AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 10, 2001

REGISTRATION NO. 333-63332
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

AMENDMENT NO. 2

FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------

FELCOR LODGING LIMITED PARTNERSHIP
FELCOR LODGING TRUST INCORPORATED
FELCOR/CSS HOTELS, L.L.C.
FELCOR/LAX HOTELS, L.L.C.
FELCOR EIGHT HOTELS, L.L.C.
FELCOR/CSS HOLDINGS, L.P.
FELCOR/ST. PAUL HOLDINGS, L.P.
FELCOR/LAX HOLDINGS, L.P.
FELCOR HOTEL ASSET COMPANY, L.L.C.
FHAC TEXAS HOLDINGS, L.P.
FELCOR OMAHA HOTEL COMPANY, L.L.C.
FELCOR MOLINE HOTEL, L.L.C.
FELCOR COUNTRY VILLA HOTEL, L.L.C.
FELCOR CANADA CO.
FELCOR TRS HOLDINGS, L.P.
KINGSTON PLANTATION DEVELOPMENT CORP.
(Exact name of co-registrant as specified in its charter)

<Table>

DELAWARE 7011 75-2564994
MARYLAND (Primary Standard Industrial 72-2541756
DELAWARE Classification Code Number) 75-2624290
DELAWARE 75-2647535
DELAWARE 75-2582006
DELAWARE 75-2620463
DELAWARE 75-2624292
DELAWARE 75-2624293
DELAWARE 75-2770156
TEXAS 75-2797670
DELAWARE 75-2769826
DELAWARE 75-2771084
DELAWARE 75-2771072
NOVA SCOTIA, CANADA 75-2773637
DELAWARE 75-2916176
DELAWARE 75-2734270
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
</Table>

<Table>

LAWRENCE D. ROBINSON, ESQ.
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
545 E. JOHN CARPENTER FRWY., SUITE 1300 545 E. JOHN CARPENTER FRWY., SUITE 1300
IRVING, TEXAS 75062 IRVING, TEXAS 75062
(972) 444-4900 (972) 444-4900
(Address, including zip code and telephone number, (Name, address, including zip code, and telephone
including area code, of registrant's principal executive number,
offices) including area code, of agent for service)
</Table>

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FELCOR NEVADA HOLDINGS, L.L.C.
FHAC NEVADA HOLDINGS, L.L.C.
(Exact name of co-registrant as specified in its charter)

<Table>

NEVADA 7011 74-2906947
NEVADA (Primary Standard Industrial 74-2906949
(State or other jurisdiction Classification Code Number) (I.R.S. Employer Identification No.)
of incorporation or organization)
</Table>

<Table>

LAWRENCE D. ROBINSON, ESQ.
101 CONVENTION CENTER DRIVE EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
SUITE 850 545 E. JOHN CARPENTER FRWY., SUITE 1300
LAS VEGAS, NEVADA 89109 IRVING, TEXAS 75062
(702) 949-0211 (972) 444-4900
(Address, including zip code and telephone number, (Name, address, including zip code, and telephone
including area code, of registrant's principal executive number,
offices) including area code, of agent for service)
</Table>

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Copies to:

ROBERT W. DOCKERY, ESQ.
JENKENS & GILCHRIST,
A PROFESSIONAL CORPORATION
1445 ROSS AVENUE, SUITE 3200
DALLAS, TEXAS 75202
(214) 855-4500

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
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2

If the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

---------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED SEPTEMBER 10, 2001

<Table>

[FELCOR LODGING
TRUST LOGO] FELCOR LODGING LIMITED PARTNERSHIP
</Table>

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OFFER TO EXCHANGE
ALL OUTSTANDING 8 1/2% SENIOR NOTES DUE 2011
($600,000,000 PRINCIPAL AMOUNT OUTSTANDING)
FOR REGISTERED 8 1/2% SENIOR NOTES DUE 2011
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We are offering to exchange all of our $600 million in outstanding 8 1/2% Senior
Notes Due 2011, or Old Notes, for $600 million in registered 8 1/2% Senior Notes
Due 2011, or New Notes. The Old Notes and New Notes are collectively referred to
as the Notes. The Old Notes were issued on June 4, 2001. The terms of the New
Notes are identical to the terms of the Old Notes except that the New Notes are
registered under the Securities Act of 1933, as amended, and therefore are
freely transferable, subject to certain conditions.

You should consider the following:

- - INVESTING IN THE NOTES INVOLVES MATERIAL RISKS. SEE "RISK FACTORS" BEGINNING
ON PAGE 18 OF THIS PROSPECTUS.

- - Our offer to exchange Old Notes for New Notes will be open until 5:00 p.m.,
New York City time, on , 2001, unless we extend the offer.

- - You should also carefully review the procedures for tendering the Old Notes
beginning on page 34 of this prospectus.

- - If you fail to tender your Old Notes, you will continue to hold unregistered
securities and your ability to transfer them could be adversely affected.

- - No public market currently exists for the Notes. We do not intend to list the
New Notes on any securities exchange and, therefore, no active public market
is anticipated.

Information about the Notes:

- - The Notes will mature on June 1, 2011.

- - We will pay interest on the Notes semi-annually on June 1 and December 1 of
each year, beginning December 1, 2001, at the rate of 8 1/2% per annum.

- - The Notes are unsecured obligations and rank equally with our existing and
future unsecured senior debt.

- - The Notes are fully and unconditionally guaranteed on an unsecured senior
basis by FelCor Lodging Trust Incorporated and by certain of our subsidiaries.

- - If we undergo a change of control or sell certain of our assets, we may be
required to offer to purchase Notes from you.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

THE DATE OF THIS PROSPECTUS IS , 2001
4

TABLE OF CONTENTS

<Table>
<Caption>
PAGE
----

Summary..................................................... 1
Risk Factors................................................ 18
The Exchange Offer.......................................... 31
Capitalization.............................................. 40
Unaudited Pro Forma Combined Financial Information.......... 41
Selected Historical Consolidated Financial Information...... 76
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 82
Business and Properties..................................... 83
Description of Certain Indebtedness......................... 103
Description of the New Notes and Guarantees................. 105
United States Federal Income Tax Considerations............. 139
Plan of Distribution........................................ 140
Legal Matters............................................... 140
Experts..................................................... 140
Index to Financial Statements............................... F-1
Appendix I: Management's Discussion and Analysis of
Financial Condition and Results of Operations of MeriStar
LP........................................................ I-1
</Table>

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We obtained market data and certain other industry data and forecasts used
throughout this prospectus from internal surveys, market research, publicly
available information and industry publications. Industry publications generally
state that they obtain their information from sources they believe to be
reliable, but they do not guarantee the accuracy and completeness of the
information. Similarly, while we believe that the internal surveys, industry
data and forecasts and market research are reliable, we have not independently
verified the data, and neither FelCor LP nor FelCor make any representation as
to the accuracy of the information.
------------

This prospectus contains registered trademarks owned or licensed by
companies other than us, including, but not limited to, Best Western(R), Bristol
House(R), Conrad International(R),Courtyard by Marriott(R), Crowne Plaza(R),
Disney(R), Doral(R), Doubletree(R), Doubletree Guest Suites(R), Embassy
Suites(R), Fairfield Inn(R), Four Points by Sheraton(R), Hampton Inn(R), Hampton
Inn & Suites(R), Harvey Hotel(R), Hilton(R), Hilton HHonors(R), Holiday Inn(R),
Holiday Inn Express(R), Holiday Inn Select(R), Homewood Suites(R) by Hilton,
Howard Johnson(R), Inter-Continental(R), Marriott(R), Radisson(R), Ramada(R),
Renaissance(R), Sheraton(R), Sheraton Suites(R), Six Continents(TM), Walt Disney
World(R), Westin(R) and Wyndham(R).

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5

FORWARD-LOOKING STATEMENTS

The information contained in this prospectus contains forward-looking
statements that involve a number of risks and uncertainties. Forward-looking
statements can be identified by the use of forward-looking terminology such as
"believes," "expects," "anticipates," "may," "will," "should," "seeks," "pro
forma" or other variations thereof, including their use in the negative, or by
discussions of strategies, plans or intentions. A number of factors could cause
results to differ materially from those anticipated by such forward-looking
statements. Among these factors are:

- whether the merger of MeriStar Hospitality Corporation with and into
FelCor and the merger of MeriStar Hospitality Operating Partnership, L.P.
with a wholly-owned subsidiary of FelCor LP is completed;

- whether and on what terms the merger related financings are completed;

- general economic conditions;

- our overall debt levels and the ability to obtain new financing and
service debt;

- our inability to retain earnings;

- our liquidity and capital expenditures;

- our growth strategy and acquisition activities;

- our inability to sell the hotels held for sale at assumed prices; and

- competitive conditions in the lodging industry.

In addition, such forward-looking statements are necessarily dependent upon
assumptions and estimates that may prove to be incorrect. Accordingly, while we
believe that the plans, intentions and expectations reflected in such
forward-looking statements are reasonable, we cannot assure you that such plans,
intentions or expectations will be achieved. The information contained in this
prospectus and in the other documents referenced herein, including "Risk
Factors," identifies important factors that could cause such differences. For
these forward-looking statements, we claim the protection of the safe harbor for
forward-looking statements contained in Section 27A of the Securities Act and
Section 21E of the Exchange Act.

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6

WHERE YOU CAN FIND MORE INFORMATION

Both FelCor and FelCor LP file annual, quarterly and special reports, proxy
statements and other information with the SEC. Our SEC filings are available to
the public from the SEC's web site at "http://www.sec.gov" and are also
available from our web site at "http://www.felcor.com." Information contained on
our web site should not be considered part of this prospectus. You may also read
and copy any document we file with the SEC at its public reference facilities at
450 Fifth Street, N.W., Washington, D.C. 20549, at 7 World Trade Center, Suite
1300, New York, New York 10048, and at Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511. You can also obtain copies of the
documents at prescribed rates by writing to the Public Reference Section of the
SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the public reference
facilities. Our SEC filings are also available at the office of the New York
Stock Exchange, 20 Broad Street, New York, New York 10005. For further
information on obtaining copies of our public filings at the New York Stock
Exchange, you should call (212) 656-5060.

We have filed with the SEC a registration statement on Form S-4 under the
Securities Act with respect to our offering of New Notes. This prospectus, which
constitutes part of the registration statement, does not contain all of the
information in the registration statement on Form S-4. You will find additional
information about us and the New Notes in the registration statement on Form
S-4. All statements made in this prospectus concerning the provisions of legal
documents are not necessarily complete and you should read the documents which
are filed as exhibits to the registration statement or otherwise filed by us
with the SEC.

We "incorporate by reference" into this prospectus the information that we
file with the SEC, which means that we can disclose important information to you
by referring you to those documents. The information incorporated by reference
is an important part of this prospectus and information that we file
subsequently with the SEC will automatically update this prospectus. The
following documents have been filed with the SEC and they are incorporated
herein by reference:

(1) Annual Report on Form 10-K for the fiscal year ended December 31,
2000;

(2) Quarterly Report on Form 10-Q for the quarterly period ended March
31, 2001;

(3) Quarterly Report on Form 10-Q/A for the quarterly period ended
June 30, 2001;

(4) Current Reports on Form 8-K filed with the SEC on May 11, June 14,
and August 31, 2001; and

(5) all documents subsequently filed by either FelCor or FelCor LP
with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, prior to the termination of
this exchange offer.

We have also incorporated by reference in this prospectus certain
information filed with the SEC by MeriStar Hospitality Corporation, or MeriStar.
Specifically, we have incorporated by reference the management's discussion and
analysis sections and the financial statements from MeriStar's Annual Report on
Form 10-K for the fiscal year ended December 31, 2000 and Quarterly Reports on
Form 10-Q for the quarterly periods ended March 31, 2001 and June 30, 2001.
These filings are also available to the public from the SEC's web site, the
SEC's public reference facilities, and the office of the New York Stock Exchange
referenced in the first paragraph of this section.

You may request a copy of our filings (other than an exhibit to a filing unless
that exhibit is specifically incorporated by reference into that filing) at no
cost, by writing to or telephoning us at the following address: Lawrence D.
Robinson, Executive Vice President, General Counsel and Secretary, FelCor
Lodging Trust Incorporated, 545 East John Carpenter Freeway, Suite 1300, Irving,
Texas 75062, telephone (972) 444-4900, or by e-mail at information@felcor.com.

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7

SUMMARY

You should read the following summary together with the more detailed
information regarding our company, MeriStar, the exchange offer and the
financial statements and notes thereto appearing elsewhere in this prospectus or
incorporated herein by reference. Unless the context otherwise requires, (i) the
words "we," "our," "ours," "us" and the "Company" refer to FelCor Lodging Trust
Incorporated, or FelCor, FelCor Lodging Limited Partnership, or FelCor LP, and
their respective subsidiaries, collectively, prior to giving effect to the
MeriStar merger described below, (ii) "MeriStar" refers to MeriStar Hospitality
Corporation and its subsidiaries, including MeriStar Hospitality Operating
Partnership, L.P., or MeriStar LP, and (iii) "on a pro forma basis" refers to
the pro forma adjustments set forth in "Unaudited Pro Forma Combined Financial
Information" beginning on page 41 of this prospectus.

FELCOR AND FELCOR LP

We are one of the nation's largest hotel real estate investment trusts, or
REITs, with ownership interests in 185 hotels at June 30, 2001, with nearly
50,000 rooms and suites. As of June 30, 2001, we owned a 100% interest in 152
hotels with 40,309 rooms and suites, a 90% or greater interest in entities
owning seven hotels with 1,745 rooms and suites, a 60% interest in an entity
owning two hotels with 983 rooms and a 50% interest in separate entities that
own 24 hotels with 5,459 rooms and suites. Our hotels are located in the United
States (35 states) and Canada, with concentrations in Texas (41 hotels),
California (19 hotels), Florida (18 hotels) and Georgia (14 hotels). Fifteen of
our hotels have been designated as held for sale. We own the largest number of
Embassy Suites, Crowne Plaza, Holiday Inn and independently owned
Doubletree-branded hotels in the world.

MERISTAR MERGER

On May 9, 2001, we entered into an Agreement and Plan of Merger with
MeriStar and MeriStar LP. Pursuant to the merger agreement, as amended, MeriStar
will be merged with and into FelCor, with FelCor as the survivor. Under the
terms of the merger agreement, which was approved by the boards of both FelCor
and MeriStar, holders of shares of MeriStar common stock will receive, for each
share of common stock, $4.60 in cash and 0.784 shares of FelCor common stock. We
also will either assume or refinance approximately $1.7 billion in MeriStar
debt. MeriStar Hotels & Resorts, Inc., an independent public hotel management
company, will continue to manage substantially all of the hotels we will acquire
from MeriStar in the merger.

The MeriStar merger will also involve the merger of MeriStar's subsidiary
operating limited partnership, MeriStar LP, with a wholly-owned subsidiary of
FelCor LP, with MeriStar LP surviving as a subsidiary of FelCor LP. The holders
of common partnership units and vested profits-only partnership units in
MeriStar LP will receive, for each such unit, $4.60 in cash and 0.784 common
partnership units in FelCor LP. Unvested profits-only partnership units will be
canceled. The holders of Class C preferred units in MeriStar LP will receive,
for each such unit, $4.60 in cash and 0.784 Series C preferred units in FelCor
LP. The holders of Class D preferred units in MeriStar LP will receive, for each
such unit, one Series D preferred unit in FelCor LP.

The MeriStar merger, which is subject to shareholder approval and other
customary conditions, is expected to close during October 2001. We will continue
to operate as a REIT and Thomas J. Corcoran, Jr. will continue as our President
and Chief Executive Officer. Paul W. Whetsell, the Chairman and Chief Executive
Officer of MeriStar, and Steven D. Jorns, a director of MeriStar, have agreed to
join our board of directors. We will maintain our existing headquarters
facilities in Irving, Texas.

MeriStar is a REIT which owns a portfolio of primarily upscale,
full-service hotels, diversified geographically, as well as by franchise and
brand affiliation, in the United States and Canada. As of June 30, 2001,
MeriStar owned 113 hotels with 28,877 rooms. The hotels are located in major
metropolitan areas or rapidly growing secondary markets and are well located
within these markets. A majority of MeriStar's hotels are operated under
nationally recognized brand names such as Hilton, Sheraton, Westin, Marriott,
Radisson, Doubletree and Embassy Suites.
1
8

Upon completion of the MeriStar merger, we will have ownership interests in
298 hotels, and for the year ended December 31, 2000, on a pro forma basis, our
revenues were $2.9 billion and our EBITDA was $803.2 million. Assuming the sale
of the 15 non-strategic hotels designated by FelCor as held for sale, after the
MeriStar merger, we will have ownership interests in 283 hotels with
approximately 75,000 rooms and suites.

We are the largest independent owner of Embassy Suites and
Doubletree-branded hotels, which are licensed by Hilton Hotels Corporation. As a
result of the MeriStar merger, we will acquire three Embassy Suites, six
Doubletree Hotels and 23 Hilton hotels. Similarly, we currently own 69 hotels,
and following the MeriStar merger, will own 88 hotels, licensed by Six
Continents Hotels, formerly known as Bass Hotels & Resorts, primarily under the
Holiday Inn and Crowne Plaza names. We also currently own 11 and, following the
MeriStar merger, will own 27, Starwood-branded hotels, primarily under the
Sheraton and Westin names, which are licensed by Starwood Hotels and Resorts
Worldwide, Inc. These incremental hotels should further strengthen our
relationships with our existing brand owners.

THE PROPERTIES

The following table includes descriptive information about our properties
and the MeriStar properties as of June 30, 2001:

<Table>
<Caption>
NUMBER OF PROPERTIES
----------------------------------
FELCOR(1) MERISTAR COMBINED(1)
--------- -------- -----------

Hilton Brands:
Embassy Suites............................................ 59 3 62
Doubletree and Doubletree Guest Suites.................... 11 6 17
Hampton Inn............................................... 4 4
Hilton and Hilton Suites.................................. 1 23 24
Homewood Suites........................................... 1 1
Six Continents Brands:
Holiday Inn............................................... 39 9 48
Crowne Plaza and Crowne Plaza Suites...................... 18 5 23
Holiday Inn Select........................................ 10 5 15
Holiday Inn Express....................................... 2 2
Starwood Brands:
Sheraton and Sheraton Suites.............................. 10 11 21
Westin.................................................... 1 4 5
Four Points by Sheraton................................... 1 1
Marriott Brands:
Courtyard by Marriott..................................... 2 5 7
Marriott.................................................. 3 3
Fairfield Inn............................................. 5 5
Radisson Brands:
Radisson and Radisson Suites.............................. 12 12
Other Brands................................................ 7 26 33
--- --- ---
Total Hotels...................................... 170 113 283
=== === ===
</Table>

- -------------------------

(1) Excludes the 15 hotels designated as held for sale.

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9

BUSINESS STRATEGY

We seek to increase our operating cash flow through active asset
management. In addition to actively overseeing the operation of our hotels by
our lessees and their managers, we apply our asset management expertise to the
renovation, redevelopment and rebranding of hotels, the maintenance of strong
strategic relationships with our brand owners and managers and the maintenance
of financial flexibility and a conservative balance sheet. We believe that
MeriStar's business strategies have historically been similar to our business
strategy. Following the completion of the MeriStar merger, we expect to apply
our business strategy to our combined company.

Hotel Renovation, Redevelopment and Rebranding

We expect to continue to differentiate ourselves from many of our
competitors by:

- our practice of upgrading, renovating and/or redeveloping most of our
recently acquired hotels to enhance their competitive position, and, in
certain instances, rebranding them to improve their revenue generating
capacity; and

- our ongoing program for the maintenance of our upgraded hotel assets,
which generally includes:

-- contribution of approximately 4.0% of total annual room and suite
revenue to a capital reserve for routine capital replacements and
improvements; and

-- adherence to a rigorous maintenance and repair program, resulting in
the expenditure of more than 4.0% of annual hotel revenues on
maintenance of the hotels.

We have demonstrated our ability to successfully execute renovations. Our
renovation and rebranding of the 18 Crown Sterling Suites hotels, which were
acquired during 1996 and 1997, achieved an overall increase in revenue per
available room ("RevPAR") of 47.7% between 1996 and 2000. During 1998, 1999 and
2000, an aggregate of approximately $550 million in capital improvements and
other capital expenditures were made to our hotels, with approximately 3% of
total hotel room nights being lost in 1998, 2% in 1999 and 1% in 2000, due to
renovations. During the same period, MeriStar spent approximately $423 million
on their renovation and ongoing property capital expenditures programs. During
2001, we currently expect to spend approximately $20 million on the renovation
of eight hotels, approximately $28 million to complete renovations started in
2000 at 46 hotels, and approximately $50 million for other capital expenditures.
We expect an insignificant number of room nights to be lost during 2001 as a
result of renovations. During 2001, MeriStar expects to spend approximately $65
million to complete renovation programs and for ongoing capital expenditures
programs. We believe that both MeriStar's and our historical capital
expenditures should limit the need for future major renovation expenditures.

The largest single renovation project that we completed during 1999 was the
Allerton Crowne Plaza in Chicago, which reopened in July 1999, after having been
closed for more than a year. This project has received numerous awards,
including Lodging Hospitality magazine's Year's Best Design competition in two
categories, Bass Hotels & Resorts 1999 Newcomer of the Year award, and Chicago's
Greater North Michigan Avenue Association 1999 Avenue Enhancement award.

Maintenance of Strong Strategic Relationships

We benefit from strategic brand owner and manager relationships with Hilton
(Embassy Suites, Hilton and Doubletree), Six Continents Hotels (Crowne Plaza and
Holiday Inn) and Starwood (Sheraton and Westin).

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10

June 30, 2001, and it became a 50% partner in joint ventures with us in
the ownership of 12 hotels and the holder of a 10% equity interest in
certain of our subsidiaries owning six hotels. Our relationship with
Promus and its Embassy Suites brand provided the foundation for our
historical growth and we expect to expand our relationship with Hilton,
as a result of the MeriStar merger.

- Six Continents Hotels is one of the largest hotel operating companies in
the world. Six Continents Hotels owns, operates or franchises more than
3,200 hotels with more than 500,000 guest rooms in nearly 100 countries
around the world. Among the brands owned by Six Continents Hotels are
Crowne Plaza, Holiday Inn, Holiday Inn Select, Holiday Inn Express and
Inter-Continental. Six Continents Hotels, which acquired Bristol Hotel
Company in March 2000, managed 90 of our hotels at June 30, 2001. Six
Continents Hotels also owns FelCor common stock and FelCor LP units
aggregating approximately 16.1% of our outstanding common stock and
units.

- Starwood is one of the world's largest hotel operating companies.
Directly and through subsidiaries, Starwood owns, leases, manages or
franchises more than 725 properties with approximately 225,000 rooms in
80 countries. Our strategic alliance with Starwood, coupled with the
purchase of seven Sheraton hotels in 1997, provided us with our initial
entry into the upscale, full-service, non-suite hotel market. Starwood
manages 11 of our hotels and is a 40% joint venture partner with us in
the ownership of two hotels and a 50% joint venture partner with us in
the ownership of one hotel.

Maintenance of Financial Flexibility

We are committed to maintaining substantial financial flexibility. In
funding our growth, we have used a broad selection of financing sources to
minimize our cost of capital, including public equity, collateralized
mortgage-backed securities, public and private debt, and asset divestitures. We
believe that our capital structure will continue to be among the more
conservative in the hotel REIT industry. We believe our financial flexibility
should enable us to pursue selective hotel acquisition and expansion
opportunities and to take advantage of renovation, redevelopment and rebranding
opportunities to help us improve our competitive position.

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11

CORPORATE STRUCTURE

The following diagram depicts our general corporate structure and debt
outstanding at June 30, 2001, on a pro forma basis (dollars in millions):

[CORPORATE STRUCTURE CHART]

(1) Assumes that the holders of the MeriStar convertible subordinated notes and
the MeriStar subordinated notes accept, and the holders of the MeriStar
senior notes do not accept, the change of control offer that we will be
required to make following the MeriStar merger.

RECENT DEVELOPMENTS

Since January 1, 2001 we:

- acquired from subsidiaries of Six Continents Hotels the leases covering
12 of the 25 hotels identified in the second quarter of 2000 as held for
sale and terminated the related management agreements in exchange for
413,585 shares of FelCor common stock valued at approximately $10
million; 11 of the leases were transferred to our taxable REIT
subsidiary, or TRS, effective as of January 1, 2001, and one was
terminated in connection with the sale of the related hotel;

- completed the acquisition of DJONT Operations, L.L.C. and its
consolidated subsidiaries, effective as of January 1, 2001, for 416,667
units of limited partnership interest in FelCor LP valued at
approximately $10 million;

- contributed eight of the hotels held for sale in March 2001 to an entity
in which we hold a 50% equity interest and in which an affiliate of
Interstate Hotels Corporation, or IHC, holds the other 50% equity
interest; another affiliate of IHC manages each of these hotels;

5
12

- entered into the merger agreement with MeriStar and MeriStar LP;

- completed the private placement of the Old Notes. Pending use to finance
in part the MeriStar merger, approximately $316 million of the proceeds
of the Old Notes was placed in a restricted proceeds account to fund the
special redemption described below. If the MeriStar merger is not closed
on or prior to November 30, 2001 or the merger agreement relating to the
MeriStar merger is terminated earlier, the funds in the restricted
proceeds account will be used to redeem $300 million aggregate principal
amount of the Notes at a redemption price equal to 101% of their
principal amount, plus accrued interest to the date of redemption.
Pursuant to the restricted proceeds agreement, the funds in the
restricted proceeds account will be released to FelCor LP to pay a
portion of the purchase price for the MeriStar merger and to pay related
fees and expenses upon receipt by the escrow agent of an officers'
certificate that states that all necessary conditions to the closing of
the MeriStar merger have been satisfied or waived;

- announced Richard J. O'Brien as our Chief Financial Officer and Executive
Vice President in June 2001;

- acquired the remaining 88 leases held by Six Continents Hotels on July 1,
2001; and

- amended and restated our line of credit in July 2001 to increase it, upon
completion of the MeriStar merger, from $600 million to $700 million.

On January 1, 2001, the provisions of the REIT Modernization Act became
effective. These provisions:

- reduce the percentage of taxable income required to be distributed by a
REIT from 95% to 90% for taxable years after 2000; and

- subject to certain limitations, permit a REIT to own taxable REIT
subsidiaries, or TRSs, that engage in businesses previously prohibited to
a REIT, including, among other things, leasing hotels from a hotel REIT,
so long as the hotels in question continue to be managed by unrelated
third parties.

This act and its impact on us are discussed in further detail elsewhere in
this prospectus.

Our principal executive offices are located at 545 E. John Carpenter
Freeway, Suite 1300, Irving, Texas 75062 and our telephone number is (972)
444-4900.

6
13

THE EXCHANGE OFFER

On June 4, 2001, we completed the private offering of $600 million of
8 1/2% Senior Notes Due 2011. We entered into a registration rights agreement
with the initial purchasers in the private offering of the Old Notes in which we
agreed, among other things, to deliver to you this prospectus and to complete
this exchange offer within 180 days of the original issuance of the Old Notes.
You are entitled to exchange in this exchange offer Old Notes that you hold for
registered New Notes with substantially identical terms. If this exchange offer
is not completed on or prior to December 3, 2001, then the interest rate on the
Old Notes will increase to 9% until it is completed or, under certain
circumstances, until a resale registration statement with respect to the Old
Notes is declared effective by the SEC. You should read the discussion under the
headings "-- Description of New Notes" and "Description of the New Notes and
Guarantees" for further information regarding the New Notes.

We believe that the New Notes to be issued in this exchange offer may be
resold by you without compliance with the registration and prospectus delivery
provisions of the Securities Act, subject to certain conditions.

The following summarizes the terms of the exchange offer. You should read
the discussion under the heading "The Exchange Offer" for further information
regarding this exchange offer and resale of the New Notes.

Securities to be
Exchanged.................. On June 4, 2001, we issued $600 million in
aggregate principal amount of Old Notes to the
initial purchasers in a transaction exempt from the
registration requirements of the Securities Act.
The terms of the New Notes and the Old Notes are
substantially identical in all material respects,
except that the New Notes will be freely
transferable by the holders, except as otherwise
provided in this prospectus. See "Description of
the New Notes and Guarantees."

The Exchange Offer......... $1,000 principal amount of New Notes in exchange
for each $1,000 principal amount of Old Notes. As
of the date hereof, Old Notes representing $600
million aggregate principal amount are outstanding.

Based on interpretations by the staff of the SEC,
as set forth in no-action letters issued to certain
third parties unrelated to us, we believe that New
Notes issued pursuant to the exchange offer in
exchange for Old Notes may be offered for resale,
resold or otherwise transferred by holders thereof,
other than any holder which is an "affiliate" of
FelCor LP, FelCor or certain of their subsidiaries
within the meaning of Rule 405 under the Securities
Act, or a broker-dealer who purchased Old Notes
directly from us to resell pursuant to Rule 144A or
any other available exemption under the Securities
Act, without compliance with the registration and
prospectus delivery requirements of the Securities
Act, provided that such New Notes are acquired in
the ordinary course of such holders' business and
such holders have no arrangement with any person to
engage in a distribution of New Notes.

However, the SEC has not considered the exchange
offer in the context of a no-action letter and we
cannot be sure that the staff of the SEC would make
a similar determination with respect to the
exchange offer as in such other circumstances.
Furthermore, each holder, other than a
broker-dealer, must acknowledge that it is not
engaged in, and does not intend to engage or
participate in, a distribution of New Notes. Each
broker-dealer that receives New Notes for its own
account pursuant to the exchange offer must
acknowledge that it will comply with the prospectus
delivery require-

7
14

ments of the Securities Act in connection with any
resale of such New Notes. Broker-dealers who
acquired Old Notes directly from us and not as a
result of market-making activities or other trading
activities may not rely on the staff's
interpretations discussed above or participate in
the exchange offer and must comply with the
prospectus delivery requirements of the Securities
Act in order to resell the Old Notes.

Registration Rights
Agreement................ We sold the Old Notes on June 4, 2001, in a private
placement in reliance on Section 4(2) of the
Securities Act. The Old Notes were immediately
resold by the initial purchasers in reliance on
Rule 144A under the Securities Act. In connection
with the sale, we, together with FelCor and the
subsidiary guarantors, entered into a registration
rights agreement with the initial purchasers
requiring us to make the exchange offer. The
registration rights agreement further provides that
we must cause the exchange offer to be completed on
or prior to December 3, 2001. See "The Exchange
Offer -- Purpose and Effect."

Expiration Date............ The exchange offer will expire at 5:00 p.m., New
York City time, on , 2001 or a later
date and time if we extend it.

Withdrawal................. The tender of the Old Notes pursuant to the
exchange offer may be withdrawn at any time prior
to the expiration date. Any Old Notes not accepted
for exchange for any reason will be returned
without expense as soon as practicable after the
expiration or termination of the exchange offer.

Interest on the New Notes
and the Old Notes........ Interest on the New Notes will accrue from June 4,
2001, or from the date of the last payment of
interest on the Old Notes, whichever is later. No
additional interest will be paid on Old Notes
tendered and accepted for exchange.

Conditions of the Exchange
Offer.................... The exchange offer is subject to certain customary
conditions, certain of which may be waived by us.
See "The Exchange Offer -- Conditions of the
Exchange Offer."

Procedures for Tendering
Old Notes................ Each holder of the Old Notes wishing to accept the
exchange offer must complete, sign and date the
letter of transmittal, or a copy thereof, in
accordance with the instructions contained herein
and therein, and mail or otherwise deliver the
letter of transmittal, or the copy, together with
the Old Notes and any other required documentation,
to the exchange agent at the address set forth
herein. Persons holding the Old Notes through the
Depository Trust Company, or DTC, and wishing to
accept the exchange offer must do so pursuant to
DTC's Automated Tender Offer Program, by which each
tendering participant will agree to be bound by the
letter of transmittal. By executing or agreeing to
be bound by the letter of transmittal, each holder
will represent to us that, among other things, (1)
the New Notes acquired pursuant to the exchange
offer are being obtained in the ordinary course of
business of the person receiving such New Notes,
(2) the holder is not engaging in and does not
intend to engage in a distribution of the New
Notes, (3) the holder does not have an arrangement
or understanding with any person to participate in
the

8
15

distribution of the New Notes, and (4) the holder
is not an "affiliate," as defined under Rule 405
promulgated under the Securities Act, of FelCor LP,
FelCor or any of the subsidiary guarantors.

We will accept for exchange any and all Old Notes
which are properly tendered, and not withdrawn, in
the exchange offer prior to the expiration date.
The New Notes will be delivered promptly following
the expiration date. See "The Exchange
Offer -- Terms of the Exchange Offer."

Exchange Agent............. SunTrust Bank is serving as exchange agent in
connection with the exchange offer.

Federal Income Tax
Considerations........... We believe the exchange of Old Notes for New Notes
pursuant to the exchange offer will not constitute
a sale or an exchange for federal income tax
purposes. See "Certain United States Federal Income
Tax Considerations."

Effect of Not Tendering.... Old Notes that are not tendered or that are
tendered but not accepted will, following the
completion of the exchange offer, continue to be
subject to the existing restrictions upon transfer.
We will have no further obligation to provide for
the registration of the Old Notes under the
Securities Act.

DESCRIPTION OF NEW NOTES

Issuer..................... FelCor Lodging Limited Partnership.

Securities Offered......... $600 million aggregate principal amount of 8 1/2%
Senior Notes Due 2011.

Maturity................... June 1, 2011.

Interest................... Interest will be payable in cash on June 1 and
December 1 of each year, beginning December 1,
2001.

Special Mandatory
Redemption............... Pending use to finance in part the MeriStar merger,
$316 million of the net proceeds of the Old Notes
was placed in a restricted proceeds account to fund
the special redemption described below. If the
MeriStar merger is not closed on or prior to
November 30, 2001 or the merger agreement relating
to the MeriStar merger is terminated earlier, the
funds in the restricted proceeds account will be
used to redeem $300 million aggregate principal
amount of the Notes at a redemption price equal to
101% of their principal amount, plus accrued
interest to the date of redemption. Pursuant to the
restricted proceeds agreement, the funds in the
restricted proceeds account will be released to
FelCor LP to pay a portion of the purchase price
for the MeriStar merger and to pay related fees and
expenses upon receipt by the escrow agent of an
officers' certificate that states that all
necessary conditions to the closing of the MeriStar
merger have been satisfied or waived. See
"Description of the Notes and Guarantees -- Special
Mandatory Redemption."

Change of Control.......... Upon a change of control, we will be required to
make an offer to purchase the New Notes at 101% of
the principal amount plus accrued and unpaid
interest. We may not have sufficient funds
available at the time of any change of control to
effect the purchase.

9
16

Guarantees................. The New Notes will be unconditionally guaranteed on
an unsecured senior basis by FelCor and by certain
wholly-owned subsidiaries that are obligors on
other senior debt of FelCor or FelCor LP.

Ranking.................... The New Notes will be unsecured and will rank
equally with all of our existing and future
unsecured senior debt. The New Notes will be
effectively subordinated to all of our and our
consolidated subsidiaries' secured debt and to all
other debt of our non-guarantor subsidiaries. As of
June 30, 2001, on a pro forma basis, we and our
consolidated subsidiaries would have had
approximately $1.4 billion of secured debt, all of
which is mortgage and capitalized lease debt and
effectively senior to the New Notes to the extent
of the value of the underlying assets.

At June 30, 2001, on a pro forma basis, our
non-guarantor subsidiaries had less than $1 million
of other debt.

Certain Other Covenants.... The indenture governing the New Notes restricts our
ability and the ability of our restricted
subsidiaries to:

- incur additional debt;

- incur additional secured debt and subsidiary
debt;

- make certain distributions, investments and other
restricted payments;

- limit the ability of restricted subsidiaries to
make payments to us;

- issue or sell stock of restricted subsidiaries;

- enter into transactions with affiliates;

- create liens;

- sell assets;

- enter into certain sale-leaseback transactions;
and

- with respect to FelCor LP and FelCor,
consolidate, merge or sell all or substantially
all of their assets.

These covenants are subject to a number of
important limitations and exceptions.

Ratings Downgrade.......... Upon the occurrence of, and during the continuance
of, a ratings downgrade, as defined, the New Notes
will bear yearly interest at a rate equal to 9%.
See "Description of the New Notes and Guarantees --
Certain Definitions -- Ratings Downgrade."

Fall-Away Covenants........ Under the indenture governing the Notes, in the
event, and only for as long as, the Notes are rated
investment grade and no default or event of default
has occurred and is continuing, many of the
covenants described above will not be applicable to
FelCor, FelCor LP and their restricted
subsidiaries.

RISK FACTORS

YOU SHOULD CAREFULLY CONSIDER THE INFORMATION SET FORTH UNDER THE CAPTION
"RISK FACTORS" BEGINNING ON PAGE 18 BEFORE INVESTING IN THE NEW NOTES.

10
17

SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

The following table sets forth unaudited pro forma condensed combined
financial data for MeriStar LP and us as a combined entity, and for FelCor and
MeriStar as a combined entity, in each case giving effect to the merger and
partnership merger as if they had occurred on the dates indicated and after
giving effect to the pro forma adjustments. The unaudited pro forma condensed
combined operating data are presented as if the merger and partnership merger
had been completed on January 1, 2000. The unaudited pro forma condensed
combined balance sheet data at June 30, 2001 is presented as if the merger and
partnership merger had occurred on June 30, 2001. In the opinion of our
management, all adjustments necessary to reflect the effects of these
transactions have been made. The merger and partnership merger will be accounted
for under the purchase method of accounting as provided by Financial Accounting
Standards No. 141 and 142. Based on FelCor's current estimate of value for the
MeriStar assets to be acquired in the amount of approximately $3.0 billion and
liabilities to be assumed in the amount of approximately $1.9 billion, no
goodwill will be recorded for this transaction.

The unaudited pro forma condensed combined financial data should be read
together with the respective historical audited and unaudited consolidated
financial statements and financial statement notes of FelCor LP and FelCor, and
of MeriStar LP and MeriStar, included in or incorporated by reference into this
prospectus. See "Where You Can Find More Information" on page iv. The unaudited
pro forma condensed combined financial data is presented for comparative
purposes only and are not necessarily indicative of what the actual combined
results of operations of FelCor LP and MeriStar LP, and FelCor and MeriStar,
would have been for the periods presented, nor do these data purport to
represent the results of future periods. See "Unaudited Pro Forma Combined
Financial Information" beginning on page 41.

FELCOR LODGING LIMITED PARTNERSHIP

<Table>
<Caption>
PRO FORMA
---------------------------
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, JUNE 30,
2000(1) 2001
------------ ------------
(IN THOUSANDS, EXCEPT PER
UNIT AND RATIO DATA)

STATEMENT OF OPERATIONS DATA:
Total revenues............................................ $2,864,452 $1,412,155
Net income before extraordinary items..................... $ 159,171 $ 91,603
Net income before extraordinary items applicable to common
unitholders............................................ $ 123,424 $ 73,771
Diluted earnings per unit data:
Net income before extraordinary items applicable to
common unitholders.................................... $ 1.21 $ 0.73
Weighted average common units outstanding.............. 101,839 101,352
OTHER DATA:
Funds From Operations(2).................................. $ 451,302 $ 223,177
EBITDA(3)................................................. $ 803,172 $ 396,600
Ratio of earnings to fixed charges(4)..................... 1.5x 1.6x
</Table>

<Table>
<Caption>
PRO FORMA
(UNAUDITED)
--------------
JUNE 30,
2001
--------------
(IN THOUSANDS)

BALANCE SHEET DATA:
Net investment in hotels.................................... $6,516,043
Total assets................................................ $7,146,928
Debt........................................................ $3,648,693
Redeemable units............................................ $ 301,983
Partners' capital........................................... $2,701,258
</Table>

11
18

FELCOR LODGING TRUST INCORPORATED

<Table>
<Caption>
PRO FORMA
(UNAUDITED)
---------------------------
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, JUNE 30,
2000(1) 2001
------------ ------------
(IN THOUSANDS, EXCEPT PER
SHARE DATA)

STATEMENT OF OPERATIONS DATA:
Total revenues............................................ $2,864,452 $1,412,155
Net income before extraordinary items..................... $ 145,657 $ 82,075
Net income before extraordinary items applicable to common
shareholders........................................... $ 110,475 $ 64,525
Diluted earnings per share data:
Net income before extraordinary items applicable to
common shareholders................................... $ 1.21 $ 0.73
Weighted average common shares outstanding............. 91,282 88,818
OTHER DATA:
Funds From Operations(2).................................. $ 451,302 $ 223,177
EBITDA(3)................................................. $ 803,172 $ 396,600
</Table>

<Table>
<Caption>
PRO FORMA
(UNAUDITED)
--------------
JUNE 30,
2001
--------------
(IN THOUSANDS)

BALANCE SHEET DATA:
Net investment in hotels.................................... $6,516,043
Total assets................................................ $7,146,928
Debt........................................................ $3,648,693
Minority interest in FelCor LP.............................. $ 333,475
Total shareholder's equity.................................. $2,669,766
</Table>

- ------------

(1) In the second quarter of 2000, we recorded a $63 million loss related to the
decision to sell certain non-strategic hotel assets, which is reflected in
the income statements presented for the period.

(2) We consider Funds From Operations to be a key measure of a real estate
investment trust's, or REIT's performance which should be considered along
with, but not as an alternative to, net income and cash flow as a measure of
operating performance and liquidity.

The White Paper on Funds From Operations approved by the Board of Governors
of the National Association of Real Estate Investment Trusts, or NAREIT,
defines Funds From Operations as net income or loss, computed in accordance
with GAAP, excluding gains or losses from extraordinary items in accordance
with GAAP and sales of depreciable operating properties, plus swap
termination costs and real estate related depreciation and amortization and
after comparable adjustments for our portion of these items related to
unconsolidated entities and joint ventures. We believe that Funds From
Operations is helpful to investors as a measure of the performance of an
equity REIT because, along with cash flow from operating activities,
financing activities and investing activities, it provides investors with an
indication of our ability to incur and service debt, to make capital
expenditures, and to fund other cash needs. We compute Funds From Operations
in accordance with standards established by NAREIT, except that we add back
rent deferred under Staff Accounting Bulletin, or SAB 101, the loss on
assets held for sale, lease termination costs and swap termination expenses
to derive Funds From Operations. This may not be comparable to Funds From
Operations reported by other REITs that do not define the term in accordance
with the current NAREIT definition, that interpret the current NAREIT
definition differently than we do or that do not adjust Funds From
Operations for rent deferred under SAB 101, the loss on assets held for
sale, lease termination costs and swap termination expense. Funds From
Operations does not represent cash generated from operating activities
determined by GAAP and should not be considered as an alternative to net
income, determined in accordance with GAAP, as an indication of our
financial performance or to cash flow from operating activities, determined
in accordance with GAAP, as a measure of our liquidity, nor is it indicative
of funds available to fund our cash needs, including our ability to make
cash distributions. Funds From Operations may include funds that may not be
available for management's discretionary use due to requirements to conserve
funds for capital expenditures and property acquisitions and other
commitments and uncertainties.

12
19

The computation of Funds From Operations for FelCor LP and FelCor yields the
same result. The following table details the computation of Funds From
Operations for FelCor LP.

<Table>
<Caption>
PRO FORMA
(UNAUDITED)
---------------------------------
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
2000 2001
------------ ------------------
(IN THOUSANDS)

Net income before extraordinary charges..................... $159,171 $ 91,603
Loss (gain) on sale of hotels............................... (6,024) 1,081
Loss on assets held for sale................................ 63,000
Swap termination expense.................................... 14,121
Series B redeemable preferred distributions................. (12,937) (6,468)
Series D redeemable preferred distributions................. (565) (282)
New redeemable preferred distributions...................... (10,500) (5,250)
Depreciation................................................ 248,990 123,350
Depreciation from unconsolidated entities................... 10,167 5,022
-------- --------
Funds From Operations....................................... $451,302 $223,177
======== ========
Weighted average units outstanding(a)....................... 106,536 106,041
</Table>

- ------------

(a) Weighted average units outstanding are computed including dilutive
options, unvested stock grants and assuming conversion of Series A
preferred units, Series C preferred units and Series D preferred units
to common units.

(3) EBITDA is computed by adding Funds From Operations, interest expense, our
portion of interest expense from unconsolidated entities, amortization
expense and our redeemable preferred distributions. EBITDA is presented
because it provides useful information regarding our ability to service
debt. EBITDA should not be considered as an alternative measure of operating
results or cash flow from operations, as determined in accordance with GAAP.
EBITDA as presented by us may not be comparable to other similarly titled
measures used by other companies. The computation of EBITDA for FelCor LP
and FelCor yields the same result. A reconciliation of Funds From Operations
to EBITDA is as follows:

<Table>
<Caption>
PRO FORMA
(UNAUDITED)
---------------------------------
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
2000 2001
------------ ------------------
(IN THOUSANDS)

Funds From Operations....................................... $451,302 $223,177
Interest expense............................................ 313,249 153,229
Interest expense from unconsolidated entities............... 9,188 4,742
Amortization expense........................................ 5,431 3,452
Series B redeemable preferred distributions................. 12,937 6,468
Series D redeemable preferred distributions................. 565 282
New redeemable preferred distributions...................... 10,500 5,250
-------- --------
EBITDA...................................................... $803,172 $396,600
======== ========
</Table>

(4) For the purpose of computing the ratio of earnings to fixed charges,
earnings consist of income from continuing operations plus fixed charges,
and minority interest in FelCor LP, with respect to FelCor, excluding
capitalized interest, and fixed charges consist of interest, whether
expensed or capitalized, and amortization of loan costs.

13
20

SUMMARY HISTORICAL FINANCIAL INFORMATION

The following tables set forth summary historical consolidated financial
information for FelCor LP and FelCor. The summary historical information is
presented as of and for the years ended December 31, 1998, 1999 and 2000 and as
of and for the six months ended June 30, 2000 and 2001. We derived the
historical financial information for the years ended December 31, 1998, 1999 and
2000 from our consolidated financial statements and the notes thereto, audited
by PricewaterhouseCoopers LLP, independent accountants. Certain
reclassifications have been made to previously reported amounts to conform to
current year presentation with no effect to previously reported net income or
shareholders' equity. The selected historical financial information as of and
for the six months ended June 30, 2000 and 2001 have been derived from the
unaudited financial statements which have been prepared by our management on the
same basis as the audited financial statements and, in the opinion of our
management, include all adjustments consisting of normal recurring accruals that
are considered necessary for a fair presentation of the results for such
periods. The results of operations for the six months ended June 30, 2000 and
2001 are not necessarily indicative of results to be anticipated for the entire
year. You should read the following in conjunction with "Selected Historical
Consolidated Financial Information," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the consolidated financial
statements and the notes thereto included elsewhere in this prospectus or
incorporated herein by reference.

FELCOR LODGING LIMITED PARTNERSHIP

<Table>
<Caption>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------ -----------------------
1998 1999 2000(1) 2000 2001(2)
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT RATIO DATA)

STATEMENT OF OPERATIONS DATA:
Total revenues......................................... $ 332,600 $ 495,517 $ 541,872 $ 258,159 $ 560,302
Net income (loss)...................................... $ 121,339 $ 135,776 $ 66,391 $ (12,372) $ 16,341
Net income (loss) applicable to common unitholders..... $ 99,916 $ 111,041 $ 41,709 $ (24,730) $ 4,041
OTHER DATA:
Funds From Operations(3)............................... $ 217,363 $ 286,895 $ 288,636 $ 149,380 $ 135,683
EBITDA(4).............................................. $ 306,361 $ 432,689 $ 470,861 $ 238,753 $ 229,576
Ratio of earnings to fixed charges(5).................. 2.7x 2.1x 1.5x 1.0x 1.2x
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets........................................... $4,175,383 $4,255,751 $4,103,603 $4,176,765 $4,403,528
Debt................................................... $1,594,734 $1,833,954 $1,838,241 $1,882,743 $2,134,093
</Table>

FELCOR LODGING TRUST INCORPORATED

STATEMENT OF OPERATIONS DATA:
Total revenues......................................... $ 332,600 $ 495,517 $ 541,872 $ 258,159 $ 560,302
Net income (loss)...................................... $ 114,839 $ 131,080 $ 61,699 $ (9,973) $ 15,753
Net income (loss) applicable to common shareholders.... $ 93,416 $ 106,345 $ 37,017 $ (22,331) $ 3,453
OTHER DATA:
Funds From Operations(3)............................... $ 217,363 $ 286,895 $ 288,636 $ 149,380 $ 135,683
EBITDA(4).............................................. $ 306,361 $ 432,689 $ 470,861 $ 238,753 $ 229,576
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets........................................... $4,175,383 $4,255,751 $4,103,603 $4,176,765 $4,403,528
Debt................................................... $1,594,734 $1,833,954 $1,838,241 $1,882,743 $2,134,093
</Table>

- ------------

(2) Includes hotel revenues and expenses with respect to 96 hotels that were
leased to either DJONT or subsidiaries of Six Continents Hotels prior to the
effectiveness of the REIT Modernization Act on January 1, 2001. Prior to
January 1, 2001, these

14
21

hotels' revenues were comprised mainly of percentage lease revenues.
Additionally in the first quarter of 2001, we recorded lease termination costs
of $36.2 million with respect to the 96 hotels.

(3) We consider Funds From Operations to be a key measure of a REIT's
performance which should be considered along with, but not as an alternative
to, net income and cash flow as a measure of operating performance and
liquidity.

The White Paper on Funds From Operations approved by the Board of Governors
of NAREIT defines Funds From Operations as net income or loss (computed in
accordance with GAAP), excluding gains or losses from debt restructuring
which would be extraordinary items in accordance with GAAP and sales of
depreciable operating properties, plus real estate related depreciation and
amortization and after comparable adjustments for our portion of these items
related to unconsolidated entities and joint ventures. We believe that Funds
From Operations is helpful to investors as a measure of the performance of
an equity REIT because, along with cash flow from operating activities,
financing activities and investing activities, it provides investors with an
indication of our ability to incur and service debt, to make capital
expenditures and to fund other cash needs. We compute Funds From Operations
in accordance with standards established by NAREIT, except that we add back
rent deferred under SAB 101, the loss on assets held for sale, lease
termination costs and swap termination expenses to derive Funds From
Operations. This may not be comparable to Funds From Operations reported by
other REITs that do not define the term in accordance with the current
NAREIT definition, that interpret the current NAREIT definition differently
than we do or that do not adjust Funds From Operations for rent deferred
under SAB 101, the loss on assets held for sale, lease termination costs and
swap termination expense. Funds From Operations does not represent cash
generated from operating activities determined by GAAP and should not be
considered as an alternative to net income (determined in accordance with
GAAP) as an indication of our financial performance or to cash flow from
operating activities (determined in accordance with GAAP) as a measure of
our liquidity, nor is it indicative of funds available to fund our cash
needs, including our ability to make cash distributions. Funds From
Operations may include funds that may not be available for our management's
discretionary use due to requirements to conserve funds for capital
expenditures and property acquisitions and other commitments and
uncertainties.

The computation of Funds From Operations for FelCor LP and FelCor yields the
same result. The following table details the computation of Funds From
Operations for FelCor LP.

<Table>
<Caption>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------ -------------------
1998 1999 2000 2000 2001
-------- -------- -------- -------- --------
(IN THOUSANDS)

Net income (loss).................................... $121,339 $135,776 $ 66,391 $(12,372) $ 16,341
Deferred rent........................................ 18,604
Lease termination costs.............................. 36,226
Swap termination expense............................. 4,824
Gain on sale......................................... (2,595)
Loss on assets held for sale......................... 63,000 63,000
Series B redeemable preferred distributions.......... (8,373) (12,937) (12,937) (6,468) (6,468)
Extraordinary charge from write-off of deferred
financing fees..................................... 3,075 1,113 3,865 225
Depreciation......................................... 90,835 152,948 160,745 81,480 79,513
Depreciation from unconsolidated entities............ 10,487 9,995 10,167 5,136 5,022
-------- -------- -------- -------- --------
Funds From Operations................................ $217,363 $286,895 $288,636 $149,380 $135,683
======== ======== ======== ======== ========
Weighted average units outstanding(a)................ 58,013 75,251 67,239 67,987 66,759
</Table>

--------------------

(a) Weighted average units outstanding are computed including dilutive
options, unvested stock grants and assuming conversion of Series A
preferred units to common units.

(4) EBITDA is computed by adding Funds From Operations, interest expense, our
portion of interest expense from unconsolidated entities, amortization
expense, and our Series B redeemable preferred distributions. EBITDA is
presented because it provides useful information regarding our ability to
service debt. EBITDA should not be considered as an alternative measure of
operating results or cash flow from operations, as determined in accordance
with GAAP. EBITDA as presented by us may not be comparable to other
similarly titled measures used by other companies. The computation of EBITDA
for FelCor LP and FelCor yields the same result. A reconciliation of Funds
From Operations to EBITDA is as follows:

Funds From Operations................................ $217,363 $286,895 $288,636 $149,380 $135,683
Interest expense..................................... 73,182 125,435 158,620 77,644 81,799
Interest expense from unconsolidated entities........ 6,521 6,729 9,188 4,787 4,742
Amortization expense................................. 922 693 1,480 474 884
Series B redeemable preferred distributions.......... 8,373 12,937 12,937 6,468 6,468
-------- -------- -------- -------- --------
EBITDA............................................... $306,361 $432,689 $470,861 $238,753 $229,576
======== ======== ======== ======== ========
</Table>

(5) For the purpose of computing the ratio of earnings to fixed charges,
earnings consist of income from continuing operations plus fixed charges,
excluding capitalized interest, and fixed charges consist of interest,
whether expensed or capitalized, and amortization of loan costs.

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The following tables set forth selected historical consolidated financial
information for MeriStar LP and MeriStar. The selected historical information is
presented as of and for the years ended December 31, 1998, 1999 and 2000 and as
of and for the six months ended June 30, 2000 and 2001. The historical financial
information for the years ended December 31, 1998, 1999 and 2000 has been
derived from the consolidated financial statements and the notes thereto of
MeriStar LP and MeriStar, which have been audited by KPMG LLP, independent
accountants. The selected historical financial information as of and for the six
months ended June 30, 2000 and 2001 has been derived from the unaudited
financial statements which have been prepared by management of MeriStar on the
same basis as the audited financial statements and, in the opinion of the
management of MeriStar, include all adjustments consisting of normal recurring
accruals that are considered necessary for a fair presentation of the results
for such periods. The results of operations for the six months ended June 30,
2000 and 2001 are not necessarily indicative of results to be anticipated for
the entire year. You should read the following in conjunction with "Selected
Historical Consolidated Financial Information," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the consolidated
financial statements and the notes thereto included elsewhere in this prospectus
or incorporated herein by reference.

