22,130 Accounts receivable, net 1,741 38,124 6,880 — 46,745 Deferred expenses, net — — 4,996 — 4,996 Other assets 5,284 8,346 3,373 — 17,003 Total assets $ 1,233,588 $ 591,225 $ 1,102,510 $ (1,204,612 ) $ 1,722,711 Debt, net $ 985,372 $ — $ 378,489 $ (39,436 ) $ 1,324,425 Distributions payable 14,849 — 120 — 14,969 Accrued expenses and other liabilities 31,587 86,095 12,331 — 130,013 Total liabilities 1,031,808 86,095 390,940 (39,436 ) 1,469,407 Redeemable units, at redemption value 3,923 — — — 3,923 Preferred units 309,337 — — — 309,337 Common units (111,480 ) 506,062 659,114 (1,165,176 ) (111,480 ) Total FelCor LP partners’ capital 197,857 506,062 659,114 (1,165,176 ) 197,857 Noncontrolling interests — (932 ) 8,673 — 7,741 Preferred capital in consolidated joint venture — — 43,783 — 43,783 Total partners’ capital 197,857 505,130 711,570 (1,165,176 ) 249,381 Total liabilities and partners’ capital $ 1,233,588 $ 591,225 $ 1,102,510 $ (1,204,612 ) $ 1,722,711 17. 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 LOSS For the Three Months Ended September 30, 2016 (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Revenues: Hotel operating revenue $ — $ 221,172 $ — $ — $ 221,172 Percentage lease revenue — — 45,242 (45,242 ) — Other revenue 15 1,622 172 — 1,809 Total revenues 15 222,794 45,414 (45,242 ) 222,981 Expenses: Hotel operating expenses — 137,001 — — 137,001 Taxes, insurance and lease expense 26 54,293 6,065 (45,242 ) 15,142 Corporate expenses — 3,517 2,727 — 6,244 Depreciation and amortization 49 11,285 16,946 — 28,280 Impairment — 20,126 — — 20,126 Other expenses 6,124 1,309 148 — 7,581 Total operating expenses 6,199 227,531 25,886 (45,242 ) 214,374 Operating income (6,184 ) (4,737 ) 19,528 — 8,607 Interest expense, net (14,513 ) 6 (4,921 ) — (19,428 ) Loss before equity in income from unconsolidated entities (20,697 ) (4,731 ) 14,607 — (10,821 ) Equity in income from consolidated entities 17,088 — — (17,088 ) — Equity in income from unconsolidated entities 378 447 (11 ) — 814 Loss from continuing operations before income tax (3,231 ) (4,284 ) 14,596 (17,088 ) (10,007 ) Income tax 576 (484 ) 154 — 246 Loss from continuing operations (2,655 ) (4,768 ) 14,750 (17,088 ) (9,761 ) Loss from discontinued operations (3,131 ) — — — (3,131 ) Loss before gain on sale of hotels (5,786 ) (4,768 ) 14,750 (17,088 ) (12,892 ) Gain on sale of hotels, net 637 7,445 (84 ) — 7,998 Net loss and comprehensive loss (5,149 ) 2,677 14,666 (17,088 ) (4,894 ) Loss attributable to noncontrolling interests — 100 14 — 114 Preferred distributions - consolidated joint venture — — (369 ) — (369 ) Net loss and comprehensive loss attributable to FelCor LP (5,149 ) 2,777 14,311 (17,088 ) (5,149 ) Preferred distributions (6,279 ) — — — (6,279 ) Net loss attributable to FelCor LP common unitholders $ (11,428 ) $ 2,777 $ 14,311 $ (17,088 ) $ (11,428 ) 17. FelCor LP’s Consolidating Financial Information — (continued) FELCOR LODGING LIMITED PARTNERSHIP CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS For the Three Months Ended September 30, 2015 (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Revenues: Hotel operating revenue $ — $ 223,474 $ — $ — $ 223,474 Percentage lease revenue — — 44,523 (44,523 ) — Other revenue 3 