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

<Table>
<Caption>
SIX MONTHS
ENDED JUNE 30,
YEAR ENDED DECEMBER 31, (UNAUDITED)
------------------------------------ -----------------------
1998(1) 1999 2000 2000 2001(2)
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS)

RESULTS OF OPERATIONS:
Total revenues......................................... $ 522,031 $ 374,820 $ 400,685 $ 148,587 $ 609,851
Net operating income................................... $ 135,910 $ 218,299 $ 230,340 $ 63,899 $ 104,199
Net income............................................. $ 85,066 $ 111,656 $ 118,036 $ 12,237 $ 40,402
OTHER FINANCIAL DATA:
EBITDA(3).............................................. $ 194,752 $ 320,094 $ 341,028 $ 118,001 $ 178,499
Net cash provided by operating activities.............. $ 186,891 $ 228,329 $ 224,088 $ 120,671 $ 114,562
Net cash (used in) provided by investing activities.... $ (785,505) $ (187,952) $ (14,286) $ 13,027 $ (49,534)
Net cash provided by (used in) financing activities.... $ 520,457 $ (41,948) $ (212,173) $ (135,629) $ (45,003)
BALANCE SHEET DATA (AT END OF PERIOD):
Investments in hotel properties, gross................. $2,957,543 $3,118,723 $3,193,730 $3,164,045 $3,209,185
Total assets........................................... $2,989,609 $3,086,096 $3,006,500 $3,036,517 $3,084,981
Long-term debt......................................... $1,602,352 $1,676,771 $1,638,319 $1,632,433 $1,653,050
</Table>

MERISTAR HOSPITALITY CORPORATION

RESULTS OF OPERATIONS:
Total revenues......................................... $ 525,297 $ 374,904 $ 400,778 $ 148,639 $ 609,851
Net operating income................................... $ 133,906 $ 217,065 $ 229,174 $ 63,310 $ 103,442
Net income............................................. $ 43,707 $ 98,964 $ 105,861 $ 10,052 $ 36,375
OTHER FINANCIAL DATA:
EBITDA(3).............................................. $ 194,609 $ 320,164 $ 341,121 $ 118,053 $ 178,360
Net cash provided by operating activities.............. $ 162,796 $ 229,193 $ 224,037 $ 121,084 $ 117,018
Net cash (used in) provided by investing activities.... $ (785,505) $ (187,952) $ (14,286) $ 13,027 $ (49,534)
Net cash provided by (used in) financing activities.... $ 543,256 $ (42,812) $ (212,121) $ (136,042) $ (47,467)
BALANCE SHEET DATA (AT END OF PERIOD):
Investments in hotel properties, gross................. $2,957,543 $3,118,723 $3,193,730 $3,164,046 $3,209,185
Total assets........................................... $2,998,460 $3,094,201 $3,013,008 $3,043,648 $3,090,907
Long-term debt......................................... $1,602,352 $1,676,771 $1,638,319 $1,632,490 $1,653,050
</Table>

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- ------------

(1) MeriStar LP and MeriStar were created on August 3, 1998, when American
General Hospitality Corporation, a corporation operating as a real estate
investment trust, or REIT, and its associated entities merged with CapStar
Hotel Company and its associated entities. In connection with the merger
between CapStar and American General, MeriStar Hotels & Resorts, a separate
publicly traded company, was created to be the lessee and manager of nearly
all of MeriStar's hotels. Prior to August 2, 1998, MeriStar LP's and
MeriStar's operating results consisted of the revenues and expenses of the
hotels.

(2) From August 3, 1998 until January 1, 2001, MeriStar Hotels & Resorts leased
substantially all of MeriStar's hotels, and MeriStar LP and MeriStar earned
lease revenue under the participating lease agreements with its lessees.
Upon assigning the 106 leases with MeriStar Hotels & Resorts to MeriStar's
taxable REIT subsidiaries on January 1, 2001, in conjunction with the REIT
Modernization Act, MeriStar LP's and MeriStar's operating results now
include the revenues and expenses of these hotels.

(3) EBITDA represents earnings before interest expense, income taxes,
depreciation and amortization. MeriStar's management believes that EBITDA is
a useful measure of operating performance because (i) it is industry
practice to evaluate hotel properties based on operating income before
interest, depreciation and amortization and minority interests of common and
preferred holders of units in MeriStar LP, which is generally equivalent to
EBITDA, and (ii) EBITDA is unaffected by the debt and equity structure of
the entity. EBITDA does not represent cash flow from operations as defined
by GAAP, is not necessarily indicative of cash available to fund all cash
flow needs, and should not be considered as an alternative to net income
under GAAP for purposes of evaluating MeriStar LP's or MeriStar's results of
operations and may not be comparable to other similarly titled measures used
by other companies.

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RISK FACTORS

An investment in the New Notes involves a significant degree of risk. You
should carefully consider the following material risk factors, together with all
of the other information included or incorporated by reference in this
prospectus, in evaluating the exchange offer.

IF YOU DO NOT PROPERLY TENDER YOUR OLD NOTES, YOU WILL CONTINUE TO HOLD
UNREGISTERED OLD NOTES AND YOUR ABILITY TO TRANSFER OLD NOTES WILL BE ADVERSELY
AFFECTED.

We will only issue New Notes in exchange for Old Notes that are timely
received by the Exchange Agent together with all required documents, including a
properly completed and signed letter of transmittal. Therefore, you should allow
sufficient time to ensure timely delivery of the Old Notes and you should
carefully follow the instructions on how to tender your Old Notes. Neither we
nor the Exchange Agent are required to tell you of any defects or irregularities
with respect to your tender of the Old Notes. If you do not tender your Old
Notes properly, then, after we consummate the exchange offer, you may continue
to hold Old Notes that are subject to the existing transfer restrictions. In
addition, if you tender your Old Notes for the purpose of participating in a
distribution of the New Notes, you will be required to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale of the New Notes. If you are a broker-dealer that
receives New Notes for your own account in exchange for Old Notes that you
acquired as a result of market-making activities or any other trading
activities, you will be required to acknowledge that you will deliver a
prospectus in connection with any resale of such New Notes. After the exchange
offer is consummated, if you continue to hold any Old Notes, you may have
difficulty selling them because there may be only a small amount of Old Notes
outstanding.

THE INTEGRATION OF MERISTAR WILL MAKE SUBSTANTIAL DEMANDS ON OUR RESOURCES,
WHICH COULD DIVERT NEEDED ATTENTION AWAY FROM OUR OTHER OPERATIONS.

The integration of MeriStar will make substantial demands on our
management, operational resources and financial and internal control systems.
Our future operating results will depend in part on our ability to continue to
implement and improve our operating and financial controls. The devotion of our
management's time to the integration of MeriStar may limit the time available to
management to attend to other operational, financial and strategic issues.

WE MAY INCUR UNDISCLOSED LIABILITIES IN CONNECTION WITH THE MERISTAR MERGER.

We may be subject to undisclosed or otherwise unforeseen environmental,
tax, pension, litigation or other liabilities in connection with the MeriStar
merger, or we may underestimate the liabilities of which we are aware. If these
unknown liabilities materialize or known liabilities are greater than we
currently estimate, they could result in a material adverse effect on our
business, financial condition and results of operations.

WE MAY NOT SUCCESSFULLY INTEGRATE MERISTAR WITH OUR EXISTING OPERATIONS AND THE
INTENDED BENEFITS MAY NOT BE REALIZED.

Our future operations and earnings will depend in part on our ability to
integrate MeriStar's properties into our system and operations and realize
synergies and cost savings. In order to achieve the anticipated benefits of the
merger, we will need to:

- realize an anticipated $5 million of annual cost savings in general and
administrative expenses from reductions in personnel, closing and
subletting MeriStar's corporate offices and the elimination of other
duplicate overhead costs;

- capitalize on increased purchasing power, including for furniture,
fixtures, equipment, insurance and utilities;

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25

- leverage our increased scale in brand negotiations; and

- effectively control the progress of the integration process and the
associated costs.

Our assessment of the potential synergies and cost savings is preliminary
and subject to change. We may need to incur additional costs to realize them,
none of which costs are currently expected to be material.

Statements regarding the increased earnings estimates, the anticipated
operating efficiencies, cost savings and other benefits we expect to realize
from the integration of MeriStar are forward-looking statements. Actual results
for the combined operations could differ materially from results currently
anticipated depending upon, among other things:

- our and MeriStar's future revenues, expenses and other operating results;

- our and MeriStar's ability to maintain present efficiency levels and
realize expected cost savings and synergies;

- unforeseen costs and expenses incurred in connection with the integration
of MeriStar into our operations and other business; and

- economic or competitive uncertainties and contingencies.

FAILURE TO COMPLETE THE MERISTAR MERGER MAY REQUIRE, UNDER SPECIFIED
CIRCUMSTANCES, PAYMENT OF TERMINATION FEES.

The MeriStar merger is subject to stockholder approval of both MeriStar and
us and other customary conditions. We cannot assure you that we will be able to
satisfy our obligations under the merger agreement and consummate the MeriStar
merger. Under these circumstances, the assets and cash flows of MeriStar will
not be available to us to repay the principal of or interest on the Notes and
our other notes.

In addition, if we fail to consummate the MeriStar merger, under certain
circumstances we may be required to pay a break-up fee and MeriStar's expenses
in connection with the MeriStar merger. These payments could amount to as much
as $40 million.

FAILURE TO COMPLETE THE MERGER MAY RESULT IN OTHER ADVERSE CONSEQUENCES TO US.

Under the merger agreement, both MeriStar and us agreed to some affirmative
and negative covenants, including covenants affecting the conduct of their
respective businesses outside the ordinary course of business. Accordingly, both
parties may forego opportunities which otherwise would be available to them had
the merger agreement not been executed. In addition, transactions such as the
merger can disrupt relationships with employees and others with whom the parties
have existing or prospective relationships. Accordingly, if the merger agreement
is terminated, the ability of MeriStar or us to continue pre-merger business
plans could be adversely affected. We expect to incur approximately $28 million
in expenses for the merger and related transaction, which may not be
reimbursable.

WE HAVE HAD AND EXPECT TO HAVE INCREASES IN LEVERAGE THAT COULD ADVERSELY AFFECT
OUR FINANCIAL CONDITION.

Our leverage has increased to fund our renovation, redevelopment and
rebranding program and our share repurchase program. In addition, we expect our
leverage to further increase as a result of the completion of the MeriStar
merger and the other related financings. The share repurchase program authorizes
repurchases up to an aggregate maximum of $300 million. Through June 30, 2001,
we repurchased approximately 10.4 million shares of common stock under this
program at an aggregate cost of approximately $189 million.

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26

At June 30, 2001, on a pro forma basis, we would have had:

- approximately $3.6 billion in consolidated debt, of which approximately
$1.4 billion would have been secured by mortgages or capital leases and
$26.2 million would have had a maturity date of less than 12 months;

- a ratio of total debt to market capitalization of 57.4%;

- we had a ratio of consolidated debt to investment in hotels at cost of
50.5%; and

- our ratio of EBITDA to interest expense for the six months then ended was
2.6-to-1.

Our leverage could have important consequences for you. For example, it
could:

- make it more difficult for us to satisfy our obligations with respect to
the Notes;

- limit our ability to obtain additional financing, if we need it, for
working capital, our renovation, redevelopment and rebranding plans,
acquisitions, debt service requirements or other purposes;

- increase our vulnerability to adverse economic and industry conditions as
well as fluctuations in interest rates;

- require us to dedicate a substantial portion of our cash flow from
operations to payments on our debt, thereby reducing funds available for
operations, future business opportunities, payment of dividends or other
purposes;

- limit our flexibility in planning for, or reacting to, changes in our
business and the industry in which we compete; and

- place us at a competitive disadvantage compared to our competitors that
have less debt.

THE NOTES ARE EFFECTIVELY JUNIOR TO CERTAIN OF OUR AND OUR SUBSIDIARIES'
EXISTING DEBT.

The Old Notes are, and the New Notes will be, unsecured and will rank
equally with our existing and future unsecured senior debt. The Notes will be
effectively subordinated to all of our and our consolidated subsidiaries'
secured debt and to all other debt of our non-guarantor subsidiaries. As of June
30, 2001, on a pro forma basis, we and our consolidated subsidiaries had
approximately $1.4 billion of secured debt, all of which was mortgage and
capitalized lease debt and effectively senior to the Notes to the extent of the
value of the underlying assets.

As of June 30, 2001, on a pro forma basis, our non-guarantor subsidiaries
had less than $1 million of other debt.

The Old Notes have, and the New Notes will have, substantially the same
covenants and other terms and conditions as our existing 7 3/8% and 7 5/8%
senior notes due 2004 and 2007, respectively, and 9 1/2% senior notes due 2008.
The Old Notes contain, and the New Notes will contain, additional restrictions
with respect to a special mandatory redemption.

WE MAY BE UNABLE TO REALIZE THE ANTICIPATED BENEFITS OF OUR RENOVATIONS.

The majority of MeriStar's and our hotels either recently have been, or are
in the process of being, substantially renovated, redeveloped and, in some
cases, rebranded. If the completion of the current renovation projects is
significantly delayed, our operating results could be adversely affected. The
recently completed and ongoing improvements may not achieve the results
anticipated when we and/or MeriStar made the decision to invest in the
improvements.

CONFLICTS OF INTEREST COULD ADVERSELY AFFECT OUR BUSINESS.

Certain FelCor directors and executive officers. Six Continents Hotels
currently manages 90 of our hotels. Richard C. North, who joined FelCor's board
during 1998, is the Group Finance Director of Six Continents plc, formerly Bass
plc, which is the parent of Six Continents Hotels and, together with its
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affiliates, owns FelCor common stock and FelCor LP units aggregating
approximately 16.1% of our outstanding common stock and units.

Issues may arise under the leases, franchise agreements and management
contracts, and in the allocation of acquisition and management opportunities,
that present conflicts of interest due to the relationship of Mr. North to the
companies with which he is associated. In the event we enter into new or
additional hotel management contracts or other transactions with Six Continents
Hotels, the interests of Mr. North, by virtue of his relationship with Six
Continents plc, may conflict with our interests. For example, any increase in
management fees payable to Six Continents Hotels may decrease our profits to the
benefit of Six Continents Hotels. Also, in the selection of franchises under
which our hotels will be operated, Mr. North by virtue of his relationship with
Six Continents plc, may have interests that conflict with our interests.

Upon completion of the MeriStar merger, two of our directors will serve on
the board of directors of MeriStar Hotels & Resorts, and one of those two
directors, Paul Whetsell, will continue to serve as the Chief Executive Officer
of MeriStar Hotels & Resorts. In addition, Mr. Bruce Wiles, who has been offered
employment with us as an executive officer following the MeriStar merger, owns
335,823 units of limited partnership interest in the operating partnership of
MeriStar Hotels & Resorts, with an aggregate value of $466,794, based on the
closing price of $1.39 per share of MeriStar Hotels & Resorts common stock on
August 30, 2001. Further, our relationship with MeriStar Hotels & Resorts will
be governed by the terms of an intercompany agreement. The initial intercompany
agreement was not negotiated on an arm's-length basis, although the recent
amendment to the intercompany agreement in connection with the REIT
Modernization Act was subject to an arm's-length negotiation. We may have
conflicting views with MeriStar Hotels & Resorts on the manner in which our
hotels are operated and managed, and with respect to acquisitions and
dispositions. Conflicts may also arise in connection with the $50.0 million
revolving credit facility, which had $36.0 million outstanding as of June 30,
2001, from MeriStar to MeriStar Hotels & Resorts and the parties' rights under
the intercompany agreement. As a result, our directors and executive officers
who serve at or have interests in MeriStar Hotels & Resorts may be presented
with decisions which benefit us to the detriment of MeriStar Hotels & Resorts or
benefit MeriStar Hotels & Resorts to our detriment. Inherent potential conflicts
of interest will be present in all of the numerous transactions between us and
MeriStar Hotels & Resorts.

We generally will be obligated under each of our management agreements with
MeriStar Hotels & Resorts to pay a termination fee to MeriStar Hotels & Resorts
if we elect to sell a hotel or if we elect not to restore a hotel after a
casualty and do not replace it with another hotel subject to a management
agreement with a fair market value equal to the fair market value of MeriStar
Hotels & Resorts' remaining management fee due under the management agreement to
be terminated. Where applicable, the termination fee is equal to the present
value, using a discount rate of 10%, of the remaining payments under the
agreement, assuming that MeriStar Hotels & Resorts would have been paid a
management fee under the agreement to be terminated, based on the operating
results for the 12 months preceding termination. Based on operating results for
relevant hotels for the 12 months ended June 30, 2001, the aggregate termination
fees payable under all of the management contracts would have ranged between
$170 million and $180 million. A decision to sell a hotel may, therefore, have
significantly different consequences for us and MeriStar Hotels & Resorts.

We anticipate that any director who has a conflict of interest with respect
to an issue presented to the FelCor board will abstain from voting upon that
issue, although he will have no legal obligation to do so. We have no provisions
in our bylaws or charter that require an interested director to abstain from
voting upon an issue. We do not expect to add provisions in our charter and
bylaws to this effect. Although each director has a fiduciary duty of loyalty to
us, there is a risk that, should an interested director vote upon an issue in
which he or one of his affiliates has an interest, his vote may reflect a bias
that could be contrary to our best interests. In addition, even if an interested
director abstains from voting, the director's participation in the meeting and
discussion of an issue in which he or companies with which he is associated have
an interest could influence the votes of other directors regarding the issue.

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Our relationship with MeriStar Hotels & Resorts may restrict future
opportunities. MeriStar is a party to an intercompany agreement with MeriStar
Hotels & Resorts, which will be assumed by us in the merger. The intercompany
agreement will generally grant MeriStar Hotels & Resorts a right of first
refusal with respect to any management opportunity at any of our properties that
we do not elect to have managed by the hotel brand owner. Following the MeriStar
merger, each of these opportunities will be made available to MeriStar Hotels &
Resorts only if we determine that:

- consistent with our status as a REIT, we must enter into a management
agreement with an unaffiliated third party with respect to the property;

- MeriStar Hotels & Resorts is qualified to be the manager of that
property; and

- the property is not to be operated by the owner of a hospitality brand
under that brand.

Although 90% of our current properties are managed by hotel brand owners, the
intercompany agreement will limit our freedom to engage hotel management
companies to manage our hotels that are not managed by hotel brand owners.

In addition, under the intercompany agreement, each party must cooperate
with the other party to effect any securities issuance of the other party by
assisting in the preparation of any registration statement or other document
required in connection with the issuance.

Acquisition of lessees. As a result of the passage of the REIT
Modernization Act, we were able to form taxable REIT subsidiaries, referred to
as TRSs, to acquire the lessee's interest in our existing hotel leases and to
serve as lessees for any hotels acquired after January 1, 2001. A TRS is a fully
taxable corporation which may be owned 100% by a REIT. A TRS generally is
permitted to engage in businesses, own assets and earn income that, if engaged
in, owned or earned by the REIT, might jeopardize REIT status or result in the
imposition of penalty taxes on the REIT. A TRS is permitted to lease hotels from
the related REIT as long as it does not directly or indirectly operate or manage
hotels, except through an independent hotel management company that satisfies
applicable requirements under the federal income tax laws. A TRS generally is
not allowed to act as a licensor or a franchisor of any brand name under which
any hotel is operated.

The acquisition of one of our primary lessees, DJONT Operations, L.L.C., or
DJONT, was completed effective January 1, 2001. In consideration for the
acquisition of DJONT, FelCor LP issued 416,667 units of limited partnership
interest valued at approximately $10 million. The acquisition of DJONT required
negotiations between us and the owners of DJONT, including Mr. Corcoran and the
children of Charles N. Mathewson, a director of FelCor. The interests of Mr.
Corcoran and Mr. Mathewson were in direct conflict with our interests in these
negotiations and, accordingly, they abstained from participation in our board's
discussion and vote on this matter.

In December 2000, we sold one hotel and, effective January 1, 2001,
completed the acquisition of leases with respect to 12 hotels that had been
leased to and operated by Six Continents Hotels. In consideration for the
acquisition of such lease and termination of the related management agreements,
413,585 shares of FelCor common stock valued at approximately $10 million were
issued to Six Continents Hotels. We acquired the remaining 88 leases held by Six
Continents Hotels, effective July 1, 2001. We have contributed these leases to
our TRSs. In consideration for these 88 leases, we issued 100 shares of our
common stock and caused our subsidiaries to agree to new long-term management
agreements with subsidiaries of Six Continents Hotels to manage these hotels.
The acquisition of the leases held by Six Continents Hotels involved
negotiations between us and Six Continents Hotels. Richard C. North, a director
of FelCor, is the Group Finance Director of Six Continents plc. The interest of
Six Continents plc in those negotiations was in direct conflict with our
interests. Mr. North abstained from participating in any discussion or vote by
our board relating to these transactions.

Adverse tax consequences to some affiliates on a sale of some
hotels. Messrs. Corcoran and Mathewson may incur additional tax liability if we
sell our investments in six hotels that we acquired in July 1994 from
partnerships controlled by these individuals. Consequently, our interests could
differ from
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Messrs. Corcoran's and Mathewson's interests in the event that we consider a
sale of any of these hotels. Decisions regarding a sale of any of these six
hotels must be made by a majority of the independent directors.

WE HAVE RESTRICTIVE DEBT COVENANTS THAT COULD ADVERSELY AFFECT OUR ABILITY TO
RUN OUR BUSINESS.

At June 30, 2001, we were a party to indentures governing an aggregate $1.4
billion in principal amount of our outstanding notes and agreements governing
our $600 million line of credit. At June 30, 2001, MeriStar was a party to
indentures governing an aggregate $856.3 million in principal amount of
MeriStar's outstanding notes and agreements governing MeriStar's $500 million
line of credit and $195 million in term loans. At June 30, 2001, on a pro forma
basis, we would have had an aggregate of $1.9 billion in indebtedness under our
senior notes and an aggregate of $330.4 million in debt under our line of
credit. All of this indebtedness contains or will contain various restrictive
covenants including, among others, provisions restricting the borrower from:

- incurring indebtedness;

- making distributions;

- making investments;

- engaging in transactions with affiliates;

- incurring liens;

- merging or consolidating with another person;

- disposing of all or substantially all of the borrower's assets; or

- permitting limitations on the ability of the borrower's subsidiaries to
make payments to the borrower.

These restrictions may adversely affect our ability to finance our operations or
engage in other business activities that may be in our best interest. For
example, on a pro forma basis, under the most restrictive of these covenants
that will be applicable to us, we would be able to incur no more than $611
million in additional indebtedness for the purpose of acquiring additional
hotels and $280 million for purposes other than acquiring additional hotels
following the merger, assuming the merger had occurred on June 30, 2001.

In addition, some of these agreements require us to maintain certain
specified financial ratios. Our ability to comply with these ratios going
forward may be affected by events beyond our control. These covenants also may
restrict our ability to engage in some transactions. In addition, any breach of
these limitations could result in the acceleration of most of our debt,
including the Notes. We may not be able to refinance or repay this debt in full
under those circumstances.

WE WILL ENCOUNTER INDUSTRY RELATED RISKS THAT MAY ADVERSELY AFFECT OUR BUSINESS.

The recent economic slowdown has adversely affected the RevPAR performance
of MeriStar and us and, if it worsens or continues, these effects could be
material. Both MeriStar and we experienced declines in revenue per available
room, or RevPAR, during the second quarter of 2001, as compared to the same
period of 2000, of 6.0% for MeriStar and of 7.4% for us. A sharper than
anticipated decline in business travel was the primary cause of the decline,
which was principally reflected in decreased occupancies. Both MeriStar and we
expect that the hotel industry will experience a RevPAR decline for the full
year 2001. The current economic slowdown and the resulting declines in RevPAR,
which began in March 2001, are currently continuing. MeriStar and we both
anticipate that third quarter RevPAR will be less than that of the prior year
period and less than that of the second quarter of 2001. The decline in
occupancy during the second and third quarters is expected to lead to declines
in room rates as hotels compete more aggressively for guests. If the economic
slowdown worsens or continues for a protracted

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time, it could have a material adverse effect on the operations and earnings of
MeriStar, us and the combined company.

Investing in hotel assets involves special risks. We have invested only in
hotel-related assets, and our hotels are subject to all of the risks common to
the hotel industry. These risks could adversely affect hotel occupancy and the
rates that can be charged for hotel rooms, and generally include:

- competition from other hotels;

- construction of more hotel rooms in a particular area than needed to meet
demand;

- increases in energy costs and other travel expenses that reduce business
and leisure travel;

- adverse effects of declines in general and local economic activity;

- fluctuations in our revenue caused by the seasonal nature of the hotel
industry;

- adverse effects of a downturn in the hotel industry; and

- risks generally associated with the ownership of hotels and real estate,
as discussed below.

We will have increased concentration of hotels in the upscale, full-service
segment, which may increase our susceptibility to an economic downturn. As a
percentage of total rooms, we currently have 18% of our hotels in the upscale,
full-service segment, MeriStar currently has 65% of its hotels in this segment,
and, as a result of the MeriStar merger, on a pro forma basis, we will have 38%
of our hotels in this segment. In an economic downturn, hotels in this segment,
which generally demand higher room rates, may be more susceptible to a decrease
in revenues, as compared to hotels in other segments that have lower room rates.
This characteristic may result from hotels in this segment generally targeting
business and high-end leisure travelers. In periods of economic difficulties,
business and leisure travelers may seek to reduce travel costs by limiting trips
or seeking to reduce costs on the trips that are taken, which could have a
material adverse effect on our revenues and results of operations.

We will have geographic concentration in three states which may create
risks of regional economic and weather conditions. We derived approximately 48%
of our revenues for the twelve months ended June 30, 2001 from hotels located in
three states: California, Florida and Texas. As a result of the MeriStar merger,
on a pro forma basis, the revenue from these three states for the twelve months
ended June 30, 2001, would be reallocated to reduce the reliance on any one
state but, collectively, would still account for approximately 48% of our
revenues. Therefore, following the merger, adverse economic or weather
conditions in these states will have a greater effect on us than similar
conditions in other states.

We could face increased competition. Each of our hotels competes with
other hotels in its geographic area. A number of additional hotel rooms have
been or may be built in a number of the geographic areas in which our hotels are
located, which could adversely affect the results of operations of these hotels.
An oversupply of hotel rooms could adversely affect both occupancy and rates in
the markets in which our hotels are located. A significant increase in the
supply of midprice, upscale and upper upscale hotel rooms and suites, if demand
fails to increase proportionately, could have a severe adverse effect on our
business, financial condition and results of operations.

Acquisition growth opportunities have decreased. There has been
substantial consolidation in, and capital allocated to, the U.S. lodging
industry since the early 1990's. This generally has resulted in higher prices
for hotels. In addition, current market prices of FelCor's common stock make its
cost of equity capital relatively high. These conditions have resulted in fewer
attractive acquisition opportunities. An important part of our historical growth
strategy has been the acquisition and, in many instances, the renovation and
repositioning of hotels at less than replacement cost. Continued industry
consolidation and competition for acquisitions could adversely affect our growth
prospects. We compete for hotel investment opportunities with other companies,
some of which have greater financial or other resources than we have. Certain
competitors may have a lower cost of capital and may be able to pay higher
prices or assume greater risks than would be prudent for us to pay or assume.

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We are subject to possible adverse effects of franchise and licensing
agreement requirements. Substantially all our hotels are operated under existing
franchise or license agreements with nationally recognized hotel brands. Each
license agreement requires that the licensed hotel be maintained and operated in
accordance with specific standards and restrictions in order to maintain
uniformity within the franchisor system. Compliance with these standards could
require a franchisee to incur significant expenses or capital expenditures,
which could adversely affect our results of operations and ability to make
payments on indebtedness. Also, changes to these standards could conflict with a
hotel's specific business plan or limit a franchisee's ability to make
improvements or modifications to a hotel without the consent of the franchisor.

If a franchise license terminates due to our failure to make required
improvements, we may be liable to the franchisor for a termination payment.
These termination payments vary by franchise agreement and hotel. The loss of a
substantial number of franchise licenses and the related termination payments
could have a material adverse effect on our business because of the loss of
associated name recognition, marketing support and centralized reservation
systems provided by the franchisor. The franchise agreements could also expire
or terminate, with specified renewal rights, at various times. As a condition to
renew, the franchise agreements could involve a renewal application process that
would require substantial capital improvements, for which we would be
responsible, to be made to the land or hotels.

As a condition to the MeriStar merger, both MeriStar and we must obtain the
consent of a number of MeriStar's franchisors, and obtaining those consents may
require additional expenditures or impose additional conditions. If required
consents are not obtained, the MeriStar merger may not be completed. If the
failure to obtain one or more consents is waived and the MeriStar merger
completed, the related franchises may be terminated, and we may be liable to the
franchisor for termination payments. Assuming all of the MeriStar franchises
were terminated on June 30, 2001, MeriStar and we estimate that the aggregate of
these termination payments, if required, would be in the range of $120 million
to $130 million. The loss of a substantial number of franchises and the related
termination payments could have a material adverse effect on our results of
operations.

We will be subject to the continued risks of brand concentration under a
limited number of brands. Following the MeriStar merger, we will continue to be
subject to the potential risks associated with concentration of our hotels under
a limited number of brands. A negative public image or other adverse event which
becomes associated with the brand could adversely affect hotels operated under
that brand. The following percentages of our revenues are expected to be
generated by hotels operated under each of the indicated brands, based on
revenues for the twelve months ended June 30, 2001, on a pro forma basis:

- Embassy Suites 25.4%

- Holiday Inns 21.0%

- Sheraton and Sheraton Suites 9.2%

- Crowne Plaza 8.8%

- Hilton and Hilton Suites 8.4%

Should any of these brands suffer a significant decline in popularity with the
traveling public, it could affect our revenues and profitability.

We are subject to the risks of hotel operations. Prior to January 1, 2001,
substantially all of MeriStar's and our hotels were leased to unaffiliated third
parties under leases providing for the payment of rent based, in part, upon
revenues from the hotels. Accordingly, our operating risks were essentially
limited to changes in hotel revenues and to the lessees' ability to pay the rent
due under the leases. On January 1, 2001, TRSs of MeriStar acquired the
leaseholds of substantially all of MeriStar's hotels, and we purchased the
leaseholds of 98 of our hotels. Effective July 1, 2001, we acquired 88
leaseholds held by Six

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Continents Hotels. As a result of these acquisitions, we became subject to the
risk of fluctuating hotel operating expenses at our hotels, including but not
limited to:

- wage and benefit costs;

- repair and maintenance expenses;

- the costs of gas and electricity, which have increased significantly in
recent months;

- the costs of liability insurance; and

- other operating expenses.

These operating expenses are more difficult to predict and control than revenue,
resulting in an increased risk of volatility in our results of operations.

The lodging business is seasonal in nature. Generally, hotel revenues are
greater in the second and third calendar quarters than in the first and fourth
calendar quarters although this may not be true for hotels in major tourist
destinations. Revenues for hotels in tourist areas generally are substantially
greater during tourist season than other times of the year. Seasonal variations
in revenue at our hotels can be expected to cause quarterly fluctuations in our
revenues. Quarterly earnings also may be adversely affected by events beyond our
control, such as extreme weather conditions, economic factors and other
considerations affecting travel.

We lack control over the management and operations of our hotels. We are
dependent on the ability of unaffiliated third party managers to operate and
manage our hotels. In order to maintain REIT status, we cannot operate our
hotels or any subsequently acquired hotels. As a result, we are unable to
directly implement strategic business decisions for the operation and marketing
of our hotels, such as decisions with respect to the setting of room rates, food
and beverage operations and similar matters.

OUR ABILITY TO GROW MAY BE LIMITED BY OUR ABILITY TO ATTRACT DEBT FINANCING.

Recently, we focused on our internal growth strategy, which includes the
renovation, redevelopment and rebranding of our hotels to achieve improved
revenue performance. We may not be able to fund growth solely from cash provided
from operating activities because we must distribute at least 90% of our taxable
income each year to maintain our status as a REIT. Consequently, we rely upon
the availability of debt or equity capital to fund hotel acquisitions and
improvements, and we may be dependent upon our ability to attract debt financing
from public or institutional lenders. We cannot assure you that we will be
successful in attracting sufficient debt financing to fund future growth at an
acceptable cost, or at all. In addition, we currently have a policy of limiting
debt to not more than 55% of our investment in hotel assets, at cost. This
policy is a board policy only and not a requirement contained in our
organizational documents. Accordingly, the policy may be modified or waived by
the board, which it has done previously, increasing the limitation from 40% in
June 1998 to 50% in February 2000 and to its current 55% in May 2001. Unless
further waived or modified by our board of directors, this limitation could also
limit our ability to incur additional debt to fund our continued growth. At June
30, 2001, on a pro forma basis, our consolidated debt represented 50.5% of our
investment in hotels at cost.

WE ARE SUBJECT TO POTENTIAL TAX RISKS.

The federal income tax laws governing REITs are complex. FelCor has
operated and intends to continue to operate in a manner that is intended to
qualify it as a REIT under the federal income tax laws. The REIT qualification
requirements are extremely complicated, and interpretations of the federal
income tax laws governing qualification as a REIT are limited. Accordingly,
FelCor cannot be certain that it has been or will continue to be successful in
operating so as to qualify as a REIT. At any time, new laws, interpretations or
court decisions may change the federal tax laws relating to, or the federal
income tax consequences of, qualification as a REIT.

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Failure to make required distributions would subject FelCor to tax. Each
year, a REIT must pay out to its shareholders at least 90%, or 95% for taxable
years prior to 2001, of its taxable income, other than any net capital gain. To
the extent that FelCor satisfies the applicable distribution requirement, but
distributes less than 100% of its taxable income, it will be subject to federal
corporate income tax on its undistributed taxable income. In addition, FelCor
will be subject to a 4% nondeductible tax if the actual amount it pays out to
its shareholders in a calendar year is less than a minimum amount specified
under federal tax laws. FelCor's only source of funds to make such distributions
comes from distributions to FelCor from FelCor LP. Accordingly, FelCor may be
required to borrow money or sell assets to make distributions sufficient to
enable it to pay out enough of its taxable income to satisfy the applicable
distribution requirement and to avoid corporate income tax and the 4% tax in a
particular year.

Failure to qualify as a REIT would subject FelCor to federal income
tax. If FelCor fails to qualify as a REIT in any taxable year, FelCor would be
subject to federal income tax on its taxable income. We might need to borrow
money or sell hotels in order to pay any such tax. If we cease to be a REIT, we
no longer would be required to distribute most of our taxable income to our
shareholders. Unless our failure to qualify as a REIT were excused under federal
income tax laws, we could not re-elect REIT status until the fifth calendar year
following the year in which we failed to qualify. In addition, FelCor's or
MeriStar's failure to qualify as a REIT in any taxable year prior to or ending
on completion of the merger could jeopardize FelCor's REIT status after the
merger and/or cause FelCor to be subject to federal income tax.

Failure to have distributed earnings and profits of Bristol Hotel Company
or CapStar Hotel Company in 1998 would cause FelCor or MeriStar to fail to
qualify as a REIT. At the end of any taxable year, a REIT may not have any
accumulated earnings and profits, described generally for federal income tax
purposes as cumulative undistributed net income, from a non-REIT corporation. In
connection with the merger of Bristol Hotel Company, or Bristol, with and into
FelCor in 1998, Arthur Andersen LLP prepared and provided to FelCor its
computation of Bristol's accumulated earnings and profits through the date of
the merger, and FelCor made a corresponding special one-time distribution to its
stockholders. In connection with the merger of CapStar Hotel Company, or
CapStar, with and into American General Hospitality Corporation, the predecessor
to MeriStar, in 1998, KPMG LLP prepared and provided to MeriStar its computation
of CapStar's accumulated earnings and profits through the date of the merger,
and the distribution of the stock of MeriStar Hotels & Resorts, Inc. by CapStar
prior to the CapStar merger was determined to be sufficient to reduce the
earnings and profits of CapStar to zero at the time of the CapStar merger.
However, the determination of accumulated earnings and profits for federal
income tax purposes is extremely complex and the computations of Arthur Andersen
LLP and KPMG LLP are not binding on the Internal Revenue Service. Should the
Internal Revenue Service successfully assert either that Bristol's accumulated
earnings and profits were greater than the amount so distributed by FelCor or
that CapStar's accumulated earnings and profits were greater than the amount so
distributed by CapStar, FelCor may fail to qualify as a REIT. Alternatively, the
Internal Revenue Service may permit FelCor to avoid losing its REIT status by
paying a deficiency dividend, on MeriStar's or its own behalf, to eliminate any
remaining accumulated earnings and profits of Bristol or CapStar. There can be
no assurance, however, that the Internal Revenue Service would not assert loss
of REIT status as the penalty for failing to distribute the accumulated earnings
and profits of Bristol or CapStar in 1998.

A sale of assets acquired from Bristol or CapStar within ten years after
the respective merger will result in corporate income tax. If we sell any asset
that we acquired from Bristol within ten years after our merger with Bristol, or
we sell any asset that MeriStar acquired from CapStar within ten years after its
merger with CapStar, and we recognize a taxable gain on the sale, we will be
taxed at the highest corporate rate on an amount equal to the lesser of:

- the amount of gain that we recognize at the time of the sale; or

- the amount of gain that MeriStar or we, as appropriate, would have
recognized if MeriStar or we had sold the asset at the time that MeriStar
or we acquired the asset from Bristol or CapStar, as appropriate, for its
then fair market value.

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The sales of the Bristol and CapStar hotels that have occurred to date have not
resulted in any material amount of tax liability. If we are successful in
selling the remaining 15 hotels designated as assets held for sale, we could
incur corporate income tax with respect to the related built-in gain, the amount
of which cannot yet be determined.

DEPARTURE OF KEY PERSONNEL, INCLUDING MR. CORCORAN, COULD ADVERSELY AFFECT OUR
FUTURE OPERATING RESULTS.

WE WILL ENCOUNTER RISKS THAT MAY ADVERSELY AFFECT REAL ESTATE OWNERSHIP.

General Risks. Our investments in hotels are subject to the numerous risks
generally associated with owning real estate, including among others:

- adverse changes in general or local economic or real estate market
conditions;

- changes in zoning laws;

- changes in traffic patterns and neighborhood characteristics;

- increases in assessed valuation and tax rates;

- increases in the cost of property insurance;

- governmental regulations and fiscal policies;

- the potential for uninsured or underinsured property losses;

- the impact of environmental laws and regulations; and

- other circumstances beyond our control.

Moreover, real estate investments are relatively illiquid, and we may not be
able to vary our portfolio in response to changes in economic and other
conditions.

Compliance with environmental laws may adversely affect our financial
condition. Owners of real estate are subject to numerous federal, state, local
and foreign environmental laws and regulations. Under these laws and
regulations, a current or former owner of real estate may be liable for the
costs of remediating hazardous substances found on its property, whether or not
it was responsible for their presence. In addition, if an owner of real property
arranges for the disposal of hazardous substances at another site, it may also
be liable for the costs of remediating the disposal site, even if it did not own
or operate the disposal site. Such liability may be imposed without regard to
fault or the legality of a party's conduct and may, in certain circumstances, be
joint and several. A property owner may also be liable to third parties for
personal injuries or property damage sustained as a result of its release of
hazardous or toxic substances, including asbestos-containing materials, into the
environment. Environmental laws and regulations may require us to incur
substantial expenses and limit the use of our properties. We could have
substantial liability for a failure to comply with applicable environmental laws
and regulations, which may be enforced by the government or, in certain
instances, by private parties. The existence of hazardous substances on a
property can also adversely affect the value of, and the owner's ability to use,
sell or borrow against, the property.

We cannot provide assurances that future or amended laws or regulations, or
more stringent interpretations or enforcement of existing environmental
requirements, will not impose any material environmental liability, or that the
environmental condition or liability relating to the hotels will not be affected
by new information or changed circumstances, by the condition of properties in
the vicinity of such hotels, such as the presence of leaking underground storage
tanks, or by the actions of unrelated third parties.

Compliance with the Americans with Disabilities Act may adversely affect
our financial condition. Under the Americans with Disabilities Act of 1990, all
public accommodations, including hotels, are required to meet certain federal
requirements for access and use by disabled persons. We believe that our hotels
substantially comply with the requirements of the Americans with Disabilities
Act. However, a

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determination that the hotels are not in compliance with that Act could result
in liability for both governmental fines and damages to private parties. If we
were required to make unanticipated major modifications to the hotels to comply
with the requirements of the Americans with Disabilities Act, it could adversely
affect our ability to pay our obligations.

UNDER CERTAIN CIRCUMSTANCES, COURTS MAY VOID THE GUARANTEES UNDER FRAUDULENT
TRANSFER LAWS.

Federal and state fraudulent conveyance laws allow courts, under specific
circumstances, to void guarantees and require noteholders to return payments
received from guarantors in the event of the bankruptcy or other financial
difficulty of the subsidiary guarantor. Under federal bankruptcy law and
comparable provisions of state fraudulent transfer laws, a guarantee of the
Notes could be voided, or claims in respect of a guarantee could be subordinated
to all other debt of the guarantor, if, among other things, at the time the
guarantor incurred the debt evidenced by its guarantee, the guarantor:

- received less than reasonably equivalent value or fair consideration for
the incurrence of such guarantee; and

- was insolvent or was rendered insolvent by reason of such incurrence; or

- was engaged in a business or transaction for which the guarantor's
remaining assets constituted unreasonably small capital; or

- intended to incur, or believed (or reasonably should have believed) that
it would incur, debts beyond its ability to pay such debts as they
mature.

In addition, any payment by that guarantor pursuant to its guarantee could
be voided and required to be returned to the guarantor, or to a fund for the
benefit of the creditors of the guarantor.

The measure of insolvency for purposes of these fraudulent transfer laws
will vary depending upon the law applied in any proceeding to determine whether
a fraudulent transfer has occurred. Generally, however, a guarantor of the Notes
would be considered insolvent if:

- the sum of its debts, including contingent liabilities, was greater than
the fair saleable value of all of its assets; or

- the present fair saleable value of its assets was less than the amount
that would be required to pay its probable liability on its existing
debts, including contingent liabilities, as they become absolute and
matured; or

- it could not pay its debts as they become due.

A court is likely to find that a guarantor of the Notes did not receive
fair consideration or reasonably equivalent value for its guarantee to the
extent that its liability under the guarantee is greater than the direct benefit
it received from the issuance of Notes. By its terms, each guarantee of the
Notes will limit the liability of the guarantor to the maximum amount that it
can pay without the guarantee being deemed a fraudulent transfer. A court may
not give effect to this limitation on liability. In that event, a court may find
that the issuance of the guarantee rendered the subsidiary guarantor insolvent.
If a court avoids the guarantee or holds it unenforceable, you will cease to
have a claim against the guarantor and will be solely a creditor of FelCor LP.
If the limitation on liability is effective, the amount that the guarantor is
found to have guaranteed might be so low that there will not be sufficient funds
to pay the Notes in full.

YOU CANNOT BE SURE THAT AN ACTIVE PUBLIC TRADING MARKET WILL EXIST FOR THE NEW
NOTES.

The New Notes will be a new issue of securities for which there is
currently no active trading market. We do not intend to list the New Notes on
any securities exchange. Although we expect the New Notes to be eligible for
trading in The PORTAL Market, we cannot assure you that an active trading market
for the New Notes will develop. The placement agents have advised us that they
intend to make a market in the New Notes. However, they are not obligated to do
so and may discontinue market-making at any time without notice.
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The liquidity of any market for the New Notes will depend upon various
factors, including:

- the number of holders of the New Notes;

- the interest of securities dealers in making a market for the New Notes;

- the overall market for high yield securities;

- our financial performance and prospects; and

- the prospects for companies in our industry generally.

Accordingly, we cannot assure you that an active trading market will
develop for the New Notes. If the New Notes are traded after their initial
issuance, they may trade at a discount from the initial offering price of the
Old Notes, depending upon prevailing interest rates and other factors including
those listed above.

Historically, the market for non-investment grade debt has been subject to
disruptions that have caused substantial volatility in the prices of securities
similar to the Notes. Any market for the New Notes may be subject to similar
disruptions. Any such disruptions may adversely affect you as a holder of the
New Notes.

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THE EXCHANGE OFFER

PURPOSE AND EFFECT

We sold the Old Notes on June 4, 2001 to the initial purchasers, pursuant
to a purchase agreement. The initial purchasers subsequently resold the Old
Notes under Rule 144A under the Securities Act. As part of the offering of the
Old Notes, we entered into a registration rights agreement. The registration
rights agreement requires, unless the exchange offer is not permitted by
applicable law or SEC policy, that we

- use our best efforts to cause the registration statement to become
effective and the exchange offer to be consummated within 180 days
following June 4, 2001; and

- upon effectiveness of the registration statement, commence the exchange
offer and keep the exchange offer open for at least 20 business days and
not more than 30 business days.

Except as provided below, upon the completion of the exchange offer, our
obligations with respect to the registration of the Old Notes and the New Notes
will terminate. A copy of the registration rights agreement previously has been
filed with the SEC, and this summary of the material provisions of the
registration rights agreement does not purport to be complete. In the event the
exchange offer is not consummated on or prior to December 3, 2001, the interest
rate on the Old Notes will increase to 9% per annum until such exchange offer
has been completed in accordance with the terms of the registration rights
agreement. Following the completion of the exchange offer, except as set forth
in the paragraph immediately below, holders of Old Notes not tendered will not
have any further registration rights and those Old Notes will continue to be
subject to certain restrictions on transfer. Accordingly, the liquidity of the
market for the Old Notes could be adversely affected upon consummation of the
exchange offer.

In order to participate in the exchange offer, a holder must represent to
us, among other things, that (i) the New Notes acquired pursuant to the exchange
offer are being obtained in the ordinary course of business of the holder, (ii)
the holder is not engaging in and does not intend to engage in a distribution of
the New Notes, (iii) the holder does not have an arrangement or understanding
with any person to participate in the distribution of the New Notes and (iv) the
holder is not an "affiliate," as defined under Rule 405 promulgated under the
Securities Act, of FelCor LP, FelCor or the subsidiary guarantors. Under certain
circumstances specified in the registration rights agreement, we may be required
to file a "shelf" registration statement for a continuous offering pursuant to
Rule 415 under the Securities Act in respect of resales of the Old Notes. See
"Description of the New Notes and Guarantees -- Registration Rights." For
purposes of the foregoing, "Transfer Restricted Securities" means each Old Note
until (i) the date on which such Old Note has been exchanged by a person other
than a broker-dealer for a New Note in the exchange offer, (ii) following the
exchange by a broker-dealer in the exchange offer of an Old Note for a New Note,
the date on which such New Note is sold to a purchaser who receives from such
broker-dealer on or prior to the date of such sale a copy of this prospectus,
(iii) the date on which such Old Note has been effectively registered under the
Securities Act and disposed of in accordance with such "shelf" registration
statement or (iv) the date on which such Old Note is distributed to the public
pursuant to Rule 144 under the Securities Act or may be distributed to the
public pursuant to Rule 144(k) under the Securities Act. See "-- Procedures for
Tendering Old Notes."

Based on an interpretation by the SEC's staff set forth in no-action
letters issued to third parties unrelated to us, we believe that, with the
exceptions set forth below, New Notes issued pursuant to the exchange offer in
exchange for Old Notes may be offered for resale, resold and otherwise
transferred by holders thereof (other than any holder which is an "affiliate" of
FelCor, FelCor LP or the subsidiary guarantors within the meaning of Rule 405
promulgated under the Securities Act, or a broker-dealer who purchased Old Notes
directly from FelCor LP to resell pursuant to Rule 144A or any other available
exemption promulgated under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that the New Notes are acquired in the ordinary course of business of the holder
and the holder does not have an arrangement or understanding with any person to

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participate in the distribution of such New Notes. Any holder who tenders in the
exchange offer for the purpose of participating in a distribution of the New
Notes cannot rely on this interpretation by the SEC's staff and must comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction. Each broker-dealer that receives
New Notes for its own account in exchange for Old Notes, where such Old Notes
were acquired by such broker-dealer as a result of market-making activities or
other trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. See "Plan of Distribution."
Broker-dealers who acquired Old Notes directly from us and not as a result of
market-making activities or other trading activities may not rely on the SEC
staff's interpretations discussed above or participate in the exchange offer and
must comply with the registration and prospectus delivery requirements of the
Securities Act in order to sell the Old Notes.

CONSEQUENCES OF FAILURE TO EXCHANGE OLD NOTES

Following the completion of the exchange offer, holders of Old Notes who
did not tender their Old Notes, or who did not properly tender their Old Notes,
will not have any further registration rights and such Old Notes will continue
to be subject to restrictions on transfer. Accordingly, the liquidity of the
market for a holder's Old Notes could be adversely affected upon expiration of
the exchange offer if such holder elects to not participate in the exchange
offer.

TERMS OF THE EXCHANGE OFFER

Upon the terms and subject to the conditions set forth in this prospectus
and in the accompanying letter of transmittal, we will accept for exchange any
and all Old Notes that are validly tendered on or prior to 5:00 p.m. New York
City time, on the expiration date. We will issue $1,000 principal amount of New
Notes in exchange for each $1,000 principal amount of the outstanding Old Notes
accepted in the exchange offer. Holders who have tendered their Old Notes may
withdraw their tender of Old Notes at any time prior to 5:00 p.m., New York City
time, on the expiration date. The exchange offer is not conditioned upon any
minimum principal amount of Old Notes being tendered for exchange. However, the
exchange offer is subject to the terms and provisions of the registration rights
agreement. See "-- Conditions of the Exchange Offer."

Old Notes may be tendered only in multiples of $1,000. Subject to the
foregoing, holders of Old Notes may tender less than the aggregate principal
amount represented by the Old Notes they hold, provided that they appropriately
indicate this fact on the letter of transmittal accompanying the tendered Old
Notes.

The form and terms of the New Notes are substantially the same as the form
and terms of the Old Notes, except that the New Notes have been registered under
the Securities Act and will not bear legends restricting their transfer. The New
Notes will evidence the same debt as the Old Notes and will be issued pursuant
to, and entitled to the benefits of, the indenture pursuant to which the Old
Notes were issued.

As of the date of this prospectus, $600 million in aggregate principal
amount of the Old Notes is outstanding. As of , 2001, Cede & Co.,
was the only registered holder of the Old Notes. Cede & Co. held the Old Notes
for of its participants. We have fixed the close of business on ,
2001, as the record date for purposes of determining the persons to whom we will
mail this prospectus and the letter of transmittal initially. Only a holder of
the Old Notes, or such holder's legal representative or attorney-in-fact, may
participate in the exchange offer. We will not fix a record date for determining
holders of the Old Notes entitled to participate in the exchange offer. We
believe that, as of the date of this prospectus, no such holder is our
affiliate, as defined in Rule 405 under the Securities Act.

We will be deemed to have accepted validly tendered Old Notes when, as and
if we have given oral or written notice thereof to the exchange agent. The
exchange agent will act as agent for the tendering holders of Old Notes and for
the purpose of receiving the New Notes from us.

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If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of other events set forth in this prospectus or
otherwise, the certificates for any such unaccepted Old Notes will be returned,
without expense, to the tendering holder as promptly as practicable after the
expiration date.

Holders who tender Old Notes in the exchange offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the letter
of transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the exchange offer. We will pay all charges and expenses, other than
certain applicable taxes, in connection with the exchange offer. See "-- Fees
and Expenses."

EXPIRATION DATE; EXTENSIONS; AMENDMENTS

The expiration date shall be , 2001, at 5:00 p.m., New York
City time, unless we, in our sole discretion, extend the exchange offer, in
which case the expiration date shall be the latest date and time to which the
exchange offer is extended, but shall not be later than , 2001.

In order to extend the exchange offer, we will notify the exchange agent of
any extension by oral or written notice and will make a public announcement
thereof, each prior to 9:00 a.m., New York City time, on the next business day
after the previously scheduled expiration date.

We reserve the right, in our sole discretion,

- to delay accepting any Old Notes;

- to extend the exchange offer;

- if any of the conditions set forth below under "-- Conditions of the
Exchange Offer" shall not have been satisfied, to terminate the exchange
offer, by giving oral or written notice of such delay, extension, or
termination to the exchange agent; and

- to amend the terms of the exchange offer in any manner.

If we amend the exchange offer in a manner we determine to constitute a
material change, we will promptly disclose such amendments by means of a
prospectus supplement that we will distribute to the registered holders of the
Old Notes. Modification of the exchange offer, including, but not limited to,

- extension of the period during which the exchange offer is open; and

- satisfaction of the conditions set forth below under "-- Conditions of
the Exchange Offer"

may require that at least five business days remain in the exchange offer.

CONDITIONS OF THE EXCHANGE OFFER

Notwithstanding any other provision of the exchange offer, we shall not be
required to accept for exchange, or to issue New Notes in exchange for, any Old
Notes and may terminate or amend the exchange offer if at any time before the
acceptance of such Old Notes for exchange or the exchange of the New Notes for
the Old Notes, we determine that the exchange offer violates applicable law, any
applicable interpretation of the staff of the SEC or any order of any
governmental agency or court of competent jurisdiction.

The foregoing conditions are for our sole benefit and may be asserted by us
regardless of the circumstances giving rise to any such condition or may be
waived by us, in whole or in part, at any time and from time to time in our sole
discretion. The failure by us at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time from time to time.

In addition, we will not accept for exchange any Old Notes tendered, and no
New Notes will be issued in exchange for any such Old Notes, if at such time any
stop order shall be threatened or in effect
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40

with respect to the registration statement, of which this prospectus constitutes
a part, or the qualification of the indenture under the Trust Indenture Act of
1939. In any such event we are required to use every reasonable effort to obtain
the withdrawal of any stop order at the earliest possible time.

ACCRUED INTEREST

The New Notes will bear interest at a rate equal to 8 1/2% per annum, which
interest shall accrue from June 4, 2001 or from the most recent interest payment
date with respect to the Old Notes to which interest was paid or duly provided
for. See "Description of the New Notes and Guarantees -- Principal, Maturity and
Interest."

PROCEDURES FOR TENDERING OLD NOTES

Only a holder of Old Notes may tender the Old Notes in the exchange offer.
To tender in the exchange offer a holder must (a) except as set forth under
"-- Book Entry Transfer," complete, sign, and date the letter of transmittal, or
a copy thereof, have the signatures thereon guaranteed if required by the letter
of transmittal, and mail or otherwise deliver the letter of transmittal or copy
to the exchange agent prior to the expiration date, or (b) tender through DTC
pursuant DTC's Automated Tender Offer Program, or ATOP. In addition, unless the
holder is tendering through ATOP, (i) certificates for the Old Notes must be
received by the exchange agent along with the letter of transmittal prior to the
expiration date, (ii) a timely confirmation of a book-entry transfer, called a
book-entry confirmation, of such Old Notes, if that procedure is available, into
the Exchange Agent's account at DTC, which is a book-entry transfer facility,
pursuant to the procedure for book-entry transfer described below, must be
received by the exchange agent prior to the expiration date or (iii) the holder
must comply with the guaranteed delivery procedures described below. To be
tendered effectively, the letter of transmittal and other required documents
must be received by the exchange agent at the address set forth under "-- The
Exchange Agent; Assistance" prior to the expiration date.

The exchange agent and DTC have confirmed that the exchange offer is
eligible for ATOP. Accordingly, DTC participants may electronically transmit
their acceptance of the exchange offer by causing DTC to transfer their Old
Notes to the exchange agent in accordance with ATOP procedures for such a
transfer. DTC will then send an agent's message (as described below) to the
exchange agent. Beneficial holders desiring to tender their Old Notes on the
expiration date should note that such beneficial holders must allow sufficient
time for completion of the ATOP procedures during normal business hours of DTC,
and prior to the time that the exchange offer expires, on such date. The term
"agent's message" means a message, transmitted by DTC to and received by the
exchange agent and forming a part of a book-entry confirmation, which states
that DTC has received an express acknowledgment from the tendering participant,
which acknowledgment states that such participant has received and agrees to be
bound by the letter of transmittal, and that the Company may enforce such letter
of transmittal, as the case may be, against such participant.

The tender by a holder that is not withdrawn before the expiration date
will constitute an agreement between that holder and us in accordance with the
terms and subject to the conditions set forth herein and in the letter of
transmittal.

THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO US. HOLDERS MAY REQUEST
THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUSTS COMPANIES OR
NOMINEES TO EFFECT THESE TRANSACTIONS FOR SUCH HOLDERS.

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41

Any beneficial owner whose Old Notes are registered in the name of a
broker-dealer, commercial bank, trust company, or other nominee and who wishes
to tender should contact the registered holder promptly and instruct the
registered holder to tender on the beneficial owner's behalf. If the beneficial
owner wishes to tender on the registered owner's behalf, the beneficial owner
must, prior to completing and executing the letter of transmittal and delivering
the registered owner's Old Notes, either make appropriate arrangements to
register ownership of the Old Notes in the beneficial owner's name or obtain a
properly completed bond power from the registered owner. The transfer of
registered ownership may take considerable time.

Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an eligible institution (as described) unless
Old Notes tendered pursuant to the letter are tendered (i) by a registered
holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" on the letter of transmittal or
(ii) for the account of an eligible institution. If signatures on a letter of
transmittal or a notice of withdrawal, as the case may be, are required to be
guaranteed, the guarantee must be by any eligible guarantor institution that is
a member of or participant in the Securities Transfer Agents Medallion Program,
the New York Stock Exchange Medallion Signature Program or an "eligible
guarantor institution" with the meaning on Rule 17Ad-15 under the Exchange Act,
each of which is an "eligible institution".

If the letter of transmittal is signed by a person other than the
registered holder of any Old Notes listed therein, the Old Notes must be
endorsed or accompanied by a properly completed bond power, signed by the
registered holder as that registered holder's name appears on the Old Notes.

If the letter of transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations, or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and evidence satisfactory to us of
their authority to so act must be submitted with the letter of transmittal
unless waived by us.

All questions as to the validity, form, eligibility (including time of
receipt), acceptance, and withdrawal of tendered Old Notes will be determined by
us in our sole discretion, which determination shall be final and binding.
FelCor reserves the absolute right to reject any and all Old Notes not properly
tendered or any Old Notes FelCor's acceptance of which would, in the opinion of
counsel for us, be unlawful. FelCor also reserves the right to waive any
defects, irregularities or conditions of tender as to particular Old Notes.
FelCor's interpretation of the terms and conditions of the exchange offer,
including the instructions in the letter of transmittal, shall be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Old Notes must be cured within such time as we shall
determine. Although we intend to notify holders of defects or irregularities
with respect to tenders of Old Notes, neither FelCor, the Exchange Agent, nor
any other person shall incur any liability for failure to give such
notification. Tenders of Old Notes will not be deemed to have been made until
such defects or irregularities have been cured or waived. Any Old Notes received
by the Exchange Agent that are not properly tendered and as to which the defects
or irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering holders, unless otherwise provided in the letter of
transmittal, as soon as practicable following , 2001, unless the
exchange offer is extended.

In addition, we reserve the right in our sole discretion to purchase or
make offers to purchase any Old Notes that remain outstanding after the
expiration date or, as set forth under "-- Conditions to the Exchange Offer," to
terminate the exchange offer and, to the extent permitted by applicable law,
purchase Old Notes in the open market, in privately negotiated transactions, or
otherwise. The terms of any such purchases or offers could differ from the terms
of the exchange offer.

By tendering, each holder will represent to us that, among other things,
(i) the New Notes acquired pursuant to the exchange offer are being obtained in
the ordinary course of business of the person receiving such New Notes, whether
or not such person is the registered holder, (ii) the holder is not engaging in
and does not intend to engage in a distribution of such New Notes, (iii) the
holder does not have an arrangement or understanding with any person to
participate in the distribution of such New

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42

Notes and (iv) the holder is not an "affiliate," as defined under Rule 405 of
the Securities Act, of FelCor, FelCor LP or any of the subsidiary guarantors.

In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the exchange offer will be made only after timely receipt
by the exchange agent of certificates for such Old Notes or a timely book-entry
confirmation of such Old Notes into the exchange agent's account at the
book-entry transfer facility, a properly completed and duly executed letter of
transmittal (or, with respect to the DTC and its participants, electronic
instructions in which the tendering holder acknowledges its receipt of an
agreement to be bound by the letter of transmittal), and all other required
documents. If any tendered Old Notes are not accepted for any reason set forth
in the terms and conditions of the exchange offer or if Old Notes are submitted
for a greater principal amount than the holder desires to exchange, such
unaccepted or non-exchanged Old Notes will be returned without expense to the
tendering holder thereof (or, in the case of Old Notes tendered by book-entry
transfer into the exchange agent's account at the book-entry transfer facility
pursuant to the book-entry transfer procedures described below, such
nonexchanged Old Notes will be credited to an account maintained with such
book-entry transfer facility) as promptly as practicable after the expiration or
termination of the exchange offer.

Each broker-dealer that receives New Notes for its own account in exchange
for Old Notes, where such Old Notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of such New
Notes. See "Plan of Distribution."

BOOK-ENTRY TRANSFER

The exchange agent will make a request to establish an account with respect
to the Old Notes at the book-entry transfer facility for purposes of the
exchange offer within two business days after the date of this prospectus, and
any financial institution that is a participant in the book-entry transfer
facility's systems may make book-entry delivery of Old Notes being tendered by
causing the book-entry transfer facility to transfer such Old Notes into the
exchange agent's account at the book-entry transfer facility in accordance with
such book-entry transfer facility's procedures for transfer. Although delivery
of Old Notes may be effected through book-entry transfer at the book-entry
transfer facility, the letter of transmittal or copy thereof, with any required
signature guarantees and any other required documents, must, in any case other
than as set forth in the following paragraph, be transmitted to and received by
the exchange agent at the address set forth under "-- Exchange Agent;
Assistance" on or prior to the expiration date or the guaranteed delivery
procedures described below must be complied with.

Holders who are tendering by book-entry transfer to the exchange agent's
account at DTC may execute their tender through ATOP by transmitting their
acceptance to DTC in accordance with DTC's ATOP procedures; DTC will then verify
the acceptance, execute a book-entry delivery to the exchange agent's account at
DTC and send an agent's message to the exchange agent. Delivery of the agent's
message by DTC to the exchange agent will satisfy the terms of the exchange
offer in lieu of execution and delivery of a letter of transmittal by the
participant identified in the agent's message. Accordingly, the letter of
transmittal need not be completed by a holder tendering through ATOP.

GUARANTEED DELIVERY PROCEDURES

Holders who wish to tender their Old Notes and whose Old Notes are not
immediately available, or who cannot deliver their Old Notes or any other
documents required by the letter of transmittal to the Exchange Agent prior to
the expiration date, may tender their Old Notes according to the guaranteed
delivery procedures set forth in the letter of transmittal. Pursuant to such
procedures:

(1) the holder tenders through an eligible institution and signs a
notice of guaranteed delivery;

(2) on or prior to the expiration date, the exchange agent receives
from the holder and the eligible institution a written or facsimile copy of
a properly completed and duly executed notice of guaranteed delivery,
substantially in the form provided by us, setting forth the name and
address of

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43

the holder, the certificate number or numbers of the tendered Old Notes,
and the principal amount of tendered Old Notes, stating that the tender is
being made thereby and guaranteeing that, within five business days after
the date of delivery of the notice of guaranteed delivery, the tendered Old
Notes, a duly executed letter of transmittal and any other required
documents will be deposited by the eligible institution with the exchange
agent; and

(3) such properly completed and executed documents required by the
letter of transmittal and the tendered Old Notes in proper form for
transfer are received by the exchange agent within five business days after
the expiration date.

Any holder who wishes to tender Old Notes pursuant to the guaranteed
delivery procedures described above must ensure that the exchange agent receives
the notice of guaranteed delivery and letter of transmittal relating to such Old
Notes prior to 5:00 p.m., New York City time, on the expiration date.

ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES

Upon satisfaction or waiver of all the conditions to the exchange offer, we
will accept any and all Old Notes that are properly tendered in the exchange
offer prior to 5:00 p.m., New York City time, on the expiration date. The New
Notes issued pursuant to the exchange offer will be delivered promptly after
acceptance of the Old Notes. For purposes of the exchange offer, we shall be
deemed to have accepted validly tendered Old Notes, when, as and if we have
given oral or written notice thereof to the exchange agent.

In all cases, issuances of New Notes for Old Notes that are accepted for
exchange pursuant to the exchange offer will be made only after the exchange
agent timely receives such Old Notes, a properly completed and duly executed
letter of transmittal and all other required documents; provided, however, we
reserve the absolute right to waive any defects or irregularities in the tender
or conditions of the exchange offer. If we do not accept any tendered Old Notes
for any reason, we will return such unaccepted Old Notes without expense to the
tendering holder thereof as promptly as practicable after the expiration or
termination of the exchange offer.

WITHDRAWAL RIGHTS

Holders may withdraw tenders of Old Notes at any time prior to 5:00 p.m.,
New York City time, on the expiration date. For the withdrawal to be effective,
the exchange agent must receive a written notice of withdrawal at its address
set forth on the back cover page of this prospectus. The notice of withdrawal
must:

- specify the name of the person, the depositor, who tendered the Old Notes
to be withdrawn, or, in the case of Old Notes tendered by book-entry
transfer, the name of the participant for whose account such Old Notes
were tendered and such participant's account number at DTC to be credited
with the withdrawn Old Notes;

- identify the Old Notes to be withdrawn, including the certificate number
or numbers and principal amount of withdrawn Old Notes;

- be signed by the holder in the same manner as the original signature on
the letter of transmittal by which such Old Notes were tendered,
including any required signature guarantees, or be accompanied by a bond
power in the name of the person withdrawing the tender, in satisfactory
form as determined by us in our sole discretion, duly executed by the
registered holder, with the signature thereon guaranteed by an eligible
institution together with the other documents required upon transfer by
the indenture, or, in the case of Old Notes tendered by a DTC participant
through ATOP, be signed by such participant in the same manner as the
participant's name is listed on the applicable agent's message; and

- specify the name in which such Old Notes are to be registered, if
different from the person who deposited the Old Notes, pursuant to such
documents of transfer.

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44

We shall determine all questions as to the validity, form and eligibility,
including time of receipt, of such withdrawal notices in our sole discretion.
The Old Notes so withdrawn will be deemed not to have been validly tendered for
exchange for purposes of the exchange offer. Any Old Notes which have been
tendered for exchange but which are withdrawn will be returned to their holder,
without cost to such holder, as soon as practicable after withdrawal. Properly
withdrawn Old Notes may be retendered by following one of the procedures
described under "-- Procedures for Tendering Old Notes" at any time on or prior
to the expiration date.

THE EXCHANGE AGENT; ASSISTANCE

SunTrust Bank is the exchange agent. All tendered Old Notes, executed
letters of transmittal and other related documents should be directed to the
exchange agent. Questions and requests for assistance and requests for
additional copies of this prospectus, the letter of transmittal and other
related documents should be addressed to the exchange agent as follows:

<Table>

BY REGISTERED OR CERTIFIED MAIL: BY HAND OR OVERNIGHT COURIER:
SunTrust Bank SunTrust Bank
Attention: George T. Hogan, Attention: George T. Hogan,
Corporate Trust Department Corporate Trust Department
25 Park Place, 24th Floor 25 Park Place, 24th Floor
Atlanta, Georgia 30303-2900 Atlanta, Georgia 30303-2900
or or
SunTrust Bank SunTrust Bank
c/o Computershare c/o Computershare
Attention: Corporate Trust Department Attention: Mary Ann Luisi, Corporate
Wall Street Plaza Trust Department
88 Pine Street, 19th Floor Wall Street Plaza
New York, New York 10005 88 Pine Street, 19th Floor
New York, New York 10005
</Table>

BY FACSIMILE:

(404) 588-7335 (GA)

(212) 701-7648 (NY)

Confirm by Telephone: (404) 588-7591 (GA); (212) 701-7673 (NY)

FEES AND EXPENSES

We will bear all expenses incident to the consummation of the exchange
offer and compliance with the registration rights agreement, including, without
limitation: (1) all registration and filing fees, including fees and expenses of
compliance with state securities or Blue Sky laws; (2) printing expenses,
including expenses of printing certificates for the New Notes in a form eligible
for deposit with DTC and of printing prospectuses; (3) messenger, telephone and
delivery expenses; (4) fees and disbursements of our counsel; (5) fees and
disbursements of independent certified public accountants; (6) rating agency
fees; (7) our internal expenses, including all salaries and expenses of our
officers and employees performing legal or accounting duties; and (8) fees and
expenses, if any, incurred in connection with the listing of the New Notes on a
securities exchange.

We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to brokers, dealers or others soliciting
acceptance of the exchange offer. We, however, will pay the exchange agent
reasonable and customary fees for its services and will reimburse it for its
reasonable out-of-pocket expenses in connection therewith.

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45

We will pay all transfer taxes, if any, applicable to the exchange of Old
Notes pursuant to the exchange offer. If, however, a transfer tax is imposed for
any reason other than the exchange of Old Notes pursuant to the exchange offer,
then the amount of any such transfer taxes (whether imposed on the registered
holder or any other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption is not submitted
with the letter of transmittal, the amount of such transfer taxes will be billed
directly to such tendering holder.

ACCOUNTING TREATMENT

We will record the New Notes at the same carrying value as the Old Notes,
as reflected in our accounting records on the date of the exchange. Accordingly,
we will not recognize any gain or loss for accounting purposes. We will amortize
expenses of the exchange offer over the term of the New Notes.

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46

CAPITALIZATION

The following table sets forth the capitalization of FelCor LP at June 30,
2001 on an actual basis and on a pro forma basis to give effect to:

- the completion of the MeriStar merger and the related financings and the
application of the proceeds; and

- the completion of the acquisition of the Six Continents Hotels leases
covering 88 hotels.

<Table>
<Caption>
JUNE 30, 2001
-------------------------------------
ACTUAL ADJUSTMENTS PRO FORMA
---------- ----------- ----------
(IN THOUSANDS)

Short-term debt:
Current portion of mortgage and capital lease debt..... $ 12,147 $ 14,044 $ 26,191
---------- ---------- ----------
Total short-term debt.......................... $ 12,147 $ 14,044 $ 26,191
========== ========== ==========
Long-term debt:
Line of credit......................................... $ 39,900 $ 290,473 $ 330,373
Senior notes:
7 3/8% due 2004..................................... 124,370 124,370
7 5/8% due 2007..................................... 174,569 174,569
9 1/2% due 2008..................................... 496,772 496,772
8 1/2% due 2011..................................... 595,073 595,073
MeriStar 9% due 2008(1)............................. 299,123 299,123
MeriStar 9 1/8% due 2011(1)......................... 199,244 199,244
Mortgage and capital lease debt........................ 690,612 711,716 1,402,328
Other debt............................................. 650 650
---------- ---------- ----------
Total long-term debt........................... 2,121,946 1,500,556 3,622,502
Redeemable units at redemption value................... 210,929 91,054 301,983
Preferred units.......................................... 293,265 100,000 393,265
Common units........................................... 1,534,491 773,502 2,307,993
---------- ---------- ----------
Total capitalization................................ $4,160,631 $2,465,112 $6,625,743
========== ========== ==========
</Table>

- ------------

(1) Assumes that the holders of the MeriStar senior notes do not accept the
change of control offer that we will be required to make following the
MeriStar merger. In the event that any of the holders of the MeriStar senior
notes accept the change of control offer, we believe that we will have
adequate sources of financing to pay the change of control purchase price.

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47

UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

FELCOR LODGING LIMITED PARTNERSHIP

PRO FORMA COMBINED STATEMENTS OF OPERATIONS

The following unaudited Pro Forma Combined Statements of Operations for the
six months ended June 30, 2001 and the year ended December 31, 2000 are based in
part upon the Consolidated Statements of Operations of FelCor LP, DJONT
Operations, L.L.C., or DJONT, Bristol Hotels & Resorts Tenant Companies, or
Bristol Tenant, and MeriStar LP for the six months ended June 30, 2001 and the
year ended December 31, 2000 included or incorporated by reference herein,
except for the consolidated statement of operations of Bristol Tenant for the
six months ended June 30, 2001 which was provided by Bristol Tenant.

The Pro Forma Combined Statements of Operations for the six months ended
June 30, 2001 and the year ended December 31, 2000 assumes that all the
following occurred on January 1, 2000:

- our acquisition of DJONT, effective January 1, 2001, for 416,667 units of
limited partnership interest in FelCor LP valued at approximately $10
million;

- our acquisition of 12 leases held by Six Continents Hotels, formerly Bass
Hotels & Resorts, effective January 1, 2001, for 413,585 of our units of
limited partnership interest valued at approximately $10 million;

- our acquisition of the remaining 88 leases held by Six Continents Hotels,
effective July 1, 2001;

- the assignment of the leases from MeriStar Hotels & Resorts, Inc. to
MeriStar LP's TRSs taxable REIT subsidiaries, or TRSs, of MeriStar LP;
and

- the completion of the merger, the partnership merger and the related
financings and application of the net proceeds.

In the opinion of our management, all material adjustments necessary to
reflect the effects of the preceding transactions have been made. The unaudited
Pro Forma Combined Statements of Operations are presented for illustrative
purposes only and are not necessarily indicative of what the actual results of
operations would have been had the transactions described above occurred on the
indicated dates, nor do they purport to represent our results of operations for
future periods.

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48

FELCOR LODGING LIMITED PARTNERSHIP

PRO FORMA COMBINED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2001
(UNAUDITED)
(IN THOUSANDS, EXCEPT FOR PER UNIT AMOUNTS)

<Table>
<Caption>
FELCOR LP MERISTAR LP MERGER
POST RMA HISTORICAL ADJUSTMENTS PRO FORMA
(A) (B) (C) TOTAL
--------- ----------- ----------- ----------

Revenues:
Room and suite revenue................................ $635,857 $402,760 $1,038,617
Food and beverage revenue............................. 123,930 145,383 269,313
Other operating departments........................... 40,635 46,005 86,640
Percentage lease revenue.............................. 10,736 10,736
Retail space rental and other revenue................. 1,882 4,967 6,849
-------- -------- ----------
Total revenues.......................................... 802,304 609,851 1,412,155
-------- -------- ----------
Expenses:
Hotel operating expenses:
Room................................................ 147,215 92,287 239,502
Food and beverage expenses.......................... 95,409 103,890 199,299
Other operating departments......................... 17,428 25,241 42,669
Management and incentive fees......................... 35,697 14,779 50,476
Other property operating costs........................ 220,601 153,718 374,319
Property taxes, insurance, and other.................. 77,417 36,902 $ 139(F) 114,458
Corporate expenses.................................... 6,372 4,535 10,907
Depreciation.......................................... 79,513 57,787 (13,950)(D) 123,350
Other merger and lease termination costs.............. 5,104 5,104
-------- -------- -------- ----------
Total operating expenses................................ 679,652 494,243 (13,811) 1,160,084
-------- -------- -------- ----------
Operating income........................................ 122,652 115,608 13,811 252,071
-------- -------- -------- ----------
Interest expense, net................................... 79,977 60,261 8,531(E) 148,769
Swap termination costs.................................. 4,824 9,297 14,121
Writedown of investments................................ 2,112 2,112
Other................................................... 1,242 160(F) 1,402
-------- -------- -------- ----------
Income before equity in income from unconsolidated
entities, minority interests, and gain (loss) on sale
of assets............................................. 37,851 42,696 5,120 85,667
Equity in income from unconsolidated entities........... 6,328 6,328
Minority interests in other partnerships................ (2,282) (6) (2,288)
Gain (loss) on sale of assets, net...................... 2,955 (1,062) 3(F) 1,896
-------- -------- -------- ----------
Net income before extraordinary items................... 44,852 41,628 5,123 91,603
Preferred distributions................................. (12,300) (282) (5,250)(G) (17,832)
-------- -------- -------- ----------
Net income before extraordinary items applicable to
common unitholders.................................... $ 32,552 $ 41,346 $ (127) $ 73,771
======== ======== ======== ==========
Basic per unit data:
Net income before extraordinary items applicable to
common unitholders.................................. $ 0.53 $ 0.74
======== ==========
Weighted average units outstanding.................... 61,628 38,392(H) 100,020
======== ======== ==========
Diluted per unit data:
Net income before extraordinary items applicable to
common unitholders.................................. $ 0.53 $ 0.73
======== ==========
Weighted average units outstanding.................... 62,069 39,283(H) 101,352
======== ======== ==========
</Table>

See notes to pro forma combined statements of operations.

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49

FELCOR LODGING LIMITED PARTNERSHIP

PRO FORMA COMBINED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2000
(UNAUDITED)
(IN THOUSANDS, EXCEPT FOR PER UNIT AMOUNTS)

<Table>
<Caption>
FELCOR LP MERISTAR LP MERGER
POST RMA POST RMA ADJUSTMENTS PRO FORMA
(I) (J) (C) TOTAL
---------- ----------- ----------- ----------

Revenues:
Room and suite revenue.................................... $1,309,292 $ 782,288 $2,091,580
Food and beverage revenue................................. 261,569 290,792 552,361
Other operating departments............................... 93,352 84,660 178,012
Percentage lease revenue.................................. 20,925 20,925
Retail space rental and other revenue..................... 3,057 18,424 $ 93(F) 21,574
---------- ---------- ----------- ----------
Total revenues.............................................. 1,667,270 1,197,089 93 2,864,452
---------- ---------- ----------- ----------
Expenses:
Hotel operating expenses:
Room.................................................... 309,234 184,791 494,025
Food and beverage expenses.............................. 200,855 209,962 410,817
Other operating departments............................. 37,172 48,263 85,435
Management and incentive fees............................. 77,214 28,943 106,157
Other property operating costs............................ 437,763 302,347 740,110
Property taxes, insurance, and other...................... 161,999 72,310 234,309
Corporate expenses........................................ 13,267 9,445 22,712
Depreciation.............................................. 161,316 107,362 (19,688)(D) 248,990
---------- ---------- ----------- ----------
Total operating expenses.................................... 1,398,820 963,423 (19,688) 2,342,555
---------- ---------- ----------- ----------
Operating income............................................ 268,450 233,666 19,781 521,897
---------- ---------- ----------- ----------
Interest expense, net....................................... 156,712 120,850 32,442(E) 310,004
Loss on assets held for sale................................ 63,000 63,000
Other....................................................... 3,376 1,622 406(F) 5,404
---------- ---------- ----------- ----------
Income before equity in income from unconsolidated entities,
minority interests, and gain (loss) on sale of assets..... 45,362 111,194 (13,067) 143,489
Equity in income from unconsolidated entities............... 11,436 11,436
Minority interests in other partnerships.................... (3,570) 3 (3,567)
Gains on sale of assets..................................... 4,388 3,439 (14)(F) 7,813
---------- ---------- ----------- ----------
Net income before extraordinary items....................... 57,616 114,636 (13,081) 159,171
Preferred distributions..................................... (24,682) (565) (10,500)(G) (35,747)
---------- ---------- ----------- ----------
Net income before extraordinary items applicable to common
unitholders............................................... $ 32,934 $ 114,071 $ (23,581) $ 123,424
========== ========== =========== ==========
Basic per unit data:
Net income before extraordinary items applicable to common
unitholders............................................. $ 0.53 $ 1.23
========== ==========
Weighted average units outstanding...................... 62,301 38,392(H) 100,693
========== =========== ==========
Diluted per unit data:
Net income before extraordinary items applicable to common
unitholders............................................. $ 0.53 $ 1.21
========== ==========
Weighted average units outstanding...................... 62,556 39,283(H) 101,839
========== =========== ==========
</Table>

See notes to pro forma combined statements of operations.

43
50

NOTES TO PRO FORMA COMBINED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2001,
AND THE YEAR ENDED DECEMBER 31, 2000
(UNAUDITED)

(A) Represents FelCor LP's historical results of operations, excluding
extraordinary items, plus the pro forma effect of FelCor LP's acquisition
of 88 hotel leases from Six Continents Hotels as if the acquisition
occurred on January 1, 2000. The computation is as follows (in thousands,
except per share amounts):

<Table>
<Caption>
FELCOR
FELCOR BRISTOL PRO FORMA POST RMA
HISTORICAL(1) TENANT(2) ADJUSTMENTS TOTAL
------------- --------- ----------- --------

Revenues:
Room and suite revenue.............. $365,343 $270,514 $635,857
Food and beverage revenue........... 53,150 70,780 123,930
Other operating departments......... 24,790 15,845 40,635
Percentage lease revenue............ 115,137 $(115,137)(3)
Retail space rental and other
revenue.......................... 1,882 1,882
-------- -------- --------- --------
Total revenues........................ 560,302 357,139 (115,137) 802,304
-------- -------- --------- --------
Expenses:
Hotel operating expenses:
Room............................. 83,404 63,811 147,215
Food and beverage expenses....... 39,141 56,268 95,409
Other operating departments...... 10,922 6,506 17,428
Management and incentive fees......... 12,612 23,085(4) 35,697
Other property operating costs........ 121,642 110,710 (11,751)(5) 220,601
Property taxes, insurance, and
other............................... 76,460 115,924 (114,967)(3) 77,417
Corporate expenses.................... 6,372 6,372
Depreciation.......................... 79,513 79,513
Lease termination costs............... 36,226 (36,226)(6)
-------- -------- --------- --------
Total operating expenses.............. 466,292 353,219 (139,859) 679,652
-------- -------- --------- --------
Operating income...................... 94,010 3,920 24,722 122,652
-------- -------- --------- --------
Interest expense, net................. 79,621 356 79,977
Swap termination costs................ 4,824 4,824
-------- -------- --------- --------
Income (loss) before equity in income
from unconsolidated entities,
minority interests, and gain on sale
of assets........................... 9,565 3,564 24,722 37,851
-------- -------- --------- --------
Equity in income from unconsolidated
entities............................ 6,328 6,328
Minority interests.................... (2,282) (2,282)
Gain on sale of assets, net........... 2,955 2,955
-------- -------- --------- --------
Net income (loss) before extraordinary
items............................... 16,566 3,564 24,722 44,852
Preferred distributions............... (12,300) (12,300)
-------- -------- --------- --------
Net income (loss) before extraordinary
items applicable to common
unitholders......................... $ 4,266 $ 3,564 $ 24,722 $ 32,552
======== ======== ========= ========
Basic per unit data:
Net income (loss) before
extraordinary items applicable to
common unitholders............... $ 0.07 $ 0.53
======== ========
Weighted average units
outstanding...................... 61,628 61,628
======== ========
Diluted per unit data:
Net income (loss) before
extraordinary items applicable to
common unitholders............... $ 0.07 $ 0.53
======== ========
Weighted average units
outstanding...................... 62,069 62,069
======== ========
</Table>

44
51
NOTES TO PRO FORMA COMBINED STATEMENTS OF OPERATIONS -- (CONTINUED)

- ---------------

(1) Represents the historical results of operations of FelCor LP for the six
months ended June 30, 2001, excluding extraordinary items. Effective January
1, 2001, with the enactment of the REIT Modernization Act, FelCor LP had
completed transactions that resulted in its newly formed taxable REIT
subsidiaries acquiring leases for 96 hotels that were previously leased to
either DJONT or Six Continents Hotels, accordingly, the revenues and
expenses associated with these hotels are included in FelCor LP's historical
consolidated statement of operations for the six month period ended June 30,
2001.

(2) Represents the historical results of operations of FelCor LP's hotels leased
to subsidiaries of Six Continents Hotels for the six months ended June 30,
2001, excluding extraordinary items.

(3) Represents the elimination of historical percentage lease revenue and
expense between FelCor LP and Six Continents Hotels. The expense elimination
also includes a $170,000 adjustment of an estimate of property tax expense.

(4) Represents the adjustment required to record the management fees at their
contractual rates. In the negotiation for the acquisition of the 88 leases
and the new long-term management contracts with Six Continents Hotels,
FelCor LP was able to spread the cost of the lease acquisition over the term
of the management agreement, by agreeing to pay management fees that are
higher than those paid by FelCor to other managers for comparable services.
Management fees for the 88 hotels are broken out between a base fee,
computed at 2% of total hotel revenue plus 5% of room revenue, and an
incentive fee, computed using a formula incorporating hotel net operating
income and FelCor LP's return on its investment in these hotels. The new
management contracts transfer the operating risk and reward of the hotels to
FelCor LP, as compared to the percentage leases, under which FelCor LP
received percentage lease revenue based solely on hotel revenues.
Additionally, under the new management contracts, FelCor LP has the ability
to terminate management contracts for hotels by substituting hotels with
similar revenue streams.

(5) Represents the elimination of historical franchise fees. These agreements
have been replaced with management contracts.

(6) Represents the elimination of lease termination costs associated with the
acquisition of DJONT and Six Continents Hotels leases in January 2001.

(B) Represents MeriStar LP's historical results of operations, excluding
extraordinary items. Effective January 1, 2001, because of the enactment of
the REIT Modernization Act, taxable REIT subsidiaries of MeriStar LP were
assigned the leases on 106 hotels that had previously been held by MeriStar
Hotels & Resorts, Inc. and entered into management contracts with MeriStar
Hotels & Resorts to manage these hotels. Accordingly, the related hotel
revenues, expenses and management fees are included in MeriStar LP's
historical results of operations for the six month period ended June 30,
2001. Some reclassifications have been made to conform to the presentation
of our statement of operations.

45
52
NOTES TO PRO FORMA COMBINED STATEMENTS OF OPERATIONS -- (CONTINUED)

(C) On May 10, 2001, FelCor and MeriStar announced that they had signed a
merger agreement, under which MeriStar will merge with and into FelCor, one
of our wholly-owned subsidiaries will merge with and into MeriStar LP, and
the limited partners of MeriStar LP, other than FelCor and its
subsidiaries, will exchange their interests in MeriStar LP for interests in
FelCor LP and, where applicable, cash. Under the merger agreement, each
holder of MeriStar common stock will receive, for each share of MeriStar
common stock, $4.60 in cash plus 0.784 of a share of FelCor common stock.
Each holder of common units and profits-only partnership units in MeriStar
LP, other than FelCor and its subsidiaries, will receive, for each common
unit and profits-only unit, $4.60 in cash plus 0.784 of a common unit of
FelCor LP. Each holder of Class C preferred units in MeriStar LP will
receive, for each unit, $4.60 in cash plus 0.784 of a Series C preferred
unit in FelCor LP. Each holder of Class D preferred units in MeriStar LP
will receive, for each unit, one Series D preferred unit in FelCor LP.
Amounts represent adjustments to record the partnership merger and related
transactions as if the partnership merger had occurred on January 1 of the
fiscal period presented. Shares of FelCor common stock and FelCor LP common
units are valued at $22.10, the closing price of FelCor common stock on the
date of the announcement. The calculation of the merger acquisition cost is
as follows (in thousands, except share and unit data):

<Table>

Issuance of 37.636 million common units of FelCor LP units
in exchange for 48.0 million common and profits-only units
of MeriStar LP............................................ $ 831,759
Issuance of 755,954 FelCor LP Series C preferred units in
exchange for 964,227 MeriStar LP Class C preferred
units..................................................... 16,707
Payment of $4.60 per unit of MeriStar LP common units, Class
C preferred units and profits-only units.................. 225,260
Issuance of 392,157 FelCor LP Series D preferred units in
exchange for a like number of MeriStar LP Class D
preferred units........................................... 8,690
Issuance of 3.6 million FelCor stock options based on a
0.784 exchange ratio in exchange for MeriStar stock
options, assuming all MeriStar option holders are not
retained by FelCor........................................ 10,600
Assumption of MeriStar's liabilities........................ 1,874,936
Transaction costs........................................... 39,600
----------
Total merger acquisition cost............................... $3,007,552
==========
</Table>

The following is a calculation of estimated transaction costs (in
thousands):

<Table>

Financial advisory fees..................................... $ 12,000
Consent payments in connection with debt agreements......... 10,600
Severance and noncompete payments........................... 8,000
Legal fees.................................................. 3,000
Accounting fees............................................. 1,000
Mailing and filing fees..................................... 1,000
Other....................................................... 4,000
----------
Transaction costs................................. $ 39,600
==========
</Table>

(D) Represents the reduction in historical depreciation associated with the
allocation of our purchase price of MeriStar LP. The allocation of basis to
the assets acquired from MeriStar LP is as follows (in thousands):

<Table>

Total merger acquisition cost............................... $3,007,552
Less: non-real estate assets acquired at historical cost
(which approximates fair value)........................... 202,203
----------
Allocation to investment in hotels.......................... $2,805,349
==========
</Table>

46
53
NOTES TO PRO FORMA COMBINED STATEMENTS OF OPERATIONS -- (CONTINUED)

The basis is anticipated to be allocated $280.5 million to land, $2,384.6
million to buildings and improvements, and $140.3 million to furniture,
fixtures, and equipment. The depreciable lives assigned to buildings and
improvements are forty years and five years for furniture, fixtures, and
equipment. The adjustment is calculated as follows (in thousands):

<Table>
<Caption>
FOR THE YEAR ENDED FOR THE SIX MONTHS ENDED
DECEMBER 31, 2000 JUNE 30, 2001
------------------ ------------------------

Buildings and improvements acquired from
MeriStar LP................................... $ 59,618 $ 29,809
Furniture, fixtures, and equipment acquired from
MeriStar LP................................... 28,056 14,028
--------- --------
87,674 43,837
Historical MeriStar LP depreciation............. (107,362) (57,787)
--------- --------
Net adjustment.................................. $ (19,688) $(13,950)
========= ========
</Table>

(E) Represents the net adjustment to historical interest expense for the
increase in interest expense related to new borrowings, resulting from
merger related transactions offset by reductions in historical interest
expense related to borrowings, that will be repaid with the proceeds of the
new borrowings, along with the push down of interest expense from MeriStar
to MeriStar LP that is not reflected in MeriStar LP's historical interest
expense, see also note (H), as follows (in thousands):

<Table>
<Caption>
INTEREST FOR THE YEAR ENDED FOR THE SIX MONTHS ENDED
RATE DECEMBER 31, 2000 JUNE 30, 2001
-------- ------------------ ------------------------

Increases:
New senior notes of $600,000........ 8.58%(1) $51,052 $22,965
New mortgage debt of $350,000....... (2) 29,540 11,725
Incremental line of credit
borrowings....................... (3) 6,876 1,019
Amortization of deferred financing
costs of new borrowings of
$19,700 over lives of 1-10
years............................ 5,883 2,942
------- -------
Total increases..................... 93,351 38,651
------- -------
Reductions:
FelCor LP $61,744 mortgage debt
repaid........................... (4) 5,340 1,940
MeriStar LP $356,923 notes payable
to MeriStar repaid............... (5) 24,977 12,489
MeriStar LP $227,000 line of credit
repaid........................... (6) 16,753 8,535
MeriStar LP $195,000 term loans
repaid........................... (6) 16,318 7,739
Historical interest capitalized by
MeriStar LP...................... (5,805) (2,876)
Historical amortization of MeriStar
LP deferred financing costs...... 4,585 2,293
------- -------
Total reductions.................... 62,168 30,120
------- -------
31,183 8,531
Plus push down of interest expense.... 1,259(7)
------- -------
Net adjustment........................ $32,442 $ 8,531
======= =======
</Table>

- ---------------

(1) Represents effective fixed rate on notes issued in May 2001.

(2) Represents estimated variable rate of LIBOR plus 200 basis points rate to be
committed by lender. Weighted average 30 day LIBOR was 6.44% for the year
ended December 31, 2000 and 4.70% for the six months ended June 30, 2001. An
increase of 0.125% in interest rates would increase interest

47
54
NOTES TO PRO FORMA COMBINED STATEMENTS OF OPERATIONS -- (CONTINUED)

expense and decrease net income by $437,500 and $218,750 for the year ended
December 31, 2000 and the six months ended June 30, 2001 respectively.

(3) Represents contractual variable rate of LIBOR plus 200 basis points. On a
proforma basis, FelCor LP will have a balance outstanding on the line of
credit of $330,373 for the periods presented. This adjustment represents the
incremental interest on this balance in excess of historical amounts.

(4) Represents the weighted average historical rates which were approximately
8.44% and 6.70% for the periods ended December 31, 2000 and June 30, 2001,
respectively.

(5) Represents contractual fixed rates of 8.71% on subordinated notes with a
principal balance of $202.5 million and 4.75% on convertible notes with a
principal balance of $154.3 million.

(6) Represents the historical weighted average interest rates (adjusted for
historical interest rate hedges) for the periods presented are as follows:

<Table>
<Caption>
2000 2001
----- -----

Line of credit....................................... 7.38% 7.52%
$121 million term loan............................... 8.30% 7.82%
$74 million term loan................................ 8.48% 8.13%
</Table>

We expect to assume approximately $500 million of MeriStar LP's senior
notes and approximately $374 million of mortgage debt of MeriStar LP's
subsidiaries in connection with the merger.

(7) See note (F).

- -------------------------

(F) FelCor has no assets, liabilities, revenues or expenses other than those
derived from its ownership of us. MeriStar has miscellaneous assets,
liabilities, revenues and expenses other than those derived from its
ownership of MeriStar LP. Upon completion of the merger and related
transactions, FelCor will contribute to us all assets and liabilities
acquired; accordingly these miscellaneous adjustments are made to reflect
the contribution of the items historically reported only at the MeriStar
level.

(G) Represents distributions on the proposed issuance of $100 million of
cumulative redeemable preferred units at an assumed distribution rate of
10.5%. An increase of 0.125% in the distribution rate would increase the
preferred distributions and decrease net income available to common
unitholders by $125,000 and $62,500 for the year ended December 31, 2000
and the six months ended June 30, 2001, respectively.

(H) Represents the impact of additional units issued in the merger on a basic
and diluted basis, and the dilutive effect of FelCor stock options issued
to MeriStar option holders as follows (in thousands):

<Table>

Basic
Units issued to MeriStar LP unitholders................... 38,392
------
Adjustment to weighted average units-basic................ 38,392
Diluted
Dilutive effect of options issued to MeriStar
optionholders.......................................... 891
------
Adjustment to weighted average units-diluted................ 39,283
======
</Table>

48
55
NOTES TO PRO FORMA COMBINED STATEMENTS OF OPERATIONS -- (CONTINUED)

(I) Represents FelCor LP's historical results of operations, excluding
extraordinary items, plus the pro forma effect of FelCor LP's acquisition
of DJONT and 100 hotel leases from Six Continents Hotels as if the
acquisition occurred on January 1, 2000. The computation is as follows (in
thousands, except per share amounts):

<Table>
<Caption>
DJONT
FELCOR LP OPERATIONS, BRISTOL BRISTOL TENANT BRISTOL
HISTORICAL LLC TENANT PREDECESSOR TOTAL ELIMINATIONS
(1) (2) (3) (4) HISTORICAL (5)
---------- ----------- -------- -------------- ---------- ------------

Revenues:
Room and suite revenue........... $709,793 $461,978 $143,952 $1,315,723 $ (6,431)
Food and beverage revenue........ 112,612 115,176 36,645 264,433 (2,864)
Other operating departments...... 56,476 31,859 5,401 93,736 (384)
Percentage lease revenue......... $536,907 536,907
Retail space rental and other
revenue........................ 3,057 3,057
-------- -------- -------- -------- ---------- --------
Total revenues.................... 539,964 878,881 609,013 185,998 2,213,856 (9,679)
-------- -------- -------- -------- ---------- --------
Expenses:
Hotel operating expenses:
Room............................. 169,531 109,074 32,163 310,768 (1,534)
Food and beverage expenses....... 84,602 90,025 28,190 202,817 (1,962)
Other operating departments...... 22,168 11,267 3,859 37,294 (122)
Management and incentive fees..... 24,766 16,770 5,589 47,125 (76)
Other property operating costs.... 236,186 178,234 53,903 468,323 (5,929)
Percentage lease expense.......... 277,491 197,210 62,206 536,907
Property taxes, insurance, and
other............................ 89,257 70,498 2,128 710 162,593 (594)
Corporate expenses................ 12,256 1,011 13,267
Depreciation...................... 160,745 572 161,317 (1)
-------- -------- -------- -------- ---------- --------
Total operating expenses.......... 262,258 886,825 604,708 186,620 1,940,411 (10,218)
-------- -------- -------- -------- ---------- --------
Operating income (loss)........... 277,706 (7,944) 4,305 (622) 273,445 539
-------- -------- -------- -------- ---------- --------
Interest expense, net............. 156,712 618 (133) (35) 157,162 168
Loss on assets held for sale...... 63,000 63,000
Other............................. 3,376 3,376
-------- -------- -------- -------- ---------- --------
Income (loss) before equity in
income from unconsolidated
entities, minority interests, and
gain on sale of assets........... 54,618 (8,562) 4,438 (587) 49,907 371
-------- -------- -------- -------- ---------- --------
Equity in income from
unconsolidated entities.......... 14,820 593 15,413
Minority interests................ (3,570) (3,243) (6,813)
Gain on sale of assets............ 4,388 4,388
Income tax expense (benefit)...... 2,798 (267) 2,531
-------- -------- -------- -------- ---------- --------
Net income (loss) before
extraordinary items.............. 70,256 (11,212) 1,640 (320) 60,364 371
Preferred distributions........... (24,682) (24,682)
-------- -------- -------- -------- ---------- --------
Net income (loss) before
extraordinary items applicable to
common unitholders............... $ 45,574 $(11,212) $ 1,640 $ (320) $ 35,682 $ 371
======== ======== ======== ======== ========== ========
Basic per unit data:
Net income before extraordinary
items applicable to common
unitholders.................... $ 0.73
========
Weighted average units
outstanding.................... 62,301
========
Diluted per unit data:
Net income before extraordinary
items applicable to common
unitholders.................... $ 0.73
========
Weighted average shares
outstanding.................... 62,556
========

PROFORMA FELCOR LP
ADJUSTMENTS POST RMA TOTAL
----------- --------------

Revenues:
Room and suite revenue........... $1,309,292
Food and beverage revenue........ 261,569
Other operating departments...... 93,352
Percentage lease revenue......... $(536,907)(6)
Retail space rental and other
revenue........................ 3,057
--------- ----------
Total revenues.................... (536,907) 1,667,270
--------- ----------
Expenses:
Hotel operating expenses:
Room............................. 309,234
Food and beverage expenses....... 200,855
Other operating departments...... 37,172
Management and incentive fees..... 30,165(7) 77,214
Other property operating costs.... (24,631)(8) 437,763
Percentage lease expense.......... (536,907)(6)
Property taxes, insurance, and
other............................ 161,999
Corporate expenses................ 13,267
Depreciation...................... 161,316
--------- ----------
Total operating expenses.......... (531,373) 1,398,820
--------- ----------
Operating income (loss)........... (5,534) 268,450
--------- ----------
Interest expense, net............. (618)(9) 156,712
Loss on assets held for sale...... 63,000
Other............................. 3,376
--------- ----------
Income (loss) before equity in
income from unconsolidated
entities, minority interests, and
gain on sale of assets........... (4,916) 45,362
--------- ----------
Equity in income from
unconsolidated entities.......... (3,977)(10) 11,436
Minority interests................ 3,243(11) (3,570)
Gain on sale of assets............ 4,388
Income tax expense (benefit)...... (2,531)(12)
--------- ----------
Net income (loss) before
extraordinary items.............. (3,119) 57,616
Preferred distributions........... (24,682)
--------- ----------
Net income (loss) before
extraordinary items applicable to
common unitholders............... $ (3,119) $ 32,934
========= ==========
Basic per unit data:
Net income before extraordinary
items applicable to common
unitholders.................... $ 0.53
==========
Weighted average units
outstanding.................... 62,301
==========
Diluted per unit data:
Net income before extraordinary
items applicable to common
unitholders.................... $ 0.53
==========
Weighted average shares
outstanding.................... 62,556
==========
</Table>

49
56
NOTES TO PRO FORMA COMBINED STATEMENTS OF OPERATIONS -- (CONTINUED)

- ---------------

(1) Represents the historical results of operations of FelCor LP for the year
ended December 31, 2000. Certain amounts have been reclassified to conform
to the June 30, 2001 presentation with no effect on previously reported net
income.

(2) Represents the historical results of operations of DJONT for the year ended
December 31, 2000. Certain amounts have been reclassified to conform to the
June 30, 2001 presentation with no effect on previously reported net
income.

(3) Represents the historical results of operations of Bristol Tenant for the
nine months ended December 31, 2000. Certain amounts have been reclassified
to conform to the June 30, 2001 presentation with no effect on previously
reported net income.

(4) Represents the historical results of operations of Bristol Tenant
Predecessor for the three months ended March 31, 2000. Certain amounts have
been reclassified to conform to the June 30, 2001 presentation with no
effect on previously reported net income.

(5) Represents adjustment to eliminate historical amounts related to (i) a
hotel leased by Bristol Tenant not owned by FelCor LP and (ii) a hotel
owned by FelCor LP but sold in December 2000.

(6) Represents the elimination of historical percentage lease revenues and
expenses between FelCor LP and the lessees.

(7) Represents the adjustment required to record the management fees at their
contractual rates. In the negotiation for the acquisition of the 88 leases
and the new long-term management contract with Six Continents Hotels,
FelCor LP was able to spread the cost of the lease acquisition over the
term of the management agreement, by agreeing to pay management fees that
are higher than those paid by FelCor to other managers for comparable
services. Management fees for the 88 hotels are broken out between a base
fee, computed at 2% of total hotel revenue plus 5% of room revenue, and an
incentive fee, computed using a formula incorporating hotel net operating
income and FelCor LP's return on its investment in these hotels. The new
management contracts transfer the operating risk and reward of the hotels
to FelCor LP, as compared to percentage leases, under which FelCor LP
received percentage lease revenue based solely on hotel revenues.
Additionally, under the new management contracts, FelCor LP has the ability
to terminate management contracts for hotels by substituting hotels with
similar revenue streams.

(8) Represents the elimination of historical franchise fees paid to Bristol
Tenant. These agreements have been replaced with management contracts.

(9) Represents the elimination of $618,000 in interest expense paid by DJONT to
FelCor.

(10) Represents the elimination of FelCor LP's equity in income of DJONT's
consolidated subsidiary.

(11) Represents the elimination of the DJONT minority interest of $3,243,000
represented by FelCor LP's ownership discussed in (10) above.

(12) Represents the elimination of the historical tax provisions of the Bristol
Tenant lessees due to the pro forma taxable loss of the TRSs. No benefit
has been recorded for deferred taxes related to these losses due to the
uncertainty of their recoverability, because based on the weight of
available evidence, management has determined it is more likely than not
that the entire balance of deferred tax assets will not be realized by the
TRSs.

50
57
NOTES TO PRO FORMA COMBINED STATEMENTS OF OPERATIONS -- (CONTINUED)

- ---------------

(J) Represents MeriStar LP's historical results of operations, excluding
extraordinary items, plus the pro forma effect of MeriStar LP's acquisition
of 106 hotel leases from MeriStar Hotels & Resorts, Inc. as if the
acquisition occurred on January 1, 2000. The computation is as follows (in
thousands):

<Table>
<Caption>
MERISTAR LP
HISTORICAL PRO FORMA MERISTAR LP
(1) ADJUSTMENTS POST RMA
----------- ----------- -----------

Revenues:
Room and suite revenue.............................. $ 782,288(2) $ 782,288
Food and beverage revenue........................... 290,792(2) 290,792
Other operating departments......................... 84,660(2) 84,660
Percentage lease revenue............................ $385,141 (364,216)(3) 20,925
Retail space rental and other revenue............... 15,544 2,880(4) 18,424
-------- --------- ----------
Total revenues........................................ 400,685 796,404 1,197,089
-------- --------- ----------
Expenses:
Hotel operating expenses:
Rooms............................................... 184,791(2) 184,791
Food and beverage expenses.......................... 209,962(2) 209,962
Other operating departments......................... 48,263(2) 48,263
Management and incentive fees......................... 28,943(5) 28,943
Other property operating costs........................ 2,731 299,616(6) 302,347
Property taxes, insurance and other................... 47,481 24,829(2) 72,310
Corporate expenses.................................... 9,445 9,445
Depreciation.......................................... 107,362 107,362
-------- --------- ----------
Total operating expenses.............................. 167,019 796,404 963,423
-------- --------- ----------
Operating income...................................... 233,666 233,666
-------- --------- ----------
Interest expense, net................................. 120,850 120,850
Other................................................. 1,622 1,622
-------- --------- ----------
Income (loss) before minority interest and gain on
sale of assets...................................... 111,194 111,194
Minority interests.................................... 3 3
Gain on sale of assets................................ 3,439 3,439
-------- --------- ----------
Net income (loss) before extraordinary items.......... 114,636 114,636
Preferred distributions............................... (565) (565)
-------- --------- ----------
Net income (loss) before extraordinary items
applicable to common shareholders................... $114,071 $ $ 114,071
======== ========= ==========
</Table>

(1) Represents MeriStar LP's historical results of operations, excluding
extraordinary items. Certain reclassifications have been made to conform to
the presentation of FelCor LP's statement of operations.

(2) Represents the historical hotel revenues and expenses of the 106 hotels
formerly leased to MeriStar Hotels & Resorts, Inc.

(3) Represents the elimination of historical percentage lease revenue received
from MeriStar Hotels & Resorts.

(4) Represents historical other hotel revenue of the 106 hotels formerly leased
to MeriStar Hotels & Resorts.

(5) Represents the contractual management fee which will be paid to MeriStar
Hotels & Resorts under the new management agreements. The base management
fee under the agreements is 2.5% of hotel revenues.

51
58
NOTES TO PRO FORMA COMBINED STATEMENTS OF OPERATIONS -- (CONTINUED)

Until January 1, 2001, MeriStar Hotels & Resorts leased substantially all of
its hotels from MeriStar LP. Under these leases, MeriStar Hotels & Resorts
assumed all of the operating risks and rewards of these hotels and paid
MeriStar LP a percentage of revenue at each hotel under the lease
agreements. Therefore, for financial statement purposes through December 31,
2000, MeriStar Hotels & Resorts recorded all of the operating revenues and
expenses of the hotels in its statements of operations, and MeriStar LP
recorded lease revenue earned under the lease agreements in its statements
of operations. Effective January 1, 2001, MeriStar Hotels & Resorts assigned
the hotel leases to newly created, wholly owned, taxable REIT subsidiaries
of MeriStar LP and these taxable REIT subsidiaries in turn, entered into
management agreements with MeriStar Hotels & Resorts to manage these hotels.
As a result of this change in structure, the wholly owned taxable REIT
subsidiaries of MeriStar LP have assumed the operating risks and rewards of
the hotels and now pay MeriStar Hotels & Resorts a management fee to manage
the hotels for it. For consolidated financial statement purposes, effective
January 1, 2001, MeriStar LP now records all of the revenues and expenses of
the hotels in its statement of operations, including a management fee paid
to MeriStar Hotels & Resorts. The terms of the management agreements are
designed to substantially mirror the economics of the former leases.

(6) Represents historical other undistributed operating costs of the 106 hotels
formerly leased to MeriStar Hotels & Resorts, Inc.

52
59

PRO FORMA COMBINED BALANCE SHEET

The following unaudited Pro Forma Combined Balance Sheet as of June 30,
2001 is based in part upon the Consolidated Balance Sheets of FelCor LP and
MeriStar LP included or incorporated by reference herein, and the consolidated
balance sheet of Bristol Tenant which was provided to us by Bristol Tenant.

The Pro Forma Combined Balance Sheet assumes all of the following occurred
on June 30, 2001:

- our acquisition of the remaining 88 leases held by Six Continents Hotels,
effective July 1, 2001; and

- the completion of the merger, the partnership merger and the related
financings and application of the net proceeds.

In the opinion of our management, all material adjustments necessary to
reflect the effects of the foregoing transactions have been made. The unaudited
Pro Forma Combined Balance Sheet is presented for illustrative purposes only and
is not necessarily indicative of what our actual financial position would have
been had the transactions described above occurred on June 30, 2001, nor does it
purport to represent our future financial position.

53
60

FELCOR LODGING LIMITED PARTNERSHIP

PRO FORMA COMBINED BALANCE SHEET
AS OF JUNE 30, 2001
(UNAUDITED, IN THOUSANDS)

<Table>
<Caption>
FELCOR LP RMA MERISTAR LP
HISTORICAL ACQUISITION FELCOR LP HISTORICAL MERGER PRO FORMA
(A) (B) POST RMA (C) ADJUSTMENTS(D) TOTAL
---------- ----------- ---------- ----------- -------------- ----------

ASSETS

Net investment in hotels.............. $3,710,694 $3,710,694 $2,867,134 $ (61,785)(E) $6,516,043
Investment in unconsolidated
entities............................ 154,980 154,980 41,714 196,694
Assets held for sale.................. 52,122 52,122 52,122
Cash and cash equivalents............. 64,220 $ 1,471 65,691 20,550 86,241
Restricted cash....................... 323,555 323,555 20,201 (316,460)(F) 27,296
Due from MeriStar Hotels & Resorts.... 10,893 10,893
Note receivable from MeriStar Hotels &
Resorts............................. 36,000 36,000
Accounts receivable................... 46,449 33,924 80,373 57,040 137,413
Prepaid expenses...................... 12,056 1,941 13,997 15,765 29,762
Deferred expenses, net................ 32,201 32,201 15,684 (5,734)(G) 42,151
Other assets.......................... 7,251 5,022 12,273 40(H) 12,313
---------- --------- ---------- ---------- --------- ----------
Total assets.................. $4,403,528 $ 42,358 $4,445,886 $3,084,981 $(383,939) $7,146,928
========== ========= ========== ========== ========= ==========

LIABILITIES, REDEEMABLE UNITS AND PARTNERS' CAPITAL

Debt.................................. $2,134,093 $2,134,093 $1,653,050 $(138,450)(I) $3,648,693
Distributions payable................. 34,199 34,199 24,245 58,444
Accrued expenses and other............ 146,077 $ 42,358 188,435 188,161 6,787(H) 383,383
Minority interest in other
partnerships........................ 50,474 50,474 2,693 53,167
---------- --------- ---------- ---------- --------- ----------
Total liabilities............. 2,364,843 42,358 2,407,201 1,868,149 (131,663) 4,143,687
---------- --------- ---------- ---------- --------- ----------
Redeemable units at redemption
value............................... 210,929 210,929 99,898 (8,844)(J) 301,983
---------- --------- ---------- ---------- --------- ----------
Preferred units:
Series A preferred units............ 149,515 149,515 149,515
Series B preferred units............ 143,750 143,750 143,750
New preferred units................. 100,000(K) 100,000
Common units.......................... 1,534,491 1,534,491 1,116,934 (343,432)(L) 2,307,993
---------- --------- ---------- ---------- --------- ----------
Partners' Capital..................... 1,827,756 1,827,756 1,116,934 (243,432) 2,701,258
---------- --------- ---------- ---------- --------- ----------
Total liabilities, redeemable
units and partners'
capital..................... $4,403,528 $ 42,358 $4,445,886 $3,084,981 $(383,939) $7,146,928
========== ========= ========== ========== ========= ==========
</Table>

See notes to pro forma combined balance sheet.

54
61

NOTES TO FELCOR LP PRO FORMA COMBINED BALANCE SHEET
AS OF JUNE 30, 2001
(UNAUDITED)

(A) Represents our historical consolidated balance sheet as of June 30, 2001.

(B) Effective January 1, 2001, with the enactment of the REIT Modernization
Act, we had completed transactions that resulted in our newly formed
taxable REIT subsidiaries acquiring leases for 96 hotels that were
previously leased to either DJONT or Six Continents Hotels. Accordingly,
the assets and liabilities associated with these hotels are included in our
historical consolidated balance sheet as of June 30, 2001. In March 2001,
we entered into an agreement with Six Continents Hotels to acquire the
remaining 88 hotel leases effective July 1, 2001. In consideration for the
acquisition of these leases, one of our taxable REIT subsidiaries entered
into long-term management agreements with Six Continents Hotels with regard
to these hotels and issued to Six Continents Hotels 100 shares of FelCor
common stock. The pro forma adjustment column represents the historical
hotel assets and liabilities associated with the 88 hotels as if the Six
Continents Hotels leases were acquired effective June 30, 2001.

(C) Represents the historical consolidated balance sheet of MeriStar LP as of
June 30, 2001. Some reclassifications have been made to conform to the
presentation of our balance sheet.