1,497 178 — 1,678 Total revenues 3 224,971 44,701 (44,523 ) 225,152 Expenses: Hotel operating expenses — 143,545 — — 143,545 Taxes, insurance and lease expense 533 53,272 3,434 (44,523 ) 12,716 Corporate expenses — 2,718 1,954 — 4,672 Depreciation and amortization 49 11,876 17,063 — 28,988 Impairment — 20,861 — — 20,861 Other expenses 3,626 1,311 870 — 5,807 Total operating expenses 4,208 233,583 23,321 (44,523 ) 216,589 Operating income (4,205 ) (8,612 ) 21,380 — 8,563 Interest expense, net (14,302 ) 3 (5,303 ) — (19,602 ) Debt extinguishment (13 ) — — — (13 ) Loss before equity in income from unconsolidated entities (18,520 ) (8,609 ) 16,077 — (11,052 ) Equity in income from consolidated entities 10,069 — — (10,069 ) — Equity in income from unconsolidated entities 417 (85 ) (11 ) — 321 Loss from continuing operations before income tax (8,034 ) (8,694 ) 16,066 (10,069 ) (10,731 ) Income tax (194 ) (860 ) — — (1,054 ) Loss from continuing operations (8,228 ) (9,554 ) 16,066 (10,069 ) (11,785 ) Income from discontinued operations — (2 ) 500 — 498 Loss before gain on sale of hotels (8,228 ) (9,556 ) 16,566 (10,069 ) (11,287 ) Gain on sale of hotels, net (41 ) (31 ) 3,226 — 3,154 Net loss and comprehensive loss (8,269 ) (9,587 ) 19,792 (10,069 ) (8,133 ) Loss attributable to noncontrolling interests — 81 146 — 227 Preferred distributions - consolidated joint venture — — (363 ) — (363 ) Net loss and comprehensive loss attributable to FelCor LP (8,269 ) (9,506 ) 19,575 (10,069 ) (8,269 ) Preferred distributions (6,279 ) — — — (6,279 ) Net loss attributable to FelCor LP common unitholders $ (14,548 ) $ (9,506 ) $ 19,575 $ (10,069 ) $ (14,548 ) 17. FelCor LP’s Consolidating Financial Information — (continued) FELCOR LODGING LIMITED PARTNERSHIP CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME For the Nine Months Ended September 30, 2016 (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Revenues: Hotel operating revenue $ — $ 667,390 $ — $ — $ 667,390 Percentage lease revenue — — 135,740 (135,740 ) — Other revenue 202 3,076 363 — 3,641 Total revenues 202 670,466 136,103 (135,740 ) 671,031 Expenses: Hotel operating expenses — 425,117 — — 425,117 Taxes, insurance and lease expense 79 161,889 17,360 (135,740 ) 43,588 Corporate expenses — 11,212 9,479 — 20,691 Depreciation and amortization 193 35,312 51,135 — 86,640 Impairment — 26,459 — — 26,459 Other expenses 6,543 3,522 486 — 10,551 Total operating expenses 6,815 663,511 78,460 (135,740 ) 613,046 Operating income (6,613 ) 6,955 57,643 — 57,985 Interest expense, net (43,775 ) 24 (15,304 ) — (59,055 ) Other gains, net — — 100 — 100 Loss before equity in income from unconsolidated entities (50,388 ) 6,979 42,439 — (970 ) Equity in income from consolidated entities 54,930 — — (54,930 ) — Equity in income from unconsolidated entities 1,094 326 (34 ) — 1,386 Income from continuing operations before income tax 5,636 7,305 42,405 (54,930 ) 416 Income tax 411 (709 ) 154 — (144 ) Income from continuing operations 6,047 6,596 42,559 (54,930 ) 272 Loss from discontinued operations (3,131 ) — — — (3,131 ) Loss before gain on sale of hotels 2,916 6,596 42,559 (54,930 ) (2,859 ) Gain on sale of hotels, net 387 6,688 (421 ) — 6,654 Net income and comprehensive income 3,303 13,284 42,138 (54,930 ) 3,795 Loss attributable to noncontrolling interests — 413 188 — 601 Preferred distributions - consolidated joint venture — — (1,093 ) — (1,093 ) Net income and comprehensive income attributable to FelCor LP 3,303 13,697 41,233 (54,930 ) 3,303 Preferred distributions (18,837 ) — — — (18,837 ) Net loss attributable to FelCor LP common unitholders $ (15,534 ) $ 13,697 $ 41,233 $ (54,930 ) $ (15,534 ) 17. FelCor LP’s Consolidating Financial Information — (continued) FELCOR LODGING LIMITED PARTNERSHIP CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME For the Nine Months Ended September 30, 2015 (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Revenues: Hotel operating revenue $ — $ 672,808 $ — $ — $ 672,808 Percentage lease revenue — — 130,397 (130,397 ) — Other revenue 111 6,645 386 — 7,142 Total revenues 111 679,453 130,783 (130,397 ) 679,950 Expenses: Hotel operating expenses — 434,206 — — 434,206 Taxes, insurance and lease expense 422 159,103 14,805 (130,397 ) 43,933 Corporate expenses — 11,010 8,765 — 19,775 Depreciation and amortization 138 37,770 47,602 — 85,510 Impairment — 20,861 — — 20,861 Other expenses 3,629 6,820 997 — 11,446 Total operating expenses 4,189 669,770 72,169 (130,397 ) 615,731 Operating income (4,078 ) 9,683 58,614 — 64,219 Interest expense, net (42,613 ) 8 (16,756 ) — (59,361 ) Debt extinguishment (28,459 ) — (2,450 ) — (30,909 ) Other gains, net — — 166 — 166 Loss before equity in income from unconsolidated entities (75,150 ) 9,691 39,574 — (25,885 ) Equity in income from consolidated entities 62,807 — — (62,807 ) — Equity in income from unconsolidated entities 8,060 (43 ) (34 ) — 7,983 Loss from continuing operations before income tax (4,283 ) 9,648 39,540 (62,807 ) (17,902 ) Income tax (256 ) (1,136 ) — — (1,392 ) Loss from continuing operations (4,539 ) 8,512 39,540 (62,807 ) (19,294 ) Income from discontinued operations — 2 417 — 419 Loss before gain on sale of hotels (4,539 ) 8,514 39,957 (62,807 ) (18,875 ) Gain on sale of hotels, net (320 ) (44 ) 19,855 — 19,491 Net income and comprehensive income (4,859 ) 8,470 59,812 (62,807 ) 616 Income attributable to noncontrolling interests — 591 (4,996 ) — (4,405 ) Preferred distributions - consolidated joint venture — — (1,070 ) — (1,070 ) Net loss and comprehensive loss attributable to FelCor LP (4,859 ) 9,061 53,746 (62,807 ) (4,859 ) Preferred distributions (23,860 ) — — — (23,860 ) Redemption of preferred units (6,096 ) — — — — (6,096 ) Net loss attributable to FelCor LP common unitholders $ (34,815 ) $ 9,061 $ 53,746 $ (62,807 ) $ (34,815 ) 17. FelCor LP’s Consolidating Financial Information — (continued) FELCOR LODGING LIMITED PARTNERSHIP CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS For the Nine Months Ended September 30, 2016 (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Operating activities: Cash flows from operating activities $ (47,665 ) $ 60,960 $ 100,749 $ — $ 114,044 Investing activities: Acquisition of land — — (8,209 ) — (8,209 ) Improvements and additions to hotels (2 ) (23,936 ) (27,390 ) — (51,328 ) Net proceeds from asset sales (1,104 ) 103,077 (252 ) — 101,721 Insurance proceeds — — 94 — 94 Change in restricted cash - investing — (1,456 ) (2,972 ) — (4,428 ) Distributions