(D) On May 10, 2001, FelCor and MeriStar announced that they had signed a
merger agreement, under which MeriStar will merge with and into FelCor, one
of our wholly-owned subsidiaries will merge with and into MeriStar LP, and
the limited partners of MeriStar LP, other than FelCor and its
subsidiaries, will exchange their interests in MeriStar LP for interests in
FelCor LP and, where applicable, cash. Under the merger agreement, each
holder of MeriStar common stock will receive, for each share of MeriStar
common stock, $4.60 in cash plus 0.784 of a share of FelCor common stock.
Each holder of common units and profits-only partnership units in MeriStar
LP, other than FelCor and its subsidiaries, will receive, for each common
unit and profits-only unit, $4.60 in cash plus 0.784 of a common unit of
FelCor LP. Each holder of Class C preferred units in MeriStar LP will
receive, for each unit, $4.60 in cash plus 0.784 of a Series C preferred
unit in FelCor LP. Each holder of Class D preferred units in MeriStar LP
will receive, for each unit, one Series D preferred unit in FelCor LP.
Amounts represent adjustments to record the merger and related transactions
as if the merger had occurred on June 30, 2001. Shares of FelCor common
stock and FelCor LP common units are valued at $22.10, the closing price of
FelCor common stock on the date of the announcement. The calculation of the
merger acquisition cost is as follows (in thousands, except share and unit
data):

<Table>

Issuance of 37.636 million common units of FelCor LP in
exchange for 48.0 million common and profits-only units of
MeriStar LP............................................... $ 831,759
Issuance of 755,954 FelCor LP Series C preferred units in
exchange for 964,227 MeriStar LP Class C preferred
units..................................................... 16,707
Payment of $4.60 per unit of MeriStar LP common, Class C
preferred and profits-only units.......................... 225,260
Issuance of 392,157 FelCor LP Series D preferred units in
exchange for a like number of MeriStar LP Class D
preferred units........................................... 8,690
Issuance of 3.6 million FelCor stock options based on a
0.784 exchange ratio in exchange for MeriStar stock
options, assuming all MeriStar option holders are not
retained by FelCor........................................ 10,600
Assumption of MeriStar's liabilities........................ 1,874,936
Transaction costs........................................... 39,600
----------
Total merger acquisition cost............................... $3,007,552
==========
</Table>

55
62
NOTES TO FELCOR LP PRO FORMA COMBINED BALANCE SHEET -- (CONTINUED)

The following is a calculation of estimated transaction costs (in
thousands):

<Table>

Financial advisory fees..................................... $12,000
Consent payments in connection with debt agreements......... 10,600
Severance and noncompete payments........................... 8,000
Legal fees.................................................. 3,000
Accounting fees............................................. 1,000
Mailing and filing fees..................................... 1,000
Other....................................................... 4,000
-------
Transaction costs................................. $39,600
=======
</Table>

(E) Represents the purchase accounting adjustment to the historical carrying
value of MeriStar LP investment in hotels as follows (in thousands):

<Table>

FelCor LP allocation to investment in hotels................ $2,805,349
MeriStar LP historical carrying amount...................... 2,867,134
----------
Adjustment............................................. $ (61,785)
==========
</Table>

(F) Represents the release of a portion of the proceeds of the $600 million
notes placement which will be used to repay MeriStar debt upon the closing
of the merger.

(G) Represents the net effect of the following adjustments (in thousands):

<Table>

Deferred financing costs for new borrowings................. $ 9,950
Elimination of historical MeriStar LP deferred financing
costs..................................................... (15,684)
--------
Adjustment............................................. $ 5,734
========
</Table>

(H) FelCor has no assets, liabilities, revenues or expenses other than those
derived from its ownership of us. MeriStar has miscellaneous assets,
liabilities, revenues and expenses other than those derived from its
ownership of MeriStar LP. Upon completion of the merger and related
transactions, FelCor will contribute to FelCor LP all assets and
liabilities acquired; accordingly these miscellaneous adjustments are made
to reflect the contribution of the items historically reported only at the
MeriStar level.

(I) Represents the net increase in debt as a result of the merger and related
transactions as follows (in thousands):

<Table>

Issuance of new mortgage debt............................... $ 350,000
Net borrowings on new line of credit........................ 290,473
Repayment of MeriStar LP notes payable to MeriStar.......... (356,923)
Repayment of MeriStar LP line of credit..................... (227,000)
Repayment of MeriStar LP term loans......................... (195,000)
---------
Net Adjustment......................................... $(138,450)
=========
</Table>

The issuance of the $600 million senior notes and the repayment of FelCor
mortgage debt are not included as these transactions were completed prior
to June 30, 2001 and are included in the historical amounts.

56
63
NOTES TO FELCOR LP PRO FORMA COMBINED BALANCE SHEET -- (CONTINUED)

(J) Represents the net change in redeemable units as follows:

<Table>

Elimination of MeriStar LP historical balance............... $(99,898)
Record at redemption value of $23.40 at June 30, 2001, 2.764
million FelCor LP common units issued in exchange for
3.525 million MeriStar LP common and profits-only units,
issuance of 755,954 FelCor LP Series C preferred units in
exchange for 964,227 MeriStar LP Class C preferred units
and issuance of 392,157 FelCor LP Series D preferred units
in exchange for a like number of MeriStar LP Class D
preferred units........................................... 91,054
--------
Net adjustment.................................... $ (8,844)
========
</Table>

(K) Represents the proposed issuance of $100 million in Series E cumulative
redeemable preferred units.

(L) Represents the net adjustments resulting from the partnership merger and
related transactions as follows (in thousands, except share and unit data):

<Table>
<Caption>
ADDITIONAL
PAID IN
PARTNERS
CAPITAL
-----------

Issuance of 34.872 million units of FelCor LP in exchange
for 44.480 million units of MeriStar LP................... $ 770,677
Issuance of 3.6 million FelCor stock options in exchange for
MeriStar stock options.................................... 10,600
Elimination of historical MeriStar balances................. (1,116,934)
Offering expenses of new $100,000 of FelCor Series E
cumulative redeemable preferred units..................... (3,200)
Allocation to state redeemable units issued to MeriStar and
holders at redemption value of $23.40 over issuance value
of $22.10................................................. (4,575)
-----------
Net adjustments................................... $ (343,432)
===========
</Table>

57
64

FELCOR LODGING TRUST INCORPORATED

PRO FORMA COMBINED STATEMENTS OF OPERATIONS

The following unaudited Pro Forma Combined Statements of Operations for the
six months ended June 30, 2001 and the year ended December 31, 2000 are based in
part upon the Consolidated Statements of Operations of FelCor, DJONT, Bristol
Tenant, and MeriStar for the six months ended June 30, 2001 and the year ended
December 31, 2000 incorporated by reference, except for the consolidated
statement of operations of Bristol Tenant for the six months ended June 30, 2001
which was provided by Bristol Tenant.

The Pro Forma Combined Statements of Operations for the six months ended
June 30, 2001 and the year ended December 31, 2000 assumes that all the
following occurred on January 1, 2000:

- our acquisition of DJONT, effective January 1, 2001, for 416,667 units of
limited partnership interest in FelCor LP valued at approximately $10
million;

- our acquisition of 12 leases held by Six Continents Hotels, effective
January 1, 2001, for 413,585 shares of our common stock valued at
approximately $10 million;

- our acquisition of the remaining 88 leases held by Six Continents Hotels,
effective July 1, 2001;

- the assignment of the leases from MeriStar Hotels & Resorts, Inc. to
MeriStar's TRSs; and

- the completion of the MeriStar merger and related financings and the
application of the net proceeds.

In the opinion of FelCor's management, all material adjustments necessary
to reflect the effects of the preceding transactions have been made. The
unaudited Pro Forma Combined Statement of Operations is presented for
illustrative purposes only and is not necessarily indicative of what the actual
results of operations would have been had the MeriStar merger and the other
transactions described above occurred on the indicated dates, nor do they
purport to represent our results of operations for future periods.

58
65

FELCOR LODGING TRUST INCORPORATED

PRO FORMA COMBINED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2001
(UNAUDITED)
(IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)

<Table>
<Caption>
FELCOR MERISTAR MERGER
POST RMA HISTORICAL ADJUSTMENTS PRO FORMA
(A) (B) (C) TOTAL
--------- ---------- ----------- ----------

Revenues:
Room and suite revenue............................... $635,857 $402,760 $1,038,617
Food and beverage revenue............................ 123,930 145,383 269,313
Other operating departments.......................... 40,635 46,005 86,640
Percentage lease revenue............................. 10,736 10,736
Retail space rental and other revenue................ 1,882 4,967 6,849
-------- -------- ----------
Total revenues......................................... 802,304 609,851 1,412,155
-------- -------- ----------
Expenses:
Hotel operating expenses:
Room............................................... 147,215 92,287 239,502
Food and beverage expenses......................... 95,409 103,890 199,299
Other operating departments........................ 17,428 25,241 42,669
Management and incentive fees........................ 35,697 14,779 50,476
Other property operating costs....................... 220,601 153,718 374,319
Property taxes, insurance, and other................. 77,417 37,041 114,458
Corporate expenses................................... 6,372 4,535 10,907
Depreciation......................................... 79,513 58,405 $(14,568)(D) 123,350
Other merger and lease termination costs............. 5,104 5,104
-------- -------- -------- ----------
Total operating expenses............................... 679,652 495,000 (14,568) 1,160,084
-------- -------- -------- ----------
Operating income....................................... 122,652 114,851 14,568 252,071
-------- -------- -------- ----------
Interest expense, net.................................. 79,977 60,261 8,531(E) 148,769
Swap termination costs................................. 4,824 9,297 14,121
Writedown of investments............................... 2,112 2,112
Other.................................................. 1,402 1,402
-------- -------- -------- ----------
Income before equity in income from unconsolidated
entities, minority interests, and gain (loss) on sale
of assets............................................ 37,851 41,779 6,037 85,667
Equity in income from unconsolidated entities.......... 6,328 6,328
Minority interests..................................... (7,015) (3,121) (1,680)(F) (11,816)
Gain (loss) on sale of assets, net..................... 2,955 (1,059) 1,896
-------- -------- -------- ----------
Net income before extraordinary items.................. 40,119 37,599 4,357 82,075
Preferred distributions................................ (12,300) (5,250)(G) (17,550)
-------- -------- -------- ----------
Net income before extraordinary items applicable to
common shareholders.................................. $ 27,819 $ 37,599 $ (893) $ 64,525
======== ======== ======== ==========
Basic per share data:
Net income before extraordinary items applicable to
common shareholders................................ $ 0.53 $ 0.74
======== ==========
Weighted average shares outstanding.................. 52,614 34,872(H) 87,486
======== ======== ==========
Diluted per share data:
Net income before extraordinary items applicable to
common shareholders................................ $ 0.53 $ 0.73
======== ==========
Weighted average shares outstanding.................. 53,055 35,763(H) 88,818
======== ======== ==========
</Table>

See notes to pro forma combined statements of operations.

59
66

FELCOR LODGING TRUST INCORPORATED

PRO FORMA COMBINED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2000
(UNAUDITED)
(IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)

<Table>
<Caption>
FELCOR MERISTAR MERGER
POST RMA POST RMA ADJUSTMENTS PRO FORMA
(I) (J) (C) TOTAL
---------- ---------- ----------- ----------

Revenues:
Room and suite revenue........................... $1,309,292 $ 782,288 $2,091,580
Food and beverage revenue........................ 261,569 290,792 552,361
Other operating departments...................... 93,352 84,660 178,012
Percentage lease revenue......................... 20,925 20,925
Retail space rental and other revenue............ 3,057 18,517 21,574
---------- ---------- ----------
Total revenues..................................... 1,667,270 1,197,182 2,864,452
---------- ---------- ----------
Expenses:
Hotel operating expenses:
Room.......................................... 309,234 184,791 494,025
Food and beverage expenses.................... 200,855 209,962 410,817
Other operating departments................... 37,172 48,263 85,435
Management and incentive fees.................... 77,214 28,943 106,157
Other property operating costs................... 437,763 302,347 740,110
Property taxes, insurance, and other............. 161,999 72,310 234,309
Corporate expenses................................. 13,267 9,445 22,712
Depreciation....................................... 161,316 107,362 $ (19,688)(D) 248,990
---------- ---------- ----------- ----------
Total operating expenses........................... 1,398,820 963,423 (19,688) 2,342,555
---------- ---------- ----------- ----------
Operating income................................... 268,450 233,759 19,688 521,897
---------- ---------- ----------- ----------
Interest expense, net.............................. 156,712 122,109 31,183(E) 310,004
Loss on assets held for sale....................... 63,000 63,000
Other.............................................. 3,376 2,028 5,404
---------- ---------- ----------- ----------
Income before equity in income from unconsolidated
entities, minority interests, and gain on sale of
assets........................................... 45,362 109,622 (11,495) 143,489
Equity in income from unconsolidated entities...... 11,436 11,436
Minority interests................................. (7,357) (10,240) 516(F) (17,081)
Gains on sale of assets............................ 4,388 3,425 7,813
---------- ---------- ----------- ----------
Net income before extraordinary items.............. 53,829 102,807 (10,979) 145,657
Preferred distributions............................ (24,682) (10,500)(G) (35,182)
---------- ---------- ----------- ----------
Net income before extraordinary items applicable to
common shareholders.............................. $ 29,147 $ 102,807 $ (21,479) $ 110,475
========== ========== =========== ==========
Basic per share data:
Net income before extraordinary items applicable
to common shareholders........................ $ 0.53 $ 1.23
========== ==========
Weighted average shares outstanding........... 55,264 34,872(H) 90,136
========== =========== ==========
Diluted per share data:
Net income before extraordinary items applicable
to common shareholders........................ $ 0.53 $ 1.21
========== ==========
Weighted average shares outstanding........... 55,519 35,763(H) 91,282
========== =========== ==========
</Table>

See notes to pro forma combined statements of operations.

60
67

NOTES TO PRO FORMA COMBINED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2001,
AND THE YEAR ENDED DECEMBER 31, 2000
(UNAUDITED)

(A) Represents FelCor's historical results of operations, excluding
extraordinary items, plus the pro forma effect of FelCor's acquisition of
88 hotel leases from Six Continents Hotels as if the acquisition occurred
on January 1, 2000. The computation is as follows (in thousands, except per
share amounts):

<Table>
<Caption>
FELCOR
FELCOR BRISTOL PRO FORMA POST RMA
HISTORICAL(1) TENANT(2) ADJUSTMENTS TOTAL
------------- --------- ----------- --------

Revenues:
Room and suite revenue............................. $365,343 $270,514 $635,857
Food and beverage revenue.......................... 53,150 70,780 123,930
Other operating departments........................ 24,790 15,845 40,635
Percentage lease revenue........................... 115,137 $(115,137)(3)
Retail space rental and other revenue.............. 1,882 1,882
-------- -------- --------- --------
Total revenues....................................... 560,302 357,139 (115,137) 802,304
-------- -------- --------- --------
Expenses:
Hotel operating expenses:
Room............................................. 83,404 63,811 147,215
Food and beverage expenses....................... 39,141 56,268 95,409
Other operating departments...................... 10,922 6,506 17,428
Management and incentive fees...................... 12,612 23,085 (4) 35,697
Other property operating costs..................... 121,642 110,710 (11,751)(5) 220,601
Property taxes, insurance, and other............... 76,460 115,924 (114,967)(3) 77,417
Corporate expenses................................. 6,372 6,372
Depreciation....................................... 79,513 79,513
Lease termination costs............................ 36,226 (36,226)(6)
-------- -------- --------- --------
Total operating expenses............................. 466,292 353,219 (139,859) 679,652
-------- -------- --------- --------
Operating income..................................... 94,010 3,920 24,722 122,652
-------- -------- --------- --------
Interest expense, net................................ 79,621 356 79,977
Swap termination costs............................... 4,824 4,824
-------- -------- --------- --------
Income (loss) before equity in income from
unconsolidated entities, minority interests, and
gain on sale of assets............................. 9,565 3,564 24,722 37,851
-------- -------- --------- --------
Equity in income from unconsolidated entities........ 6,328 6,328
Minority interests................................... (2,870) (4,145)(7) (7,015)
Gain on sale of assets, net.......................... 2,955 2,955
-------- -------- --------- --------
Net income (loss) before extraordinary items......... 15,978 3,564 20,577 40,119
Preferred distributions.............................. (12,300) (12,300)
-------- -------- --------- --------
Net income (loss) before extraordinary items
applicable to common shareholders.................. $ 3,678 $ 3,564 $ 20,577 $ 27,819
======== ======== ========= ========
Basic per share data:
Net income (loss) before extraordinary items
applicable to common shareholders................ $ 0.07 $ 0.53
======== ========
Weighted average shares outstanding................ 52,614 52,614
======== ========
Diluted per share data:
Net income (loss) before extraordinary items
applicable to common shareholders................ $ 0.07 $ 0.53
======== ========
Weighted average shares outstanding................ 53,055 53,055
======== ========
</Table>

- ---------------

(1) Represents the historical results of operations of FelCor for the six months
ended June 30, 2001, excluding extraordinary items. Effective January 1,
2001, with the enactment of the REIT Modernization Act, FelCor had completed
transactions that resulted in its newly formed taxable subsidiaries
acquiring leases for 96 hotels that were previously leased to either DJONT
or Six Continents Hotels, accordingly, the revenues and expenses associated
with these hotels are included in FelCor's historical consolidated statement
of operations for the six month period ended June 30, 2001.

61
68
NOTES TO PRO FORMA COMBINED STATEMENTS OF OPERATIONS -- (CONTINUED)

(2) Represents the historical results of operations of FelCor hotels leased to
subsidiaries of Six Continents Hotels for the six months ended June 30,
2001, excluding extraordinary items.

(3) Represents the elimination of historical percentage lease revenue and
expense between FelCor and Six Continents Hotels. The expense elimination
also includes a $170,000 adjustment of an estimate of property tax expense.

(4) Represents the adjustment required to record the management fees at their
contractual rates. In the negotiation for the acquisition of the 88 leases
and the new long-term management contracts with Six Continents Hotels,
FelCor was able to spread the cost of the lease acquisition over the term of
the management agreement, by agreeing to pay management fees that are higher
than those paid by FelCor to other managers for comparable services.
Management fees for the 88 hotels are broken out between a base fee,
computed at 2% of total hotel revenue plus 5% of room revenue, and an
incentive fee, computed using a formula incorporating hotel net operating
income and FelCor's return on its investment in these hotels. The new
management contracts transfer the operating risk and reward of the hotels to
FelCor, as compared to the percentage leases, under which FelCor received
percentage lease revenue based solely on hotel revenues. Additionally, under
the new management contracts, FelCor has the ability to terminate management
contracts for hotels by substituting hotels with similar revenue streams.

(5) Represents the elimination of historical franchise fees. These agreements
have been replaced with management contracts.

(6) Represents the elimination of lease termination costs associated with the
acquisition of DJONT and the Six Continents Hotels leases in January 2001.

(7) Represents the adjustment to record FelCor's minority interest holders share
of the revenues and expenses of the Bristol Tenant lessee and the proforma
adjustments.

(B) Represents MeriStar's historical results of operations, excluding
extraordinary items. Effective January 1, 2001, because of the enactment of
the REIT Modernization Act, taxable REIT subsidiaries of MeriStar were
assigned the leases on 106 hotels that had previously been held by MeriStar
Hotels & Resorts, Inc. and entered into management contracts with MeriStar
Hotels & Resorts to manage these hotels. Accordingly, the related hotel
revenues, expenses and management fees are included in MeriStar's
historical results of operations for the six month period ended June 30,
2001. Certain reclassifications have been made to conform to the
presentation of our statements of operations.

62
69
NOTES TO PRO FORMA COMBINED STATEMENTS OF OPERATIONS -- (CONTINUED)

(C) On May 10, 2001, FelCor and MeriStar announced that they had signed a
merger agreement, under which MeriStar will merge with and into FelCor, a
wholly-owned subsidiary of FelCor LP will merge with and into MeriStar LP,
and the limited partners of MeriStar LP, other than FelCor and its
subsidiaries, will exchange their interests in MeriStar LP for interests in
FelCor LP and, where applicable, cash. Under the merger agreement, each
holder of MeriStar common stock will receive, for each share of MeriStar
common stock, $4.60 in cash plus 0.784 of a share of FelCor common stock.
Each holder of common units and profits-only partnership units in MeriStar
LP, other than FelCor and its subsidiaries will receive, for each common
unit and profits-only unit, $4.60 in cash plus 0.784 of a common unit of
FelCor LP. Each holder of Class C preferred units in MeriStar LP will
receive, for each unit, $4.60 in cash plus 0.784 of a Series C preferred
unit in FelCor LP. Each holder of Class D preferred units in MeriStar LP
will receive, for each unit, one Series D preferred unit in FelCor LP.
Amounts represent adjustments to record the merger and related transactions
as if the merger had occurred on January 1 of the fiscal period presented.
Shares of FelCor common stock and FelCor LP common units are valued at
$22.10, the closing price of FelCor common stock on the date of the
announcement. The calculation of the merger acquisition cost is as follows
(in thousands, except share and unit data):

<Table>

Issuance of 34.872 million shares of FelCor common stock in
exchange for 44.5 million shares of MeriStar common
stock..................................................... $ 770,677
Issuance of 2.764 million FelCor LP common units in exchange
for 3.5 million MeriStar LP common and profits-only
units..................................................... 61,082
Issuance of 755,954 FelCor LP Series C preferred units in
exchange for 964,227 MeriStar LP Class C preferred
units..................................................... 16,707
Payment of $4.60 per share of MeriStar common stock and per
MeriStar LP common, Class C preferred and profits-only
units..................................................... 225,260
Issuance of 392,157 FelCor LP Series D preferred units in
exchange for a like number of MeriStar LP Class D
preferred units........................................... 8,690
Issuance of 3.6 million FelCor stock options based on a
0.784 exchange ratio in exchange for MeriStar stock
options, assuming all MeriStar option holders are not
retained by FelCor........................................ 10,600
Assumption of MeriStar's liabilities........................ 1,874,936
Transaction costs........................................... 39,600
----------
Total merger acquisition cost............................... $3,007,552
==========
</Table>

The following is a calculation of estimated transaction costs (in
thousands):

<Table>

Financial advisory fees..................................... 12,000
Consent payments in connection with debt agreements......... 10,600
Severance and noncompete payments........................... 8,000
Legal fees.................................................. 3,000
Accounting fees............................................. 1,000
Mailing and filing fees..................................... 1,000
Other....................................................... 4,000
----------
Transaction costs................................. $ 39,600
==========
</Table>

63
70
NOTES TO FELCOR PRO FORMA COMBINED STATEMENTS OF OPERATIONS -- (CONTINUED)

(D) Represents the reduction in historical depreciation associated with the
allocation of FelCor's purchase price of MeriStar. The allocation of basis
to the assets acquired from MeriStar is as follows (in thousands):

<Table>

<Table>
<Caption>
FOR THE YEAR ENDED FOR THE SIX MONTHS ENDED
DECEMBER 31, 2000 JUNE 30, 2001
------------------ ------------------------

Buildings and improvements acquired from
MeriStar...................................... $ 59,618 $ 29,809
Furniture, fixtures, and equipment acquired from
MeriStar...................................... 28,056 14,028
--------- --------
87,674 43,837
Historical MeriStar depreciation................ (107,362) (58,405)
--------- --------
Net adjustment.................................. $ (19,688) $(14,568)
========= ========
</Table>

(E) Represents the net adjustment to historical interest expense for the
increase in interest expense related to new borrowings resulting from
merger related transactions offset by reductions in historical interest
expense related to borrowings that will be repaid with the proceeds of the
new borrowings as follows (in thousands):

<Table>
<Caption>
INTEREST FOR THE YEAR ENDED FOR THE SIX MONTHS ENDED
RATE DECEMBER 31, 2000 JUNE 30, 2001
-------- ------------------ ------------------------

64
71
NOTES TO FELCOR PRO FORMA COMBINED STATEMENTS OF OPERATIONS -- (CONTINUED)

<Table>
<Caption>
INTEREST FOR THE YEAR ENDED FOR THE SIX MONTHS ENDED
RATE DECEMBER 31, 2000 JUNE 30, 2001
-------- ------------------ ------------------------

Reductions:
FelCor $61,744 mortgage debt
repaid........................... (4) 5,340 1,940
MeriStar $202,623 subordinated notes
repaid........................... 8.71%(5) 17,648 8,824
MeriStar $154,300 convertible notes
repaid........................... 4.75%(5) 7,329 3,665
MeriStar $227,000 line of credit
repaid........................... (6) 16,753 8,535
MeriStar $195,000 term loans
repaid........................... (6) 16,318 7,739
Historical interest capitalized by
MeriStar......................... (5,805) (2,876)
Historical amortization of MeriStar
deferred financing costs......... 4,585 2,293
------- -------
Total reductions.................... 62,168 30,120
------- -------
Net adjustment........................ $31,183 $ 8,531
======= =======
</Table>

(1) Represents effective fixed rate on notes issued in May 2001.

(2) Represents estimated variable rate of LIBOR plus 200 basis points to be
committed by lender. Weighted average 30 day LIBOR was 6.44% for the year
ended December 31, 2000 and 4.70% for the six months ended June 30, 2001. An
increase of 0.125% in interest rates would increase interest expense by
$437,500 and $218,750 and decrease net income available to common
shareholders by $391,563 and $191,406 for the year ended December 31, 2000
and the six months ended June 30, 2001, respectively.

(3) Represents contractual variable rate of LIBOR plus 200 basis points. On a
pro forma basis, FelCor will have a balance outstanding on the line of
credit of $330,373 for the periods presented. This adjustment represents the
incremental interest on this balance in excess of historical amounts.

(4) Represents the weighted average historical rates which were approximately
8.44% and 6.70% for the periods ended December 31, 2000 and June 30, 2001,
respectively.

(5) Represents contractual fixed rates of 8.71% on subordinated notes with a
principal balance of $202.5 million and 4.75% on convertible notes with a
principal balance of $154.3 million.

(6) Represents the historical weighted average interest rates (adjusted for
historical interest rate hedges) for the periods presented are as follows:

<Table>
<Caption>
2000 2001
----- -----

FelCor expects to assume approximately $500 million of MeriStar LP's senior
notes and approximately $374 million of mortgage debt of MeriStar's
subsidiaries in connection with the merger.

(F) Represents adjustment necessary to record impact of merger related
transactions on minority interests. After the partnership merger, MeriStar
LP common unit holders will have the option of redeeming each FelCor LP
common unit issued to them for an amount of cash equal to the then average
market price of a share of FelCor common stock, or, at FelCor's option, one
share of FelCor common stock. If holders elect to redeem their units,
FelCor intends to redeem them by issuing its common stock. Accordingly, pro
forma effect has not been given to the range of possible results.

(G) Represents dividends on the proposed issuance of $100 million of cumulative
redeemable preferred stock at an assumed dividend rate of 10.5%. An
increase of 0.125% in the dividend rate would

65
72
NOTES TO FELCOR PRO FORMA COMBINED STATEMENTS OF OPERATIONS -- (CONTINUED)

increase the preferred dividends by $125,000 and $62,500 and decrease net
income available to common shareholders by $111,875 and $54,688 for the
year ended December 31, 2000 and the six months ended June 30, 2001,
respectively.

(H) Represents the impact of additional shares issued in the merger on a basic
and diluted basis and the dilutive effect of FelCor stock options issued to
MeriStar option holders as follows (in thousands):

<Table>

Basic
Shares issued to MeriStar stockholders.................... 34,872
------
Adjustment to weighted average shares-basic............... 34,872
Diluted
Dilutive effect of options issued to MeriStar
optionholders.......................................... 891
------
Adjustment to weighted average shares-diluted............... 35,763
======
</Table>

FelCor does not include partnership units in its diluted weighted average
shares computation. If the partnership units were included, the net income
available to common shareholders would be increased by the minority
interest allocated to the partnership unitholders, resulting in no impact
to earnings per share.

66
73
NOTES TO FELCOR PRO FORMA COMBINED STATEMENTS OF OPERATIONS -- (CONTINUED)

(I) Represents FelCor's historical results of operations, excluding
extraordinary items, plus the pro forma effect of FelCor's acquisitions of
DJONT and 100 hotel leases from Six Continents Hotels as if the acquisition
occurred on January 1, 2000. The computation is as follows (in thousands,
except per share amounts):

<Table>
<Caption>
BRISTOL
FELCOR DJONT BRISTOL TENANT
HISTORICAL OPERATIONS, LLC TENANT PREDECESSOR
(1) (2) (3) (4)
---------- --------------- -------- -----------

Revenues:
Room and suite revenue........... $709,793 $461,978 $143,952
Food and beverage revenue........ 112,612 115,176 36,645
Other operating departments...... 56,476 31,859 5,401
Percentage lease revenue......... $536,907
Retail space rental and other
revenue........................ 3,057
-------- -------- -------- --------
Total revenues.................... 539,964 878,881 609,013 185,998
-------- -------- -------- --------
Expenses:
Hotel operating expenses:
Room........................... 169,531 109,074 32,163
Food and beverage expenses..... 84,602 90,025 28,190
Other operating departments.... 22,168 11,267 3,859
Management and incentive fees..... 24,766 16,770 5,589
Other property operating costs.... 236,186 178,234 53,903
Percentage lease expense.......... 277,491 197,210 62,206
Property taxes, insurance, and
other............................ 89,257 70,498 2,128 710
Corporate expenses................ 12,256 1,011
Depreciation...................... 160,745 572
-------- -------- -------- --------
Total operating expenses.......... 262,258 886,825 604,708 186,620
-------- -------- -------- --------
Operating income (loss)........... 277,706 (7,944) 4,305 (622)
-------- -------- -------- --------
Interest expense, net............. 156,712 618 (133) (35)
Loss on assets held for sale...... 63,000
Other............................. 3,376
-------- -------- -------- --------
Income (loss) before equity in
income from unconsolidated
entities, minority interests, and
gain on sale of assets........... 54,618 (8,562) 4,438 (587)
-------- -------- -------- --------
Equity in income from
unconsolidated entities.......... 14,820 593
Minority interests................ (8,262) (3,243)
Gain on sale of assets............ 4,388
Income tax expense (benefit)...... 2,798 (267)
-------- -------- -------- --------
Net income (loss) before
extraordinary items.............. 65,564 (11,212) 1,640 (320)
Preferred distributions........... (24,682)
-------- -------- -------- --------
Net income (loss) before
extraordinary items applicable to
common shareholders.............. $ 40,882 $(11,212) $ 1,640 $ (320)
======== ======== ======== ========
Basic per share data:
Net income (loss) before
extraordinary items applicable
to common shareholders......... $ 0.74
========
Weighted average shares
outstanding.................... 55,264
========
Diluted per share data:
Net income (loss) before
extraordinary items applicable
to common shareholders......... $ 0.74
========
Weighted average shares
outstanding.................... 55,519
========

BRISTOL FELCOR
TOTAL ELIMINATIONS PROFORMA POST RMA
HISTORICAL (5) ADJUSTMENTS TOTAL
---------- ------------ ----------- ----------

Revenues:
Room and suite revenue........... $1,315,723 $ (6,431) $1,309,292
Food and beverage revenue........ 264,433 (2,864) 261,569
Other operating departments...... 93,736 (384) 93,352
Percentage lease revenue......... 536,907 $(536,907)(6)
Retail space rental and other
revenue........................ 3,057 3,057
---------- -------- --------- ----------
Total revenues.................... 2,213,856 (9,679) (536,907) 1,667,270
---------- -------- --------- ----------
Expenses:
Hotel operating expenses:
Room........................... 310,768 (1,534) 309,234
Food and beverage expenses..... 202,817 (1,962) 200,855
Other operating departments.... 37,294 (122) 37,172
Management and incentive fees..... 47,125 (76) 30,165(7) 77,214
Other property operating costs.... 468,323 (5,929) (24,631)(8) 437,763
Percentage lease expense.......... 536,907 (536,907)(6)
Property taxes, insurance, and
other............................ 162,593 (594) 161,999
Corporate expenses................ 13,267 13,267
Depreciation...................... 161,317 (1) 161,316
---------- -------- --------- ----------
Total operating expenses.......... 1,940,411 (10,218) (531,373) 1,398,820
---------- -------- --------- ----------
Operating income (loss)........... 273,445 539 (5,534) 268,450
---------- -------- --------- ----------
Interest expense, net............. 157,162 168 (618)(9) 156,712
Loss on assets held for sale...... 63,000 63,000
Other............................. 3,376 3,376
---------- -------- --------- ----------
Income (loss) before equity in
income from unconsolidated
entities, minority interests, and
gain on sale of assets........... 49,907 371 (4,916) 45,362
---------- -------- --------- ----------
Equity in income from
unconsolidated entities.......... 15,413 (3,977)(10) 11,436
Minority interests................ (11,505) 4,063(11) (7,357)
Gain on sale of assets............ 4,388 4,388
Income tax expense (benefit)...... 2,531 (2,531)(12)
---------- -------- --------- ----------
Net income (loss) before
extraordinary items.............. 55,672 371 (2,299) 53,829
Preferred distributions........... (24,682) (24,682)
---------- -------- --------- ----------
Net income (loss) before
extraordinary items applicable to
common shareholders.............. $ 30,990 $ 371 $ (2,299) $ 29,147
========== ======== ========= ==========
Basic per share data:
Net income (loss) before
extraordinary items applicable
to common shareholders......... $ 0.53
==========
Weighted average shares
outstanding.................... 55,264
==========
Diluted per share data:
Net income (loss) before
extraordinary items applicable
to common shareholders......... $ 0.53
==========
Weighted average shares
outstanding.................... 55,519
==========
</Table>

67
74
NOTES TO FELCOR PRO FORMA COMBINED STATEMENTS OF OPERATIONS -- (CONTINUED)

- ---------------

(1) Represents the historical results of operations of FelCor for the year
ended December 31, 2000. Certain amounts have been reclassified to conform
to the June 30, 2001 presentation with no effect on previously reported net
income.

(5) Represents adjustment to eliminate historical amounts related to (i) a
hotel leased by Bristol Tenant not owned by FelCor and (ii) a hotel owned
by FelCor but sold in December 2000.

(6) Represents the elimination of historical percentage lease revenues and
expenses between FelCor and the lessees.

(7) Represents the adjustment required to record the management fees at their
contractual rates. In the negotiation for the acquisition of the 88 leases
and the new long-term management contracts with Six Continents Hotels,
FelCor was able to spread the cost of the lease acquisition over the term
of the management agreement, by agreeing to pay management fees that are
higher than those paid by FelCor to other managers for comparable services.
Management fees for the 88 hotels are broken out between a base fee,
computed at 2% of total hotel revenue plus 5% of room revenue, and an
incentive fee, computed using a formula incorporating hotel net operating
income and FelCor's return on its investment in these hotels. The new
management contracts transfer the operating risk and reward of the hotels
to FelCor, as compared to the percentage leases, under which FelCor
received percentage lease revenue based solely on hotel revenues.
Additionally, under the new management contracts, FelCor has the ability to
terminate management contracts for hotels by substituting hotels with
similar revenue streams.

(8) Represents the elimination of historical franchise fees paid to Six
Continents Hotels. These agreements have been replaced with management
contracts.

(9) Represents the elimination of $618,000 in interest expense paid by DJONT to
FelCor.

(10) Represents the elimination of FelCor's equity in income of DJONT's
consolidated subsidiary.

(11) Represents adjustment of $135,000 to record the minority interest holders
share of the revenues and expenses of the lessees plus the elimination of
the DJONT minority interest of $3,243,000 represented by FelCor's ownership
discussed in (10) above.

(12) Represents the elimination of the historical tax provisions of the Six
Continents Hotels lessees due to the pro forma taxable loss of the TRSs. No
benefit has been recorded for deferred taxes related to these losses due to
the uncertainty of their recoverability, because based on the weight of
available evidence, management has determined it is more likely than not
that the entire balance of deferred tax assets will not be realized by the
TRSs.

68
75
NOTES TO FELCOR PRO FORMA COMBINED STATEMENTS OF OPERATIONS -- (CONTINUED)

(J) Represents MeriStar's historical results of operations, excluding
extraordinary items, plus the pro forma effect of MeriStar's acquisition of
106 hotel leases from MeriStar Hotels & Resorts, Inc. as if the
acquisitions occurred on January 1, 2000. The computation is as follows (in
thousands):

<Table>
<Caption>
MERISTAR
HISTORICAL PRO FORMA MERISTAR
(1) ADJUSTMENTS POST RMA
---------- ----------- ----------

Revenues:
Room and suite revenue............................. $ 782,288(2) $ 782,288
Food and beverage revenue.......................... 290,792(2) 290,792
Other operating departments........................ 84,660(2) 84,660
Percentage lease revenue........................... $ 385,141 (364,216)(3) 20,925
Retail space rental and other revenue.............. 15,637 2,880(4) 18,517
--------- --------- ----------
Total revenues............................. 400,778 796,404 1,197,182
--------- --------- ----------
Expenses:
Hotel operating expenses:
Rooms........................................... 184,791(2) 184,791
Food and beverage expenses...................... 209,962(2) 209,962
Other operating departments..................... 48,263(2) 48,263
Management and incentive fees...................... 28,943(5) 28,943
Other property operating costs..................... 2,731 299,616(6) 302,347
Property taxes, insurance and other................ 47,481 24,829(2) 72,310
Corporate expenses................................. 9,445 9,445
Depreciation....................................... 107,362 107,362
--------- --------- ----------
Total operating expenses................... 167,019 796,404 963,423
--------- --------- ----------
Operating income..................................... 233,759 233,759
--------- --------- ----------
Interest expense, net................................ 122,109 122,109
Other................................................ 2,028 2,028
--------- --------- ----------
Income before minority interest and gain on sale of
assets............................................. 109,622 109,622
Minority interests................................... (10,240) (10,240)
Gain on sale of assets............................... 3,425 3,425
--------- --------- ----------
Net income before extraordinary items applicable to
common shareholders................................ $ 102,807 $ $ 102,807
========= ========= ==========
</Table>

(1) Represents MeriStar's historical results of operations, excluding
extraordinary items. Certain reclassifications have been made to conform to
the presentation of FelCor's statement of operations.

(2) Represents the historical hotel revenues and expenses of the 106 hotels
formerly leased to MeriStar Hotels & Resorts, Inc.

(3) Represents the elimination of historical percentage lease revenue received
from MeriStar Hotels & Resorts.

(4) Represents historical other hotel revenue of the 106 hotels formerly leased
to MeriStar Hotels & Resorts.

Until January 1, 2001, MeriStar Hotels & Resorts leased substantially all of
its hotels from MeriStar. Under these leases, MeriStar Hotels & Resorts
assumed all of the operating risks and rewards of these hotels and paid
MeriStar a percentage of revenue at each hotel under the lease agreements.
Therefore, for financial statement purposes through December 31, 2000,
MeriStar Hotels & Resorts recorded all of the operating revenues and
expenses of the hotels in its statements of operations, and MeriStar
recorded lease revenue earned under the lease agreements in its statements
of operations. Effective January 1, 2001, MeriStar Hotels & Resorts assigned
the hotel leases to newly created,

69
76
NOTES TO FELCOR PRO FORMA COMBINED STATEMENTS OF OPERATIONS -- (CONTINUED)

wholly owned, taxable REIT subsidiaries of MeriStar and MeriStar's taxable
REIT subsidiaries in turn, entered into management agreements with MeriStar
Hotels & Resorts to manage these hotels. As a result of this change in
structure, MeriStar's wholly owned taxable REIT subsidiaries have assumed
the operating risks and rewards of the hotels and now pay MeriStar Hotels &
Resorts a management fee to manage the hotels for them. For consolidated
financial statement purposes, effective January 1, 2001, MeriStar now
records all of the revenues and expenses of the hotels in its statement of
operations, including a management fee paid to MeriStar Hotels & Resorts.
The terms of the management agreements are designed to substantially mirror
the economics of the former leases.

(6) Represents historical other undistributed operating costs of the 106 hotels
formerly leased to MeriStar Hotels & Resorts.

70
77

PRO FORMA COMBINED BALANCE SHEET

The following unaudited Pro Forma Combined Balance Sheet as of June 30,
2001 is based in part upon the Consolidated Balance Sheets of FelCor and
MeriStar incorporated by reference, and the consolidated balance sheet of
Bristol Tenant which was provided to us by Bristol Tenant.

The Pro Forma Combined Balance Sheet assumes all of the following occurred
on June 30, 2001:

- our acquisition of the remaining 88 leases held by Six Continents Hotels,
effective July 1, 2001; and

- the completion of the MeriStar merger and related financings and the
application of the net proceeds.

In the opinion of our management, all material adjustments necessary to
reflect the effects of the foregoing transactions have been made. The unaudited
Pro Forma Combined Balance Sheet is presented for illustrative purposes only and
is not necessarily indicative of what the actual financial position would have
been had the MeriStar merger and the other transactions described above occurred
on June 30, 2001, nor does it purport to represent our future financial
position.

71
78

FELCOR LODGING TRUST INCORPORATED

PRO FORMA COMBINED BALANCE SHEET
AS OF JUNE 30, 2001
(UNAUDITED, IN THOUSANDS)

<Table>
<Caption>
FELCOR RMA MERISTAR
HISTORICAL ACQUISITION FELCOR HISTORICAL MERGER PRO FORMA
(A) (B) POST RMA (C) ADJUSTMENTS(D) TOTAL
---------- ----------- ---------- ---------- -------------- ----------

ASSETS

Net investment in hotels........... $3,710,694 $3,710,694 $2,867,134 $ (61,785)(E) $6,516,043
Investment in unconsolidated
entities......................... 154,980 154,980 41,714 196,694
Assets held for sale............... 52,122 52,122 52,122
Cash and cash equivalents.......... 64,220 $ 1,471 65,691 20,550 86,241
Restricted cash.................... 323,555 323,555 20,201 (316,460)(F) 27,296
Due from MeriStar Hotels &
Resorts.......................... 10,893 10,893
Note receivable from MeriStar
Hotels & Resorts................. 36,000 36,000
Accounts receivable................ 46,449 33,924 80,373 57,040 137,413
Prepaid expenses................... 12,056 1,941 13,997 15,765 29,762
Deferred expenses, net............. 32,201 32,201 21,570 (11,620)(G) 42,151
Other assets....................... 7,251 5,022 12,273 40 12,313
---------- --------- ---------- ---------- --------- ----------
Total assets............... $4,403,528 $ 42,358 $4,445,886 $3,090,907 $(389,865) $7,146,928
========== ========= ========== ========== ========= ==========

LIABILITIES & SHAREHOLDERS' EQUITY

Debt............................... $2,134,093 $2,134,093 $1,653,050 $(138,450)(H) $3,648,693
Distributions payable.............. 34,199 34,199 24,245 58,444
Accrued expenses and other......... 146,077 $ 42,358 188,435 194,948 383,383
Minority interest in Operating
Partnership...................... 253,841 253,841 93,288 (13,654)(I) 333,475
Minority interest in other
partnerships..................... 50,474 50,474 2,693 53,167
---------- --------- ---------- ---------- --------- ----------
Total liabilities.......... 2,618,684 42,358 2,661,042 1,968,224 (152,104) 4,477,162
---------- --------- ---------- ---------- --------- ----------
Shareholders' equity:
Preferred stock.................... 293,265 293,265 100,000(J) 393,265
Common stock....................... 699 699 486 (137)(K) 1,048
Additional paid-in capital......... 2,063,981 2,063,981 1,180,687 (396,114)(K) 2,848,554
Accumulated other comprehensive
income (loss).................... (899) (899) (13,350) 13,350(L) (899)
Distributions in excess of
earnings......................... (256,221) (256,221) 28,981 (28,981)(L) (256,221)
Less: Common stock in treasury, at
cost............................. (315,981) (315,981) (74,121) 74,121(L) (315,981)
---------- --------- ---------- ---------- --------- ----------
Total shareholders'
equity................... 1,784,844 1,784,844 1,122,683 (237,761) 2,669,766
---------- --------- ---------- ---------- --------- ----------
Total liabilities and
shareholders' equity..... $$4,403,528 $ 42,358 $4,445,886 $3,090,907 $(389,865) $7,146,928
========== ========= ========== ========== ========= ==========
</Table>

See notes to pro forma combined balance sheet.

72
79

NOTES TO FELCOR PRO FORMA COMBINED BALANCE SHEET
AS OF JUNE 30, 2001
(UNAUDITED)

(A) Represents our historical consolidated balance sheet as of June 30, 2001.

(B) Effective January 1, 2001, with the enactment of the REIT Modernization
Act, we had completed transactions that resulted in its newly formed
taxable REIT subsidiaries acquiring leases for 96 hotels that were
previously leased to either DJONT or Six Continents Hotels. Accordingly,
the assets and liabilities associated with these hotels are included in our
consolidated balance sheet as of June 30, 2001. In March 2001, we entered
into an agreement with Six Continents Hotels to acquire the remaining 88
hotel leases effective July 1, 2001. In consideration for the acquisition
of these leases, taxable REIT subsidiaries of FelCor entered into long-term
management agreements with Six Continents Hotels with regard to these
hotels and issued to Six Continents Hotels 100 shares of FelCor common
stock. The pro forma adjustment column represents the historical hotel
assets and liabilities associated with the 88 hotels as if the Six
Continents Hotels leases were acquired effective June 30, 2001.

(C) Represents the historical consolidated balance sheet of MeriStar as of June
30, 2001. Certain reclassifications have been made to conform to the
presentation of our balance sheet.

(D) On May 10, 2001, FelCor and MeriStar announced that they had signed a
merger agreement, under which MeriStar will merge with and into FelCor, one
of our wholly-owned subsidiaries will merge with and into MeriStar LP and
the limited partners of MeriStar LP, other than FelCor and its
subsidiaries, will exchange their interests in MeriStar LP for interests in
FelCor LP and, where applicable, cash. Under the merger agreement, each
holder of MeriStar common stock will receive, for each share of MeriStar
common stock, $4.60 in cash plus 0.784 of a share of FelCor common stock.
Each holder of common units and profits-only partnership units in MeriStar
LP, other than FelCor and its subsidiaries, will receive, for each common
unit and profits-only unit, $4.60 in cash plus 0.784 of a common unit of
FelCor LP. Each holder of Class C preferred units in MeriStar LP will
receive, for each unit, $4.60 in cash plus 0.784 of a Series C preferred
unit in FelCor LP. Each holder of Class D preferred units in MeriStar LP
will receive, for each unit, one Series D preferred unit in FelCor LP.
Amounts represent adjustments to record the merger and related transactions
as if the merger had occurred on June 30, 2001. Shares of FelCor common
stock and FelCor LP common units are valued at $22.10, the closing price of
FelCor common stock on the date of the announcement. The calculation of the
merger acquisition cost is as follows (in thousands, except share and unit
data):

<Table>

73
80
NOTES TO FELCOR PRO FORMA COMBINED BALANCE SHEET -- (CONTINUED)

The following is a calculation of estimated transaction costs (in
thousands):

<Table>

Financial advisory fees..................................... 12,000
Consent payments in connection with debt agreements......... 10,600
Severance noncompete tax payments........................... 8,000
Legal fees.................................................. 3,000
Accounting fees............................................. 1,000
Mailing and filing fees..................................... 1,000
Other....................................................... 4,000
-------
Transaction costs................................. $39,600
=======
</Table>

(E) Represents the purchase accounting adjustment to the historical carrying
value of MeriStar investment in hotels as follows (in thousands):

<Table>

FelCor allocation to investment in hotels................... $2,805,349
MeriStar historical carrying amount......................... 2,867,134
----------
Adjustment............................................. $ (61,785)
==========
</Table>

(F) Represents the release of a portion of the proceeds of the $600 million
notes placement which will be used to repay MeriStar debt upon closing of
the merger.

(G) Represents the net effect of the following adjustments (in thousands):

<Table>

Deferred financing costs for new borrowings................. $ 9,950
Elimination of historical MeriStar deferred financing
costs..................................................... (21,570)
--------
Adjustment............................................. $(11,620)
========
</Table>

(H) Represents the net decrease in debt as a result of the merger and related
transactions as follows (in thousands):

<Table>

Issuance of new mortgage debt............................... $ 350,000
Net borrowings on new line of credit........................ 290,473
Repayment of MeriStar subordinated notes.................... (202,623)
Repayment of MeriStar convertible notes..................... (154,300)
Repayment of MeriStar line of credit........................ (227,000)
Repayment of MeriStar term loans............................ (195,000)
---------
Net adjustment......................................... $(138,450)
=========
</Table>

(I) Represents the net adjustment to minority interest as follows (in
thousands, except share and unit data):

<Table>

Issuance of 2.769 million FelCor LP common units in exchange
for 3.532 million MeriStar LP common and profits-only
units..................................................... $ 61,082
Issuance of 755,954 FelCor LP Series C preferred units in
exchange for 964,227 MeriStar LP Class C preferred
units..................................................... 16,707
Issuance of 392,157 FelCor LP Series D preferred units in
exchange for a like number of MeriStar LP Class D
preferred units........................................... 8,690
Elimination of historical MeriStar minority interest........ (93,288)
Adjustment to reflect minority interest as 12.5% of common
equity.................................................... (6,845)
--------
Net adjustment.................................... $(13,654)
========
</Table>

74
81
NOTES TO FELCOR PRO FORMA COMBINED BALANCE SHEET -- (CONTINUED)

The minority interest percentage is calculated as follows (in thousands):

<Table>

Historical FelCor common stock.............................. 52,981
Historical FelCor LP units convertible into FelCor common
stock..................................................... 9,014
FelCor common stock issued in the merger.................... 34,872
FelCor LP units convertible into FelCor common stock issued
in the merger............................................. 3,520
--------
Total shares and units............................ 100,387
========
Units as a percentage of shares and units................... 12.5%
</Table>

(J) Represents the proposed issuance of $100 million in Series C cumulative
redeemable preferred stock.

(K) Represents the net adjustments resulting from the merger and related
transactions as follows (in thousands, except share and unit data):

<Table>
<Caption>
ADDITIONAL
COMMON PAID IN
STOCK CAPITAL
------ -----------

Issuance of 34.872 million shares of FelCor common stock in
exchange for 44.5 million shares of MeriStar common
stock..................................................... $ 349 $ 770,328
Issuance of 3.6 million FelCor stock options in exchange for
MeriStar stock options.................................... 10,600
Elimination of historical MeriStar balances................. (486) (1,180,687)
Offering expenses of new $100,000 of FelCor Series C
cumulative redeemable preferred stock..................... (3,200)
Adjustment to reflect minority interest as 12.5% of common
equity.................................................... 6,845
----- -----------
Net adjustments................................... $(137) $ (396,114)
===== ===========
</Table>

(L) Represents the elimination of historical MeriStar balances.

75
82

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION

FELCOR LP AND FELCOR

The following tables set forth selected historical consolidated financial
information for FelCor LP and FelCor. The selected historical information is
presented as of and for the years ended December 31, 1996, 1997, 1998, 1999 and
2000 and as of and for the six months ended June 30, 2000 and 2001. We derived
the historical financial information for the years ended December 31, 1996,
1997, 1998, 1999 and 2000 from our consolidated financial statements and the
notes to them, audited by PricewaterhouseCoopers LLP, independent accountants.
Certain reclassifications have been made to previously reported amounts to
conform to current year presentation with no effect to previously reported net
income or shareholders' equity. The selected historical financial information as
of and for the six months ended June 30, 2000 and 2001 has been derived from the
unaudited financial statements which have been prepared by our management on the
same basis as the audited financial statements and, in the opinion of our
management, include all adjustments consisting of normal recurring accruals that
are considered necessary for a fair presentation of the results for those
periods. The results of operations for the six months ended June 30, 2000 and
2001 are not necessarily indicative of results to be anticipated for the entire
year. The following information should be read together with our consolidated
financial statements and financial statement notes included elsewhere in this
prospectus or incorporated herein by reference. See "Where You Can Find More
Information" beginning on page iv.

FELCOR LODGING LIMITED PARTNERSHIP

<Table>
<Caption>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------------------- -----------------------
1996 1997 1998(1) 1999 2000(2) 2000 2001(3)
--------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS EXCEPT PER SHARE AND RATIO DATA)

STATEMENT OF OPERATIONS DATA:
Total revenues....................... $ 98,934 $ 169,688 $ 332,600 $ 495,517 $ 541,872 $ 258,159 $ 560,302
Net income (loss).................... $ 46,527 $ 69,467 $ 121,339 $ 135,776 $ 66,391 $ (12,372) $ 16,341
Net income (loss) applicable to
common unitholders................. $ 38,793 $ 57,670 $ 99,916 $ 111,041 $ 41,709 $ (24,730) $ 4,041
Diluted earnings per unit:
Net income (loss) applicable to
common unitholders before
extraordinary charge............. $ 1.58 $ 1.68 $ 1.93 $ 1.59 $ 0.73 $ (0.39) $ 0.07
Net income (loss) applicable to
common unitholders............... $ 1.49 $ 1.67 $ 1.87 $ 1.57 $ 0.67 $ (0.39) $ 0.07
Weighted average common units
outstanding...................... 26,004 34,467 53,323 70,561 62,556 63,297 62,069
OTHER DATA:
Cash flows provided by operating
activities......................... $ 67,494 $ 97,478 $ 192,583 $ 282,365 $ 277,304 $ 138,743 $ 93,630
Cash flows (used in) provided by
investing activities............... $(478,428) $ (687,860) $ (550,498) $ (205,517) $ (34,766) $ (28,629) $ (265,414)
Cash flows provided by (used in)
financing activities............... $ 251,906 $ 600,132 $ 375,064 $ (75,417) $ (252,601) $ (95,385) $ 209,944
Cash distributions per common
unit(4)............................ $ 1.92 $ 2.10 $ 2.545 $ 2.20 $ 2.20 $ 1.10 $ 1.10
Funds From Operations(5)............. $ 77,141 $ 129,815 $ 217,363 $ 286,895 $ 288,636 $ 149,380 $ 135,683
EBITDA(6)............................ $ 88,355 $ 165,613 $ 306,361 $ 432,689 $ 470,861 $ 238,753 $ 229,576
Ratio of earnings to fixed
charges(7)......................... 5.3x 3.2x 2.7x 2.1x 1.5x 1.0x 1.2x
BALANCE SHEET DATA (AT END OF PERIOD):
Investment in hotels, net of
accumulated depreciation........... $ 899,691 $1,489,764 $3,964,484 $4,035,344 $3,750,275 $3,796,755 $3,710,694
Total assets......................... $ 978,788 $1,673,364 $4,175,383 $4,255,751 $4,103,603 $4,176,765 $4,403,528
Debt................................. $ 239,425 $ 476,819 $1,594,734 $1,833,954 $1,838,241 $1,882,743 $2,134,093
Redeemable units..................... $ 98,542 $ 102,933 $ 67,595 $ 52,338 $ 205,800 $ 151,948 $ 210,929
Partners' capital.................... $ 619,496 $1,049,016 $2,337,375 $2,212,651 $1,880,599 $1,963,703 $1,827,756
</Table>

76
83

FELCOR LODGING TRUST INCORPORATED

<Table>
<Caption>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------------------- -----------------------
1996 1997 1998(1) 1999 2000(2) 2000(2) 2001(3)
--------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS EXCEPT PER SHARE AND RATIO DATA)

STATEMENT OF OPERATIONS DATA:
Total revenues....................... $ 98,934 $ 169,688 $ 332,600 $ 495,517 $ 541,872 $ 258,159 $ 560,302
Net income (loss).................... $ 40,937 $ 63,650 $ 114,839 $ 131,080 $ 61,699 $ (9,973) $ 15,753
Net income (loss) applicable to
common shareholders................ $ 33,203 $ 51,853 $ 93,416 $ 106,345 $ 37,017 $ (22,331) $ 3,453
Diluted earnings per share:
Net income (loss) applicable to
common shareholders before
extraordinary charge............. $ 1.53 $ 1.65 $ 1.92 $ 1.59 $ 0.74 $ (0.39) $ 0.07
Net income (loss) applicable to
common shareholders.............. $ 1.43 $ 1.64 $ 1.86 $ 1.57 $ 0.67 $ (0.39) $ 0.07
Weighted average common shares
outstanding...................... 23,218 31,610 50,314 67,581 55,519 57,161 53,055
OTHER DATA:
Cash flows provided by operating
activities......................... $ 67,494 $ 97,478 $ 192,583 $ 282,365 $ 277,304 $ 138,743 $ 93,630
Cash flows (used in) provided by
investing activities............... $(478,428) $ (687,860) $ (550,498) $ (205,517) $ (34,766) $ (28,629) $ (265,414)
Cash flows provided by (used in)
financing activities............... $ 251,906 $ 600,132 $ 375,064 $ (75,417) $ (252,601) $ (95,385) $ 209,944
Cash distributions per common
share(4)........................... $ 1.92 $ 2.10 $ 2.545 $ 2.20 $ 2.20 $ 1.10 $ 1.10
Funds From Operations(5)............. $ 77,141 $ 129,815 $ 217,363 $ 286,895 $ 288,636 $ 149,380 $ 135,683
EBITDA(6)............................ $ 88,355 $ 165,613 $ 306,361 $ 432,689 $ 470,861 $ 238,753 $ 229,576
BALANCE SHEET DATA (AT END OF PERIOD):
Investment in hotels, net of
accumulated depreciation........... $ 899,691 $1,489,764 $3,964,484 $4,035,344 $3,750,275 $3,796,755 $3,710,694
Total assets......................... $ 978,788 $1,673,364 $4,175,383 $4,255,751 $4,103,603 $4,176,765 $4,403,528
Debt................................. $ 239,425 $ 476,819 $1,594,734 $1,833,954 $1,838,241 $1,882,743 $2,134,093
Minority interest in FelCor
Partnership........................ $ 76,112 $ 73,451 $ 87,353 $ 90,078 $ 252,294 $ 221,878 $ 253,841
Total shareholders' equity........... $ 641,926 $1,078,498 $2,317,617 $2,174,911 $1,834,105 $1,894,258 $1,784,844
</Table>

- ------------

(1) On July 28, 1998, FelCor completed the merger of Bristol Hotel Company's
real estate holdings with and into FelCor. The merger resulted in the net
acquisition of 107 primarily full-service hotels in return for approximately
31 million shares of newly issued common stock. FelCor subsequently
contributed all assets and liabilities it acquired in the merger to us in
exchange for approximately 31 million of our common units.

(2) In the second quarter of 2000, we recorded a $63 million loss related to the
decision to sell certain non-strategic hotel assets, which is reflected in
the income statements presented for the period.

(3) Includes hotel revenues and expenses with respect to 96 hotels that were
leased to either DJONT or subsidiaries of Six Continents Hotels prior to the
effectiveness of the REIT Modernization Act on January 1, 2001. Prior to
January 1, 2001, revenues were comprised mainly of percentage lease
revenues. Additionally, in the first quarter of 2001, we recorded lease
termination costs of $36.2 million with respect to the 96 hotels.

(4) In 1998, we declared a special one-time distribution of accumulated but
undistributed earnings and profits as a result of Bristol Hotel Company
merging with and into FelCor, in addition to the annual dividend of $2.20
per common unit. The amount of the one-time distribution was $0.345 per
common unit.

(5) We consider Funds From Operations to be a key measure of a REIT's
performance, which should be considered along with, but not as an
alternative to, net income and cash flow as a measure of operating
performance and liquidity.

77
84

expense to derive Funds From Operations. This may not be comparable to Funds
From Operations reported by other REITs that do not define the term in
accordance with the current NAREIT definition, that interpret the current NAREIT
definition differently than we do or that do not adjust Funds From Operations
for rent deferred under SAB 101, the loss on assets held for sale, lease
termination costs and swap termination expense. Funds From Operations does
not represent cash generated from operating activities determined by GAAP
and should not be considered as an alternative to net income, determined in
accordance with GAAP, as an indication of our financial performance or to
cash flow from operating activities, determined in accordance with GAAP, as
a measure of our liquidity, nor is it indicative of funds available to fund
our cash needs, including its ability to make cash distributions. Funds From
Operations may include funds that may not be available for discretionary use
by our management due to requirements to conserve funds for capital
expenditures and property acquisitions and other commitments and
uncertainties.

The computation of Funds From Operations for FelCor LP and FelCor yields the
same result. The following table details our computation of Funds From
Operations for FelCor LP.

<Table>
<Caption>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
--------------------------------------------------- -------------------
1996 1997 1998 1999 2000 2000 2001
------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS)

Net income (loss)....................... $46,527 $ 69,467 $121,339 $135,776 $ 66,391 $(12,372) $ 16,341
Deferred rent........................... 18,604
Lease termination costs................. 36,226
Swap termination expense................ 4,824
Gain on sale............................ (2,595)
Loss on assets held for sale............ 63,000 63,000
Series B redeemable preferred
distributions......................... (8,373) (12,937) (12,937) (6,468) (6,468)
Extraordinary charge from write-off of
deferred financing fees............... 2,354 185 3,075 1,113 3,865 225
Depreciation............................ 26,544 50,798 90,835 152,948 160,745 81,480 79,513
Depreciation from unconsolidated
entities.............................. 1,716 9,365 10,487 9,995 10,167 5,136 5,022
------- -------- -------- -------- -------- -------- --------
Funds From Operations................... $77,141 $129,815 $217,363 $286,895 $288,636 $149,380 $135,683
======= ======== ======== ======== ======== ======== ========
Weighted average units outstanding(a)... 29,306 39,157 58,013 75,251 67,239 67,987 66,759
</Table>

- ------------

(a) Weighted average units outstanding are computed including dilutive
options, unvested stock grants and assuming conversion of Series A
preferred units to common units.

(6) EBITDA is computed by adding Funds From Operations, interest expense, our
portion of interest expense from unconsolidated entities, amortization
expense and our Series B redeemable preferred distributions. EBITDA is
presented because it provides useful information regarding our ability to
service debt. EBITDA should not be considered as an alternative measure of
operating results or cash flow from operations, as determined in accordance
with GAAP. EBITDA as presented by us may not be comparable to other
similarly titled measures used by other companies. The computation of EBITDA
for FelCor LP and FelCor yields the same result. A reconciliation of Funds
From Operations to EBITDA is as follows:

Funds From Operations................... $77,141 $129,815 $217,363 $286,895 $288,636 $149,380 $135,683
Interest expense........................ 9,803 28,792 73,182 125,435 158,620 77,644 81,799
Interest expense from unconsolidated
entities.............................. 818 5,895 6,521 6,729 9,188 4,787 4,742
Amortization expense.................... 593 1,111 922 693 1,480 474 884
Series B redeemable preferred
distributions......................... 8,373 12,937 12,937 6,468 6,468
------- -------- -------- -------- -------- -------- --------
EBITDA.................................. $88,355 $165,613 $306,361 $432,689 $470,861 $238,753 $229,576
======= ======== ======== ======== ======== ======== ========
</Table>

(7) For the purpose of computing the ratio of earnings to fixed charges,
earnings consist of income from continuing operations plus fixed charges and
minority interest in FelCor LP, with respect to FelCor, excluding
capitalized interest, and fixed charges consist of interest, whether
expensed or capitalized, and amortization of loan costs.

78
85

MERISTAR LP AND MERISTAR

The following table sets forth selected historical consolidated financial
information for MeriStar LP and MeriStar. The selected historical information is
presented as of and for the years ended December 31, 1996, 1997, 1998, 1999 and
2000 and as of and for the six months ended June 30, 2000 and 2001. The
historical financial information for the years ended December 31, 1998, 1999 and
2000 has been derived from the consolidated financial statements and financial
statement notes of MeriStar LP and MeriStar which have been audited by KPMG LLP,
independent auditors. The selected historical consolidated financial information
for MeriStar LP as of and for the years ended December 31, 1996 and 1997 has
been derived from the unaudited financial statements which have been prepared by
management of MeriStar. The selected historical financial information as of and
for the six months ended June 30, 2000 and 2001 has been derived from the
unaudited financial statements which have been prepared by management of
MeriStar, on the same basis as the audited financial statements and, in the
opinion of management of MeriStar, include all adjustments consisting of normal
recurring accruals that are considered necessary for a fair presentation of the
results for those periods. The results of operations for the six months ended
June 30, 2000 and 2001 are not necessarily indicative of results to be
anticipated for the entire year. The following information should be read
together with the consolidated financial statements and financial statement
notes of MeriStar LP and MeriStar included in this prospectus supplement or
incorporated herein by reference. See "Where You Can Find More Information"
beginning on page iv.

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

<Table>
<Caption>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
---------------------------------------------------------------- (UNAUDITED)
1996 1997 -----------------------
(UNAUDITED) (UNAUDITED) 1998(A) 1999 2000 2000 2001(B)
----------- ----------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND OPERATING DATA)

RESULTS OF OPERATIONS:
Total revenues....................... $ 102,742 $ 292,554 $ 522,031 $ 374,820 $ 400,685 $ 148,587 $ 609,851
Net operating income................. $ 18,773 $ 58,537 $ 135,910 $ 218,299 $ 230,340 $ 63,899 $ 104,199
Interest expense, net................ $ 12,223 $ 20,968 $ 50,492 $ 100,387 $ 117,524 $ 58,417 $ 60,261
Income (loss) before gain (loss) on
sale of assets and extraordinary
gain (loss)......................... $ 3,915 $ 21,290 $ 86,304 $ 116,207 $ 111,197 $ 5,398 $ 42,690
Gain (loss) on sale of assets, net of
tax(C).............................. $ -- $ -- $ -- $ -- $ 3,439 $ 3,439 $ (1,062)
Extraordinary gain (loss), net of
tax(D).............................. $ (1,956) $ (4,092) $ (1,238) $ (4,551) $ 3,400 $ 3,400 $ (1,226)
Net income........................... $ 1,959 $ 17,198 $ 85,066 $ 111,656 $ 118,036 $ 12,237 $ 40,402
Net income applicable to common
unitholders......................... $ 1,959 $ 17,198 $ 84,416 $ 111,091 $ 117,471 $ 10,916 $ 40,120
Basic earnings per unit before
extraordinary gain (loss)(E)........ $ 0.31 $ 1.29 $ 2.38 $ 2.22 $ 2.25 $ 0.16 $ 0.85
Diluted earnings per unit before
extraordinary gain (loss)(E)........ $ 0.31 $ 1.27 $ 2.25 $ 2.15 $ 2.18 $ 0.16 $ 0.83
Distributions per common unit(F)..... $ -- $ -- $ 0.82 $ 2.02 $ 2.02 $ 1.01 $ 1.01
Number of partnership units
outstanding(G)...................... 12,754 26,743 51,460 52,193 48,851 50,435 48,712
OTHER FINANCIAL DATA:
EBITDA(H)............................ $ 26,672 $ 78,891 $ 194,752 $ 320,094 $ 341,028 $ 118,001 $ 178,499
Net cash provided by operating
activities.......................... $ 12,147 $ 55,417 $ 186,891 $ 228,329 $ 224,088 $ 120,671 $ 114,562
Net cash (used in) provided by
investing activities................ $(223,425) $ (579,758) $ (785,505) $ (187,952) $ (14,286) $ 13,027 $ (49,534)
Net cash provided by (used in)
financing activities................ $ 226,131 $ 584,220 $ 520,457 $ (41,948) $ (212,173) $ (135,629) $ (45,003)
Ratio of earnings to combined fixed
charges and preferred
distributions(I).................... 1.33x 2.71x 2.35x 1.89x 1.82x 1.08x 1.57x
BALANCE SHEET DATA:
Investments in hotel properties,
gross............................... $ 343,092 $ 950,052 $2,957,543 $3,118,723 $3,193,730 $3,164,045 $3,209,185
Total assets......................... $ 354,795 $1,040,223 $2,989,609 $3,086,096 $3,006,500 $3,036,517 $3,084,981
Long-term debt....................... $ 199,476 $ 491,790 $1,602,352 $1,676,771 $1,638,319 $1,632,433 $1,653,050
Redeemable units..................... $ -- $ 66,847 $ 89,435 $ 81,401 $ 88,545 $ 93,932 $ 99,898
Partners' capital.................... $ 49,141 $ 396,838 $1,170,220 $1,203,518 $1,142,772 $1,111,010 $1,116,934
</Table>

79
86

MERISTAR HOSPITALITY CORPORATION

<Table>
<Caption>
SIX MONTHS
ENDED JUNE 30,
YEAR ENDED DECEMBER 31, (UNAUDITED)
------------------------------------------------------------- -----------------------
1996 1997 1998(A) 1999 2000 2000 2001(B)
--------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND OPERATING DATA)

RESULTS OF OPERATIONS:
Total revenues.......................... $ 109,792 $ 316,393 $ 525,297 $ 374,904 $ 400,778 $ 148,639 $ 609,851
Net operating income.................... $ 19,334 $ 61,512 $ 133,906 $ 217,065 $ 229,174 $ 63,310 $ 103,442
Interest expense, net................... $ 12,346 $ 21,024 $ 64,378 $ 100,398 $ 117,524 $ 58,417 $ 60,261
Income (loss) before gain (loss) on sale
of assets, extraordinary gain (loss)
and cumulative effect of accounting
change................................. $ 4,353 $ 24,152 $ 48,708 $ 103,496 $ 99,382 $ 3,573 $ 38,658
Gain (loss) on sale of assets, net of
tax(C)................................. $ -- $ -- $ -- $ -- $ 3,425 $ 3,425 $ (1,059)
Extraordinary gain (loss), net of
tax(D)................................. $ (1,956) $ (4,092) $ (4,080) $ (4,532) $ 3,054 $ 3,054 $ (1,224)
Cumulative effect of accounting change,
net of tax(J).......................... $ -- $ -- $ (921) $ -- $ -- $ -- $ --
Net income (loss)....................... $ 2,397 $ 20,060 $ 43,707 $ 98,964 $ 105,861 $ 10,052 $ 36,375
Basic earnings (loss) per share before
extraordinary gain (loss)(E)........... $ 0.31 $ 1.29 $ 1.45 $ 2.19 $ 2.21 $ 0.14 $ 0.84
Diluted earnings (loss) per share before
extraordinary gain (loss)(E)........... $ 0.31 $ 1.27 $ 1.40 $ 2.11 $ 2.14 $ 0.14 $ 0.82
Dividends per common share(F)........... $ -- $ -- $ 0.82 $ 2.02 $ 2.02 $ 1.01 $ 1.01
Number of shares of common stock issued
and outstanding(G)..................... 12,754 24,867 46,718 47,257 44,380 45,987 44,480
OTHER FINANCIAL DATA:
EBITDA(H)............................... $ 27,582 $ 82,502 $ 194,609 $ 320,164 $ 341,121 $ 118,053 $ 178,360
Net cash provided by operating
activities............................. $ 13,373 $ 59,882 $ 162,796 $ 229,193 $ 224,037 $ 121,084 $ 117,018
Net cash (used in) provided by investing
activities............................. $(225,251) $ (586,259) $ (785,505) $ (187,952) $ (14,286) $ 13,027 $ (49,534)
Net cash provided by (used in) financing
activities............................. $ 226,830 $ 588,428 $ 543,256 $ (42,812) $ (212,121) $ (136,042) $ (47,467)
BALANCE SHEET DATA:
Investments in hotel properties,
gross.................................. $ 343,092 $ 950,052 $2,957,543 $3,118,723 $3,193,730 $3,164,046 $3,209,185
Total assets............................ $ 379,161 $1,124,642 $2,998,460 $3,094,201 $3,013,008 $3,043,648 $3,090,907
Long-term debt.......................... $ 200,361 $ 492,771 $1,602,352 $1,676,771 $1,638,319 $1,632,490 $1,653,050
</Table>

- ------------

(A) MeriStar LP and MeriStar were created on August 3, 1998, when American
General Hospitality Corporation, a corporation operating as a REIT, and its
associated entities merged with CapStar Hotel Company and its associated
entities. In connection with the merger between CapStar and American
General, MeriStar Hotels & Resorts, a separate publicly traded company, was
created to be the lessee and manager of nearly all of MeriStar's hotels.
Prior to August 2, 1998, MeriStar LP's and MeriStar's operating results
consisted of the revenues and expenses of the hotels.

(B) From August 3, 1998 until January 1, 2001, MeriStar Hotels & Resorts leased
substantially all of MeriStar's hotels, and MeriStar LP and MeriStar earned
lease revenue under the participating lease agreements with its lessees.
Upon assigning the 106 leases with MeriStar Hotels & Resorts to MeriStar's
taxable REIT subsidiaries on January 1, 2001, in conjunction with the REIT
Modernization Act, MeriStar LP's and MeriStar's operating results now
include the revenues and expenses of these hotels.

(C) During 2000, MeriStar LP and MeriStar sold three limited service hotels
that resulted in a gain on sales of assets. During 2001, MeriStar LP and
MeriStar sold one hotel that resulted in a loss on the sale of the asset.

(D) During 1996, 1997, 1998, and 1999 some loan facilities were refinanced and
the write-offs of deferred costs associated with these facilities were
recorded as extraordinary losses in accordance with GAAP. During 2000,
MeriStar LP repaid some of its notes payable to MeriStar at a discount, and
MeriStar repurchased some of its convertible notes at a discount, which
resulted in extraordinary gains. During 2001, MeriStar LP and MeriStar paid
down a portion of its revolving credit facility resulting in an
extraordinary loss.

(E) Basic and diluted earnings per unit or share before extraordinary loss for
the year ended December 31, 1996 is based on earnings for the period from
August 20, 1996, the date of CapStar's initial public offering, through
December 31, 1996.

(F) No distributions or dividends were declared prior to August 3, 1998, the
date of the merger between American General and CapStar.

(G) As of the end of the period presented.

(H) EBITDA represents earnings before interest expense, income taxes,
depreciation and amortization. MeriStar's management believes that EBITDA
is a useful measure of operating performance because it is industry
practice to evaluate hotel properties based on operating income before
interest, depreciation and amortization, which is generally equivalent to
EBITDA, and EBITDA is unaffected by the debt and equity structure of the
entity. EBITDA does not represent cash flow from operations as

80
87

defined by GAAP, is not necessarily indicative of cash available to fund
all cash flow needs, and should not be considered as an alternative to net
income under GAAP for purposes of evaluating MeriStar LP's and MeriStar's
results of operations and may not be comparable to other similarly titled
measures used by other companies.

For the six months ended June 30, 2001, MeriStar LP's and MeriStar's EBITDA
has been presented before the effect of non-recurring items; swap
termination costs of $9,297; the write-down of MeriStar LP's investment in
STS Hotel Net of $2,112; FelCor merger costs of $3,789; and costs to
terminate the leases with Prime Hospitality Corporation of $1,315.

(I) For the purpose of computing the ratio of earnings to combined fixed
charges and preferred distributions, earnings consist of income from
continuing operations plus fixed charges, excluding capitalized interest,
and fixed charges consist of interest, whether expensed or capitalized, and
amortization of loan costs.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The management's discussion and analysis of financial condition and results
of operations of FelCor, FelCor LP and MeriStar are incorporated in this
document by reference to the companies' Annual Reports on Form 10-K for the year
ended December 31, 2000 and Quarterly Reports on Forms 10-Q and 10-Q/A for the
six months ended June 30, 2001. See "Where You Can Find More Information." The
management's discussion and analysis of financial condition and results of
operations of MeriStar LP is attached as Appendix I to this prospectus.

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BUSINESS AND PROPERTIES

FELCOR AND FELCOR LP

We are one of the nation's largest hotel REITs, with ownership interests in
185 hotels at June 30, 2001, with nearly 50,000 rooms and suites. As of June 30,
2001, we own a 100% interest in 152 hotels with 40,309 rooms and suites, a 90%
or greater interest in entities owning seven hotels with 1,745 rooms and suites,
a 60% interest in an entity owning two hotels with 983 rooms and a 50% interest
in separate entities that own 24 hotels with 5,459 rooms and suites. Our hotels
are located in the United States (35 states) and Canada, with concentrations in
Texas (41 hotels), California (19 hotels), Florida (18 hotels) and Georgia (14
hotels). We own the largest number of Embassy Suites, Crowne Plaza, Holiday Inn
and independently owned Doubletree-branded hotels in the world.

We seek to increase operating cash flow through both internal growth and
selective acquisitions, while maintaining a flexible and conservative capital
structure. In addition to renovating, redeveloping and repositioning our
acquired hotels, we may seek to acquire new upscale properties that will benefit
from affiliation with one of the premium brands available to us through our
strategic brand owner and manager relationships with Hilton, Six Continents
Hotels and Starwood.

In support of this strategy, on July 28, 1998, we merged Bristol Hotel
Company into FelCor, acquiring its 107 primarily full-service hotels. These
hotels added more than 28,000 rooms and suites to our portfolio, more than
doubling our size. The merger also provided diversification, both geographically
and by asset class, by adding hotels in many of our key markets and broadening
our portfolio in the full-service, upscale and midscale hotel markets. During
1998, we purchased 16 hotels in addition to those acquired in the merger. Since
1998, we have sold nine hotels, contributed eight hotels to a joint venture in
which we have a 50% interest, and acquired a 50% joint venture interest in one
hotel.

MERISTAR MERGER

The MeriStar merger will also involve the merger of MeriStar's subsidiary
operating limited partnership, MeriStar LP, with a wholly-owned subsidiary of
our operating limited partnership, FelCor LP, with MeriStar LP surviving as a
subsidiary of FelCor LP. The holders of common partnership units and vested
profits-only partnership units in MeriStar LP will receive, for each such unit,
$4.60 in cash and 0.784 common partnership units in FelCor LP. Unvested
profits-only partnership units will be cancelled. The holders of Class C
preferred units in MeriStar LP will receive, for each such unit, $4.60 in cash
and 0.784 Series C preferred units in FelCor LP. The holders of Class D
preferred units in MeriStar LP will receive, for each such unit, one Series D
preferred unit in FelCor LP.

The MeriStar merger, which is subject to stockholder approval and other
customary conditions, is expected to close near the end of the third quarter of
2001. The equity portion of the transaction is structured to qualify as a
tax-free merger with respect to the share consideration. We will continue to
operate as a REIT and Thomas J. Corcoran, Jr. will continue as our President and
Chief Executive Officer. Paul W. Whetsell and Steven D. Jorns, directors of
MeriStar, have agreed to join our board of directors. We will maintain our
existing headquarters facilities in Irving, Texas.

MeriStar is a REIT which owns a portfolio of primarily upscale,
full-service hotels, diversified geographically as well as by franchise and
brand affiliations, in the United States and Canada. As of

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June 30, 2001, MeriStar owned 113 hotels with 28,877 rooms. The hotels are
located in major metropolitan areas or rapidly growing secondary markets and are
well located within these markets. A majority of MeriStar's hotels are operated
under nationally recognized brand names such as Hilton, Sheraton, Westin,
Marriott, Radisson, Doubletree and Embassy Suites.

Upon completion of the MeriStar merger, we will have ownership interests in
298 hotels, and for the year ended December 31, 2000, on a pro forma basis, our
revenues were $2.9 billion and our EBITDA was $819.0 million. Assuming the sale
of the 15 remaining non-strategic hotels designated by FelCor as held for sale,
after the MeriStar merger, we will have ownership interests in 283 hotels with
approximately 75,000 rooms and suites.

We are the largest independent owner of Embassy Suites and
Doubletree-branded hotels, which are licensed by Hilton. As a result of the
MeriStar merger, we will acquire three Embassy Suites, six Doubletree Hotels and
23 Hilton hotels. Similarly, we currently own 69 hotels, and following the
MeriStar merger, will own 88 hotels, licensed by Six Continents Hotels,
primarily under the Holiday Inn and Crowne Plaza names. We also currently own 11
and, following the MeriStar merger, will own 26, Starwood-branded hotels,
primarily under the Sheraton and Westin names, which are licensed by Starwood.

THE INDUSTRY

The United States hotel industry profitability has improved each year since
1992 until 2000, its longest sustained growth in history. According to
PricewaterhouseCoopers LLP's 1999 Lodging Industry Briefing and April 10, 2001
U.S. Lodging Industry Update, after a period of extended unprofitability in the
late 1980's and early 1990's, during which time the increase in the supply of
new hotel rooms significantly outpaced growth in room demand, lodging industry
profit increased every year from 1992 through 2000. The percentage growth in
room demand exceeded percentage growth in new room supply from 1992 through
1996. While 1997 and 1998 experienced the highest number of new room starts in
the prior 10 years, 1999 showed a decline in new room starts of 9.7% from the
1998 level and is expected to decline by 16.2% in 2000, compared to 1999,
according to PricewaterhouseCoopers LLP's January 2001 Hospitality Directions.
In spite of the above-average increases in room supply since 1995, according to
PricewaterhouseCoopers LLP's September 1997 and January 2001 Hospitality
Directions, and April 10, 2001 U.S. Lodging Industry Update, annual revenue per
available room has grown each year from 1991 through 2000. Recent economic
conditions have produced the hotel industry's first declines in RevPAR, compared
to prior year periods, since 1991. A decline in our RevPAR will likely result in
a corresponding decrease in revenues and net income. Although we had positive
RevPAR growth of 2.0% in the first quarter of 2001, during the second quarter
our hotels experienced a RevPAR decline of 7.4%, and MeriStar's hotels had a
RevPAR decline of 6.0%, compared to the same period of 2000. According to Smith
Travel Research, the U.S. hospitality industry experienced a 3.7% decline in
RevPAR for the second quarter.

Smith Travel Research, a leading provider of industry data, classifies
hotel chains into five distinct categories: Upper Upscale, Upscale, Midscale
With Food & Beverage, Midscale Without Food & Beverage, and Economy. We remain
focused on properties in the Upper Upscale (including Doubletree Guest Suites,
Embassy Suites, Sheraton and Westin hotels), Upscale (including Crowne Plaza,
Doubletree Hotels and Homewood Suites), and Midscale With Food & Beverage
(including Harvey, Holiday Inn and Holiday Inn Select hotels) categories, from
which we derived approximately 97% of our room and suite revenues in 2000.

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Smith Travel Research also categorizes hotels based upon their relative
market positions, as measured by ADR, as Luxury, Upscale, Midprice, Economy and
Budget. The following table contains information with respect to average
occupancy, ADR and RevPAR for our hotels and MeriStar's hotels, as well as all
Upscale U.S. hotels, Midprice U.S. hotels and U.S. hotels as reported by Smith
Travel Research for the periods indicated.

<Table>
<Caption>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED
---------------------------------------------- JUNE 30,
1996 1997 1998 1999 2000 2001
------- ------- ------ ------- ------- ----------

NUMBER OF FELCOR HOTELS............ 43 73 193 188 186 185
NUMBER OF MERISTAR HOTELS.......... 19 47 117 116 114 113
OCCUPANCY:
FelCor hotels(1)................. 71.6% 73.2% 68.3% 68.2% 70.4% 68.8%
MeriStar hotels(2)............... 71.6 72.0 71.5 71.6 72.2 70.9
All Upscale U.S. hotels(3)....... 68.4 67.9 65.9 64.9 65.1 63.3
All Midprice U.S. hotels(4)...... 65.5 64.9 62.0 61.1 61.5 59.9
All U.S. hotels.................. 65.1 64.5 63.8 63.1 63.5 61.9
ADR:
FelCor hotels(1)................. $105.50 $112.47 $96.62 $100.72 $104.42 $106.42
MeriStar hotels(2)............... 82.84 86.87 95.00 101.14 107.60 112.28
All Upscale U.S. hotels(3)....... 83.94 88.25 85.33 87.45 90.88 94.62
All Midprice U.S. hotels(4)...... 62.85 67.67 62.15 64.89 68.23 70.81
All U.S. hotels.................. 70.95 75.31 78.15 81.29 85.24 87.67
REVPAR:
FelCor hotels(1)................. $ 75.52 $ 82.37 $66.02 $ 68.72 $ 73.52 $ 73.26
MeriStar hotels(2)............... 59.31 62.55 67.90 72.44 77.71 79.66
All Upscale U.S. hotels(3)....... 57.40 59.92 56.23 56.76 59.16 59.89
All Midprice U.S. hotels(4)...... 41.16 43.91 38.53 39.65 41.96 42.42
All U.S. hotels.................. 46.21 48.44 49.86 51.29 54.13 54.27
</Table>

- ------------

(1) Information is historical, including periods prior to ownership by FelCor.
(2) Information is historical, as provided by MeriStar.
(3) This category includes hotels in the "upscale price level," defined as
hotels with ADRs in the 70th to 85th percentiles in their respective
markets.
(4) This category includes hotels in the "midprice level," defined as hotels
with ADRs in the 40th to 70th percentiles in their respective markets.

BUSINESS STRATEGY

Hotel Renovation, Redevelopment and Rebranding

We expect to continue to differentiate ourselves from many of our
competitors by:

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- our ongoing program for the maintenance of our upgraded hotel assets,
which generally includes:

-- contribution of approximately 4.0% of total annual room and suite
revenue to a capital reserve for routine capital replacements and
improvements; and

-- adherence to a rigorous maintenance and repair program, resulting in
the expenditure of more than 4.0% of annual hotel revenues on
maintenance of the hotels.

We have demonstrated our ability to successfully execute renovations. Our
renovation and rebranding of the 18 Crown Sterling Suites hotels, which were
acquired during 1996 and 1997, achieved an overall RevPAR increase of 47.7%
between 1996 and 2000. During 1998, 1999 and 2000, an aggregate of approximately
$550 million in capital improvements and other capital expenditures were made to
our hotels, with approximately 3% of total hotel room nights being lost in 1998,
2% in 1999 and 1% in 2000, due to renovations. During the same period, MeriStar
spent approximately $423 million on their renovation and ongoing property
capital expenditures. During 2001, we currently expect to spend approximately
$20 million on the renovation of eight hotels, approximately $28 million to
complete renovations started in 2000 at 46 hotels, and approximately $50 million
for other capital expenditures. We expect an insignificant number of room nights
to be lost during 2001 as a result of renovations. During 2001, MeriStar expects
to spend approximately $65 million to complete renovation programs and for
ongoing capital expenditure programs. We believe that both our and MeriStar's
historical capital expenditures should limit the need for future major
renovation expenditures.

The largest single renovation project that we have completed was the
Allerton Crowne Plaza in Chicago, which reopened in July 1999, after having been
closed for more than a year. This project received numerous awards, including
Lodging Hospitality magazine's Year's Best Design competition in two categories,
Bass Hotels & Resorts 1999 Newcomer of the Year award, and Chicago's Greater
North Michigan Avenue Association 1999 Avenue Enhancement award.

Maintenance of Strong Strategic Relationships

- Hilton, which acquired Promus Hotel Corporation in 1999, has a hotel
system of more than 1,960 hotels with more than 325,000 guest rooms
worldwide, and is now the largest operator of full-service, all-suite
hotels in the United States. In addition to its Hilton and Conrad
International-branded hotels, Hilton owns the Embassy Suites, Doubletree
and Doubletree Guest Suites brands and at June 30, 2001, managed 71 of
our hotels. As a result of its acquisition of Promus, Hilton acquired an
equity interest in FelCor having an aggregate value of approximately $32
million at June 30, 2001, and it became a 50% partner in joint ventures
with us in the ownership of 12 hotels and the holder of a 10% equity
interest in certain of our subsidiaries owning six hotels. Our
relationship with Promus and its Embassy Suites brand provided the
foundation for our historical growth, and we expect to expand our
relationship with Hilton, as a result of the MeriStar merger.

- Six Continents Hotels is one of the largest hotel operating companies in
the world. Six Continents Hotels owns, operates or franchises more than
3,200 hotels with more than 500,000 guest rooms in nearly 100 countries
around the world. Among the brands owned by Six Continents Hotels are
Crowne Plaza, Holiday Inn, Holiday Inn Select, Holiday Inn Express and
Inter-Continental. Six Continents Hotels, which acquired Bristol Hotels &
Resorts in March 2000, managed 90 of our hotels at June 30, 2001. Six
Continents Hotels also owns FelCor common stock and FelCor LP units
aggregating approximately 16.1% of our outstanding common stock and
units.

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suite hotel market. Starwood manages 11 of our hotels and is a 40% joint
venture partner with us in the ownership of two hotels and a 50% joint
venture partner with us in the ownership of one hotel.

Maintenance of Financial Flexibility

HOTELS HELD FOR SALE

We identified 25 non-strategic hotels during 2000 which we have announced
our intention to sell. These hotels include most of our limited service hotels,
a number of our small market Holiday Inn hotels and all of our Marriott-branded
hotels. These hotels represent 8.3% of our total rooms, but only 4.2% of total
revenues. Management believes the sale of these non-strategic hotels will allow
us and our brand managers to focus our efforts on our upscale and full service
hotels in more strategic markets. Our board of directors approved a $63 million
loss on assets held for sale, to reflect the difference between our book value
and the estimated market value for these hotels.

We have completed the sale of two of the hotels held for sale, recognizing
a gain of approximately $135,000. In addition, in March 2001, we contributed
eight of the hotels held for sale to an entity in which we own a 50% equity
interest, and an affiliate of IHC holds the other 50% equity interest. We
contributed assets with a book value of approximately $77 million, received net
cash proceeds of $48 million and retained a $17 million preferred interest. As a
result of these transactions, at June 30, 2001, we had 15 remaining hotels
designated as hotels held for sale.

RECENT DEVELOPMENTS

Since January 1, 2001, we:

- acquired from subsidiaries of Six Continents Hotels the leases covering
12 of the 25 hotels identified in the second quarter of 2000 as held for
sale and terminated the related management agreements in exchange for
413,585 shares of FelCor common stock valued at approximately $10
million; 11 of the leases were transferred to our TRSs effective as of
January 1, 2001, and one was terminated in connection with the sale of
the related hotel;

- completed the acquisition of DJONT, effective as of January 1, 2001, for
416,667 units of limited partnership interest in FelCor LP, valued at
approximately $10 million;

- contributed eight of the hotels held for sale in March 2001 to an entity
in which we hold a 50% equity interest and in which an affiliate of IHC
holds the other 50% equity interest; another affiliate of IHC manages
each of these hotels;

- entered into the merger agreement with MeriStar and MeriStar LP;

- completed the private placement of the Old Notes. Pending use to finance
in part the MeriStar merger, approximately $316 million of the proceeds
of the proceeds of the Old Notes was placed in a restricted proceeds
account to fund the special redemption described below. If the MeriStar
merger is not closed on or prior to November 30, 2001 or the merger
agreement relating to the MeriStar merger is terminated earlier, the
funds in the restricted proceeds account will be used to redeem $300
million aggregate principal amount of the notes at a redemption price
equal to 101% of their principal amount, plus accrued interest to the
date of redemption. Pursuant to the restricted proceeds agreement, the
funds in the restricted proceeds account will be released to FelCor LP to

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pay a portion of the purchase price for the MeriStar merger and to pay
related fees and expenses upon receipt by the escrow agent of an
officers' certificate that states that all necessary conditions to the
closing of the MeriStar merger have been satisfied or waived;

- announced Richard J. O'Brien as our Chief Financial Officer and Executive
Vice President in June 2001;

- acquired the remaining 88 leases held by Six Continents Hotels on July 1,
2001; and

- amended and restated our line of credit to increase it, upon completion
of the MeriStar merger, from $600 million to $700 million.

REIT Modernization Act

On January 1, 2001, the provisions of the REIT Modernization Act became
effective. These provisions, among other things, reduce the distribution
requirement for REITs from 95% of taxable income to 90% of taxable income for
taxable years after 2000. These provisions also provide that for purposes of
determining whether rents attributable to personal property leased in connection
with the lease of real property are greater than 15% of the total rents received
under the lease, the rents attributable to the personal property will be
determined on the basis of a comparison of the fair market values of the real
and personal property rather than a comparison of their adjusted bases.

In addition, these provisions allow REITs, subject to certain limitations,
to own, directly or indirectly, up to 100% of the stock of a TRS that can engage
in businesses previously prohibited to a REIT. In particular, these provisions
permit hotel REITs to own a TRS that can lease hotels from the REIT, rather than
requiring the lessee to be a separate, unaffiliated party. Hotels leased to a
TRS still must be managed, however, by an unaffiliated third party. The TRS
provisions are complex and impose several conditions on the use of TRSs,
generally to assure that TRSs are subject to an appropriate level of corporate
taxation. Further, no more than 20% of a REIT's assets may consist of securities
of TRSs, and no more than 25% of a REIT's assets may consist of non-qualifying
assets, including securities of TRSs and other taxable subsidiaries. In
addition, the TRS legislation provides that a REIT may not own more than 10% of
the voting power or value of a taxable subsidiary that is not treated as a TRS.
Although the TRS provisions became effective on January 1, 2001, a taxable
subsidiary in existence on July 12, 1999 is grandfathered under the new
provisions unless and until (1) it engages in a new line of business or acquires
a substantial new asset or (2) FelCor acquires additional stock in the taxable
subsidiary. Such existing taxable subsidiaries can be converted into TRSs on a
tax-free basis at any time before January 1, 2004. As a result of the TRS
provisions, we and MeriStar were able to form or acquire one or more TRSs to
acquire all or a portion of our and its existing hotel leases and to serve as
the lessee for any additional hotels that we or it acquires. Any "profit" from
leases held by a TRS, after payment of the applicable corporate tax, will be
available for distribution to us or MeriStar in the form of dividends.

As a result of the passage of the REIT Modernization Act, we completed the
acquisition of 100% of DJONT, effective January 1, 2001, and contributed the
same to our TRSs. As consideration, we issued 416,667 FelCor LP units, valued at
approximately $10 million, and assumed DJONT's accumulated shareholders'
deficit. On January 1, 2001, we acquired from Six Continents Hotels the leases
covering 11 of the hotels and terminated the related management agreements in
exchange for 413,585 FelCor LP units valued at approximately $10 million
including the cost of terminating one additional lease in connection with the
sale of the related hotel. We acquired the remaining 88 leases held by Six
Continents Hotels on July 1, 2001. As consideration for the acquisition of such
leases, we entered into long term management agreements with Six Continents
Hotels with regard to these hotels and FelCor issued to Six Continents Hotels
100 shares of its common stock.

In 2000, MeriStar established a special committee of independent members of
its board of directors to negotiate the transfer of MeriStar's existing leases
with subsidiaries of MeriStar Hotels & Resorts to MeriStar's TRSs. Accordingly,
effective January 1, 2001, MeriStar's TRSs executed agreements with subsidiaries
of MeriStar Hotels & Resorts, which assigned MeriStar's existing leases to
MeriStar's TRSs.

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In connection with the assignment, the TRSs executed new management agreements
with a subsidiary of MeriStar Hotels & Resorts for each property that was
previously leased by them. The management agreements were structured to
substantially mirror the economics of the former lease agreements. However,
since this structure is a significant change from the business structure
MeriStar has maintained, it is not currently possible to predict the outcome of
this restructuring.

HOTEL BRANDS

The following table includes descriptive information about our properties
and the MeriStar properties as of June 30, 2001:

<Table>
<Caption>
NUMBER OF PROPERTIES
----------------------------------
FELCOR(1) MERISTAR COMBINED(1)
--------- -------- -----------

Hilton Brands:
Embassy Suites............................................ 59 3 62
Doubletree and Doubletree Guest Suites.................... 11 6 17
Hampton Inn............................................... 4 4
Hilton and Hilton Suites.................................. 1 23 24
Homewood Suites........................................... 1 1
Six Continents Hotels Brands:
Holiday Inn............................................... 39 9 48
Crowne Plaza and Crowne Plaza Suites...................... 18 5 23
Holiday Inn Select........................................ 10 5 15
Holiday Inn Express....................................... 2 2
Starwood Brands:
Sheraton and Sheraton Suites.............................. 10 11 21
Westin.................................................... 1 4 5
Four Points by Sheraton................................... 1 1
Marriott Brands:
Courtyard by Marriott..................................... 2 5 7
Marriott.................................................. 3 3
Fairfield Inn............................................. 5 5
Radisson Brands:
Radisson.................................................. 12 12
Other Brands................................................ 7 26 33
--- --- ---
Total Hotels...................................... 170 113 283
=== === ===
</Table>

- ------------

(1) Excludes the 15 hotels designated as held for sale.

Embassy Suites Hotels

Embassy Suites hotels are upscale, full service, all suite hotels designed
to attract frequent business travelers, leisure travelers and weekend guests.
Embassy Suites consistently achieves one of the highest guest satisfaction
ratings in the industry. Embassy Suites hotels offer numerous services and
amenities, such as:

- two-room suites, containing two telephones, a mini-refrigerator, coffee
maker, microwave oven, wet bar, and two color televisions;

- complimentary, full, cooked-to-order breakfast;

- complimentary cocktails during two hours every evening, subject to local
laws and regulations, in an atrium environment;

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- fitness center, indoor heated pool, sauna, whirlpool and steam room; and

- guest laundry and valet services.

Restaurant, banquet, in-room dining and lounge services are available to guests
at customary rates. Embassy Suites hotels are constructed, maintained and
operated in accordance with a comprehensive set of building, maintenance,
operational, record keeping and reservation system guidelines designed to ensure
a uniformly high level of service, appearance and quality.

Holiday Inn and Holiday Inn Select Hotels

The Holiday Inn brand is positioned to attract the business and leisure
traveler seeking up-to-date products and features, value and friendly service.
Holiday Inn hotels typically offer a full-service restaurant and lounge,
swimming pool, meeting and banquet facilities, optional fitness center and
electronic locks. In-room amenities generally include a hair dryer, coffee
maker, iron and ironing board, alarm/clock radio and 25" television. The Holiday
Inn name is recognized around the world, with more than 1,500 hotels currently
being operated under this brand.

The Holiday Inn Select hotels are focused on the business traveler. Each
room offers a residential decor with a well-lit work area, including a dataport
and voicemail, and in-room coffee makers. Amenities offered at the Holiday Inn
Select hotels generally include full business services such as photocopying and
telecopying, meeting capabilities for small to mid-size groups, swimming pool,
exercise facilities and full service restaurant and lounge. There are more than
70 Holiday Inn Select hotels operating in the Americas.

The Holiday Inn, Holiday Inn Select and Crowne Plaza brands are part of the
family of brands owned, operated and franchised by Six Continents Hotels. Six
Continents Hotels owns, operates or franchises more than 3,000 hotels with more
than 500,000 guest rooms in nearly 100 countries around the world.

Crowne Plaza Hotels

Crowne Plaza hotels offer upscale accommodations for business and leisure
travelers looking for a full range of services. Guests receive personalized
attention, including welcoming valet and bell staff, concierge service and full
health and exercise facilities. Large guest rooms provide a well-lit work area,
two telephones with dataport and voicemail, in-room coffee maker, iron, hair
dryer, make-up mirror and free newspaper delivered every weekday. Full business
services are available to handle guest secretarial requirements. Crowne Plaza
hotels also provide attractive and functional meeting areas that are suitable
for a variety of occasions, ranging from small private gatherings to banquets
and large conferences. There are currently more than 140 Crowne Plaza hotels and
over 40,000 guest rooms in major urban centers, gateway cities and resort
destinations worldwide.

Sheraton and Sheraton Suites

Sheraton hotels, including Sheraton Suites, are part of Starwood, which
owns the Sheraton, Westin and other brand names. Sheraton Suites hotels
typically offer two-room suites, each with a wet bar, refrigerator, microwave,
coffee maker and two televisions. Restaurant, lounge, swimming pool and fitness
center facilities are also typically available to guests. While each of these
hotels offers some suite accommodations, the substantial percentage of the
accommodations are non-suite rooms.

Sheraton hotels generally offer numerous amenities and facilities, such as
multiple restaurants, banquet and meeting space, recreational facilities
(including indoor and/or outdoor pools and fitness centers) and business
centers. Starwood owns, leases, manages or franchises more than 725 properties
with approximately 225,000 rooms in over 80 countries.

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Hilton and Hilton Suites

Hilton hotels are upscale, full-service hotels designed to attract business
travelers, leisure guests, and in the many Hilton properties with appropriate
facilities, groups and conventions. Hilton Suites are full-service, all-suites
properties with the amenities of the conventional Hilton-branded hotels in an
all-suites format.

Over decades of operation, the Hilton name has achieved 98% brand awareness
worldwide. Conrad Hilton purchased his first hotel in 1919, built the first
Hilton-branded hotel in 1925, and established the first "nationwide" hotel chain
in 1943. Today Hilton has 499 hotels with 147,667 rooms worldwide which are
owned, managed or franchised by Hilton, and is the owner of a number of other
hotel brands as set forth in "Embassy Suites" above.

Radisson Hotels

Radisson Hotels and Resorts Worldwide is one of the Carlson Companies, a
travel and entertainment conglomerate that includes Carlson Wagonlit Travel,
TGIFriday's and Regent International Hotels. From the original purchase of the
Radisson hotel in downtown Minneapolis in the 1960's, the brand has grown to
more than 375 properties with nearly 90,000 guest rooms in 50 countries.
Radisson hotels are full-service properties, generally with restaurants, meeting
space and banquet capabilities.

Doubletree and Doubletree Guest Suites Hotels

The Doubletree Guest Suites all-suite hotels comprise one of the largest
all-suite hotel chains in the United States, as measured by number of suites and
system revenues. The Doubletree Guest Suites all-suite hotels are targeted at
business travelers and families who need or desire greater space than that which
is typically provided at traditional hotels. Each guest suite has a separate
living room and dining/work area, with a color television, refrigerator and wet
bar.

Traditional full-service Doubletree hotels are targeted at business
travelers, group meetings and leisure travelers, and typically include a
swimming pool, gift shop, meeting and banquet facilities, at least one
restaurant and cocktail lounge, room service, parking facilities and other
amenities.

Other Hotels

Twenty-nine of our hotels are operated under other brands, as follows:

- Hampton Inn (8 hotels);

- Holiday Inn Express (5 hotels);

- Fairfield Inn (5 hotels);

- Harvey Hotel (4 hotels);

- Courtyard by Marriott (2 hotels);

- Homewood Suites (1 hotel);

- Westin (1 hotel); and

- Independents (3 hotels).

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HOTEL PORTFOLIO

FELCOR

The following table sets forth certain descriptive information regarding
our hotels at June 30, 2001:

<Table>
<Caption>
LOCATION FRANCHISE BRAND ROOMS/SUITES
- -------- --------------- ------------

Birmingham, AL(1)........................................... Embassy Suites 242
Montgomery (East I-85), AL.................................. Holiday Inn 213
Texarkana (I-30), AR(2)..................................... Holiday Inn 210
Flagstaff, AZ............................................... Embassy Suites 119
Phoenix (Airport-44th St.), AZ.............................. Embassy Suites 229
Phoenix (Camelback), AZ..................................... Embassy Suites 233
Phoenix (Crescent), AZ(1)................................... Sheraton 342
Scottsdale (Downtown), AZ(2)(4)............................. Fairfield Inn 218
Tempe (ASU), AZ(1).......................................... Embassy Suites 224
Anaheim (Disney(R) Area), CA(1)............................. Embassy Suites 222
Burlingame (SF Airport So), CA(2)........................... Embassy Suites 339
Covina (I-10), CA(1)(4)..................................... Embassy Suites 264
Dana Point, CA.............................................. Doubletree Guest Suites 198
El Segundo (LAX Airport South), CA.......................... Embassy Suites 350
Irvine (Orange County Airport), CA.......................... Crowne Plaza 335
Milpitas, CA(1)............................................. Embassy Suites 267
Milpitas (San Jose North), CA............................... Crowne Plaza 305
Napa, CA(1)................................................. Embassy Suites 205
Oxnard (Mandalay Beach), CA................................. Embassy Suites 249
Palm Desert, CA(1).......................................... Embassy Suites 198
Pleasanton, CA.............................................. Crowne Plaza 244
Santa Barbara, CA(1)........................................ Holiday Inn 160
San Diego (On the Bay), CA(2)............................... Holiday Inn 600
San Francisco (Financial District), CA(2)................... Holiday Inn 566
San Francisco (Fisherman's Wharf), CA(2).................... Holiday Inn 584
San Francisco (Union Square), CA............................ Crowne Plaza 400
San Rafael (Marin Co.), CA(1)(4)............................ Embassy Suites 235
South San Francisco (SF Airport North), CA(1)............... Embassy Suites 312
Aurora (Denver Southeast), CO(7)............................ Doubletree 248
Avon (Beaver Creek Resort), CO.............................. Independent 72
Hartford (Downtown), CT..................................... Crowne Plaza 342
Stamford, CT(2)............................................. Holiday Inn Select 383
Wilmington, DE(7)........................................... Doubletree 244
Boca Raton, FL(3)........................................... Doubletree Guest Suites 182
Boca Raton, FL.............................................. Embassy Suites 263
Cocoa Beach (Oceanfront Resort), FL......................... Holiday Inn 500
Deerfield Beach, FL(1)...................................... Embassy Suites 244
Ft. Lauderdale, FL(1)....................................... Embassy Suites 359
Ft. Lauderdale (Cypress Creek), FL(1)....................... Sheraton Suites 253
Jacksonville, FL............................................ Embassy Suites 277
Kissimmee (Nikki Bird Resort), FL(2)........................ Holiday Inn 529
Lake Buena Vista (Walt Disney World(R)), FL(2).............. Doubletree Guest Suites 229
Miami (Airport), FL(2)...................................... Crowne Plaza 304
Miami (Airport), FL(1)...................................... Embassy Suites 314
Orlando (North), FL......................................... Embassy Suites 277
Orlando (South), FL(1)...................................... Embassy Suites 244
Orlando (International Drive Resort), FL.................... Holiday Inn 652
Orlando (Airport), FL....................................... Holiday Inn Select 288
Tampa (Busch Gardens), FL(3)................................ Doubletree Guest Suites 129
Tampa (Rocky Point), FL..................................... Doubletree Guest Suites 203
Tampa (Near Busch Gardens), FL(2)........................... Holiday Inn 395
</Table>

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<Table>
<Caption>
LOCATION FRANCHISE BRAND ROOMS/SUITES
- -------- --------------- ------------

Atlanta (Downtown), GA(4)................................... Courtyard by Marriott 211
Atlanta (Airport), GA....................................... Crowne Plaza 378
Atlanta (Powers Ferry), GA(1)............................... Crowne Plaza 296
Atlanta (Buckhead), GA(1)................................... Embassy Suites 317
Atlanta (Airport), GA....................................... Embassy Suites 233
Atlanta (Perimeter Center), GA(1)(4)........................ Embassy Suites 241
Atlanta (Downtown), GA(4)................................... Fairfield Inn 242
Atlanta (Airport North), GA(1).............................. Holiday Inn 493
Atlanta (Jonesboro South), GA(1)............................ Holiday Inn 180
Atlanta (Perimeter Dunwoody), GA(1)......................... Holiday Inn Select 250
Atlanta (Airport Gateway), GA............................... Sheraton 395
Atlanta (Galleria), GA(1)................................... Sheraton Suites 278
Brunswick, GA............................................... Embassy Suites 130
Columbus (Airport North), GA(2)............................. Holiday Inn 223
Davenport, IA(3)............................................ Hampton Inn 132
Davenport, IA(3)............................................ Holiday Inn 287
Chicago (Allerton), IL...................................... Crowne Plaza 443
Chicago (Lombard), IL(1)(4)................................. Embassy Suites 262
Chicago (O'Hare), IL(1)..................................... Sheraton Suites 297
Deerfield, IL(1)............................................ Embassy Suites 237
Moline, IL(3)............................................... Hampton Inn 138
Moline (Airport), IL(3)..................................... Holiday Inn 216
Moline (Airport), IL(3)..................................... Holiday Inn Express 111
Indianapolis (North), IN(1)(4).............................. Embassy Suites 222
Colby, KS(3)................................................ Holiday Inn Express 72
Great Bend, KS(3)........................................... Holiday Inn 175
Hays, KS(3)................................................. Hampton Inn 116
Hays, KS(3)................................................. Holiday Inn 190
Overland Park, KS(1)(4)..................................... Embassy Suites 199
Salina, KS(1)(3)............................................ Holiday Inn 192
Salina (I-70), KS(2)(3)..................................... Holiday Inn Express Hotel
& Suites 93
Lexington, KY............................................... Hilton Suites 174
Lexington, KY(1)............................................ Sheraton Suites 155
Baton Rouge, LA(1).......................................... Embassy Suites 224
New Orleans, LA(1).......................................... Embassy Suites 372
New Orleans (Chateau LeMoyne), LA(1)(2)(4).................. Holiday Inn 171
New Orleans (French Quarter), LA(1)(2)...................... Holiday Inn 276
Boston (Marlborough), MA(1)................................. Embassy Suites 229
Boston (Government Center), MA(2)........................... Holiday Inn Select 303
Baltimore (BWI), MD(7)...................................... Embassy Suites 251
Troy, MI(7)................................................. Embassy Suites 251
Bloomington, MN............................................. Embassy Suites 219
Minneapolis (Airport), MN(1)................................ Embassy Suites 311
Minneapolis (Downtown), MN.................................. Embassy Suites 218
St. Paul, MN(5)............................................. Embassy Suites 210
Kansas City (Country Club Plaza), MO(1)(2)(4)............... Embassy Suites 266
Kansas City (Northeast), MO................................. Holiday Inn 167
St. Louis (Downtown), MO.................................... Embassy Suites 297
St. Louis (Westport), MO(1)................................. Holiday Inn 318
Jackson (Downtown), MS(1)................................... Crowne Plaza 354
Jackson (Briarwood), MS(1)(3)............................... Hampton Inn 119
Jackson (North), MS(1)...................................... Holiday Inn Hotel & Suites 224
Olive Branch (Whispering Woods Hotel and Conference Center),
MS........................................................ Independent 179
Charlotte, NC(1)(4)......................................... Embassy Suites 274
Raleigh/Durham, NC.......................................... Doubletree Guest Suites 203
</Table>

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<Table>
<Caption>
LOCATION FRANCHISE BRAND ROOMS/SUITES
- -------- --------------- ------------

Raleigh, NC(1)(4)........................................... Embassy Suites 225
Omaha, NE................................................... Doubletree Guest Suites 189
Omaha (Central), NE(1)...................................... Hampton Inn 132
Omaha (Southwest), NE....................................... Hampton Inn 131
Omaha (I-80), NE(1)......................................... Holiday Inn 383
Omaha (Old Mill Northwest), NE.............................. Crowne Plaza 213
Omaha (Southwest), NE....................................... Holiday Inn Express Hotel
& Suites 78
Omaha (Southwest), NE....................................... Homewood Suites 108
Parsippany, NJ(1)(4)........................................ Embassy Suites 274
Piscataway, NJ(1)........................................... Embassy Suites 225
Secaucus (Meadowlands), NJ(2)(4)............................ Embassy Suites 261
Secaucus (Meadowlands), NJ.................................. Crowne Plaza 301
Albuquerque (Mountain View), NM............................. Holiday Inn 360
Syracuse, NY................................................ Embassy Suites 215
Cleveland, OH............................................... Embassy Suites 268
Columbus, OH................................................ Doubletree Guest Suites 194
Dayton, OH(1)............................................... Doubletree Guest Suites 138
Tulsa, OK................................................... Embassy Suites 240
Philadelphia (Center City), PA(1)........................... Crowne Plaza 445
Philadelphia (Independence Mall), PA(1)..................... Holiday Inn 364
Philadelphia (Society Hill), PA(1).......................... Sheraton 365
Pittsburgh, PA(1)(2)........................................ Holiday Inn Select 251
Charleston (Mills House), SC................................ Holiday Inn 214
Greenville (Roper), SC...................................... Crowne Plaza 208
Myrtle Beach (Kingston Plantation), SC...................... Embassy Suites 255
Knoxville (Central), TN(2).................................. Holiday Inn 242
Nashville (Airport), TN(3).................................. Doubletree Guest Suites 138
Nashville, TN............................................... Embassy Suites 296
Nashville (Opryland/Airport), TN(2)......................... Holiday Inn Select 385
Addison (North Dallas), TX(1)............................... Crowne Plaza 429
Amarillo (I-40), TX(2)...................................... Holiday Inn 247
Austin (Downtown), TX(7).................................... Doubletree Guest Suites 189
Austin (Airport North), TX(1)(4)............................ Embassy Suites 261
Austin (Town Lake), TX...................................... Holiday Inn 320
Beaumont (Midtown I-10), TX................................. Holiday Inn 253
Corpus Christi, TX(1)....................................... Embassy Suites 150
Dallas (Alpha Road), TX..................................... Bristol House(R) 127
Dallas (Market Center), TX(1)............................... Crowne Plaza 354
Dallas (Park Central), TX(1)................................ Crowne Plaza Suites 295
Dallas (Campbell Centre), TX(7)............................. Doubletree 302
Dallas (DFW Airport South), TX.............................. Embassy Suites 305
Dallas (Love Field), TX(1).................................. Embassy Suites 248
Dallas (Market Center), TX(1)............................... Embassy Suites 244
Dallas (Park Central), TX................................... Embassy Suites 279
Dallas (Regal Row), TX(4)................................... Fairfield Inn 204
Dallas (Downtown West End), TX.............................. Hampton Inn 311
Dallas, TX(1)............................................... Harvey Hotel 313
Dallas (Park Central), TX(6)................................ Sheraton 438
Dallas (Park Central), TX(6)................................ Westin 545
Houston (Near the Galleria), TX(4).......................... Courtyard by Marriott 209
Houston (Medical Center), TX(1)............................. Crowne Plaza 297
Houston (Near the Galleria), TX(4).......................... Fairfield Inn 107
Houston (I-10 East), TX(4).................................. Fairfield Inn 160
Houston (I-10 East), TX(4).................................. Hampton Inn 90
Houston (Medical Center), TX(1)(2).......................... Holiday Inn Hotel & Suites 285
</Table>

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<Table>
<Caption>
LOCATION FRANCHISE BRAND ROOMS/SUITES
- -------- --------------- ------------

Houston (International Airport), TX(1)...................... Holiday Inn 401
Houston (I-10 West), TX..................................... Holiday Inn Select 345
Houston (Near Greenway Plaza), TX(1)........................ Holiday Inn Select 355
Irving (DFW Airport North), TX(1)........................... Harvey Hotel 506
Irving (DFW Airport North), TX(1)........................... Harvey Suites 164
Midland (Country Villa), TX................................. Holiday Inn 250
Odessa (Parkway Blvd), TX................................... Holiday Inn Express Hotel
& Suites 186
Odessa (Centre), TX......................................... Holiday Inn Hotel & Suites 245
Plano, TX(1)................................................ Harvey Hotel 279
Plano, TX................................................... Holiday Inn 161
San Antonio (Airport), TX(1)(2)(4).......................... Embassy Suites 261
San Antonio (Northwest), TX(1)(4)........................... Embassy Suites 217
San Antonio (Downtown), TX(2)............................... Holiday Inn 315
San Antonio (International Airport), TX..................... Holiday Inn Select 397
Waco (I-35), TX............................................. Holiday Inn 171
Salt Lake City (Airport), UT(2)............................. Holiday Inn 191
Tyson's Corner, VA (1)(4)................................... Sheraton 437
Burlington, VT(1)........................................... Sheraton 309
Cambridge, Canada........................................... Holiday Inn 139
Kitchener (Waterloo), Canada................................ Holiday Inn 182
Peterborough (Waterfront), Canada........................... Holiday Inn 155
Sarnia, Canada.............................................. Holiday Inn 151
Toronto (Yorkdale), Canada.................................. Holiday Inn 370
Toronto (Airport), Canada................................... Holiday Inn Select 444
</Table>

- ------------

(1) Encumbered by mortgage debt.