from unconsolidated entities 786 — — — 786 Intercompany financing 120,897 — — (120,897 ) — Cash flows from investing activities 120,577 77,685 (38,729 ) (120,897 ) 38,636 Financing activities: Proceeds from borrowings — — 55,000 — 55,000 Repayment of borrowings — — (141,989 ) — (141,989 ) Payment of deferred financing fees — — (12 ) — (12 ) Distributions paid to noncontrolling interests — (14 ) (2 ) — (16 ) Contributions from noncontrolling interests — 313 239 — 552 Repurchase of common units (30,462 ) — — — (30,462 ) Distributions paid to preferred unitholders (18,837 ) — — — (18,837 ) Distributions paid to common unitholders (25,141 ) — — — (25,141 ) Net proceeds from issuance of preferred capital - consolidated joint venture — — 597 — 597 Intercompany financing — (142,606 ) 21,709 120,897 — Other (702 ) — (1,097 ) — (1,799 ) Cash flows from financing activities (75,142 ) (142,307 ) (65,555 ) 120,897 (162,107 ) Effect of exchange rate changes on cash — (9 ) — — (9 ) Change in cash and cash equivalents (2,230 ) (3,671 ) (3,535 ) — (9,436 ) Cash and cash equivalents at beginning of period 21,219 34,294 4,273 — 59,786 Cash and cash equivalents at end of period $ 18,989 $ 30,623 $ 738 $ — $ 50,350 17. FelCor LP’s Consolidating Financial Information — (continued) FELCOR LODGING LIMITED PARTNERSHIP CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS For the Nine Months Ended September 30, 2015 (in thousands) FelCor LP Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Total Consolidated Operating activities: Cash flows from operating activities $ (40,093 ) $ 59,884 $ 94,271 $ — $ 114,062 Investing activities: Improvements and additions to hotels (13 ) (21,664 ) (14,302 ) — (35,979 ) Hotel development — — (31,599 ) — (31,599 ) Net proceeds from asset sales (429 ) 10 190,454 — 190,035 Insurance proceeds 274 — — — 274 Change in restricted cash - investing — (1,964 ) (2,240 ) — (4,204 ) Distributions from unconsolidated entities 6,460 — — — 6,460 Intercompany financing 139,524 — — (139,524 ) — Cash flows from investing activities 145,816 (23,618 ) 142,313 (139,524 ) 124,987 Financing activities: Proceeds from borrowings 475,000 — 504,000 — 979,000 Repayment of borrowings (545,453 ) — (621,240 ) — (1,166,693 ) Payment of deferred financing fees (8,500 ) — (5,848 ) — (14,348 ) Distributions paid to preferred unitholders (26,125 ) — — — (26,125 ) Distributions paid to common unitholders (16,498 ) — — — (16,498 ) Net proceeds from common unit issuance 198,651 — — — 198,651 Distributions paid to noncontrolling interests — (401 ) (15,893 ) — (16,294 ) Contributions from noncontrolling interests — 513 2,031 — 2,544 Redemption of preferred units (169,986 ) — — — (169,986 ) Net proceeds from issuance of preferred capital- consolidated joint venture — — 1,744 — 1,744 Intercompany financing — (32,703 ) (106,821 ) 139,524 — Other (76 ) — (1,070 ) — (1,146 ) Cash flows from financing activities (92,987 ) (32,591 ) (243,097 ) 139,524 (229,151 ) Effect of exchange rate changes on cash — (134 ) — — (134 ) Change in cash and cash equivalents 12,736 3,541 (6,513 ) — 9,764 Cash and cash equivalents at beginning of period 5,717 32,923 8,507 — 47,147 Cash and cash equivalents at end of period $ 18,453 $ 36,464 $ 1,994 $ — $ 56,911 |