(2) Situated on land leased under a long-term ground lease.

(3) This hotel is one of the 15 remaining non-strategic hotels that we intend to
sell.

(4) This hotel is one of 24 hotels owned by unconsolidated entities in which we
own a 50% equity interest.

(5) Owned subject to a capitalized industrial revenue bond lease that expires in
2011 and permits us to purchase the fee interest at expiration for a nominal
amount.

(6) This hotel is one of two hotels owned by a joint venture in which we own a
60% equity interest.

(7) This hotel is one of six hotels in which we own a 90% equity interest.

MERISTAR

The following table sets forth certain information with respect to
MeriStar's hotels at June 30, 2001:

<Table>
<Caption>
LOCATION FRANCHISE BRAND ROOMS/SUITES
- -------- --------------- ------------

Mesa, AZ................................................ Sheraton 273
Phoenix, AZ............................................. Crowne Plaza 250
Tucson, AZ.............................................. Embassy Suites 204
Century City, CA........................................ Courtyard by Marriott 134
Irvine, CA(2)........................................... Hilton 289
Los Angeles, CA......................................... Marriott 469
Marina Del Rey, CA(2)................................... Courtyard by Marriott 276
Monterey, CA............................................ Hilton 204
Palm Springs, CA(1)..................................... Doral Palm Springs 285
Sacramento, CA(2)....................................... Hilton 331
San Diego, CA........................................... Holiday Inn Select 317
San Francisco, CA(2).................................... Sheraton 525
San Jose, CA(2)......................................... Crowne Plaza 239
San Jose, CA(1)......................................... Wyndham 355
San Pedro, CA(1)........................................ Hilton 226
Santa Barbara, CA....................................... Santa Barbara Inn 71
</Table>

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<Table>
<Caption>
LOCATION FRANCHISE BRAND ROOMS/SUITES
- -------- --------------- ------------

Colorado Springs, CO.................................... Holiday Inn 200
Colorado Springs, CO(2)................................. Sheraton 500
Englewood, CO(2)........................................ Embassy Suites 236
Hartford, CT(1)......................................... Hilton 388
Meriden, CT............................................. Ramada 150
Shelton, CT(2).......................................... Ramada 155
Windsor Locks, CT....................................... Doubletree Bradley Airport 200
Washington, DC(1)....................................... Embassy Row Hilton 193
Washington, DC.......................................... Georgetown Inn 96
Washington, DC.......................................... The Latham Hotel 143
Captiva, FL............................................. South Seas Plantation 579
Clearwater, FL(1)....................................... Hilton 426
Clearwater, FL.......................................... Ramada 289
Cocoa Beach, FL......................................... Hilton 296
Ft. Lauderdale, FL...................................... Holiday Inn 240
Key Largo, FL........................................... Howard Johnson Resort 100
Key Largo, FL........................................... Westin 200
Lake Buena Vista, FL(1)................................. Courtyard by Marriott 314
Lake Buena Vista, FL.................................... Sheraton 489
Marco Island, FL........................................ Radisson 268
Madeira Beach, FL....................................... Holiday Inn 149
Orlando, FL............................................. Radisson 742
Sanibel Island, FL...................................... Best Western Hotel 46
Sanibel Island, FL...................................... Safety Harbor Resort and Spa 193
Sanibel Island, FL...................................... Sanibel Inn 96
Sanibel Island, FL...................................... Seaside Inn 32
Sanibel Island, FL...................................... Song of the Sea 30
Sanibel Island, FL...................................... Sundial Beach Resort 243
Tampa, FL............................................... Doubletree 496
Atlanta, GA(2).......................................... Doubletree Guest Suites 155
Atlanta, GA............................................. Westin Atlanta Airport 495
Jekyll Island, GA(1).................................... Jekyll Inn 262
Marietta, GA............................................ Wyndham 218
Arlington Heights, IL................................... Radisson 201
Chicago, IL............................................. Radisson Hotel & Suites 350
Rosemont, IL(2)......................................... Holiday Inn 507
Schaumburg, IL.......................................... Radisson 200
Indianapolis, IN........................................ Doubletree Guest Suites 137
Lexington, KY........................................... Radisson Plaza 367
Louisville, KY.......................................... Hilton 321
Kenner, LA(2)........................................... Holiday Inn Select 303
Lafayette, LA(2)........................................ Hilton & Towers 327
New Orleans, LA(1)...................................... Maison de Ville 23
Annapolis, MD........................................... Radisson 219
Baltimore, MD........................................... Radisson 148
Columbia, MD............................................ Sheraton 287
Detroit, MI............................................. Hilton 151
Grand Rapids, MI(2)..................................... Hilton 224
Kansas City, MO......................................... Holiday Inn Sports Complex 163
Charlotte, NC(2)........................................ Sheraton Airport Plaza 222
Durham, NC.............................................. Hilton 194
Durham, NC.............................................. Courtyard by Marriott 146
Mahwah, NJ.............................................. Ramada 128
Mahwah, NJ.............................................. Sheraton 225
Morristown, NJ.......................................... Westin 199
Mt. Arlington, NJ(2).................................... Four Points by Sheraton 124
</Table>

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<Table>
<Caption>
LOCATION FRANCHISE BRAND ROOMS/SUITES
- -------- --------------- ------------

Princeton, NJ(1)........................................ Doral Forrestal 290
Secaucus, NJ(1)......................................... Courtyard by Marriott 165
Somerset, NJ(2)......................................... Marriott 440
Albuquerque, NM(2)...................................... Doubletree 295
Albuquerque, NM(1)...................................... Wyndham 276
Las Vegas, NV........................................... Crowne Plaza 201
Las Vegas, NV........................................... St. Tropez Suites 149
Rochester, NY(1)........................................ Radisson 171
Middleburg Heights, OH.................................. Radisson 237
Toledo, OH(1)........................................... Hilton 213
Oklahoma City, OK....................................... Westin 395
Lake Oswego, OR(2)...................................... Crowne Plaza 161
Frazer, PA.............................................. Sheraton 198
Philadelphia, PA(2)..................................... Embassy Suites 288
Trevose, PA............................................. Holiday Inn Select 215
Arlington, TX(2)........................................ Hilton 309
Austin, TX(2)........................................... Doubletree 350
Austin, TX.............................................. Hilton & Towers 320
Bedford, TX............................................. Holiday Inn Select 243
Dallas, TX.............................................. Radisson 304
Dallas, TX.............................................. Renaissance 289
Dallas, TX.............................................. Sheraton 348
Houston, TX(2).......................................... Hilton 292
Houston, TX(2).......................................... Marriott 302
Houston, TX............................................. Hilton 295
Houston, TX............................................. Sheraton 382
Irving, TX(2)........................................... Holiday Inn Select 409
Midland, TX............................................. Hilton 249
Salt Lake City, UT...................................... Hilton 287
Alexandria, VA.......................................... Holiday Inn 178
Alexandria, VA.......................................... Radisson 253
Arlington, VA........................................... Hilton 209
Arlington, VA........................................... Hilton 386
Richmond, VA............................................ Richmond Hotel and Conference 280
Center
Bellevue, WA............................................ Hilton 179
Madison, WI(2).......................................... Crowne Plaza 226
Madison, WI............................................. Holiday Inn 194
Calgary, Alberta, Canada................................ Holiday Inn 170
Guildford, B.C., Canada................................. Sheraton 278
Vancouver, B.C., Canada................................. Holiday Inn 100
Vancouver, B.C., Canada................................. Ramada 118
</Table>

- ------------

(1) Situated on land leased under a long-term ground lease.

(2) Encumbered by mortgage debt.

MANAGEMENT AGREEMENTS

FelCor

In July 2001, we acquired the leasehold interests in 88 hotels from Six
Continents Hotels. In connection with such acquisition, Six Continents Hotels
assigned the leases to those hotels to our TRSs, and the TRSs executed new
management agreements with Six Continents Hotels for the 88 hotels that were
previously leased.

Additionally, as a result of our acquisition of DJONT, our TRSs became
parties to management agreements with subsidiaries of Hilton, including Promus
Hotels, Inc. and its affiliates, DT Management,

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Inc. and its affiliates, and subsidiaries of Starwood, including Sheraton
Operating Corporation and its affiliates.

Management Fees and Performance Standards. Under the agreements with Six
Continents Hotels, the TRS lessees generally pay Six Continents Hotels a basic
management fee for each hotel equal to 2% of adjusted gross revenues of the
hotel plus 5% of the room revenue of the hotel for each fiscal month during the
initial term and any renewal term. The basic management fees owed under the
other management agreements are generally as follows:

- Doubletree -- between 2% and 3% of the hotel's total sales per month;

- Sheraton -- 2% of the hotel's total revenue per accounting period; and

- Promus -- 2% of adjusted gross income payable monthly.

Under the management agreements with Six Continents Hotels, the TRS lessees
are required to pay an incentive management fee based on the performance of all
the managed hotels, considered in the aggregate. The incentive management fee is
computed as a percentage of hotel profits in excess of specified returns to us
based on our investment in the managed hotels. The management agreements with
the other managers generally provide for an incentive management fee based on a
percentage of the TRS lessee's net income before overhead on a hotel by hotel
basis.

Term and Termination. The management agreements with Six Continents Hotels
generally have initial terms of 12 to 17 years. Six Continents Hotels may renew
the management agreements for one additional 5-year term on mutually acceptable
terms and conditions, provided the hotel meets certain performance standards.
The TRSs may elect not to continue to operate the hotels under the brand beyond
the expiration of the initial term, however, such election will give Six
Continents Hotels the right to force us to sell such hotel to it at an appraised
value. The management agreements with the other managers generally have initial
terms of between 10 and 20 years, and the agreements are generally renewable
beyond the initial term for a period or periods of between 5 and 10 years only
upon the mutual written agreement of the parties.

The management agreements are generally terminable upon the occurrence of
standard events of default or if the hotel subject to the agreement fails to
meet certain financial expectations. Upon termination by either party for any
reason, the TRSs generally will pay all amounts due and owing under the
management agreement through the effective date of such termination. Under the
Six Continents Hotels management agreements, if we sell any individual hotel, we
may be required to pay Six Continents Hotels a monthly replacement management
fee equal to the existing fee structure for up to one year. In addition, if a
TRS breaches the agreement, resulting in a default and termination thereof, or
otherwise causes or suffers a termination for any reason other than an event of
default by Six Continents Hotels, the TRS may be liable for liquidated damages
under the terms of the management agreement. However, if the termination results
from the sale of a hotel, no such liquidated damages will be owed if the net
proceeds of the sold hotel are reinvested in one or more hotels licensed by Six
Continents Hotels within one year from the sale of the hotel.

Assignment. Generally, neither party to the management agreements has the
right to sell, assign or transfer the agreements to a third party without the
prior written consent of the other party to the agreement, which consent shall
not be unreasonably withheld. A change in control of either party will generally
require the other's consent, which shall not be unreasonably withheld.

MeriStar

Effective January 1, 2001, MeriStar's TRSs executed agreements with
subsidiaries of MeriStar Hotels & Resorts which assigned MeriStar's existing
leases with MeriStar Hotels & Resorts to MeriStar's TRSs.

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Management Fees and Performance Standards. Each of MeriStar's TRSs will
pay MeriStar Hotels & Resorts a management fee for each hotel equal to a
specified percentage of aggregate hotel operating revenues, increased or
reduced, as the case may be, by 20% of the positive or negative difference
between:

- the actual excess of total operating revenues over total operating
expenses; and

- the projected excess of total operating revenues over total operating
expenses.

The total management fee for a hotel in any fiscal year will not be less
than 2.5% or greater than 4.0% of aggregate hotel operating revenues.

Term and Termination. The management agreements with MeriStar Hotels &
Resorts have initial terms of 10 years with three renewal periods of five years
each. A renewal will not go into effect if a change in the federal tax laws
permits MeriStar or one of its subsidiaries to operate the hotel directly
without adversely affecting MeriStar's ability to qualify as a REIT or if
MeriStar Hotels & Resorts elects not to renew the agreement. MeriStar may elect
not to renew the management agreements only as provided below.

MeriStar's TRSs have the right to terminate a management agreement for a
hotel upon the sale of the hotel to a third party or if the hotel is destroyed
and MeriStar elects not to rebuild after a casualty. Upon that termination,
MeriStar's TRS will be required to pay MeriStar Hotels & Resorts the fair market
value of the management agreement. That fair market value will be equal to the
present value, using a discount rate of 10%, of the remaining payments under the
agreement, assuming that MeriStar Hotels & Resorts would have been paid
management fees under the agreement based on the operating results for the 12
months preceding the termination. MeriStar's TRSs will be able to credit against
any termination payments the projected fees, discounted to present value at a
discount rate of 10%, under any management agreements or leases entered into
between MeriStar's TRSs and subsidiaries of MeriStar Hotels & Resorts following
August 3, 1998.

If gross operating profit from a hotel is less than 85% of the amount
projected in the hotel's budget in any fiscal year and gross operating profit
from that hotel is less than 90% of the projected amount in the next fiscal
year, MeriStar's TRSs will have the right to terminate the management agreement
for the hotel without a termination fee unless:

- MeriStar did not materially comply with the capital expenditures
contemplated by the budget for either or both of the applicable fiscal
years; or

- MeriStar Hotels & Resorts cures the shortfall by agreeing to reduce its
management fee for the next fiscal year by the amount of the shortfall
between the actual operating profit for the second fiscal year and 90% of
the projected gross operating profit for that year.

MeriStar Hotels & Resorts can only use this cure right once during the term
of the management agreement.

Assignment. MeriStar Hotels & Resorts does not have the right to assign a
management agreement without the prior written consent of the relevant TRS. A
change in control of MeriStar Hotels & Resorts will require MeriStar's consent
which may be granted or withheld in MeriStar's sole discretion.

THE INTERCOMPANY AGREEMENT

General

MeriStar is party to an intercompany agreement with MeriStar Hotels &
Resorts. On completion of the merger, we will assume MeriStar's rights and
obligations under this agreement. The intercompany

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agreement provides that, for so long as the agreement remains in effect,
MeriStar Hotels & Resorts will be prohibited from making real property
investments that a REIT could make unless:

- we are first given the opportunity, but elect not to pursue the
activities or investments;

- it is on land already owned or leased by MeriStar Hotels & Resorts or
subject to a lease or purchase option in favor of MeriStar Hotels &
Resorts;

- MeriStar Hotels & Resorts will operate the property under a brand name
owned by them; or

- it is a minority investment made as part of a lease or management
agreement arrangement.

We will have a right of first refusal with respect to the sale of any
property under a brand name owned by MeriStar Hotels & Resorts.

The intercompany agreement generally grants MeriStar Hotels & Resorts the
right of first refusal to become the manager of any real property acquired by us
that we do not elect to have managed by the brand owner. This opportunity will
be made available to MeriStar Hotels & Resorts only if we determine that:

- consistent with our status as a REIT, we must enter into a management
agreement with an unaffiliated third party with respect to the property;

- MeriStar Hotels & Resorts is qualified to be the manager of that
property; and

- the property is not to be operated by the owner of a hospitality brand
under that brand.

Equity Offerings

If either MeriStar or MeriStar Hotels & Resorts desires to engage in a
securities issuance, such issuing party will give notice to such other party as
promptly as practicable of its desire to engage in a securities issuance. Any
such notice will include the proposed material terms of such issuance, to the
extent determined by the issuing party, including whether such issuance is
proposed to be pursuant to public or private offering, the amount of securities
proposed to be issued and the manner of determining the offering price and other
terms thereof. The non-issuing party will cooperate with the issuing party in
every way to effect any securities issuance of the issuing party by assisting in
the preparation of any registration statement or other document required in
connection with such issuance and, in connection therewith, providing the
issuing party with such information as may be required to be included in such
registration statement or other document.

Term

The intercompany agreement will terminate upon the earlier of August 3,
2008, and the date of a change in ownership or control of MeriStar Hotels &
Resorts.

CREDIT FACILITY

MeriStar LP is obligated to lend MeriStar Hotels & Resorts up to $50
million for general corporate purposes pursuant to a revolving credit agreement.
Borrowings under the revolving credit agreement bear interest at a rate of 650
basis points over the 30-day London Interbank Offered Rate per year and mature
on the 91st day following the maturity of MeriStar Hotels & Resorts' senior
credit facility, as amended, restated, refinanced or renewed. The revolving
credit agreement is expressly subordinated to MeriStar Hotel & Resorts' $100
million senior credit facility. As of June 30, 2001, there was $36.0 million
outstanding under this revolving credit agreement. Upon effectiveness of the
MeriStar merger, we will succeed to MeriStar's role as lender under this credit
facility.

In connection with the MeriStar merger, we expect this revolving credit
agreement will be amended to fix the maturity date at February 28, 2004, to set
the interest rate at 600 basis points over the 30-day LIBOR, and to set the
default interest rate to 800 basis points over the 30-day LIBOR.

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THE LEASES

As a result of the acquisition of DJONT and the acquisition of the 88
leases from Six Continents Hotels on July 1, 2001, all of our hotel leases are
held by our TRSs.

As of June 30, 2001, 109 of MeriStar's hotel leases were held by its TRSs
and four of its leases were held by third parties.

COMPETITION

The hotel industry is highly competitive. Each of our hotels and those of
MeriStar is located in a developed area that includes other hotel properties and
competes for guests primarily with other full and limited service hotels in its
immediate vicinity and secondarily with other hotel properties in its geographic
market. We believe that brand recognition, location, the quality of the hotel
and services provided, and price are the principal competitive factors affecting
our hotels and those of MeriStar.

ENVIRONMENTAL MATTERS

We customarily obtain a Phase I environmental audit from independent
environmental consultants before acquiring a hotel. The principal purpose of a
Phase I audit is to identify indications of potential environmental
contamination for which such hotels may have liability and, secondarily, to
assess, to a limited extent, the potential for environmental regulatory
compliance liabilities. The Phase I audits of the hotels were designed to meet
the requirements of the then current industry standards governing Phase I
audits, and consistent with those requirements, none of the audits involved
testing of groundwater, soil or air. Accordingly, they do not represent
evaluations of conditions at the studied sites that would be revealed only
through such testing. In addition, their assessment of environmental regulatory
compliance issues was general in scope and was not a detailed determination of
the hotel's complete environmental compliance status. Similarly, the audits did
not involve comprehensive analysis of potential offsite liability. The Phase I
audit reports did not reveal any environmental liability that we believe would
have a material adverse effect on our business, assets or results of operations,
nor are we aware of any such liability. Nevertheless, it is possible that these
reports do not reveal or accurately assess all environmental liabilities and
that there are material environmental liabilities of which we are unaware.

We believe that the hotels are in compliance, in all material respects,
with all federal, state, local and foreign laws and regulations regarding
hazardous substances and other environmental matters, the violation of which
would have a material adverse effect on us. We have not been notified by any
governmental authority or private party of any material noncompliance, liability
or claim relating to hazardous or toxic substances or other environmental
matters in connection with any of our current or former properties. See "Risk
Factors -- We will encounter risks that may adversely affect real estate
ownership -- Compliance with environmental laws may adversely affect our
financial condition."

TAX STATUS

FelCor elected to be taxed as a REIT under the federal income tax laws,
commencing with its initial taxable year ended December 31, 1994. MeriStar was
created on August 3, 1998 when American Hospitality Corporation, a corporation
operating as a REIT, and its associated entities merged with CapStar Hotel
Company and its related entities. As a REIT, each of FelCor and MeriStar
generally is not subject to federal income taxation at the corporate level on
its taxable income that is distributed to its shareholders. Each of FelCor and
MeriStar may, however, be subject to certain state and local taxes on its income
and property. A REIT is subject to a number of organizational and operational
requirements, including a requirement that it currently distribute annually at
least 90% of its taxable income. In connection with FelCor's and MeriStar's
elections to be taxed as a REIT, each of FelCor's and MeriStar's charter imposes
restrictions on the ownership and transfer of shares of its common stock. Each
of FelCor LP and MeriStar LP expects to make distributions on its units
sufficient to enable FelCor and MeriStar, respectively, to meet its distribution
obligations as a REIT. Each of FelCor and MeriStar has adopted the calendar year
as its taxable year.
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EMPLOYEES

FelCor LP has no employees. Management functions of FelCor LP are performed
by FelCor as the sole general partner. Mr. Corcoran entered into an employment
agreement with FelCor in 1994 that continues in effect until December 31, 2001
and automatically renews for successive one-year terms, unless terminated
otherwise. None of FelCor's other executive officers has an employment agreement
with FelCor. In addition to Mr. Corcoran, FelCor had 50 other full-time
employees at June 30, 2001.

As of June 30, 2001, MeriStar and MeriStar LP employed 50 persons, all of
whom work at MeriStar's existing corporate headquarters.

All persons employed in the day-to-day operation of our and MeriStar's
hotels are employees of the lessees, or of the management companies engaged by
the lessees, to operate such hotels and are not our or MeriStar's employees.

PERSONNEL AND OFFICE SHARING ARRANGEMENTS

We share executive offices with FelCor, Inc., a private company controlled
by Mr. Corcoran and, prior to January 1, 2001, we also shared offices with
DJONT. Each entity bears an allocated share of the costs thereof, including, but
not limited to, rent, salaries of certain personnel, other than Mr. Corcoran,
who is compensated solely by FelCor, office supplies, telephones and
depreciation of office furniture, fixtures and equipment. FelCor LP reimburses
FelCor for its share of such allocated costs. Such allocations of shared costs
are subject to the approval of a majority of the independent directors of
FelCor. For the year ended December 31, 2000 and the six months ended June 30,
2001, we bore $7.5 million, or 89.5%, and $4.6 million, or 99.5%, of all
allocable expenses under this arrangement.

LEGAL PROCEEDINGS

There is no litigation pending or known to be threatened against us or
MeriStar or affecting any of our or MeriStar's hotels other than claims arising
in the ordinary course of business or which are not considered to be material.
Furthermore, most of such claims are substantially covered by insurance. We do
not believe that any claims known to us, individually or in the aggregate, will
have a material adverse effect on us or MeriStar, without regard to any
potential recoveries from insurers or other third parties.

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DESCRIPTION OF CERTAIN INDEBTEDNESS

LINE OF CREDIT

On July 26, 2001, we entered into an amended and restated credit agreement,
pursuant to which we provided for an increase of our line of credit, upon
completion of the MeriStar merger, from $600 million to $700 million. The Chase
Manhattan Bank serves as administrative agent, and The Chase Manhattan Bank of
Canada serves as an additional administrative agent, under the line of credit.
Our line of credit matures on the earlier of the third anniversary of the
MeriStar merger or October 31, 2004, provided that the maturity date may be
extended two years, subject to certain conditions. The line of credit is
guaranteed by certain of our subsidiaries, which are also guarantors of the Old
Notes and the 7 3/8%, 7 5/8% and 9 1/2% senior notes, and will be guarantors of
the New Notes offered by this prospectus.

Borrowings by the U.S. borrower under the line of credit bear interest, at
our option:

- at a base rate equal to the higher of the base rate announced from time
to time by The Chase Manhattan Bank and 0.5% plus the Federal funds rate,
in either case plus an applicable margin of 0% to 1.000%; or

- at a Eurodollar rate based upon the 1, 2, 3, 6, 9 or 12-month LIBOR plus
an applicable margin of 0.875% to 2.500%.

Borrowings by the Canadian borrower under the line of credit, at our
option, may be in the form of:

- Canadian Prime Rate Loans, which bear interest at a prime rate equal to
the greater of the per annum rate of interest quoted, published and
commonly known as the "prime rate" of The Chase Manhattan Bank of Canada
and the 30-day Canadian Dollar Bankers' Acceptance rate, or CDOR rate,
plus 1.0%, in either case plus an applicable margin of 0% to 1.000%; or

- Bankers' Acceptance Loans, which are purchased at a discount to face
amount at a discount rate generally equal to the CDOR rate plus an
acceptance fee calculated on the face amount at a rate per annum equal to
the applicable margin that would be payable with respect to a comparable
Eurodollar rate loan.

The applicable margin varies depending upon our long-term senior unsecured
actual debt rating or leverage ratio. At June 30, 2001, the margin was 0.500% in
the case of base rate/prime rate borrowings and 2.000% in the case of Eurodollar
rate borrowings. At June 30, 2001, borrowings outstanding under our line of
credit aggregated $39.9 million and bore interest at a weighted average interest
rate of 6.559% per annum.

Our line of credit requires us to comply with certain financial tests and
to maintain certain financial ratios, including our unsecured interest expense
coverage, fixed charge coverage ratio, maintenance of tangible net worth,
limitations on total indebtedness, limitations on total secured indebtedness,
adjusted net operating income and limitations on recourse second indebtedness.

Failure to satisfy any of the financial covenants would constitute an event
of default, notwithstanding our ability to meet our debt service obligations. An
event of default also includes, without limitation, a cross-default to other
indebtedness, bankruptcy and a change of control.

In addition to the financial covenants, our line of credit includes certain
other affirmative and negative covenants, including: restrictions on our ability
to create or acquire wholly-owned subsidiaries, restrictions on the
operation/ownership of our hotels, limitations on our ability to lease property
or guaranty leases of other persons, limitations on our ability to make
restricted payments, limitations on our ability to merge or consolidate with
other persons, issue stock of our subsidiaries and sell all or substantially all
of our assets, restrictions on our ability to construct new hotels or acquire
hotels under construction, limitations on our ability to change the nature of
our business, limitations on our ability to modify certain instruments,
limitations on our ability to create liens, limitations on our ability to enter
into transactions with affiliates and limitations on our ability to enter into
joint ventures.

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7 3/8% AND 7 5/8% SENIOR NOTES

In October 1997, we issued $175,000,000 aggregate principal amount of
7 3/8% senior notes due 2004 and $125,000,000 aggregate principal amount of
7 5/8% senior notes due 2007. These senior notes were issued under an indenture
containing covenants and other terms and conditions substantially similar to
those governing the Old Notes; however, the indenture governing the Old Notes
contains additional restrictions upon the redemption of the Notes and the
repurchase of capital stock. See "Description of the New Notes and Guarantees."

9 1/2% SENIOR NOTES

In September 2000, we issued $400 million aggregate principal amount of our
9 1/2% senior notes due 2008. In January 2001, we issued an additional $100
million aggregate principal amount of these notes. These senior notes were
issued under an indenture containing covenants and other terms and conditions
substantially similar to those governing the Old Notes; however, the indenture
governing these notes contains additional redemption features and the indenture
governing the Old Notes contains a special redemption provision that required
approximately $316 million of net proceeds to be placed in a restricted proceeds
account pending completion of the MeriStar merger.

MERISTAR 9% AND 9 1/8% SENIOR NOTES

In January 2000, MeriStar LP and MeriStar Hospitality Finance Corp. issued
$300 million aggregate principal amount of their 9% senior notes due 2008 and
$200 million aggregate principal amount of their 9 1/8% senior notes due 2011.
The indenture under which MeriStar's 9% and 9 1/8% senior notes were issued
contains certain covenants, including maintenance of certain financial ratios,
reporting requirements and other customary restrictions. These notes are
currently guaranteed by MeriStar and certain subsidiaries of MeriStar LP and
MeriStar Hospitality Finance Corp. Upon completion of the MeriStar, merger an
offer to purchase these notes at 101% of their aggregate principal amount will
be required to be made to all noteholders, unless waived. To the extent
noteholders elect to accept the change of control offer, we have obtained a
commitment from lenders for up to $500 million in a stock secured term loan
facility which will be available for use to fund, if necessary, our obligation
to repurchase up to $500 million of outstanding senior notes of MeriStar LP
after the merger. The stock secured term loan facility will have a term of
between five and one-half years and seven years and bear interest at a fixed
market interest rate not to exceed LIBOR plus 5.25%.

MORTGAGE DEBT

Our and MeriStar's mortgage debt contains affirmative covenants that are
generally equal to or less restrictive than our line of credit. Most of our and
MeriStar's mortgage debt is non-recourse to us and MeriStar, respectively.

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DESCRIPTION OF THE NEW NOTES AND GUARANTEES

The Old Notes were, and the New Notes will be, issued by FelCor LP under
the Indenture dated June 4, 2001 among itself, FelCor, the Subsidiary Guarantors
and SunTrust Bank, as trustee. The terms of the Old Notes and the New Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939. The New Notes are substantially
identical to the terms and provisions of the Old Notes, except for certain
transfer restrictions and registration rights relating to the Old Notes. The
term "Notes" refers to both the Old Notes and the New Notes.

The following description is a summary of the material provisions of the
Indenture. It does not restate the Indenture in its entirety. Because this is a
summary, we urge you to read the Indenture and the relevant portions of the
Trust Indenture Act because they, and not this description, define your rights
as holders of the Notes. We have previously filed copies of the Indenture with
the SEC. You may request a copy of the Indenture by contacting us at the address
set forth under "Where You Can Find More Information."

You can find the definitions of certain terms used in this description
under the subheading "Certain Definitions." For purposes of this section only,
references to FelCor LP and FelCor do not include their respective subsidiaries.

GENERAL

The Notes will be in the aggregate principal amount of $600 million and
will be unsecured senior obligations of FelCor LP. The Notes will mature on June
1, 2011. The Notes will initially bear yearly interest at 8 1/2% from June 4,
2001 or from the most recent interest payment date to which interest has been
paid or provided for, payable semiannually to holders of record at the close of
business on the May 15 or the November 15, immediately preceding the interest
payment date on June 1 and December 1 of each year, commencing December 1, 2001.
Notwithstanding anything to the contrary contained herein, upon the occurrence
of, and during the continuance of, a Ratings Downgrade, the Notes will bear
yearly interest at the rate set forth in the immediately preceding sentence plus
0.5%.

Principal of, premium, if any, and interest on the Notes will be payable,
and the Notes may be exchanged or transferred, at the office or agency of FelCor
LP in the Borough of Manhattan, The City of New York, which initially will be
the corporate trust office of the trustee c/o Computershare, Wall Street Plaza,
88 Pine Street, 19th Floor, New York, New York 10005, as agent for the trustee;
provided that, at the option of FelCor LP, payment of interest may be made by
check mailed to the holders at their addresses as they appear in the security
register for the Notes.

The Old Notes have been, and the New Notes will be, issued only in fully
registered form, without coupons, in denominations of $1,000 of principal amount
and any integral multiple. See "-- Book-Entry; Delivery and Form." No service
charge will be made for any registration of transfer or exchange of Notes, but
FelCor LP may require payment of a sum sufficient to cover any transfer tax or
other similar governmental charge payable in connection with a registration of
transfer.

Subject to the covenants described below under "Covenants" and applicable
law, FelCor LP may issue additional Notes under the Indenture. The Notes and any
additional notes subsequently issued under the Indenture will be treated as a
single class for all purposes under the Indenture.

GUARANTEES AND SUBSIDIARY GUARANTORS

The Old Notes are, and the New Notes will be, guaranteed on an unsecured
senior basis by FelCor and the Subsidiary Guarantors. At present, the Subsidiary
Guarantors consist of FelCor/CSS Hotels, L.L.C., FelCor/LAX Hotels, L.L.C.,
FelCor Eight Hotels, L.L.C., FelCor/CSS Holdings, L.P., FelCor/St. Paul
Holdings, L.P., FelCor/LAX Holdings, L.P., FelCor Hotel Asset Company, L.L.C.,
FelCor Nevada Holdings L.L.C., FHAC Nevada Holdings, L.L.C., FHAC Texas
Holdings, L.P., FelCor Omaha Hotel Company, L.L.C., FelCor Country Villa Hotel,
L.L.C., FelCor Moline Hotel, L.L.C., FelCor Canada Co., FelCor TRS Holdings,
L.P. and Kingston Plantation Development Corp. each of
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which is a guarantor with respect to the Line of Credit, the Old Notes and the
existing 7 3/8%, 7 5/8% and 9 1/2% senior notes. The guarantees are
unconditional regardless of the enforceability of the Notes and the Indenture.

FelCor currently conducts no other business and has no significant assets
other than its general partner interest and an indirect limited partner interest
in FelCor LP. Four of the Subsidiary Guarantors that are limited partnerships
own directly an aggregate of 25 of the hotels and own general partner interests
in a partnership that owns directly one additional hotel in which FelCor and
FelCor LP have an interest. Four of the Subsidiary Guarantors that are limited
liability companies directly own an aggregate of 51 of the hotels and own direct
or indirect membership interests in other entities that own an aggregate of 22
of the hotels, including seven hotels that are owned directly by a limited
partnership that is a Subsidiary Guarantor and six hotels that are owned
directly by FelCor Canada Co., another Subsidiary Guarantor. None of the
remaining seven Subsidiary Guarantors directly owns any hotel properties or
engages in any business other than the ownership of partnership and membership
interests in other entities. FelCor LP and certain of the Subsidiary Guarantors
own additional subsidiaries, none of which is material to FelCor LP.

Upon completion of the MeriStar merger, MeriStar LP will guarantee the
Notes. To the extent that current subsidiaries of MeriStar and MeriStar LP who
are guarantors of MeriStar's senior notes continue, after the merger, as
guarantors thereof, or are otherwise required under the Indenture to become
Subsidiary Guarantors, these subsidiaries will also guarantee the Notes. It is
anticipated that FelCor and FelCor LP will become co-obligors under, and that
the Guarantors will become guarantors of, MeriStar's senior notes, to the extent
that they remain outstanding. Each future Restricted Subsidiary that
subsequently guarantees Indebtedness of FelCor LP or FelCor that ranks equally
with or subordinate in right of payment to the Notes will be required to execute
a Subsidiary Guarantee. See "-- Covenants -- Limitation on Issuances of
Guarantees by Restricted Subsidiaries."

OPTIONAL REDEMPTION

The Notes are not redeemable prior to their maturity, except as set forth
under "-- Special Mandatory Redemption."

SPECIAL MANDATORY REDEMPTION

Pending use of a portion of the net proceeds of the Old Notes to finance in
part the MeriStar merger, FelCor LP has entered into a restricted proceeds
agreement with the trustee, as escrow agent.

Under the restricted proceeds agreement, $316 million of the net proceeds
of the Old Notes was placed in a restricted proceeds account under the escrow
agent's exclusive dominion and control to fund the special mandatory redemption
described below. Pending application of the funds in the restricted proceeds
account by FelCor LP for the payment of (a) a portion of the purchase price for
the MeriStar merger and related fees and expenses or (b) in the event of a
special mandatory redemption of the Notes described below, the redemption price
in connection therewith, the funds in the restricted proceeds account are
required to be invested in cash or cash equivalents.

Pursuant to the restricted proceeds agreement, the funds in the restricted
proceeds account will be released to FelCor LP to be applied towards a portion
of the purchase price for the MeriStar merger and to pay related fees and
expenses upon receipt by the escrow agent of an officers' certificate that
states that all conditions to the closing of the MeriStar merger have been
satisfied or waived.

An aggregate of $300 million principal amount of the Notes will be subject
to special mandatory redemption on the earlier of (a) November 30, 2001, if the
MeriStar merger has not been consummated on or prior to such date, (b) within 15
days after the termination of the agreement relating to the MeriStar merger or
(c) at any time if FelCor LP determines that the MeriStar merger is likely not
to be able to be consummated in a manner consistent in all material respects
with the description of such transactions contained in the offering memorandum
relating to the Old Notes, in each case, at a price

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equal to 101% of the principal amount thereof together with accrued and unpaid
interest to the date of redemption. Upon consummation of the MeriStar merger,
the foregoing provisions relating to the special mandatory redemption of the
Notes will be of no further effect.

SELECTION AND NOTICE OF REDEMPTION

No Notes of a principal amount of $1,000 or less shall be redeemed in part.
If a partial redemption is made pursuant to "-- Special Mandatory Redemption"
above, the trustee will select the Notes only on a pro rata basis or on as
nearly a pro rata basis as is practicable (subject to DTC procedures) unless
such method is otherwise prohibited. Notice of redemption will be mailed by
first-class mail at least 10 but not more than 30 days before the redemption
date to each holder of Notes to be redeemed at its registered address. Unless
FelCor LP defaults in the payment of the redemption price, on and after the
redemption date, interest will cease to accrue on Notes or portions thereof
called for redemption.

SINKING FUND

There will be no sinking fund payments for the Notes.

REGISTRATION RIGHTS

FelCor LP and FelCor have agreed with the initial purchasers of the Old
Notes, for the benefit of the holders of the Old Notes, that FelCor LP and
FelCor will use their best efforts, at their cost, to file and cause to become
effective a registration statement with respect to a registered exchange offer
to exchange the Old Notes for an issue of notes that will be senior notes of
FelCor LP, or the exchange notes, with terms identical to the notes tendered,
including the guarantee by FelCor and the Subsidiary Guarantors, except that the
exchange notes will not have legends restricting transfer. When the SEC declares
the registration statement relating to the exchange offer effective, FelCor LP
will offer the exchange notes in return for surrender of the Old Notes. The
exchange offer will remain open for at least 20 business days after the date
notice of the exchange offer is mailed to the holders. For each Old Note
surrendered to FelCor LP under the exchange offer, the holder will receive an
exchange note of equal principal amount. Interest on each exchange note accrues
from the last interest payment date on which interest was paid on the Old Notes
surrendered or, if no interest has been paid on the Old Notes, from June 4,
2001. In the event that applicable interpretations of the SEC staff do not
permit FelCor LP and FelCor to effect the exchange offer, or under certain other
circumstances, FelCor LP and FelCor will, at their cost, use their best efforts
to cause a shelf registration statement with respect to resales of the Notes to
become effective and to keep such shelf registration statement effective until
the expiration of the time period referred to in Rule 144(k) under the
Securities Act, or until an earlier date when all of the Notes have been sold
under the shelf registration statement. FelCor LP and FelCor shall, in the event
of a shelf registration, provide each holder copies of the prospectus, notify
each holder when the shelf registration statement for the Notes has become
effective and take other actions that are required to permit resales of the
Notes. A holder that sells its Notes pursuant to the shelf registration
statement generally will be required to be named as a selling security holder in
the related prospectus and to deliver a prospectus to purchasers, will be
subject to certain of the civil liability provisions under the Securities Act in
connection with those sales and will be bound by those provisions of the
registration rights agreement that are applicable to that holder, including
certain indemnification obligations.

Based on an interpretation by the Commission's staff set forth in no-action
letters issued to third parties unrelated to the Company, the Company believes
that, with the exceptions set forth below, New Notes issued pursuant to the
exchange offer in exchange for Old Notes may be offered for resale, resold and
otherwise transferred by holders thereof, other than any holder which is an
"affiliate" of the Company within the meaning of Rule 405 promulgated under the
Securities Act, or a broker-dealer who purchased Old Notes directly from the
Company to resell pursuant to Rule 144A or any other available exemption
promulgated under the Securities Act, without compliance with the registration
and prospectus delivery provisions of the Securities Act, provided that the New
Notes are acquired in the ordinary course of business of the holder and the
holder does not have an arrangement or understanding with any person to
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participate in the distribution of such New Notes. Any holder who tenders in the
exchange offer for the purpose of participating in a distribution of the New
Notes cannot rely on this interpretation by the Commission's staff and must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction. Each
broker-dealer that receives New Notes for its own account in exchange for Old
Notes, where such Old Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such New Notes. See
"Plan of Distribution." Broker-dealers who acquired Old Notes directly from us
and not as a result of market-making activities or other trading activities may
not rely on the staff's interpretations discussed above or participate in the
exchange offer and must comply with the prospectus delivery requirements of the
Securities Act in order to sell the Old Notes.

If the exchange offer is not consummated and a shelf registration statement
is not declared effective by the SEC on or prior to December 3, 2001, the annual
interest rate borne by the Notes will be increased by 0.5% until the exchange
offer is consummated or the SEC declares the shelf registration statement
effective.

If FelCor LP and FelCor effect the exchange offer, FelCor LP and FelCor
will be entitled to close the exchange offer 20 business days after its
commencement; provided that FelCor LP has accepted all Old Notes validly
tendered in accordance with the terms of the exchange offer. Notes not tendered
in the exchange offer will bear interest at the rate set forth on the cover page
of this prospectus and will be subject to all of the terms and conditions
specified in the Indenture and to the transfer restrictions described under
"Transfer Restrictions" in the offering memorandum relating to the Old Notes.

This description of some of the provisions of the registration rights
agreement is a summary only. We urge you to read the registration rights
agreement because it defines your rights regarding registration of the Notes.
You can obtain a copy of the registration rights agreement upon request from
FelCor LP and FelCor.

RANKING

The Notes will be unsecured senior obligations of FelCor LP, and will rank
equally in right of payment with other unsecured Senior Indebtedness of FelCor
LP and with MeriStar's 9% senior notes due 2008 and 9 1/8% senior notes due
2011, if the MeriStar merger is consummated. The Notes will be effectively
subordinated to all of our and our consolidated Subsidiaries' secured
Indebtedness and to all other Indebtedness of the non-guarantor Subsidiaries.
Our secured Indebtedness includes only mortgage and capitalized lease debt. As
of June 30, 2001, on a pro forma basis, we and our consolidated Subsidiaries had
approximately $1.4 billion of mortgage and capitalized lease debt, which is
effectively senior to the Notes to the extent of the value of the underlying
assets.

As of June 30, 2001, on a pro forma basis, our non-guarantor Subsidiaries
had less than $1 million of other Indebtedness.

CERTAIN DEFINITIONS

Set forth below are definitions of certain terms contained in the Indenture
that are used in this description. Please refer to the Indenture for the
definition of other capitalized terms used in this description that are not
defined below.

"Acquired Indebtedness" means Indebtedness of a Person existing at the time
such Person becomes a Restricted Subsidiary or assumed in connection with an
Asset Acquisition from such Person by a Restricted Subsidiary and not incurred
by such Person in connection with, or in anticipation of, such Person becoming a
Restricted Subsidiary or such Asset Acquisition; provided that Indebtedness of
such Person that is redeemed, defeased, retired or otherwise repaid at the time
of or immediately upon consummation of the transactions by which such Person
becomes a Restricted Subsidiary or such Asset Acquisition shall not be Acquired
Indebtedness.

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"Adjusted Consolidated Net Income" means, for any period, the aggregate net
income (or loss) of FelCor, FelCor LP and their respective Restricted
Subsidiaries for such period determined on a consolidated basis in conformity
with GAAP plus the minority interest in FelCor LP, if applicable; provided that
the following items shall be excluded in computing Adjusted Consolidated Net
Income, without duplication:

(1) the net income of any Person, other than FelCor LP, FelCor or a
Restricted Subsidiary, except to the extent of the amount of dividends or
other distributions actually paid to FelCor LP, FelCor or any of their
respective Restricted Subsidiaries by such Person during such period;

(2) the net income of any Restricted Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by such
Restricted Subsidiary of such net income is not at the time permitted by
the operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation
applicable to such Restricted Subsidiary;

(3) any after-tax gains or losses attributable to Asset Sales;

(4) for so long as the Notes are not rated Investment Grade, any
amount paid or accrued as dividends on Preferred Stock of FelCor LP, FelCor
or any Restricted Subsidiary owned by Persons other than FelCor or FelCor
LP and any of their respective Restricted Subsidiaries; and

(5) all extraordinary gains and extraordinary losses.

"Adjusted Consolidated Net Tangible Assets" means the total amount of
assets of FelCor LP, FelCor and their respective Restricted Subsidiaries (less
applicable depreciation, amortization and other valuation reserves), except to
the extent resulting from write-ups of capital assets (excluding write-ups in
connection with accounting for acquisitions in conformity with GAAP), after
deducting from the total amount of assets:

(1) all current liabilities of FelCor LP, FelCor and their respective
Restricted Subsidiaries, excluding intercompany items, and

(2) all goodwill, trade names, trademarks, patents, unamortized debt
discount and expense and other like intangibles,

all as set forth on the most recent quarterly or annual consolidated balance
sheet of FelCor LP or FelCor and their respective Restricted Subsidiaries,
prepared in conformity with GAAP and filed with the SEC or provided to the
trustee pursuant to the "SEC Reports and Reports to Holders" covenant.

"Adjusted Total Assets" means, for any Person, the sum of:

(1) Total Assets for such Person as of the end of the calendar quarter
preceding the Transaction Date as set forth on the most recent quarterly or
annual consolidated balance sheet of FelCor LP or FelCor and their
respective Restricted Subsidiaries, prepared in conformity with GAAP and
filed with the SEC or provided to the trustee pursuant to the "SEC Reports
and Reports to Holders" covenant, and

(2) any increase in Total Assets following the end of such quarter
including, without limitation, any increase in Total Assets resulting from
the application of the proceeds of any additional Indebtedness.

"Affiliate" means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.

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"Asset Acquisition" means:

(1) an investment by FelCor LP or FelCor or any of their respective
Restricted Subsidiaries in any other Person pursuant to which such Person
shall become a Restricted Subsidiary or shall be merged into or
consolidated with FelCor LP or FelCor or any of their respective Restricted
Subsidiaries; provided that such Person's primary business is related,
ancillary, incidental or complementary to the businesses of FelCor LP or
FelCor or any of their respective Restricted Subsidiaries on the date of
such investment; or

(2) an acquisition by FelCor LP or FelCor or any of their respective
Restricted Subsidiaries from any other Person that constitutes
substantially all of a division or line of business, or one or more hotel
properties, of such Person; provided that the property and assets acquired
are related, ancillary, incidental or complementary to the businesses of
FelCor LP or FelCor or any of their respective Restricted Subsidiaries on
the date of such acquisition.

"Asset Disposition" means the sale or other disposition by FelCor LP or
FelCor or any of their respective Restricted Subsidiaries, other than to FelCor
LP, FelCor or another Restricted Subsidiary, of:

(1) all or substantially all of the Capital Stock of any Restricted
Subsidiary, or

(2) all or substantially all of the assets that constitute a division
or line of business, or one or more hotel properties, of FelCor LP or
FelCor or any of their respective Restricted Subsidiaries.

"Asset Sale" means any sale, transfer or other disposition, including by
way of merger, consolidation or sale-leaseback transaction, in one transaction
or a series of related transactions by FelCor LP or FelCor or any of their
Restricted Subsidiaries to any Person other than FelCor LP or FelCor or any of
their respective Restricted Subsidiaries of:

(1) all or any of the Capital Stock of any Restricted Subsidiary other
than sales permitted under clause (4) of the "Limitation on the Issuance
and Sale of Capital Stock of Restricted Subsidiaries" covenant described
below,

(2) all or substantially all of the property and assets of an
operating unit or business of FelCor LP or FelCor or any of their
respective Restricted Subsidiaries, or

(3) any other property and assets of FelCor LP or FelCor or any of
their respective Restricted Subsidiaries outside the ordinary course of
business of FelCor LP or FelCor or such Restricted Subsidiary and, in each
case, that is not governed by the provisions of the Indenture applicable to
mergers, consolidations and sales of assets of FelCor LP and FelCor;

provided that "Asset Sale" shall not include:

- sales or other dispositions of inventory, receivables and other current
assets,

- sales, transfers or other dispositions of assets with a fair market value
not in excess of $1 million in any transaction or series of related
transactions, or

- sales or other dispositions of assets for consideration at least equal to
the fair market value of the assets sold or disposed of, to the extent
that the consideration received would satisfy the second bullet of clause
(1) of the second paragraph of the "Limitation on Asset Sales" covenant.

"Average Life" means at any date of determination with respect to any debt
security, the quotient obtained by dividing:

(1) the sum of the products of:

- the number of years from such date of determination to the dates
of each successive scheduled principal payment of such debt
security, and

- the amount of such principal payment, by

(2) the sum of all such principal payments.

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"Capital Stock" means, with respect to any Person, any and all shares,
interests, participation or other equivalents (however designated, whether
voting or non-voting), including partnership interests, whether general or
limited, in the equity of such Person, whether outstanding on the Closing Date
or issued thereafter, including, without limitation, all Common Stock, Preferred
Stock and Units.

"Capitalized Lease" means, as applied to any Person, any lease of any
property, whether real, personal or mixed, of which the discounted present value
of the rental obligations of such Person as lessee, in conformity with GAAP, is
required to be capitalized on the balance sheet of such Person.

"Capitalized Lease Obligations" means the discounted present value of the
rental obligations under a Capitalized Lease as reflected on the balance sheet
of such Person in accordance with GAAP.

"Change of Control" means such time as:

(1) a "person" or "group" (as such terms are defined in Sections 13(d)
and 14(d)(2) of the Securities and Exchange Act of 1934 (the "Exchange
Act")), becomes the ultimate "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act) of more than 35% of the total voting power of the
Voting Stock of FelCor or, other than by FelCor, of FelCor LP on a fully
diluted basis; or

(2) individuals who on the Closing Date constitute the Board of
Directors (together with any new or replacement directors whose election by
the Board of Directors or whose nomination by the Board of Directors for
election by FelCor's shareholders was approved by a vote of at least a
majority of the members of the Board of Directors then still in office who
either were members of the Board of Directors on the Closing Date or whose
election or nomination for election was so approved) cease for any reason
to constitute a majority of the members of the Board of Directors then in
office.

"Closing Date" means June 4, 2001.

"Common Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) that have no preference on liquidation or with respect to
distributions over any other class of Capital Stock, including partnership
interests, whether general or limited, of such Person's equity, whether
outstanding on the Closing Date or issued thereafter, including, without
limitation, all series and classes of common stock.

"Consolidated EBITDA" means, for any period, Adjusted Consolidated Net
Income for such period plus, to the extent such amount was deducted in
calculating such Adjusted Consolidated Net Income:

(1) Consolidated Interest Expense,

(2) income taxes (other than income taxes (either positive or
negative) attributable to extraordinary and non-recurring gains or losses
or sales of assets),

(3) depreciation expense,

(4) amortization expense, and

(5) all other non-cash items reducing Adjusted Consolidated Net Income
(other than items that will require cash payments and for which an accrual
or reserve is, or is required by GAAP to be, made),

less all non-cash items increasing Adjusted Consolidated Net Income, all as
determined on a consolidated basis for FelCor LP, FelCor and their respective
Restricted Subsidiaries in conformity with GAAP; provided that, if any
Restricted Subsidiary is not a Wholly Owned Restricted Subsidiary, Consolidated

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EBITDA shall be reduced (to the extent not otherwise reduced in accordance with
GAAP) by an amount equal to:

- the amount of the Adjusted Consolidated Net Income attributable to such
Restricted Subsidiary multiplied by

- the percentage ownership interest in the income of such Restricted
Subsidiary not owned on the last day of such period by FelCor LP or
FelCor or any of their respective Restricted Subsidiaries.

"Consolidated Interest Expense" means, for any period, without duplication,
the aggregate amount of interest expense in respect of Indebtedness during such
period, all as determined on a consolidated basis (without taking into account
Unrestricted Subsidiaries) in conformity with GAAP including, without
limitation:

- amortization of original issue discount on any Indebtedness and the
interest portion of any deferred payment obligation, calculated in
accordance with GAAP;

- all commissions, discounts and other fees and expenses owed with respect
to letters of credit and bankers' acceptance financing;

- the net costs associated with Interest Rate Agreements and Indebtedness
that is Guaranteed or secured by assets of FelCor LP, FelCor or any of
their respective Restricted Subsidiaries; and

- all but the principal component of rentals in respect of capitalized
lease obligations paid, accrued or scheduled to be paid or to be accrued
by FelCor LP, FelCor and their respective Restricted Subsidiaries;

excluding (A) the amount of such interest expense of any Restricted Subsidiary
if the net income of such Restricted Subsidiary is excluded in the calculation
of Adjusted Consolidated Net Income pursuant to clause (2) of the definition
thereof (but only in the same proportion as the net income of such Restricted
Subsidiary is excluded from the calculation of Adjusted Consolidated Net Income
pursuant to clause (2) of the definition thereof) and (B) any premiums, fees and
expenses (and any amortization thereof) payable in connection with the offering
of the Notes or paid in connection with any other Indebtedness outstanding on
March 31, 2001, all as determined on a consolidated basis (without taking into
account Unrestricted Subsidiaries) in conformity with GAAP.

"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement.

"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.

"Disqualified Stock" means any class or series of Capital Stock of any
Person that by its terms or otherwise is:

(1) required to be redeemed prior to the Stated Maturity of the Notes,

(2) redeemable at the option of the holder of such class or series of
Capital Stock, other than Units, at any time prior to the Stated Maturity
of the Notes, or

(3) convertible into or exchangeable for Capital Stock referred to in
clause (1) or (2) above or Indebtedness having a scheduled maturity prior
to the Stated Maturity of the Notes;

provided that any Capital Stock that would not constitute Disqualified Stock but
for provisions thereof giving holders thereof the right to require such Person
to repurchase or redeem such Capital Stock upon the occurrence of an "asset
sale" or "change of control" occurring prior to the Stated Maturity of the Notes
shall not constitute Disqualified Stock if the "asset sale" or "change of
control" provisions applicable to such Capital Stock are no more favorable to
the holders of such Capital Stock than the provisions contained in "Limitation
on Asset Sales" and "Repurchase of Notes upon a Change of Control"
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covenants described below and such Capital Stock specifically provides that such
Person will not repurchase or redeem any such stock pursuant to such provision
prior to FelCor LP's repurchase of the Notes as are required to be repurchased
pursuant to the "Limitation on Asset Sales" and "Repurchase of Notes upon a
Change of Control" covenants described below.

"DJONT" means DJONT Operations, L.L.C., a Delaware limited liability
company.

"Fair market value" means the price that would be paid in an arm's-length
transaction between an informed and willing seller under no compulsion to sell
and an informed and willing buyer under no compulsion to buy, as determined in
good faith by the Board of Directors, whose determination shall be conclusive if
evidenced by a Board Resolution.

"Funds From Operations" for any period means the consolidated net income of
FelCor LP, FelCor and their respective Restricted Subsidiaries for such period
in conformity with GAAP excluding gains or losses from debt restructurings which
would be extraordinary items in accordance with GAAP and sales of depreciable
operating property, plus depreciation of real property (including furniture and
equipment) and after adjustments for unconsolidated partnerships and joint
ventures plus the minority interest in FelCor LP, if applicable; provided that
for purposes of the payment of any dividend or distribution by FelCor LP or
FelCor, "Funds From Operations" shall be equal to $80 million plus the amount
thereof computed for the period commencing with July 1, 2000 and ending on the
last day of the last fiscal quarter preceding the payment of such dividend or
distribution.

"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Closing Date, including, without limitation,
those set forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations contained or referred to in
the Indenture shall be computed in conformity with GAAP applied on a consistent
basis, except that calculations made for purposes of determining compliance with
the terms of the covenants and with other provisions of the Indenture shall be
made without giving effect to:

- the amortization of any expenses incurred in connection with the offering
of the Notes, and

- except as otherwise provided, the amortization of any amounts required or
permitted by Accounting Principles Board Opinions No. 16 and 17.

"Government Securities" means direct obligations of, obligations guaranteed
by, or participations in pools consisting solely of obligations of or
obligations guaranteed by, the United States of America for the payment of which
obligations or guarantee the full faith and credit of the United States of
America is pledged and that are not callable or redeemable at the option of the
issuer thereof.

"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person:

(1) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness of such other Person (whether arising by
virtue of partnership arrangements, or by agreements to keep-well, to
purchase assets, goods, securities or services (unless such purchase
arrangements are on arm's-length terms and are entered into in the ordinary
course of business), to take-or-pay, or to maintain financial statement
conditions or otherwise), or

(2) entered into for purposes of assuring in any other manner the
obligee of such Indebtedness of the payment thereof or to protect such
obligee against loss in respect thereof (in whole or in part);

provided that the term "Guarantee" shall not include endorsements for collection
or deposit in the ordinary course of business. The term "Guarantee" used as a
verb has a corresponding meaning.

"Guarantors" means FelCor and the Subsidiary Guarantors, collectively.
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"Incur" means, with respect to any Indebtedness, to incur, create, issue,
assume, Guarantee or otherwise become liable for or with respect to, or become
responsible for, the payment of, contingently or otherwise, such Indebtedness,
including an "Incurrence" of Acquired Indebtedness; provided that neither the
accrual of interest nor the accretion of original issue discount shall be
considered an Incurrence of Indebtedness.

"Indebtedness" means, with respect to any Person at any date of
determination (without duplication):

(1) all indebtedness of such Person for borrowed money,

(2) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments,

(3) the face amount of letters of credit or other similar instruments
(excluding obligations with respect to letters of credit (including trade
letters of credit) securing obligations (other than obligations described
in (1) or (2) above or (5), (6) or (7) below) entered into in the ordinary
course of business of such Person to the extent such letters of credit are
not drawn upon or, if drawn upon, to the extent such drawing is reimbursed
no later than the third Business Day following receipt by such Person of a
demand for reimbursement),

(4) all unconditional obligations of such Person to pay the deferred
and unpaid purchase price of property or services, which purchase price is
due more than six months after the date of placing such property in service
or taking delivery and title thereto or the completion of such services,
except Trade Payables,

(5) all Capitalized Lease Obligations,

(6) all Indebtedness of other Persons secured by a Lien on any asset
of such Person, whether or not such Indebtedness is assumed by such Person;
provided that the amount of such Indebtedness shall be the lesser of (A)
the fair market value of such asset at that date of determination and (B)
the amount of such Indebtedness,

(7) all Indebtedness of other Persons Guaranteed by such Person to the
extent such Indebtedness is Guaranteed by such Person, and

(8) to the extent not otherwise included in this definition or the
definition of Consolidated Interest Expense, obligations under Currency
Agreements and Interest Rate Agreements.

The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations of the type described
above and, with respect to obligations under any Guarantee, the maximum
liability upon the occurrence of the contingency giving rise to the obligation;
provided that:

- the amount outstanding at any time of any Indebtedness issued with
original issue discount shall be deemed to be the face amount with
respect to such Indebtedness less the remaining unamortized portion of
the original issue discount of such Indebtedness at the date of
determination in conformity with GAAP, and

- Indebtedness shall not include any liability for federal state, local or
other taxes.

"Interest Coverage Ratio" means, on any Transaction Date, the ratio of:

- the aggregate amount of Consolidated EBITDA for the then most recent four
fiscal quarters prior to such Transaction Date for which reports have
been filed with the SEC or provided to the Trustee pursuant to the "SEC
Reports and Reports to Holders" covenant ("Four Quarter Period") to

- the aggregate Consolidated Interest Expense during such Four Quarter
Period.

In making the foregoing calculation,

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(1) pro forma effect shall be given to any Indebtedness Incurred or
repaid (other than in connection with an Asset Acquisition or Asset
Disposition) during the period ("Reference Period") commencing on the first
day of the Four Quarter Period and ending on the Transaction Date (other
than Indebtedness Incurred or repaid under a revolving credit or similar
arrangement to the extent of the commitment thereunder (or under any
predecessor revolving credit or similar arrangement) in effect on the last
day of such Four Quarter Period unless any portion of such Indebtedness is
projected, in the reasonable judgment of the senior management of FelCor LP
or FelCor, to remain outstanding for a period in excess of 12 months from
the date of the Incurrence thereof), in each case as if such Indebtedness
had been Incurred or repaid on the first day of such Reference Period;

(2) Consolidated Interest Expense attributable to interest on any
Indebtedness (whether existing or being Incurred) computed on a pro forma
basis and bearing a floating interest rate shall be computed as if the rate
in effect on the Transaction Date (taking into account any Interest Rate
Agreement applicable to such Indebtedness if such Interest Rate Agreement
has a remaining term in excess of 12 months or, if shorter, at least equal
to the remaining term of such Indebtedness) had been the applicable rate
for the entire period;

(3) pro forma effect shall be given to Asset Dispositions and Asset
Acquisitions (including giving pro forma effect to the application of
proceeds of any Asset Disposition and any Indebtedness Incurred or repaid
in connection with any such Asset Acquisitions or Asset Dispositions) that
occur during such Reference Period but subsequent to the end of the related
Four Quarter Period as if they had occurred and such proceeds had been
applied on the first day of such Reference Period; and

(4) pro forma effect shall be given to asset dispositions and asset
acquisitions (including giving pro forma effect to the application of
proceeds of any asset disposition and any Indebtedness Incurred or repaid
in connection with any such asset acquisitions or asset dispositions) that
have been made by any Person that has become a Restricted Subsidiary or has
been merged with or into FelCor LP or FelCor or any of their respective
Restricted Subsidiaries during such Reference Period but subsequent to the
end of the related Four Quarter Period and that would have constituted
Asset Dispositions or Asset Acquisitions during such Reference Period but
subsequent to the end of the related Four Quarter Period had such
transactions occurred when such Person was a Restricted Subsidiary as if
such asset dispositions or asset acquisitions were Asset Dispositions or
Asset Acquisitions and had occurred on the first day of such Reference
Period; provided that to the extent that clause (3) or (4) of this sentence
requires that pro forma effect be given to an Asset Acquisition or Asset
Disposition, such pro forma calculation shall be based upon the four full
fiscal quarters immediately preceding the Transaction Date of the Person,
or division or line of business, or one or more hotel properties, of the
Person that is acquired or disposed of to the extent that such financial
information is available.

"Interest Rate Agreement" means any interest rate protection agreement,
interest rate future agreement, interest rate option agreement, interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedge agreement, option or future contract or other similar
agreement or arrangement with respect to interest rates.

"Investment" in any Person means any direct or indirect advance, loan or
other extension of credit (including without limitation by way of Guarantee or
similar arrangement, but excluding advances to customers in the ordinary course
of business that are, in conformity with GAAP, recorded as accounts receivable
on the consolidated balance sheet of FelCor LP, FelCor and their respective
Restricted Subsidiaries) or capital contribution to (by means of any transfer of
cash or other property (tangible or intangible) to others or any payment for
property or services solely for the account or use of others, or otherwise), or
any purchase or acquisition of Capital Stock, bonds, notes, debentures or other
similar instruments issued by, such Person and shall include:

(1) the designation of a Restricted Subsidiary as an Unrestricted
Subsidiary, and

(2) the fair market value of the Capital Stock (or any other
Investment), held by FelCor LP or FelCor or any of their respective
Restricted Subsidiaries of (or in) any Person that has ceased to be a
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Restricted Subsidiary, including without limitation, by reason of any
transaction permitted by clause(3) of the "Limitation on the Issuance and
Sale of Capital Stock of Restricted Subsidiaries" covenant;

provided that the fair market value of the Investment remaining in any Person
that has ceased to be a Restricted Subsidiary shall be deemed not to exceed the
aggregate amount of Investments previously made in such Person valued at the
time such Investments were made, less the net reduction of such Investments. For
purposes of the definition of "Unrestricted Subsidiary" and the "Limitation on
Restricted Payments" covenant described below:

- "Investment" shall include the fair market value of the assets (net of
liabilities (other than liabilities to FelCor LP or FelCor or any of
their respective Restricted Subsidiaries)) of any Restricted Subsidiary
at the time such Restricted Subsidiary is designated an Unrestricted
Subsidiary,

- the fair market value of the assets (net of liabilities (other than
liabilities to FelCor LP or FelCor or any of their respective Restricted
Subsidiaries)) of any Unrestricted Subsidiary at the time that such
Unrestricted Subsidiary is designated a Restricted Subsidiary shall be
considered a reduction in outstanding Investments, and

- any property transferred to or from an Unrestricted Subsidiary shall be
valued at its fair market value at the time of such transfer.

"Investment Grade" means a rating of the Notes by both S&P and Moody's,
each such rating being in one of such agency's four highest generic rating
categories that signifies investment grade (i.e. BBB- (or the equivalent) or
higher by S&P and Baa3 (or the equivalent) or higher by Moody's); provided, in
each case, such ratings are publicly available; provided, further, that in the
event Moody's or S&P is no longer in existence for purposes of determining
whether the Notes are rated "Investment Grade," such organization may be
replaced by a nationally recognized statistical rating organization (as defined
in Rule 436 under the Securities Act) designated by FelCor LP and FelCor, notice
of which shall be given to the Trustee.

"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including without limitation, any conditional sale or other
title retention agreement or lease in the nature thereof or any agreement to
give any security interest).

"Line of Credit" means the credit facility established pursuant to the
Seventh Amended and Restated Credit Agreement dated as of July 26, 2001, among
FelCor LP, FelCor, and FelCor Canada Co., as borrowers, the lenders party
thereto, The Chase Manhattan Bank, as Administrative Agent, The Chase Manhattan
Bank of Canada, as an Additional Administrative Agent, Bankers Trust Company, as
Syndication Agent, J.P. Morgan Securities Inc. and Deutsche Banc Alex. Brown
Inc., as Co-Lead Arrangers and Joint Bookrunners, and Bank of America, N.A.,
Wells Fargo Bank, National Association and Salomon Smith Barney Inc., as
Co-Documentation Agents, together with all other agreements, instruments and
documents executed or delivered pursuant thereto or in connection therewith, in
each case as such agreements, instruments or documents may be amended,
supplemented, extended, renewed, replaced or otherwise modified from time to
time; provided that, with respect to an agreement providing for the refinancing
of Indebtedness under the Line of Credit, such agreement shall be the Line of
Credit under the Indenture only if a notice to that effect is delivered by
FelCor LP and FelCor to the trustee.

"Moody's" means Moody's Investors Service, Inc. and its successors.

"Net Cash Proceeds" means:

(1) with respect to any Asset Sale, the proceeds of such Asset Sale in
the form of cash or cash equivalents, including payments in respect of
deferred payment obligations (to the extent corresponding to the principal,
but not interest, component thereof) when received in the form of cash or
cash equivalents (except to the extent such obligations are financed or
sold with recourse to
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FelCor LP or FelCor or any of their respective Restricted Subsidiaries) and
proceeds from the conversion of other property received when converted to
cash or cash equivalents, net of:

- brokerage commissions and other fees and expenses (including fees and
expenses of counsel and investment bankers) related to such Asset
Sale,

- provisions for all taxes actually paid or payable as a result of such
Asset Sale by FelCor LP, FelCor and their respective Restricted
Subsidiaries, taken as a whole,

- payments made to repay Indebtedness or any other obligation
outstanding at the time of such Asset Sale that either (A) is secured
by a Lien on the property or assets sold or (B) is required to be paid
as a result of such sale, and

- amounts reserved by FelCor LP, FelCor and their respective Restricted
Subsidiaries against any liabilities associated with such Asset Sale,
including without limitation, pension and other post-employment
benefit liabilities, liabilities related to environmental matters and
liabilities under any indemnification obligations associated with such
Asset Sale, all as determined on a consolidated basis in conformity
with GAAP, and

(2) with respect to any issuance or sale of Capital Stock, the
proceeds of such issuance or sale in the form of cash or cash equivalents,
including payments in respect of deferred payment obligations (to the
extent corresponding to the principal, but not interest, component thereof)
when received in the form of cash or cash equivalents (except to the extent
such obligations are financed or sold with recourse to FelCor LP or FelCor
or any of their respective Restricted Subsidiaries) and proceeds from the
conversion of other property received when converted to cash or cash
equivalents, net of attorney's fees, accountants's fees, underwriters' or
placement agents' fees, discounts or commissions and brokerage, consultant
and other fees incurred in connection with such issuance or sale and net of
tax paid or payable as a result thereof.

"Offer to Purchase" means an offer to purchase Notes by FelCor LP, from the
holders commenced by mailing a notice to the trustee and each holder stating:

(1) the covenant pursuant to which the offer is being made and that
all Notes validly tendered will be accepted for payment on a pro rata
basis;

(2) the purchase price and the date of purchase (which shall be a
Business Day no earlier than 30 days nor later than 60 days from the date
such notice is mailed) ("Payment Date");

(3) that any Note not tendered will continue to accrue interest
pursuant to its terms;

(4) that, unless FelCor LP defaults in the payment of the purchase
price, any Note accepted for payment pursuant to the Offer to Purchase
shall cease to accrue interest on and after the Payment Date;

(5) that holders electing to have a Note purchased pursuant to the
Offer to Purchase will be required to surrender the Note, together with the
form entitled "Option of the Holder to Elect Purchase" on the reverse side
of the Note completed, to the Paying Agent at the address specified in the
notice prior to the close of business on the Business Day immediately
preceding the Payment Date;

(6) that holders will be entitled to withdraw their election if the
Payment Agent receives, not later than the close of business on the third
Business Day immediately preceding the Payment Date, a telegram, facsimile
transmission or letter setting forth the name of such holder, the principal
amount of Notes delivered for purchase and a statement that such holder is
withdrawing his election to have such Notes purchased; and

(7) that holders whose Notes are being purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered; provided that each Note

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purchased and each new Note issued shall be in a principal amount of $1,000
or integral multiples thereof.

On the Payment Date, FelCor LP shall

- accept for payment on a pro rata basis Notes or portions thereof tendered
pursuant to an Offer to Purchase; and

- deposit with the Paying Agent money sufficient to pay the purchase price
of all Notes or portions thereof so accepted;

- and shall promptly thereafter deliver, or cause to be delivered, to the
trustee all Notes or portions thereof so accepted together with an
Officers' Certificate specifying the Notes or portions thereof accepted
for payment by FelCor LP.

The Paying Agent shall promptly mail to the holders of Notes so accepted
payment in an amount equal to the purchase price, and the trustee shall promptly
authenticate and mail to such holders a new Note equal in principal amount to
any unpurchased portion of any Note surrendered; provided that each Note
purchased and each new Note issued shall be in a principal amount of $1,000 or
integral multiples thereof. FelCor LP will publicly announce the results of an
Offer to Purchase as soon as practicable after the Payment Date. FelCor LP will
comply with Rule 14e-1 under the Exchange Act and any other securities laws and
regulations thereunder to the extent such laws and regulations are applicable,
in the event that FelCor LP is required to repurchase Notes pursuant to an Offer
to Purchase.

"Permitted Investment" means:

(1) an Investment in FelCor LP or FelCor or any of their Restricted
Subsidiaries or a Person that will, upon the making of such Investment,
become a Restricted Subsidiary or be merged or consolidated with or into or
transfer or convey all or substantially all its assets to, FelCor LP or
FelCor or any of their Restricted Subsidiaries; provided that such person's
primary business is related, ancillary, incidental or complementary to the
businesses of FelCor LP or FelCor or any of their respective Restricted
Subsidiaries on the date of such Investment;

(2) Temporary Cash Investments;

(3) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as expenses
in accordance with GAAP; and

(4) stock, obligations or securities received in satisfaction of
judgments.

"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participation or other equivalents (however designated, whether
voting or non-voting) that have a preference on liquidation or with respect to
distributions over any other class of Capital Stock, including preferred
partnership interests, whether general or limited, or such Person's preferred or
preference stock, whether outstanding on the Closing Date or issued thereafter,
including, without limitation, all series and classes of such preferred or
preference stock.

"Ratings Downgrade" means a rating of the Notes (1) by S&P and Moody's
lower than, in the case of S&P, BB- and, in the case of Moody's, Ba3; provided
in each case such ratings are publicly available or (2) by S&P or Moody's lower
than, in the case of S&P, BB- or, in the case of Moody's, Ba3; provided that in
any such case such rating is the only rating publicly available.

"Restricted Subsidiary" means any Subsidiary of FelCor LP or FelCor other
than an Unrestricted Subsidiary; provided, that FelCor LP shall not be a
Restricted Subsidiary of FelCor.

"Secured Indebtedness" means any Indebtedness secured by a Lien upon the
property of FelCor LP or FelCor or any of their respective Restricted
Subsidiaries, other than Indebtedness secured by a Stock Pledge to the extent
such Indebtedness does not exceed 50% of Adjusted Total Assets.

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"Senior Indebtedness" means the following obligations of FelCor LP or
FelCor or any of their respective Restricted Subsidiaries, whether outstanding
on the Closing Date or thereafter Incurred:

(1) all Indebtedness and all other monetary obligations (including
expenses fees and other monetary obligations) of FelCor LP and FelCor under
the Line of Credit;

(2) all Indebtedness and all other monetary obligations of FelCor LP
or FelCor or any of their respective Restricted Subsidiaries (other than
the Notes), including principal and interest on such Indebtedness, unless
such Indebtedness, by its terms or by the terms of any agreement or
instrument pursuant to which such Indebtedness is issued is expressly
subordinated in right of payment to the Notes; and

(3) Subsidiary Debt.

Senior Indebtedness will also include interest accruing subsequent to
events of bankruptcy of FelCor LP and FelCor and their respective Restricted
Subsidiaries at the rate provided for the document governing such Senior
Indebtedness, whether or not such interest is an allowed claim enforceable
against the debtor in a bankruptcy case under bankruptcy law.

"Significant Subsidiary" means, at any determination date, any Restricted
Subsidiary that, together with its Subsidiaries:

(1) for the most recent fiscal year of FelCor LP and FelCor, accounted
for more than 10% of the consolidated revenues of FelCor LP, FelCor and
their respective Restricted Subsidiaries, or

(2) as of the end of such fiscal year, was the owner of more than 10%
of the consolidated assets of FelCor LP, FelCor and their respective
Restricted Subsidiaries, all as set forth on the most recently available
consolidated financial statements thereof for such fiscal year.

"S&P" means Standard & Poor's, a division of The McGraw-Hill Companies, and
its successors.

"Stated Maturity" means:

(1) with respect to any debt security, the date specified in such debt
security as the fixed date on which the final installment of principal of
such debt security is due and payable, and

(2) with respect to any scheduled installment of principal of or
interest on any debt security, the date specified in such debt security as
the fixed date on which such installment is due and payable.

"Stock Pledge" means a security interest in the equity interests of
subsidiaries of FelCor and/or FelCor LP.

"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the voting power
of the outstanding Voting Stock is owned, directly or indirectly, by such Person
and one or more other Subsidiaries of such Person and the accounts of which
would be consolidated with those of such Person in its consolidated financial
statements in accordance with GAAP, if such statements were prepared as of such
date.

"Subsidiary Debt" means all unsecured Indebtedness of which a Restricted
Subsidiary is the primary obligor.

"Subsidiary Guarantee" means a Guarantee by each Subsidiary Guarantor for
payment of the Notes by such Subsidiary Guarantor. The Subsidiary Guarantee will
be an unsecured senior obligation of each Subsidiary Guarantor and will be
unconditional regardless of the enforceability of the Notes and the Indenture.
Notwithstanding the foregoing, each Subsidiary Guarantee by a Subsidiary
Guarantor shall provide by its terms that it shall be automatically and
unconditionally released and discharged upon any sale, exchange or transfer, to
any Person not an Affiliate of FelCor LP or FelCor, of all of the Capital Stock
owned by FelCor LP, FelCor and their respective Restricted Subsidiaries in, or
all or substantially

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all the assets of, such Restricted Subsidiary (which sale, exchange or transfer
is not then prohibited by the Indenture).

"Subsidiary Guarantor" means each of the following:

(1) FelCor/CSS Hotels, L.L.C., a Delaware limited liability company;

(2) FelCor/LAX Hotels, L.L.C., a Delaware limited liability company;

(3) FelCor/CSS Holdings, L.P., a Delaware limited partnership;

(4) FelCor/St. Paul Holdings, L.P., a Delaware limited partnership;

(5) FelCor/LAX Holdings, L.P., a Delaware limited partnership;

(6) FelCor Eight Hotels, L.L.C., a Delaware limited liability company;

(7) FelCor Hotel Asset Company, L.L.C., a Delaware limited liability
company;

(8) FelCor Nevada Holdings L.L.C., a Nevada limited liability company;

(9) FHAC Nevada Holdings, L.L.C., a Nevada limited liability company;

(10) FHAC Texas Holdings, L.P., a Texas limited partnership;

(11) FelCor Omaha Hotel Company, L.L.C., a Delaware limited liability
company;

(12) FelCor Country Villa Hotel, L.L.C., a Delaware limited liability
company;

(13) FelCor Moline Hotel, L.L.C., a Delaware limited liability
company;

(14) FelCor Canada Co., a Nova Scotia unlimited liability company;

(15) FelCor TRS Holdings, L.P., a Delaware limited partnership;

(16) Kingston Plantation Development Corp., a Delaware corporation;
and

(17) each other Restricted Subsidiary that executes a Subsidiary
Guarantee in compliance with the "Limitation on Issuances of Guarantees by
Restricted Subsidiaries" covenant below.

"Temporary Cash Investment" means any of the following:

(1) direct obligations of the United States of America or any agency
thereof or obligations fully and unconditionally guaranteed by the United
States of America or any agency thereof,

(2) time deposits accounts, certificates of deposit and money market
deposits maturing within 180 days of the date of acquisition thereof issued
by a bank or trust company which is organized under the laws of the United
States of America, any state thereof, and which bank or trust company has
capital, surplus and undivided profits aggregating in excess of $50 million
and has outstanding debt which is rated "A" (or such similar equivalent
rating) or higher by at least one nationally recognized statistical rating
organization (as defined in Rule 436 under the Securities Act) or any
money-market fund sponsored by a registered broker dealer or mutual fund
distributor,

(3) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (1) above entered
into with a bank meeting the qualifications described in clause (2) above,

(4) commercial paper, maturing not more than 90 days after the date of
acquisition, issued by a corporation (other than an Affiliate of FelCor LP
or FelCor) organized and in existence under the laws of the United States
of America, any state of the United States of America with a rating at the
time as of which any investment therein is made of "P-1" (or higher)
according to Moody's or "A-1" (or higher) according to S&P, and

(5) securities with maturities of six months or less from the date of
acquisition issued or fully and unconditionally guaranteed by any state,
commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least "A"
by S&P or Moody's.

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"Total Assets" means the sum of:

(1) Undepreciated Real Estate Assets, and

(2) all other assets of FelCor LP, FelCor and their respective
Restricted Subsidiaries on a consolidated basis determined in conformity
with GAAP (but excluding intangibles and accounts receivables).

"Total Unencumbered Assets" as of any date means the sum of:

(1) those Undepreciated Real Estate Assets not securing any portion of
Secured Indebtedness, and

(2) all other assets (but excluding intangibles and accounts
receivable) of FelCor LP, FelCor and their respective Restricted
Subsidiaries not securing any portion of Secured Indebtedness determined on
a consolidated basis in accordance with GAAP.

"Trade Payables" means, with respect to any Person, any accounts payable or
any other indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by such Person or any of its Subsidiaries arising in the
ordinary course of business in connection with the acquisition of goods or
services.

"Transaction Date" means, with respect to the Incurrence of any
Indebtedness by FelCor LP or FelCor or any of their respective Restricted
Subsidiaries, the date such Indebtedness is to be Incurred and, with respect to
any Restricted Payment, the date such Restricted Payment is to be made.

"Undepreciated Real Estate Assets" means, as of any date, the cost (being
the original cost to FelCor LP or FelCor or any of their respective Restricted
Subsidiaries plus capital improvements) of real estate assets of FelCor LP,
FelCor and their Restricted Subsidiaries on such date, before depreciation and
amortization of such real estate assets, determined on a consolidated basis in
conformity with GAAP.

"Units" means the limited partnership units of FelCor LP, that by their
terms are redeemable at the option of the holder thereof and that, if so
redeemed, at the election of FelCor are redeemable for cash or Common Stock of
FelCor.

"Unrestricted Subsidiary" means

(1) any Subsidiary of FelCor LP or FelCor that at the time of
determination shall be designated an Unrestricted Subsidiary by the Board
of Directors in the manner provided below; and

(2) any Subsidiary of an Unrestricted Subsidiary.

The Board of Directors may designate any Restricted Subsidiary (including
any newly acquired or newly formed Subsidiary of FelCor LP or FelCor) to be an
Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of, or
owns or holds any Lien on any property of, FelCor LP or FelCor or any of their
respective Restricted Subsidiaries; provided that:

- any Guarantee by FelCor LP or FelCor or any of their respective
Restricted Subsidiaries of any Indebtedness of the Subsidiary being so
designated shall be deemed an "Incurrence" of such Indebtedness and an
"Investment" by FelCor LP or FelCor or such Restricted Subsidiary (or
all, if applicable) at the time of such designation;

- either (i) the Subsidiary to be so designated has total assets of $1,000
or less or (ii) if such Subsidiary has assets greater than $1,000, such
designation would be permitted under the "Limitation on Restricted
Payments" covenant described below; and

- if applicable, the Incurrence of Indebtedness and the Investment referred
to in the first bullet of this proviso would be permitted under the
"Limitation on Indebtedness" and "Limitation on Restricted Payments"
covenants described below.

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The Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that:

- no Default or Event of Default shall have occurred and be continuing at
the time of or after giving effect to such designation; and

- all Liens and Indebtedness of such Unrestricted Subsidiary outstanding
immediately after such designation would, if Incurred at such time, have
been permitted to be Incurred (and shall be deemed to have been Incurred)
for all purposes of the Indenture.

Any such designation by the Board of Directors shall be evidenced to the trustee
by promptly filing with the trustee a copy of the Board Resolution giving effect
to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing provisions.

"Unsecured Indebtedness" means any Indebtedness of FelCor LP or FelCor or
any of their respective Restricted Subsidiaries that is not Secured
Indebtedness.

"Voting Stock" means with respect to any Person, Capital Stock of any class
or kind ordinarily having the power to vote for the election of directors,
managers or other voting members of the governing body of such Person.

"Wholly Owned" means, with respect to any Subsidiary of any Person, the
ownership of all of the outstanding Capital Stock of such Subsidiary (other than
any director's qualifying shares or Investments by individuals mandated by
applicable law) by such Person or one or more Wholly Owned Subsidiaries of such
Person.

COVENANTS

The Indenture contains, among others, the following covenants, provided
that the Indenture will provide that the "Limitation on Liens," the "Limitation
on Sale-Leaseback Transactions," the "Limitation on Restricted Payments," the
"Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries," the "Limitation on the Issuance and Sale of Capital Stock of
Restricted Subsidiaries," the "Limitation on Issuances of Guarantees by
Restricted Subsidiaries," and the "Limitation on Transactions with Affiliates"
covenants will not be applicable in the event, and only for so long as, the
Notes are rated Investment Grade and no Default or Event of Default has occurred
and is continuing.

Limitation on Indebtedness

(1) Neither FelCor LP nor FelCor will, and neither FelCor LP nor FelCor
will permit any of their respective Restricted Subsidiaries to, Incur any
Indebtedness if, immediately after giving effect to the Incurrence of such
additional Indebtedness, the aggregate principal amount of all outstanding
Indebtedness of FelCor LP, FelCor and their respective Restricted Subsidiaries
on a consolidated basis determined in accordance with GAAP is greater than 60%
of Adjusted Total Assets.

(2) Neither FelCor LP nor FelCor will, and neither FelCor LP nor FelCor
will permit any of their respective Restricted Subsidiaries to, Incur any
Subsidiary Debt or any Secured Indebtedness if, immediately after giving effect
to the Incurrence of such additional Subsidiary Debt or Secured Indebtedness,
the aggregate principal amount of all outstanding Subsidiary Debt and Secured
Indebtedness of FelCor LP, FelCor and their respective Restricted Subsidiaries
on a consolidated basis is greater than 45% of Adjusted Total Assets.

(3) Neither FelCor LP nor FelCor will, and neither FelCor LP nor FelCor
will permit any of their respective Restricted Subsidiaries to, Incur any
Indebtedness (other than the 7 3/8%, 7 5/8%, and 9 1/2% senior notes, the
Subsidiary Guarantees relating to the 7 3/8%, 7 5/8%, and 9 1/2% senior notes
and other Indebtedness existing on the Closing Date); provided that FelCor LP or
FelCor or any of their respective Restricted Subsidiaries may Incur Indebtedness
if, after giving effect to the Incurrence of such Indebtedness and the

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receipt and application of the proceeds therefrom, the Interest Coverage Ratio
of FelCor LP, FelCor and their respective Restricted Subsidiaries on a
consolidated basis would be greater than 2.0 to 1.

(4) Notwithstanding paragraphs (1), (2) or (3), FelCor LP or FelCor or any
of their respective Restricted Subsidiaries (except as specified below) may
Incur each and all of the following:

(A) Indebtedness outstanding under the Line of Credit at any time in
an aggregate principal amount not to exceed $700 million less any amount of
such Indebtedness permanently repaid as provided under the "Limitation on
Asset Sales" covenant described below;

(B) Indebtedness owed to:

- FelCor LP or FelCor evidenced by an unsubordinated promissory note, or

- to any Restricted Subsidiary;

provided that any event which results in any such Restricted Subsidiary ceasing
to be a Restricted Subsidiary or any subsequent transfer of such Indebtedness
(other than to FelCor LP or FelCor or any other Restricted Subsidiary) shall be
deemed, in each case, to constitute an Incurrence of such Indebtedness not
permitted by this clause (B);

(C) Indebtedness issued in exchange for, or the net proceeds of which
are used to refinance or refund, outstanding Indebtedness (other than
Indebtedness Incurred under clause (A), (B), (D) or (F) of this paragraph
(4)) and any refinancings thereof in an amount not to exceed the amount so
refinanced or refunded (plus premiums, accrued interest, fees and
expenses); provided that Indebtedness the proceeds of which are used to
refinance or refund the Notes or Indebtedness that ranks equally with or
subordinate in right of payment to, the Notes shall only be permitted under
this clause (C) if:

- in case the Notes are refinanced in part or the Indebtedness to be
refinanced ranks equally with the Notes, such new Indebtedness, by its
terms or by the terms of any agreement or instrument pursuant to which
such new Indebtedness is outstanding, ranks equally with or is
expressly made subordinate in right of payment to the remaining Notes,

- in case the Indebtedness to be refinanced is subordinated in right of
payment to the Notes, such new Indebtedness, by its terms or by the
terms of any agreement or instrument pursuant to which such new
Indebtedness is issued or remains outstanding, is expressly made
subordinate in right of payment to the Notes at least to the extent
that the Indebtedness to be refinanced is subordinated to the Notes,
and

- such new Indebtedness, determined as of the date of Incurrence of such
new Indebtedness, does not mature prior to the Stated Maturity of the
Indebtedness to be refinanced or refunded, and the Average Life of
such new Indebtedness is at least equal to the remaining Average Life
of the Indebtedness to be refinanced or refunded; and

provided further that in no event may Indebtedness of FelCor LP or FelCor that
ranks equally with or subordinate in right of payment to the Notes be refinanced
by means of any Indebtedness of any Restricted Subsidiary pursuant to this
clause (C);

(D) Indebtedness:

- in respect of performance, surety or appeal bonds provided in the
ordinary course of business,

- under Currency Agreements and Interest Rate Agreements; provided that
such agreements (i) are designed solely to protect FelCor LP or FelCor
or any of their respective Restricted Subsidiaries against
fluctuations in foreign currency exchange rates or interest rates and
(ii) do not increase the Indebtedness of the obligor outstanding at
any time other than as a result of fluctuations in foreign currency
exchange rates or interest rates or by reason of fees, indemnities and
compensation payable thereunder, and

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- arising from agreements providing for indemnification, adjustment of
purchase price or similar obligations, or from Guarantees or letters
of credit, surety bonds or performance bonds securing any obligations
of FelCor LP or FelCor or any of their respective Restricted
Subsidiaries pursuant to such agreements, in any case Incurred in
connection with the disposition of any business, assets or Restricted
Subsidiary (other than Guarantees of Indebtedness Incurred by any
Person acquiring all or any portion of such business, assets or
Restricted Subsidiary for the purpose of financing such acquisition),
in a principal amount not to exceed the gross proceeds actually
received by FelCor LP, FelCor and their respective Restricted
Subsidiaries on a consolidated basis in connection with such
disposition;

(E) Indebtedness of FelCor LP or FelCor, to the extent the net
proceeds thereof are promptly:

- used to purchase Notes tendered in an Offer to Purchase made as a
result of a Change in Control, or

- deposited to defease the Notes as described below under "Defeasance;"
or

(F) Guarantees of the Notes and the 7 3/8%, 7 5/8% and 9 1/2% senior
notes and Guarantees of Indebtedness of FelCor LP or FelCor by any of their
respective Restricted Subsidiaries provided the guarantee of such
Indebtedness is permitted by and made in accordance with the "Limitation on
Issuances of Guarantees by Restricted Subsidiaries" covenant described
below.

(5) Notwithstanding any other provision of this "Limitation on Indebtedness"
covenant, the maximum amount of Indebtedness that FelCor LP or FelCor or any
of their respective Restricted Subsidiaries may Incur pursuant to this
"Limitation on Indebtedness" covenant shall not be deemed to be exceeded, with
respect to any outstanding Indebtedness due solely to the result of
fluctuations in the exchange rates of currencies.

(6) For purposes of determining any particular amount of Indebtedness under
this "Limitation on Indebtedness" covenant,

- Indebtedness Incurred under the Line of Credit on or prior to the Closing
Date shall be treated as Incurred pursuant to clause (A) of paragraph (4)
of this "Limitation on Indebtedness" covenant,

- Guarantees, Liens or obligations with respect to letters of credit
supporting Indebtedness otherwise included in the determination of such
particular amount shall not be included, and

- any Liens granted pursuant to the equal and ratable provisions referred
to in the "Limitation on Liens" covenant described below shall not be
treated as Indebtedness.

For purposes of determining compliance with this "Limitation on Indebtedness"
covenant, in the event that an item of Indebtedness meets the criteria of more
than one of the types of Indebtedness described in the above clauses (other than
Indebtedness referred to in second bullet in this paragraph (6), each of FelCor
LP and FelCor, in its sole discretion, shall classify such item of Indebtedness
and only be required to include the amount and type of such Indebtedness in one
of such clauses; provided that FelCor LP and FelCor must classify such item of
Indebtedness in an identical fashion.

Maintenance of Total Unencumbered Assets

FelCor LP, FelCor and their respective Restricted Subsidiaries will
maintain Total Unencumbered Assets of not less than 150% of the aggregate
outstanding principal amount of the Unsecured Indebtedness of FelCor LP, FelCor
and their respective Restricted Subsidiaries on a consolidated basis.

Limitation on Liens

Neither FelCor LP nor FelCor shall secure any Indebtedness under the Line
of Credit by a Lien unless contemporaneously therewith effective provision is
made to secure the notes equally and ratably

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with the Indebtedness under the Line of Credit for so long as the Indebtedness
under the Line of Credit is secured by such Lien.

Limitation on Sale-Leaseback Transactions

Neither FelCor LP nor FelCor will, and neither FelCor LP nor FelCor will
permit any of their respective Restricted Subsidiaries to, enter into any
sale-leaseback transaction involving any of its assets or properties whether now
owned or hereafter acquired, whereby any of them sells or transfers such assets
or properties and then or thereafter leases such assets or properties or any
substantial part thereof.

The foregoing restriction does not apply to any sale-leaseback transaction
if:

(1) the lease is for a period, including renewal rights, of not in
excess of three years;

(2) the lease secures or relates to industrial revenue or pollution
control bonds;

(3) the transaction is solely between FelCor LP or FelCor and any
Wholly Owned Restricted Subsidiary or solely between Wholly Owned
Restricted Subsidiaries; or

(4) FelCor LP or FelCor or any of their respective Restricted
Subsidiaries, within 12 months after the sale or transfer of any assets or
properties is completed, applies an amount not less than the net proceeds
received from such sale in accordance with clause (1) or (2) of the second
paragraph of the "Limitation on Asset Sales" covenant described below.

Limitation on Restricted Payments

Neither FelCor LP nor FelCor will, and neither FelCor LP nor FelCor will
permit any of their respective Restricted Subsidiaries to, directly or
indirectly:

(1) declare or pay any dividend or make any distribution on or with
respect to its Capital Stock held by Persons other than FelCor LP or FelCor
or any of their respective Restricted Subsidiaries, other than:

- dividends or distributions payable solely in shares of its Capital
Stock (other than Disqualified Stock) or in options, warrants or other
rights to acquire shares of such Capital Stock, and

- pro rata dividends or distributions on Common Stock of FelCor LP or
any Restricted Subsidiary held by minority stockholders;

(2) purchase, redeem, retire or otherwise acquire for value any shares
of Capital Stock of:

- FelCor LP, FelCor or an Unrestricted Subsidiary (including options,
warrants or other rights to acquire such shares of Capital Stock) held
by any Person other than FelCor LP or FelCor or any of their
respective Restricted Subsidiaries unless in connection with such
purchase the Unrestricted Subsidiary is designated as a Restricted
Subsidiary, or

- a Restricted Subsidiary (including options, warrants or other rights
to acquire such shares of Capital Stock) held by an Affiliate of
FelCor LP or FelCor (other than a Wholly Owned Restricted Subsidiary)
or any holder (or any Affiliate of such holder) of 5% or more of the
Capital Stock of FelCor LP or FelCor;

(3) make any voluntary or optional principal payment, or voluntary or
optional redemption, repurchase, defeasance, or other acquisition or
retirement for value, of Indebtedness of FelCor LP or FelCor that is
subordinated in right of payment to the Notes; or

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(4) make an Investment, other than a Permitted Investment, in any
Person (such payments or any other actions described in clauses (1) through
(4) above being collectively "Restricted Payments") if, at the time of, and
after giving effect to, the proposed Restricted Payment:

(A) a Default or Event of Default shall have occurred and be
continuing,

(B) FelCor LP or FelCor could not Incur at least $1.00 of
Indebtedness under the paragraphs (1), (2) and (3) of the "Limitation on
Indebtedness" covenant, or

(C) the aggregate amount of all Restricted Payments (the amount, if
other than in cash, to be determined in good faith by the Board of
Directors, whose determination shall be conclusive and evidenced by a
Board Resolution) made after September 15, 2000 shall exceed the sum of:

- 95% of the aggregate amount of the Funds From Operations (or, if
the Funds From Operations is a loss, minus 100% of the amount of
such loss) (determined by excluding income resulting from transfers
of assets by FelCor LP or FelCor or any of their respective
Restricted Subsidiaries to an Unrestricted Subsidiary) accrued on a
cumulative basis during the period (taken as one accounting period)
beginning on July 1, 2000 and ending on the last day of the last
fiscal quarter preceding the Transaction Date for which reports
have been filed with the SEC or provided to the Trustee pursuant to
the "SEC Reports and Reports to Holders" covenant, plus

- the aggregate Net Cash Proceeds received by FelCor LP or FelCor
after September 15, 2000 from the issuance and sale permitted by
the Indenture of its Capital Stock (other than Disqualified Stock)
to a Person who is not a Subsidiary of FelCor LP or FelCor,
including an issuance or sale permitted by the Indenture of
Indebtedness of FelCor LP or FelCor for cash subsequent to
September 15, 2000 upon the conversion of such Indebtedness into
Capital Stock (other than Disqualified Stock) of FelCor LP or
FelCor, or from the issuance to a Person who is not a Subsidiary of
FelCor LP or FelCor of any options, warrants or other rights to
acquire Capital Stock of FelCor LP or FelCor (in each case,
exclusive of any Disqualified Stock or any options, warrants or
other rights that are redeemable at the option of the holder, or
are required to be redeemed, prior to the Stated Maturity of the
Notes), plus

- an amount equal to the net reduction in Investments (other than
reductions in Permitted Investments) in any Person resulting from
payments of interest on Indebtedness, dividends, repayments of
loans or advances, or other transfers of assets, in each case to
FelCor LP or FelCor or any of their respective Restricted
Subsidiaries or from the Net Cash Proceeds from the sale of any
such Investment (except, in each case, to the extent any such
payment or proceeds are included in the calculation of Funds From
Operations) or from redesignations of Unrestricted Subsidiaries as
Restricted Subsidiaries (valued in each case as provided in the
definition of "Investments") not to exceed, in each case, the
amount of Investments previously made by FelCor LP, FelCor and
their respective Restricted Subsidiaries in such Person or
Unrestricted Subsidiary, plus

- the purchase price of noncash tangible assets acquired in exchange
for an issuance of Capital Stock (other than Disqualified Stock) of
FelCor LP or FelCor subsequent to September 15, 2000.

Notwithstanding the foregoing, FelCor LP or FelCor may declare or pay any
dividend or make any distribution that is necessary to maintain FelCor's status
as a REIT under the Code if:

- the aggregate principal amount of all outstanding Indebtedness of FelCor
LP or FelCor on a consolidated basis at such time is less than 60% of
Adjusted Total Assets, and

- no Default or Event of Default shall have occurred and be continuing.

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The foregoing provisions shall not be violated by reason of:

(1) the payment of any dividend within 60 days after the date of
declaration thereof if, at said date of declaration, such payment would
comply with the foregoing paragraph;

(2) the redemption, repurchase, defeasance or other acquisition or
retirement for value of Indebtedness that is subordinated in right of
payment to the Notes including premium, if any, and accrued and unpaid
interest, with the proceeds of, or in exchange for, Indebtedness Incurred
under clause (C) of paragraph (4) of the "Limitation on Indebtedness"
covenant;

(3) the repurchase, redemption or other acquisition of Capital Stock
of FelCor LP or FelCor or an Unrestricted Subsidiary (or options, warrants
or other rights to acquire such Capital Stock) in exchange for, or out of
the proceeds of a substantially concurrent issuance of, shares of Capital
Stock (other than Disqualified Stock) of FelCor LP or FelCor (or options,
warrants or other rights to acquire such Capital Stock);

(4) the making of any principal payment on, or the repurchase,
redemption, retirement, defeasance or other acquisition for value of,
Indebtedness of FelCor LP or FelCor which is subordinated in right of
payment to the Notes in exchange for, or out of the proceeds of, a
substantially concurrent issuance of, shares of the Capital Stock (other
than Disqualified Stock) of FelCor LP or FelCor (or options, warrants or
other rights to acquire such Capital Stock);

(5) payments or distributions, to dissenting stockholders pursuant to
applicable law pursuant to or in connection with a consolidation, merger or
transfer of assets that complies with the provisions of the Indenture
applicable to mergers, consolidations and transfers of all or substantially
all of the property and assets of FelCor LP or FelCor;

(6) Investments in any Person or Persons in an aggregate amount not to
exceed $150 million after September 15, 2000; or

(7) Restricted Payments in an aggregate amount not to exceed $200
million after September 15, 2000; provided that at the time of, and after
giving effect to, the proposed Restricted Payment FelCor LP and FelCor
could have incurred at least $1.00 of Indebtedness under paragraphs (1),
(2) and (3) of the "Limitation on Indebtedness" covenant;

provided that, except in the case of clauses (1) and (3), no Default or
Event of Default shall have occurred and be continuing or occur as a
direct consequence of the actions or payments set forth therein.

Each Restricted Payment permitted pursuant to this paragraph (other than the
Restricted Payment referred to in clause (2) of this paragraph, an exchange of
Capital Stock for Capital Stock or Indebtedness referred to in clause (3) or (4)
of this paragraph, an Investment referred to in clause (6) of this paragraph or
a Restricted Payment referred to in clause (7) of this paragraph), and the Net
Cash Proceeds from any issuance of Capital Stock referred to in clauses (3) and
(4), shall be included in calculating whether the conditions of clause (C) of
the first paragraph of this "Limitation on Restricted Payments" covenant have
been met with respect to any subsequent Restricted Payments.

Notwithstanding anything to the contrary contained in this "Limitation on
Restricted Payments" covenant, except in the case of clauses (3) and (5) of the
immediately preceding paragraph, in no case shall FelCor LP, FelCor or any of
their respective Restricted Subsidiaries, directly or indirectly, purchase,
redeem or otherwise acquire any Capital Stock unless at the time of, and after
giving effect to, such proposed Restricted Payment, the ratio of Indebtedness to
Consolidated EBITDA of FelCor LP, FelCor and their respective Restricted
Subsidiaries on a consolidated basis would be equal to or less than 4.85 to 1.

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Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries

Neither FelCor LP nor FelCor will, and neither FelCor LP nor FelCor will
permit any of their respective Restricted Subsidiaries to, create or otherwise
cause or suffer to exist or become effective any consensual encumbrance or
restriction of any kind on the ability of any Restricted Subsidiary to:

- pay dividends or make any other distributions permitted by applicable law
on any Capital Stock of such Restricted Subsidiary owned by FelCor LP or
FelCor or any of their respective Restricted Subsidiaries,

- pay any Indebtedness owed to FelCor LP, FelCor or any other Restricted
Subsidiary,

- make loans or advances to FelCor LP, FelCor or any other Restricted
Subsidiary, or

- transfer its property or assets to FelCor LP, FelCor or any other
Restricted Subsidiary.

The foregoing provisions shall not restrict any encumbrances or restrictions:

(1) existing on the Closing Date in the Indenture, the Line of Credit
and any other agreement in effect on the Closing Date to the extent listed
on a schedule to the Indenture, and any extensions, refinancings, renewals
or replacements of such agreements; provided that the encumbrances and
restrictions in any such extensions, refinancings, renewals or replacements
are no less favorable in any material respect to the holders than those
encumbrances or restrictions that are then in effect and that are being
extended, refinanced, renewed or replaced;

(2) existing under or by reason of applicable law;

(3) existing with respect to any Person or the property or assets of
such Person acquired by FelCor LP, FelCor or any Restricted Subsidiary,
existing at the time of such acquisition and not incurred in contemplation
thereof, which encumbrances or restrictions are not applicable to any
Person or the property or assets of any Person other than such Person or
the property or assets of such Person so acquired;

(4) in the case of the last bullet in the first paragraph of this
"Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries" covenant:

- that restrict in a customary manner the subletting, assignment or
transfer of any property or asset that is a lease, license, conveyance
or contract or similar property or asset,

- existing by virtue of any transfer of, agreement to transfer, option
or right with respect to, or Lien on, any property or assets of FelCor
LP, FelCor or any Restricted Subsidiary not otherwise prohibited by
the Indenture, or

- arising or agreed to in the ordinary course of business, not relating
to any Indebtedness, and that do not, individually or in the
aggregate, detract from the value of property or assets of FelCor LP,
FelCor or any Restricted Subsidiary in any manner material to FelCor
LP, FelCor and their respective Restricted Subsidiaries taken as a
whole;

(5) with respect to a Restricted Subsidiary and imposed pursuant to an
agreement that has been entered into for the sale or disposition of all or
substantially all of the Capital Stock of, or property and assets of, such
Restricted Subsidiary; or

(6) contained in the terms of any Indebtedness or any agreement
pursuant to which such Indebtedness was issued if:

- the encumbrance or restriction applies only in the event of a payment
default or a default with respect to a financial covenant contained in
such Indebtedness or agreement,

- the encumbrance or restriction is not materially more disadvantageous
to the holders of the Notes than is customary in comparable financings
(as determined by FelCor LP and FelCor), and
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- each of FelCor LP and FelCor determines that any such encumbrance or
restriction will not materially affect such Persons' ability to make
principal or interest payments on the Notes.

Nothing contained in this "Limitation on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries" covenant shall prevent FelCor
LP, FelCor or any Restricted Subsidiary from:

- creating, incurring, assuming or suffering to exist any Liens otherwise
permitted in the "Limitation on Liens" covenant, or

- restricting the sale or other disposition of property or assets of FelCor
LP or FelCor or any of their respective Restricted Subsidiaries that
secure Indebtedness of FelCor LP, FelCor or any of their respective
Restricted Subsidiaries.

Limitation on the Issuance and Sale of Capital Stock of Restricted
Subsidiaries

Neither FelCor LP nor FelCor will sell, and neither FelCor LP nor FelCor
will permit any of their respective Restricted Subsidiaries, directly or
indirectly, to issue or sell, any shares of Capital Stock of a Restricted
Subsidiary (including options, warrants or other rights to purchase shares of
such Capital Stock) except:

(1) to FelCor LP, FelCor or a Wholly Owned Restricted Subsidiary;

(2) issuances of director's qualifying shares or sales to individuals
of shares of Restricted Subsidiaries, to the extent required by applicable
law or to the extent necessary to obtain local liquor licenses;

(3) if, immediately after giving effect to such issuance or sale, such
Restricted Subsidiary would no longer constitute a Subsidiary and any
Investment in such Person remaining after giving effect to such issuance or
sale would have been permitted to be made under the "Limitation on
Restricted Payments" covenant if made on the date of such issuance or sale,
or

(4) sales of not greater than 20% of the Capital Stock of a
newly-created Restricted Subsidiary made in connection with, or in
contemplation of, the acquisition or development by such Restricted
Subsidiary of one or more properties to any Person that is, or is an
Affiliate of, the entity that provides, franchise management or other
services, as the case may be, to one or more properties owned by such
Restricted Subsidiary.

Limitation on Issuances of Guarantees by Restricted Subsidiaries

Neither FelCor LP nor FelCor will permit any of their respective Restricted
Subsidiaries, directly or indirectly, to Guarantee any Indebtedness of FelCor LP
or FelCor which ranks equally with or subordinate in right of payment to the
Notes ("Guaranteed Indebtedness"), unless:

(1) such Restricted Subsidiary simultaneously executes and delivers a
supplemental indenture to the Indenture providing for a Subsidiary
Guarantee by such Restricted Subsidiary, and

(2) such Restricted Subsidiary waives and will not in any manner
whatsoever claim or take the benefit or advantage of, any rights of
reimbursement, indemnity or subrogation or any other rights against FelCor
LP, FelCor or any other Restricted Subsidiary as a result of any payment by
such Restricted Subsidiary under its Subsidiary Guarantee;

provided that this paragraph shall not be applicable to any Guarantee of any
Restricted Subsidiary that existed at the time such Person became a Restricted
Subsidiary and was not Incurred in connection with, or in contemplation of, such
person becoming a Restricted Subsidiary. If the Guaranteed Indebtedness:

- ranks equally with the Notes, then the Guarantee of such Guaranteed
Indebtedness shall rank equally with, or subordinate to, the Subsidiary
Guarantee, or

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- is subordinate to the Notes, then the Guarantee of such Guaranteed
Indebtedness shall be subordinated to the Subsidiary Guarantee at least
to the extent that the Guaranteed Indebtedness is subordinated to the
Notes.

Notwithstanding the foregoing, any Subsidiary Guarantee by a Restricted
Subsidiary may provide by its terms that it shall be automatically and
unconditionally released and discharged upon:

(1) any sale, exchange or transfer, to any Person not an Affiliate of
FelCor LP or FelCor, of all of Capital Stock held by FelCor LP, FelCor and
their respective Restricted Subsidiaries in, or all or substantially all
the assets of, such Restricted Subsidiary (which sale, exchange or transfer
is not prohibited by the Indenture), or

(2) the release or discharge of the Guarantee which resulted in the
creation of such Subsidiary Guarantee, except a discharge or release by or
as a result of payment under such Guarantee.

Limitation on Transactions with Affiliates

Neither FelCor LP nor FelCor will, and neither FelCor LP nor FelCor will
permit any of their respective Restricted Subsidiaries to, directly or
indirectly, enter into, renew or extend any transaction (including, without
limitations, the purchase, sale, lease or exchange of property or assets, or the
rendering of any service) with any holder (or any Affiliate of such holder) of
5% or more of any class of Capital Stock of FelCor LP or FelCor or with any
Affiliate of FelCor LP or FelCor or any of their respective Restricted
Subsidiaries, except upon fair and reasonable terms no less favorable to FelCor
LP, FelCor or such Restricted Subsidiary than could be obtained, at the time of
such transaction or, if such transaction is pursuant to a written agreement, at
the time of the execution of the agreement providing therefor, in a comparable
arm's-length transaction with a Person that is not such a holder or an
Affiliate.

The foregoing limitation does not limit, and shall not apply to:

(1) transactions (A) approved by a majority of the independent
directors of FelCor or (B) for which FelCor LP, FelCor or any Restricted
Subsidiary delivers to the trustee a written opinion of a nationally
recognized investment banking firm stating that the transaction is fair to
FelCor LP, FelCor or such Restricted Subsidiary from a financial point of
view;

(2) any transaction solely between FelCor LP or FelCor and any of
their respective Wholly Owned Restricted Subsidiaries or solely between
Wholly Owned Restricted Subsidiaries;

(3) the payment of reasonable and customary fees and expenses to
directors of FelCor who are not employees of FelCor;

(4) any payments or other transactions pursuant to any tax-sharing
agreement between FelCor LP or FelCor and any other Person with which
FelCor LP or FelCor files a consolidated tax return or with which FelCor LP
or FelCor is part of a consolidated group for tax purposes; or

(5) any Restricted Payments not prohibited by the "Limitation on
Restricted Payments" covenant.

Notwithstanding the foregoing, any transaction or series of related
transactions covered by the first paragraph of this "Limitation on Transactions
with Affiliates" covenant and not covered by (2) through (5) of the immediately
foregoing paragraph,

- the aggregate amount of which exceeds $2 million in value or relates to
the leasing of one or more hotel properties to DJONT, must be approved or
determined to be fair in the manner provided for in clause (1)(A) or (B)
above, and

- the aggregate amount of which exceeds $5 million in value, must be
determined to be fair in the manner provided for in clause (1)(B) above.

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Limitation on Asset Sales

Neither FelCor LP nor FelCor will, and neither FelCor LP or FelCor will
permit any of their respective Restricted Subsidiaries to, consummate any Asset
Sale, unless:

(1) the consideration received by FelCor LP, FelCor or such Restricted
Subsidiary is at least equal to the fair market value of the assets sold or
disposed of, and

(2) at least 75% of the consideration received consists of cash or
Temporary Cash Investments; provided, with respect to the sale of one or
more hotel properties that up to 75% of the consideration may consist of
indebtedness of the purchaser of such hotel properties; provided, further,
that such indebtedness is secured by a first priority Lien on the hotel
property or properties sold.

In the event and to the extent that the Net Cash Proceeds received by
FelCor LP, FelCor or such Restricted Subsidiary from one or more Asset Sales
occurring on or after the Closing Date in any period of 12 consecutive months
exceed 10% of Adjusted Consolidated Net Tangible Assets (determined as of the
date closest to the commencement of such 12-month period for which a
consolidated balance sheet of FelCor LP, FelCor and their respective Restricted
Subsidiaries has been filed with the SEC or provided to the Trustee pursuant to
the "SEC Reports and Reports to Holders" covenant), then FelCor LP or FelCor
shall or shall cause the relevant Restricted Subsidiary to:

(1) within 12 months after the date Net Cash Proceeds so received
exceed 10% of Adjusted Consolidated Net Tangible Assets:

- apply an amount equal to such excess Net Cash Proceeds to permanently
reduce Senior Indebtedness of FelCor LP, FelCor, or any Restricted
Subsidiary or Indebtedness of any other Restricted Subsidiary, in each
case owing to a Person other than FelCor LP, FelCor or any of their
respective Restricted Subsidiaries, or

- invest an equal amount, or the amount not so applied pursuant to the
foregoing bullet (or enter into a definitive agreement committing to
so invest within 12 months after the date of such agreement), in
property or assets (other than current assets) of a nature or type or
that are used in a business (or in a Restricted Subsidiary having
property and assets of a nature or type, or engaged in a business)
similar or related to the nature or type of the property and assets
of, or the business of, FelCor LP or FelCor or any of their respective
Restricted Subsidiaries existing on the date of such investment, and

(2) apply (no later than the end of the 12-month period referred to in
clause (1)) such excess Net Cash Proceeds (to the extent not applied
pursuant to clause (1)) as provided in the following paragraph of this
"Limitation on Asset Sales" covenant.

The amount of such excess Net Cash Proceeds required to be applied (or to
be committed to be applied) during such 12-month period as set forth in clause
(1) of the preceding sentence and not applied as so required by the end of such
period shall constitute "Excess Proceeds." If, as of the first day of any
calendar month, the aggregate amount of Excess Proceeds not previously subject
to an Offer to Purchase pursuant to this "Limitation on Asset Sales" covenant
totals at least $10 million, FelCor LP must commence, not later than the
fifteenth Business Day of such month, and consummate an Offer to Purchase from
the holders on a pro rata basis an aggregate principal amount of Notes equal to
the Excess Proceeds on such date, at a purchase price equal to 100% of the
principal amount of the Notes, plus, in each case, accrued interest (if any) to
the Payment Date.

REPURCHASE OF NOTES UPON A CHANGE OF CONTROL

FelCor LP must commence, within 30 days of the occurrence of a Change of
Control, and consummate an Offer to Purchase for all Notes then outstanding, at
a purchase price equal to 101% of the principal amount of the Notes, plus
accrued interest (if any) to the Payment Date.

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There can be no assurance that FelCor LP will have sufficient funds
available at the time of any Change of Control to make any debt payment
(including repurchases of Notes) required by the foregoing covenant (as well as
any covenant that may be contained in other securities of FelCor LP or FelCor
that might be outstanding at the time). The above covenant requiring FelCor LP
to repurchase the Notes will, unless consents are obtained, require FelCor LP to
repay all indebtedness then outstanding which by its terms would prohibit such
Note repurchase, either prior to or concurrently with such Note repurchase.

SEC REPORTS AND REPORTS TO HOLDERS

Whether or not FelCor LP or FelCor is then required to file reports with
the SEC, FelCor LP and FelCor shall file with the SEC all such reports and other
information as they would be required to file with the SEC by Sections 13(a) or
15(d) under the Exchange Act if they were subject thereto; provided that, if
filing such documents by FelCor LP or FelCor with the SEC is not permitted under
the Exchange Act, FelCor LP or FelCor shall provide such documents to the
trustee and upon written request supply copies of such documents to any
prospective holder; provided, further, that if the rules and regulations of the
SEC permit FelCor LP and FelCor to file combined reports or information pursuant
to the Exchange Act, FelCor LP and FelCor may file combined reports and
information. FelCor LP and FelCor shall supply the trustee and each holder or
shall supply to the trustee for forwarding to each such holder, without cost to
such holder, copies of such reports and other information.

EVENTS OF DEFAULT

Events of Default under the Indenture include the following:

(1) default in the payment of principal of, or premium, if any, on any
Note when they are due and payable at maturity, upon acceleration,
redemption or otherwise;

(2) default in the payment of interest on any Note when they are due
and payable, and such default continues for a period of 30 days;

(3) default in the performance or breach of the provisions of the
Indenture applicable to mergers, consolidations and transfers of all or
substantially all of the assets of FelCor LP and FelCor or the failure by
FelCor LP to make or consummate an Offer to Purchase in accordance with the
"Limitations on Asset Sales" or "Repurchase of Notes upon a Change of
Control" covenants, or a default in the performance or breach of the
provisions of the Indenture applicable to special mandatory redemptions or
the failure by FelCor LP to redeem the Notes in accordance with "Special
Mandatory Redemption";

(4) FelCor LP or FelCor defaults in the performance of or breaches any
other covenant or agreement of FelCor LP or FelCor in the Indenture or
under the Notes (other than a default specified in clause (1), (2) or (3)
above) and such default or breach continues for a period of 30 consecutive
days after written notice by the trustee or the holders of 25% or more in
aggregate principal amount of the Notes;

(5) there occurs with respect to any issue or issues of Indebtedness
of FelCor LP or FelCor or any Significant Subsidiary having an outstanding
principal amount of $10 million or more in the aggregate for all such
issues of all such Persons, whether such Indebtedness now exists or shall
hereafter be created,

- an event of default that has caused the holder thereof to declare such
Indebtedness to be due and payable prior to its Stated Maturity and
such Indebtedness has not been discharged in full or such acceleration
has not been rescinded or annulled within 30 days of such acceleration
and/or

- the failure to make a principal payment at the final (but not any
interim) fixed maturity and such defaulted payment shall not have been
made, waived or extended within 30 days of such payment default;

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(6) any final judgment or order (not covered by insurance) for the
payment of money in excess of $10 million in the aggregate for all such
final judgments or orders against all such Persons (treating any
deductibles, self-insurance or retention as not covered by insurance):

- shall be rendered against FelCor LP or FelCor or any Significant
Subsidiary and shall not be paid or discharged, and

- and there shall be any period of 60 consecutive days following entry
of the final judgment or order that causes the aggregate amount for
all such final judgments or orders outstanding and not paid or
discharged against all such Persons to exceed $10 million during which
a stay of enforcement of such final judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect;

(7) a court having jurisdiction in the premises enters a decree or
order for:

- relief in respect of FelCor LP or FelCor or any Significant Subsidiary
in an involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect,

- appointment of a receiver, liquidator, assignee custodian, trustee,
sequestrator or similar official of FelCor LP or FelCor or any
Significant Subsidiary or for all or substantially all of the property
and assets of FelCor LP or FelCor or any Significant Subsidiary, or

- the winding up or liquidation of the affairs of FelCor LP or FelCor or
any Significant Subsidiary and, in each case, such decree or order
shall remain unstayed and in effect for a period of 60 consecutive
days; or

(8) FelCor LP or FelCor or any Significant Subsidiary:

- commences a voluntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, or consents to the
entry of an order for relief in an involuntary case under such law,

- consents to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
official of FelCor LP or FelCor or Significant Subsidiary or for all
or substantially all of the property and assets of FelCor LP or FelCor
or any Significant Subsidiary, or

- effects any general assignment for the benefit of its creditors.

If an Event of Default (other than an Event of Default specified in clause
(7) or (8) above that occurs with respect to FelCor LP or FelCor) occurs and is
continuing under the Indenture, the trustee or the holders of at least 25% in
aggregate principal amount of the Notes then outstanding, by written notice to
FelCor LP and FelCor (and to the trustee if such notice is given by the
holders), may, and the trustee at the request of the holders of at least 25% in
aggregate principal amount of the Notes then outstanding shall, declare the
principal of, premium, if any, and accrued interest on the Notes to be
immediately due and payable. Upon a declaration of acceleration, such principal
of, premium, if any, and accrued interest shall be immediately due and payable.
In the event of a declaration of acceleration because an Event of Default set
forth in clause (5) above has occurred and is continuing, such declaration of
acceleration shall be automatically rescinded and annulled if the event of
default triggering such Event of Default pursuant to clause (5) shall be
remedied or cured by FelCor LP, FelCor or the relevant Significant Subsidiary or
waived by the holders of the relevant Indebtedness within 60 days after the
declaration of acceleration with respect thereto.

If an Event or Default specified in clause (7) or (8) above occurs with
respect to FelCor LP or FelCor, the principal of, premium, if any, and accrued
interest on the Notes then outstanding shall automatically become and be
immediately due and payable without any declaration or other act on the part of
the trustee or any holder. The holders of at least a majority in principal
amount of the outstanding

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Notes by written notice to FelCor LP, FelCor and to the trustee, may waive all
past defaults and rescind and annul a declaration of acceleration and its
consequences if:

- all existing Events of Default, other than the nonpayment of the
principal of, premium, if any, and interest on the Notes that have become
due solely by such declaration of acceleration, have been cured or
waived, and

- the rescission would not conflict with any judgment or decree of a court
of competent jurisdiction.

As to the waiver of defaults, see "-- Modification and Waiver."

The holders of at least a majority in aggregate principal amount of the
outstanding Notes may direct the time, method and place of conducting any
proceeding for any remedy available to the trustee or exercising any trust or
power conferred on the trustee. However, the trustee may refuse to follow any
direction that conflicts with law or the Indenture, that may involve the trustee
in personal liability, or that the trustee determines in good faith may be
unduly prejudicial to the rights of holders of Notes not joining in the giving
of such direction and may take any other action it deems proper that is not
inconsistent with any such direction received from holders of Notes. A holder
may not pursue any remedy with respect to the Indenture or the Notes unless:

(1) the holder gives the trustee written notice of a continuing Event
of Default;

(2) the holders of at least 25% in aggregate principal amount of
outstanding Notes make a written request to the trustee to pursue the
remedy;

(3) such holder or holders offer the trustee indemnity satisfactory to
the trustee against any costs, liability or expense;

(4) the trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity; and

(5) during such 60-day period, the holders of a majority in aggregate
principal amount of the outstanding Notes do not give the trustee a
direction that is inconsistent with the request.

However, such limitations do not apply to the right of any holder of a Note
to receive payment of the principal of, premium, if any, or interest on, such
Note or to bring suit for the enforcement of any such payment on or after the
due date expressed in the Notes, which right shall not be impaired or affected
without the consent of the holder.

The Indenture requires certain officers of FelCor LP and FelCor to certify,
on or before a date not more than 90 days after the end of each fiscal year,
that a review has been conducted of the activities of FelCor LP and FelCor and
their respective Restricted Subsidiaries and of their performance under the
Indenture and that FelCor LP and FelCor have fulfilled all obligations
thereunder, or, if there has been a default in fulfillment of any such
obligation, specifying each such default and the nature and status thereof.
FelCor LP and FelCor will also be obligated to notify the trustee of any default
or defaults in the performance of any covenants or agreements under the
Indenture.

CONSOLIDATION, MERGER AND SALE OF ASSETS

Neither FelCor LP nor FelCor will merge with or into, or sell, convey,
transfer, lease or otherwise dispose of all or substantially all of its property
and assets (as an entirety or substantially an entirety in one transaction or a
series of related transactions) to, any Person or permit any Person to merge
with or into FelCor LP or FelCor unless:

(1) FelCor LP or FelCor shall be the continuing Person, or the Person
(if other than FelCor LP or FelCor) formed by such consolidation or into
which FelCor LP or FelCor is merged or that acquired or leased such
property and assets of FelCor LP or FelCor shall be an entity organized and
validly existing under the laws of the United States of America or any
state or jurisdiction thereof and

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shall expressly assume, by a supplemental indenture, executed and delivered
to the trustee, all of the obligations of FelCor LP or FelCor on the Notes
and under the Indenture;

(2) immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing;

(3) immediately after giving effect to such transaction on a pro forma
basis FelCor LP or FelCor, or any Person becoming the successor obligor of
the Notes, as the case may be, could Incur at least $1.00 of Indebtedness
under paragraphs (1), (2) and (3) of the "Limitation on Indebtedness"
covenant; provided that this clause (3) shall not apply to a consolidation
or merger with or into a Wholly Owned Restricted Subsidiary with a positive
net worth; provided that, in connection with any such merger or
consolidation, no consideration (other than Capital Stock (other than
Disqualified Stock) in the surviving Person or FelCor LP or FelCor) shall
be issued or distributed to the holders of Capital Stock of FelCor LP or
FelCor; and

(4) FelCor LP or FelCor delivers to the trustee an Officers'
Certificate (attaching the arithmetic computations to demonstrate
compliance with clause (3)) and an Opinion of Counsel, in each case stating
that such consolidation, merger or transfer and such supplemental indenture
complies with this provision and that all conditions precedent provided for
herein relating to such transaction have been complied with; provided that
clause (3) above does not apply if, in the good faith determination of the
Board of Directors of FelCor LP or FelCor, whose determination shall be
evidenced by a Board Resolution, the principal purpose of such transaction
is to change the state of domicile of FelCor LP or FelCor; and provided,
further, that any such transaction shall not have as one of its purposes
the evasion of the foregoing limitations.

DEFEASANCE

Defeasance and Discharge. The Indenture provides that FelCor LP, FelCor
and the Subsidiary Guarantors will be deemed to have paid and will be discharged
from any and all obligations in respect of the Notes or any Subsidiary Guarantee
on the 123rd day after the deposit referred to below, and the provisions of the
Indenture will no longer be in effect with respect to the Notes (except for,
among other things: certain obligations to register the transfer or exchange of
the Notes; to replace stolen, lost or mutilated Notes; to maintain paying
agencies and to hold monies for payment in trust) if, among other things,

(1) FelCor LP has deposited with the trustee, in trust, money and/or
U.S. Government Obligations that through the payment of interest and
principal in respect thereof in accordance with their terms will provide
money in an amount sufficient to pay the principal of, premium, if any, and
accrued interest on the Notes on the Stated Maturity of such payments in
accordance with the terms of the Indenture and the Notes,

(2) FelCor LP has delivered to the trustee:

(A) either

- an Opinion of Counsel to the effect that holders will not recognize
income, gain or loss for federal income tax purposes as a result of
FelCor LP's exercise of its option under this "Defeasance"
provision and will be subject to federal income tax on the same
amount and in the same manner and at the same times as would have
been the case if such deposit, defeasance and discharge had not
occurred, which Opinion of Counsel must be based upon (and
accompanied by a copy of) a ruling of the Internal Revenue Service
to the same effect unless there has been a change in applicable
federal income tax law after the Closing Date such that a ruling is
no longer required, or

- a ruling directed to the trustee received from the Internal Revenue
Service to the same effect as the aforementioned Opinion of
Counsel, and

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(B) an Opinion of Counsel to the effect that the creation of the
defeasance trust does not violate the Investment Company Act of 1940 and
after the passage of 123 days following the deposit, the trust fund will
not be subject to the effect of Section 547 of the United States
Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law,

(3) immediately after giving effect to such deposit on a pro forma
basis, no Event of Default, shall have occurred and be continuing on the
date of such deposit or during the period ending on the 123rd day after the
date of such deposit, and such deposit shall not result in a breach or
violation of, or constitute a default under, any other agreement or
instrument to which FelCor LP, FelCor or any of their respective Restricted
Subsidiaries is a party or by which FelCor LP, FelCor or any of their
respective Restricted Subsidiaries are bound, and

(4) if at such time the Notes are listed on a national securities
exchange, FelCor LP has delivered to the trustee an Opinion of Counsel to
the effect that the Notes will not be delisted as a result of such deposit,
defeasance and discharge.

Defeasance of Certain Covenants and Certain Events of Default. The
Indenture further provides that the provisions of the Indenture will no longer
be in effect with respect to clause (3) under "Consolidation, Merger and Sale of
Assets" and all the covenants described herein under "Covenants," clause (3)
under "Events of Default" with respect to such clause (3) under "Consolidation,
Merger and Sale of Assets," clause (4) under "Events of Default" with respect to
such other covenants and clauses (5) and (6) under "Events of Default" shall be
deemed not to be Events of Default upon, among other things:

(1) the deposit with the trustee, in trust, of money and/or U.S.
Government Obligations that through the payment of interest and principal
in respect thereof in accordance with their terms will provide money in an
amount sufficient to pay the principal of, premium, if any, and accrued
interest on the Notes on the Stated Maturity of such payments in accordance
with the terms of the Indenture and the Notes,

(2) the satisfaction of the provisions described in clauses (2)(B),
(3) and (4) of the preceding paragraph titled "Defeasance and Discharge,"
and

(3) the delivery by FelCor LP to the trustee of an Opinion of Counsel
to the effect that, among other things, the holders will not recognize
income, gain or loss for federal income tax purposes as a result of such
deposit and defeasance of certain covenants and Events of Default and will
be subject to federal income tax on the same amount and in the same manner
and at the same times as would have been the case if such deposit and
defeasance had not occurred.

Defeasance and Certain Other Events of Default. In the event FelCor LP
exercises its option to omit compliance with certain covenants and provisions of
the Indenture with respect to the Notes as described in the immediately
preceding paragraph and the Notes are declared due and payable because of the
occurrence of an Event of Default that remains applicable, the amount of money
and/or U.S. Government Obligations on deposit with the trustee will be
sufficient to pay amounts due on the Notes at the time of their Stated Maturity
but may not be sufficient to pay amounts due on the Notes at the time of the
acceleration resulting from such Event of Default. However, FelCor LP, FelCor
and the Subsidiary Guarantors will remain liable for such payments.

MODIFICATION AND WAIVER

Subject to certain limited exceptions, modifications and amendments of the
Indenture may be made by FelCor LP, FelCor and the trustee with the consent of
the holders of not less than a majority in aggregate principal amount of the
outstanding Notes; provided that no such modification or amendment may, without
the consent of each holder affected thereby:

(1) change the Stated Maturity of the principal of, or any installment
of interest on, any Note,

(2) reduce the principal amount of, or premium, if any, or interest
on, any Note,
136
143

(3) change the place of payment of principal of, or premium, if any,
or interest on, any Note,

(4) impair the right to institute suit for the enforcement of any
payment on or after the Stated Maturity (or, in the case of a redemption,
on or after the Redemption Date) of any Note,

(5) reduce the above-stated percentages of outstanding Notes the
consent of whose holders is necessary to modify or amend the Indenture,

(6) waive a default in the payment of principal of, premium, if any,
or interest on the Notes,

(7) voluntarily release a Guarantor of the Notes,

(8) reduce the percentage or aggregate principal amount of outstanding
Notes the consent of whose holders is necessary for waiver of compliance
with certain provisions of the Indenture or for waiver of certain defaults,
or

(9) make any change to the provisions of the indenture relating to the
special mandatory redemption described under "-- Special Mandatory
Redemption" which would adversely affect the rights of any of the holders
of the Notes.

NO PERSONAL LIABILITY OF INCORPORATORS, PARTNERS, STOCKHOLDERS, OFFICERS,
DIRECTORS, OR EMPLOYEES

The Indenture provides that no recourse for the payment of the principal
of, premium, if any, or interest on any of the Notes or for any claim based
thereon or otherwise in respect thereof, and no recourse under or upon any
obligation, covenant or agreement of FelCor LP or FelCor in the Indenture, or in
any of the Notes or because of the creation of any Indebtedness represented
thereby, shall be had against any incorporator, partner, stockholder, officer,
director, employee or controlling person of FelCor LP, FelCor or the Subsidiary
Guarantors or of any successor Person thereof. Each holder, by accepting the
Notes, waives and releases all such liability.

CONCERNING THE TRUSTEE

The Indenture provides that, except during the continuance of a Default,
the trustee will not be liable, except for the performance of such duties as are
specifically set forth in the Indenture. If an Event of Default has occurred and
is continuing, the trustee will use the same degree of care and skill in its
exercise of the rights and powers vested in it under the Indenture as a prudent
person would exercise under the circumstances in the conduct of such person's
own affairs.

The Indenture and provisions of the Trust Indenture Act of 1939
incorporated by reference into the Indenture contain limitations on the rights
of the trustee, should it become a creditor of FelCor LP or FelCor, to obtain
payment of claims in certain cases or to realize on certain property received by
it in respect of any such claims, as security or otherwise. The trustee is
permitted to engage in other transactions; provided that if it acquires any
conflicting interest, it must eliminate such conflict or resign.

BOOK ENTRY; DELIVERY AND FORM

The certificates representing the New Notes will be issued in fully
registered form without interest coupons. Old Notes sold in reliance on Rule
144A are represented by the Global Old Notes. New Notes issued in exchange for
the Global Old Notes will be issued in the form of one or more Global New Notes
and will be deposited with the trustee as custodian for, and registered in the
name of a nominee of, DTC.

Old Notes originally purchased by or transferred to Institutional
Accredited Investors who are not qualified institutional buyers ("Non-Global
Purchasers") were in registered form without interest coupons and represented by
the Certificated Old Notes. New Notes issued in exchange for the Certificated
Old Notes will be issued in the form of one or more Certificated New Notes.

Ownership of beneficial interests in a Global Note will be limited to
persons who have accounts with DTC ("participants") or persons who hold
interests through participants. Ownership of beneficial interests in a Global
Note will be shown on, and the transfer of that ownership will be effected only
through,
137
144

records maintained by DTC or its nominee (with respect to interests of
participants) and the records of participants (with respect to interests of
persons other than participants). Qualified institutional buyers may hold their
interests in a Global Note directly through DTC if they are participants in such
system, or indirectly through organizations that are participants in such
system.

So long as DTC, or its nominee, is the registered owner or holder of a
Global Note, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the Notes represented by such Global Note for all
purposes under the Indenture and the Notes. No beneficial owner of an interest
in a Global Note will be able to transfer that interest except in accordance
with DTC's applicable procedures, in addition to those provided for under the
Indenture.

Payments of the principal of, and interest on, a Global Note will be made
to DTC or its nominee, as the case may be, as the registered owner thereof.
Neither FelCor LP, FelCor, any Subsidiary Guarantor, the trustee nor any Paying
Agent will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in a
Global Note or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.

FelCor LP expects that DTC or its nominee, upon receipt of any payment of
principal or interest in respect of a Global Note, will credit participants'
accounts with payments in amounts proportionate to their respective beneficial
interests in the principal amount of such Global Note as shown on the records of
DTC or its nominee. FelCor LP also expects that payments by participants to
owners of beneficial interests in such Global Note held through such
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers registered
in the names of nominees for such customers. Such payments will be the
responsibility of such participants.

Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in same-day funds.

FelCor LP expects that DTC will take any action permitted to be taken by a
holder of Notes (including the presentation of Notes for exchange as described
below) only at the direction of one or more participants to whose account the
DTC interests in a Global Note is credited and only in respect of such portion
of the aggregate principal amount of Notes as to which such participant or
participants has or have given such direction. However, if there is an Event of
Default under the Notes, DTC will exchange the applicable Global Note for
Certificated Notes, which it will distribute to its participants and which, in
the case of a Global Old Note, may be legended with respect to the restrictions
on transfer thereof.

FelCor LP understands that: DTC is a limited purpose trust company
organized under the laws of the State of New York, a "banking organization"
within the meaning of New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the Uniform Commercial
Code and a "Clearing Agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC was created to hold securities for its participants
and facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes in accounts of its
participants, thereby eliminating the need for physical movement of certificates
and certain other organizations. Indirect access to the DTC system is available
to others such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a participant, either directly or
indirectly ("indirect participants").

Although DTC is expected to follow the foregoing procedures in order to
facilitate transfers of interests in a Global Note among its participants, it is
under no obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. Neither FelCor LP, FelCor, any
Subsidiary Guarantor, nor the trustee will have any responsibility for the
performance by DTC or its participants or indirect participants of their
respective obligations under the rules and procedures governing its operations.

If DTC is at any time unwilling or unable to continue as a depositary for
the Global Notes and a successor depositary is not appointed by FelCor LP within
90 days, FelCor LP will issue Certificated Notes, which, in the case of a Global
Old Note, may bear a legend with respect to the restrictions on
138
145

transfer thereof, in exchange for the Global Notes. Holders of an interest in a
Global Note may receive Certificated Notes, which, in the case of a Global Old
Note, may bear a legend with respect to the restrictions on transfer thereof, in
accordance with the DTC's rules and procedures in addition to those provided for
under the Indenture.

UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The following general discussion summarizes the material U. S. federal
income tax aspects of the exchange offer to holders of the Old Notes. This
discussion is for general information only and does not consider all aspects of
exchange offer that might impact owners of the Old Notes in light of such
holder's personal circumstances. This discussion deals only with Old Notes held
as "capital assets" within the meaning of Section 1221 of the Internal Revenue
Code of 1986, as amended (the "Code") (generally property held for investment
and not for sale to customers in the ordinary course of a trade or business).
This discussion also does not address the U.S. federal income tax consequences
to holders subject to special treatment under the U.S. federal income tax laws,
such as dealers in securities, or foreign currency, tax-exempt entities, banks,
thrifts, insurance companies, persons that hold the Old Notes as part of a
"straddle", a "hedge" against currency risk or a "conversion transaction";
persons that have a "functional currency" other than the U.S. dollar, and
investors in pass-through entities. In addition, this discussion does not
address any of the United States federal income tax consequences of owning or
disposing of New Notes, nor does it address any tax consequences arising out of
the tax laws of any state, local or foreign jurisdiction.

This discussion is based upon the Internal Revenue Code of 1986, as
amended, existing and proposed regulations thereunder, Internal Revenue Service,
or IRS, rulings and pronouncements, reports of congressional committees,
judicial decisions and current administrative rulings and practice, all as in
effect on the date hereof, all of which are subject to change at any time, and
any such change may be applied retroactively in a manner that could adversely
affect the tax consequences described below. We have not and will not seek any
rulings or opinions from the IRS or counsel with respect to the matters
discussed below. There can be no assurance that the IRS will not take positions
concerning the tax consequences of the exchange offer which are different from
those discussed herein.

The exchange of Old Notes for New Notes pursuant to the exchange offer
should not constitute a taxable exchange. As a result, a holder (1) should not
recognize taxable gain or loss as a result of exchanging Old Notes for New Notes
pursuant to the exchange offer, (2) the holding period of the New Notes should
include the holding period of the Old Notes exchanged therefor and (3) the
adjusted tax basis of the New Notes should be the same as the adjusted tax basis
of the Old Notes exchanged therefore immediately before the exchange.

THE FEDERAL TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR
SITUATION. HOLDERS OF OLD NOTES ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH
RESPECT TO THE APPLICATION OF THE TAX CONSIDERATIONS DISCUSSED ABOVE IN LIGHT OF
THEIR PARTICULAR SITUATIONS AS WELL AS THE APPLICATION OF ANY STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS, INCLUDING THE EFFECTS OF CHANGES IN SUCH LAWS.

139
146

PLAN OF DISTRIBUTION

Each broker-dealer that receives New Notes for its own account pursuant to
the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. We have agreed that, starting on the expiration date and
ending 180 days after the expiration date, we will make this prospectus, as
amended or supplemented, available to any broker-dealer for use in connection
with any such resale.

We will not receive any proceeds from any sales of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant to
the exchange offer and any broker or dealer that participates in a distribution
of such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit of any such resale of New Notes and any
commissions or concessions received by such persons may be deemed to be
underwriting compensation under the Securities Act. The letter of transmittal
states that by acknowledging that it will deliver, and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.

We have agreed to pay all expenses incident to our performance of, or
compliance with, the registration rights agreement and will indemnify the
holders of Old Notes (including any broker-dealers), and certain parties related
to such holders, against certain liabilities, including liabilities under the
Securities Act.

LEGAL MATTERS

Certain legal matters with respect to the legality of the New Notes will be
passed upon for FelCor and FelCor LP by Jenkens & Gilchrist, a Professional
Corporation, Dallas, Texas.

EXPERTS

The financial statements of FelCor, FelCor LP and DJONT incorporated in
this prospectus by reference to the Annual Reports on Form 10-K of FelCor and
FelCor LP for the year ended December 31, 2000 have been so incorporated in
reliance on the reports of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.

The financial statements of MeriStar Hospitality Operating Partnership,
L.P. and subsidiaries and MeriStar Hospitality Corporation and subsidiaries as
of December 31, 2000 and 1999, and for each of the years in the three-year
period ended December 31, 2000 and the financial statement schedules of real
estate and accumulated depreciation have been included or incorporated by
reference in this prospectus in reliance upon the reports of KPMG LLP,
independent certified public accountants, appearing elsewhere herein or
incorporated by reference, and upon the authority of said firm as experts in
accounting and auditing.

The combined financial statements of Bristol Hotels & Resorts Tenant
Companies incorporated in this prospectus by reference from FelCor's Annual
Report on Form 10-K for the year ended December 31, 2000 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.

140
147

INDEX TO FINANCIAL STATEMENTS

<Table>
<Caption>
PAGE
-----

FELCOR LODGING LIMITED PARTNERSHIP
Consolidated Balance Sheets -- June 30, 2001 (Unaudited)
and December 31, 2000.................................. F-2
Consolidated Statements of Operations -- For the Six
Months Ended June 30, 2001 and 2000 (Unaudited)........ F-3
Consolidated Statements of Cash Flows -- For the Six
Months Ended June 30, 2001 and 2000 (Unaudited)........ F-4
Notes to Consolidated Financial Statements................ F-5
</Table>

MERISTAR HOSPITALITY CORPORATION

The financial statements of MeriStar Hospitality Corporation are
incorporated in this document by reference to the company's Annual Report on
Form 10-K for the year ended December 31, 2000 and Quarterly Report on Form 10-Q
for the six months ended June 30, 2001. See "Where You Can Find More
Information."

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

<Table>
<Caption>
PAGE
----

Condensed Consolidated Balance Sheets -- June 30, 2001
(unaudited) and December 31, 2000......................... F-20
Condensed Consolidated Statements of Operations and
Comprehensive Income -- Six Months Ended June 30, 2001 and
2000 (unaudited).......................................... F-21
Condensed Consolidated Statements of Partners' Capital --Six
Months Ended June 30, 2001 and 2000 (unaudited)........... F-22
Condensed Consolidated Statements of Cash Flows -- Six
Months Ended June 30, 2001 and 2000 (unaudited)........... F-23
Notes to Condensed Consolidated Financial Statements........ F-24
Independent Auditors' Report................................ F-34
Consolidated Balance Sheets -- December 31, 2000 and 1999... F-35
Consolidated Statements of Operations -- Years Ended
December 31, 2000, 1999 and 1998.......................... F-36
Consolidated Statements of Partners' Capital -- Years Ended
December 31, 2000, 1999 and 1998.......................... F-37
Consolidated Statements of Cash Flows -- Years Ended
December 31, 2000, 1999 and 1998.......................... F-38
Notes to Consolidated Financial Statements.................. F-39
Schedule III -- Real Estate and Accumulated Depreciation.... F-60
</Table>

F-1
148

FELCOR LODGING LIMITED PARTNERSHIP

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

<Table>
<Caption>
JUNE 30, DECEMBER 31,
2001 2000
----------- ------------
(UNAUDITED)

ASSETS

Investment in hotels, net of accumulated depreciation of
$553,281 at June 30, 2001 and $473,101 at December 31,
2000...................................................... $3,710,694 $3,750,275
Investment in unconsolidated entities....................... 154,980 128,593
Assets held for sale........................................ 52,122 129,294
Cash and cash equivalents................................... 64,220 26,060
Restricted cash............................................. 323,555
Accounts receivable......................................... 46,449 31,241
Note receivable from unconsolidated entity.................. 7,695
Deferred expenses, net of accumulated amortization of $9,934
at June 30, 2001 and $7,146 at December 31, 2000.......... 32,201 23,944
Other assets................................................ 19,307 6,501
---------- ----------
Total assets...................................... $4,403,528 $4,103,603
========== ==========

LIABILITIES AND PARTNERS' CAPITAL

Debt........................................................ $2,134,093 $1,838,241
Distributions declared but unpaid........................... 34,199 33,957
Accrued expenses and other liabilities...................... 146,077 94,232
Minority interest in other partnerships..................... 50,474 50,774
---------- ----------
Total liabilities................................. 2,364,843 2,017,204
---------- ----------
Commitments and contingencies
Redeemable units at redemption value........................ 210,929 205,800
Preferred units, $.01 par value, 20,000 units authorized:
Series A Cumulative Preferred Units, 5,981 units issued
and outstanding........................................ 149,515 149,515
Series B Redeemable Preferred Units, 58 units issued and
outstanding............................................ 143,750 143,750
Partners' capital........................................... 1,534,491 1,587,334
---------- ----------
Total liabilities and partners' capital........... $4,403,528 $4,103,603
========== ==========
</Table>

The accompanying notes are an integral part of these consolidated financial

F-2
149

FELCOR LODGING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000
(UNAUDITED, IN THOUSANDS EXCEPT FOR PER UNIT DATA)

<Table>
<Caption>
SIX MONTHS ENDED
JUNE 30,
-------------------
2001 2000
-------- --------

Revenues:
Hotel operating revenue:
Room................................................... $365,343
Food and beverage...................................... 53,150
Other operating departments............................ 24,790
Percentage lease revenue.................................. 115,137 $256,335
Retail space rental and other revenue..................... 1,882 1,824
-------- --------
Total revenues.................................... 560,302 258,159
-------- --------
Expenses:
Hotel operating expenses:
Room................................................... 83,404
Food and beverage...................................... 39,141
Other operating departments............................ 10,922
Management fees........................................... 12,612
Other property operating costs............................ 121,642
Taxes, insurance and lease expense........................ 76,460 47,588
Corporate expenses........................................ 6,372 6,112
Depreciation.............................................. 79,513 81,480
Lease termination costs................................... 36,226
-------- --------
Total operating expenses.......................... 466,292 135,180
-------- --------
Operating income............................................ 94,010 122,979
Interest expense, net....................................... (79,621) (76,781)
Swap termination expense.................................... (4,824)
Loss on assets held for sale................................ (63,000)
-------- --------
Income (loss) before equity in income from unconsolidated
entities, minority interests, and gain on sale of
assets.................................................... 9,565 (16,802)
Equity in income from unconsolidated entities............... 6,328 5,648
Minority interests in other partnerships.................... (2,282) (2,093)
Gain on sale of assets...................................... 2,955 875
-------- --------
Income (loss) before extraordinary items.................... 16,566 (12,372)
Extraordinary charge from write off of deferred financing
fees...................................................... (225)
-------- --------
Net income (loss)........................................... 16,341 (12,372)
Preferred distributions..................................... (12,300) (12,358)
-------- --------
Net income (loss) applicable to unitholders................. $ 4,041 $(24,730)
======== ========
Per unit data:
Basic:
Net income (loss) applicable to unitholders............ $ 0.07 $ (0.39)
======== ========
Weighted average units outstanding..................... 61,628 63,066
Diluted:
Net income (loss) applicable to unitholders............ $ 0.07 $ (0.39)
======== ========
Weighted average units outstanding..................... 62,069 63,297
</Table>

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

F-3
150

FELCOR LODGING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000
(UNAUDITED, IN THOUSANDS)

<Table>
<Caption>
SIX MONTHS ENDED
JUNE 30,
--------------------
2001 2000
--------- --------

Cash flows from operating activities:
Net income (loss)......................................... $ 16,341 $(12,372)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation............................................ 79,513 81,480
Gain on sale of assets.................................. (2,955) (875)
Amortization of deferred financing fees................. 2,563 2,383
Accretion of debt....................................... (150) (448)
Amortization of unearned officers' and directors'
compensation.......................................... 884 474
Equity in income from unconsolidated entities........... (6,328) (5,648)
Extraordinary write off of deferred financing fees...... 225
Lease termination costs................................. 36,226
Loss on assets held for sale............................ 63,000
Minority interests in other partnerships................ 2,282 2,093
Changes in assets and liabilities:
Accounts receivable..................................... (10,077) (10,204)
Deferred expenses....................................... (11,045) (4,003)
Other assets............................................ (11,297) (1,251)
Deferred rent........................................... 18,604
Accrued expenses and other liabilities.................. (2,552) 5,510
--------- --------
Net cash flow provided by operating activities..... 93,630 138,743
--------- --------
Cash flows provided by (used in) investing activities:
Restricted cash........................................... (323,555)
Improvements and additions to hotels...................... (29,431) (41,408)
Proceeds from sale of interest in hotels.................. 48,049
Operating cash received in acquisition of lessee.......... 25,583
Proceeds from sale of assets.............................. 10,967 1,071
Cash distributions from unconsolidated entities........... 2,973 11,708
--------- --------
Net cash flow used in investing activities......... (265,414) (28,629)
--------- --------
Cash flows provided by (used in) financing activities:
Proceeds from borrowings.................................. 849,748 500,892
Repayment of borrowings................................... (553,746) (451,847)
Purchase of treasury stock................................ (4,046) (56,733)
Proceeds from exercise of stock option.................... 692
Buyback of assumed stock options.......................... (1,860)
Distributions paid to minority interest................... (2,582) (3,054)
Distributions paid to preferred unitholders............... (12,300) (12,368)
Distributions paid to unitholders......................... (67,822) (70,415)
--------- --------
Net cash flow provided by (used in) financing
activities........................................ 209,944 (95,385)
--------- --------
Net change in cash and cash equivalents..................... 38,160 14,729
Cash and cash equivalents at beginning of periods........... 26,060 36,123
--------- --------
Cash and cash equivalents at end of periods................. $ 64,220 $ 50,852
========= ========
Supplemental cash flow information -- interest paid......... $ 84,115 $ 73,259
========= ========
</Table>

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

F-4
151

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION

FelCor Lodging Limited Partnership and its subsidiaries (the "Company") at
June 30, 2001, owned interests in 185 hotels in the United States and Canada
with nearly 50,000 rooms and suites (collectively, the "Hotels"). The sole
general partner of the Company is FelCor Lodging Trust Incorporated ("FelCor")
the nation's second largest hotel real estate investment trust ("REIT"). At June
30, 2001, FelCor owned a greater than 85 percent equity interest in the Company.
At June 30, 2001, the Company owned a 100 percent interest in 152 of the Hotels,
a 90 percent or greater interest in entities owning seven hotels, a 60 percent
interest in an entity owning two hotels and 50 percent interests in entities
that own 24 hotels. Fifteen of the Company's hotels have been designated as held
for sale.

On May 9, 2001, the Company entered into an Agreement and Plan of Merger
(the "Merger Agreement") with MeriStar Hospitality Corporation ("MeriStar").
Pursuant to the Merger Agreement, MeriStar will be merged with and into FelCor
subject to the approval of the shareholders of both companies. Under the terms
of the merger plan holders of MeriStar common shares will receive, for each
common share, $4.60 in cash and 0.784 shares of common stock of FelCor. The
Company also will either assume or refinance $1.6 billion in MeriStar debt. A
separate publicly traded company, MeriStar Hotels & Resorts, will continue to
manage the hotels acquired from MeriStar in the merger. The merger is expected
to close in September of 2001.

The transaction will also involve the merger of the Company's subsidiary
with and into MeriStar's subsidiary operating limited partnership. The holders
of common partnership units in MeriStar's partnership will receive, for each
common unit, $4.60 in cash and 0.784 common partnership units in the Company.
Preferred units in MeriStar's partnership will receive similar preferred units
in the Company or a combination of cash and units. The proposed mergers are
subject to shareholder approval and other customary conditions. The equity
portion of the transaction is structured to qualify as a tax free merger with
respect to the share consideration.

On January 1, 2001, the REIT Modernization Act ("RMA") went into effect.
Among other things, the RMA permits a REIT to form taxable subsidiaries that
lease hotels from the REIT, provided that the hotels continue to be managed by
unrelated third parties. Effective January 1, 2001, the Company completed
transactions that resulted in its newly formed taxable subsidiaries acquiring
leases for 96 hotels that were leased to either DJONT Operations, L.L.C. and its
consolidated subsidiaries (collectively "DJONT") or subsidiaries of Six
Continents Hotels, formerly Bass Hotels and Resorts, ("Six Continents Hotels").
By acquiring these leases through its taxable subsidiaries, the Company acquired
the economic benefits and risks of these hotel operations and reports hotel
revenues and expenses rather than percentage lease revenues. Additionally, in
2001, the Company entered into an agreement to acquire its remaining 88 hotel
leases held by Six Continents Hotels. This transaction was effective July 1,
2001.

F-5
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FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1. ORGANIZATION -- (CONTINUED)

The following table provides a schedule of the Hotels by brand, broken out
between those hotels whose operations are consolidated for purposes of the
Company's financial statements, those hotels whose operations are reported as
unconsolidated entities for purposes of the Company's financial statements and
those hotels operated under leases with Six Continents Hotels at June 30, 2001:

<Table>
<Caption>
UNCONSOLIDATED SIX CONTINENTS
BRAND CONSOLIDATED JOINT VENTURES HOTELS LEASED TOTAL
- ----- ------------ -------------- -------------- -----

Hilton(R) Brands:
Embassy Suites(R)............................ 45 14 59
Doubletree(R) and Doubletree Guest
Suites(R)................................. 14 14
Hampton Inn(R)............................... 2 1 5 8
Hilton Suites(R)............................. 1 1
Homewood Suites(R)........................... 1 1
Six Continents Hotels Brands:
Holiday Inn(R)............................... 1 43 44
Crowne Plaza(R) and Crowne Plaza Suites(R)... 18 18
Holiday Inn Select(R)........................ 10 10
Holiday Inn Express(R)....................... 5 5
Starwood Brands:
Sheraton(R) and Sheraton Suites(R)........... 9 1 10
Westin(R).................................... 1 1
Other Brands................................... 1 7 6 14
-- -- -- ---
Total Hotels......................... 73 24 88 185
== == == ===
</Table>

The Hotels are located in the United States (35 states) and Canada, with a
concentration in Texas (41 hotels), California (19 hotels), Florida (16 hotels)
and Georgia (14 hotels).

At June 30, 2001, (i) subsidiaries of Six Continents Hotels managed 90 of
the Hotels, (ii) subsidiaries of Hilton managed 72 of the Hotels, (iii)
subsidiaries of Starwood Hotels & Resorts Worldwide, Inc. ("Starwood") managed
11 of the Hotels, (iv) subsidiaries of Interstate Hotels Corporation ("IHC")
managed eight of the Hotels and (v) three independent management companies
managed the four remaining Hotels.

Effective January 1, 2001, with the enactment of the RMA, the Company
acquired and contributed to a newly formed taxable REIT subsidiary, all the
equity interests in DJONT. In consideration for the acquisition, the Company
issued an aggregate of 416,667 units of limited partnership interest valued at
approximately $10 million, which, together with DJONT's accumulated
shareholders' deficit of $24.5 million, was expensed as a lease termination cost
in the first quarter of 2001.

Effective January 1, 2001, the Company completed the acquisition of 12 of
the leases, which were held by Six Continents Hotels. In consideration for the
acquisition and termination of these leases and the related management
agreements of such leases, FelCor issued to Six Continents Hotels 413,585 shares
of FelCor common stock valued at approximately $10 million and the Company
issued the corresponding number of units. Of this $10 million in consideration
for acquisition of these leases, approximately $8.3 million associated with 11
of the hotels had been previously accrued in connection with the hotels
designated as held for sale and $1.7 million was expensed as lease termination
costs in the first quarter of 2001. Of the 12 hotels, two have been sold, eight
have been contributed to a joint venture with IHC, one remains to be sold and
one will be retained. In March 2001, the Company contributed the eight hotels
managed by IHC to a joint venture with IHC. The Company also entered into an
agreement with Six

F-6
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FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1. ORGANIZATION -- (CONTINUED)

Continents Hotels to acquire the remaining 88 leases, which became effective
July 1, 2001. In consideration for the acquisition of such leases the Company
entered into long-term management agreements with Six Continents Hotels with
regard to these hotels and, on July 1, 2001, FelCor issued to Six Continents
Hotels 100 shares of FelCor common stock.

Certain reclassifications have been made to prior period financial
information to conform to the current period's presentation with no effect to
previously reported net income or partners' capital.

The financial information for the six months ended June 30, 2001 and 2000,
is unaudited but includes all adjustments (consisting only of normal recurring
accruals) which the Company considers 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, 2000,
included in the Company's Annual Report on Form 10-K ("Form 10-K"). Operating
results for the six months ended June 30, 2001 are not necessarily indicative of
the results that may be expected for the entire year ending December 31, 2001.

2. DEFERRED RENT

The Company recognized deferred lease income under Staff Accounting
Bulletin No. 101 ("SAB 101") of $18.6 million for the six months ended June 30,
2000, respectively. In accordance with SAB 101, rent deferred in the first
quarter of 2001 was fully earned and recognized as percentage lease revenue in
the second quarter of 2001, because all contingencies related to such revenue
were resolved with regard to the leases acquired July 1, 2001. For the six
months ended June 30, 2001, SAB 101 had no financial impact to the Company.

3. ASSETS HELD FOR SALE

In the second quarter of 2000, the Company identified 25 hotels that it
considered non-strategic and announced its intention to sell such hotels. In
connection with the decision to sell these hotels, the Company recorded, at June
30, 2000, an expense of $63 million representing the difference between the net
book value of these hotels and the estimated net proceeds. No depreciation
expense has been recorded on these hotels since June 30, 2000. Revenues related
to the assets held for sale, less costs associated with those assets, were
included in the Company's results of operations for the six months ended June
30, 2001 and 2000, and represented income of $7.1 million and $6.1 million (net
of depreciation expense in 2000), respectively.

In March 2001, the Company contributed eight of the hotels held for sale to
an entity in which the Company owns a 50 percent equity interest and a
subsidiary of IHC holds the other 50 percent equity interest. The Company
contributed assets with a book value of approximately $77 million, received net
cash proceeds of $48 million and retained a $17 million preferred interest.

In June 2001, the Company sold the 140-room Hampton Inn located in
Marietta, Georgia, for a net sales price of $7.1 million. The Company is
actively marketing the remaining 15 hotels held for sale.

4. INVESTMENT IN UNCONSOLIDATED ENTITIES

The Company owned 50 percent interests in joint venture partnerships that
owned and operated 24 hotels at June 30, 2001, and 16 hotels at June 30, 2000.
The Company also owned a 50% interest in partnerships that owned an undeveloped
parcel of land, a condominium management company and developed and sold
condominiums in Myrtle Beach, South Carolina. The Company accounts for its
investments in these unconsolidated entities under the equity method.

F-7
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FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. INVESTMENT IN UNCONSOLIDATED ENTITIES -- (CONTINUED)

Summarized unaudited combined financial information for 100 percent of
these unconsolidated entities is as follows (in thousands):

<Table>
<Caption>
JUNE 30, DECEMBER 31,
2001 2000
-------- ------------

Balance sheet information:
Investment in hotels...................................... $342,294 $294,941
Non-recourse mortgage debt................................ $266,660 $225,302
Equity.................................................... $ 96,975 $ 82,986
</Table>

<Table>
<Caption>
SIX MONTHS ENDED
JUNE 30,
-----------------
2001 2000
------- -------

Statements of operations information:
Total revenues............................................ $41,300 $39,173
Net income................................................ $14,327 $13,649
Net income attributable to the Company.................... $ 7,399 $ 6,719
Amortization of cost in excess of book value.............. (1,071) (1,071)
------- -------
Equity in income from unconsolidated entities............. $ 6,328 $ 5,648
======= =======
</Table>

5. DEBT

Debt at June 30, 2001, and December 31, 2000, consisted of the following
(in thousands):

<Table>
<Caption>
JUNE DECEMBER
COLLATERAL INTEREST RATE MATURITY DATE 2001 2000
---------- ------------- -------------- ---------- ----------

Floating Rate Debt:
Line of credit.................. None LIBOR + 200bp August 2003 $ 112,000
Mortgage debt................... 3 hotels LIBOR + 200bp February 2003 61,909
Promissory note................. None LIBOR + 200bp June 2016 $ 650 650
---------- ----------
Total floating rate
debt................... 650 174,559
---------- ----------
Fixed Rate Debt:
Line of credit -- swapped....... None 7.66% August 2003 39,900 250,000
Publicly-traded term notes...... None 7.38% October 2004 174,569 174,505
Publicly-traded term notes...... None 7.63% October 2007 124,370 124,320
Publicly-traded term notes...... None 9.50% September 2008 101,699
Publicly-traded term notes...... None 9.50% September 2008 395,073 394,731
Publicly-traded term notes...... None 8.50% June 2011 595,073
Mortgage debt................... 15 hotels 7.24% November 2007 138,854 140,148
Mortgage debt................... 7 hotels 7.54% April 2009 96,826 97,604
Mortgage debt................... 6 hotels 7.55% June 2009 72,810 73,389
Mortgage debt................... 7 hotels 8.73% May 2010 143,163 144,032
Mortgage debt................... 8 hotels 8.70% May 2010 183,807 184,829
Other........................... 13 hotels 6.96%-7.23% 2000-2005 67,299 80,124
---------- ----------
Total fixed rate debt.... 2,133,443 1,663,682
---------- ----------
Total debt............... $2,134,093 $1,838,241
========== ==========
</Table>

One month LIBOR at June 30, 2001, was 3.835%.

F-8
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FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. DEBT -- (CONTINUED)

At June 30, 2001, the Company's line of credit was matched with an interest
rate swap agreement, which effectively converted the floating rate on the line
of credit to a fixed rate.

The line of credit contains various affirmative and negative covenants
including limitations on total indebtedness, total secured indebtedness, and
cash distributions, as well as the obligation to maintain certain minimum
tangible net worth and certain minimum interest and debt service coverage
ratios. At June 30, 2001, the Company was in compliance with all such covenants.

The Company's other borrowings contain affirmative and negative covenants
that are generally equal to or less restrictive than the line of credit. Most of
the mortgage debt is non-recourse to the Company and contains provisions
allowing for the substitution of collateral upon satisfaction of certain
conditions. Most of the mortgage debt is prepayable; subject to various
prepayment penalties, yield maintenance, or defeasance obligations.

Interest expense is reported net of interest income of $2.2 million and
$863,000 for the six months ended June 30, 2001 and 2000, respectively, and
capitalized interest of $229,000 and $497,000, respectively.

On June 4, 2001, the Company completed the private placement of $600
million in 8 1/2 percent senior unsecured notes that mature in June 2001.
Approximately $315 million of the proceeds were placed in escrow pending
completion of the merger with MeriStar. The remaining proceeds were used to pay
down the Line of Credit and other floating rate debt. Associated with the pay
down of the Line of Credit, the Company terminated interest rate swaps with a
notional value of $200 million, resulting in a one-time $4.8 million swap
termination cost, which was expensed in the second quarter. An extraordinary
charge of $225,000 was recorded to write-off unamortized deferred financing
costs associated with the prepayment of the floating rate debt.

On January 11, 2001, the Company completed the private placement of $100
million in 9 1/2 percent senior unsecured notes that mature in September 2008.
These notes were issued at a premium to yield an effective rate of 9 1/8
percent. The proceeds were used initially to pay down the company's line of
credit.

6. ADOPTION OF SFAS 133

On January 1, 2001, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended by SFAS No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities." SFAS No. 133, as amended,
establishes accounting and reporting standards for derivative instruments.
Specifically, SFAS No. 133 requires an entity to recognize all derivatives as
either assets or liabilities on the balance sheet and to measure those
instruments at fair value. Additionally, the fair value adjustments will affect
either partners' capital or net income depending on whether the derivative
instrument qualifies as a hedge for accounting purposes and the nature of the
hedging activity.

Upon adoption of SFAS 133, on January 1, 2001, the Company recorded the
fair value of its interest swap rate agreements with a notional value of $250
million as an asset of $248,000 with a corresponding credit to accumulated other
comprehensive income reported in partners' capital.

As of June 30, 2001, the Company held an interest rate swap agreement with
a notional value of $50 million. The fixed interest rate paid on this swap was
5.6 percent and the floating swap rate received was 4.06 percent with a maturity
of July 2003. The fair value of the Company's interest rate swap agreement at
June 30, 2001 was a liability of $899,000 which was recorded in accrued expenses
and accumulated other comprehensive income reported in partners' capital.
Assuming no changes in the index rates over the next twelve months, the swap
currently held by the Company would result in additional
F-9
156
FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. ADOPTION OF SFAS 133 -- (CONTINUED)

interest expense of $561,000. In June 2001, interest rate swaps with a notional
amount of $200 million were terminated at a cost of $4.8 million when the
corresponding floating rate debt was prepaid.

In the normal course of business, the Company is exposed to the effect of
interest rate changes. The Company limits these risks by following established
risk management policies and procedures including the use of derivatives.
Derivatives are used primarily to fix the rate on floating rate debt and manage
the cost of borrowing obligations. The Company requires that hedging derivative
instruments are effective in reducing the interest rate risk exposure that they
are designated to hedge. Instruments that meet these hedging criteria are
formally designated as hedges at the inception of the derivative contract. The
Company does not use derivatives for trading or speculative purposes, and the
Company has a policy of only entering into contracts with major financial
institutions.

To determine the fair values of its derivative instruments, the Company
uses a variety of methods and assumptions that are based on market conditions
and risks existing at each balance sheet date. All methods of assessing fair
value result in a general approximation of value, and such value may never
actually be realized.

At June 30, 2001, the Company's financing facilities consist of a $600
million floating rate line of credit. To reduce the risk of variable interest
rates, the Company currently uses an interest rate swap agreement, to
effectively convert a portion of its floating rate debt to fixed-rate debt. The
differences to be paid or received by the Company under the terms of the
interest rate swap agreements are accrued as interest rates change and
recognized as an adjustment to interest expense.

7. COMPREHENSIVE INCOME

SFAS No. 130, "Reporting Comprehensive Income" establishes standards for
reporting and displaying comprehensive income and its components. Total
comprehensive income for the six months ended June 30, 2001 is calculated as
follows (in thousands):

<Table>

Net income.................................................. $16,341
Realized loss on terminated interest rate swap agreements... 4,824
Unrealized loss on interest rate swap agreements............ (5,723)
-------
Total comprehensive income........................ $15,442
=======
</Table>

Although the Company conducts business in Canada, the Canadian operations
were not material to our consolidated financial position, results of operations
or cash flows during the six months ended June 30, 2001 and 2000. Additionally,
foreign currency transaction gains and losses were not material to the Company's
results of operations for the six months ended June 30, 2001 and 2000.

8. RECENTLY ISSUED STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS

In June 2001, the Financial Accounting Standards Board ("FASB") approved
SFAS No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other
Intangible Assets." SFAS No. 141 requires that the purchase method of accounting
be used for all business combinations initiated after June 30, 2001. SFAS No.
142 will be effective for fiscal years beginning after December 15, 2001 and
will require (1) intangible assets (as defined in SFAS No. 141) to be
reclassified into goodwill, (2) goodwill amortization to cease, and (3) the
testing of goodwill for impairment at transition and at interim periods (if an
event or circumstance would result in an impairment). The Company will adopt
SFAS No. 142 on June 30, 2001, with the purchase of any goodwill and intangible
assets acquired after June 30, 2001. The

F-10
157
FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. RECENTLY ISSUED STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS -- (CONTINUED)

Company has not yet determined the impact of SFAS No. 142 on the Company's
results of operations and financial position.

9. INCOME TAXES

Under the RMA that became effective January 1, 2001, the Company leases
certain of its hotels to wholly-owned taxable REIT subsidiaries that are subject
to federal and state income taxes. The Company accounts for income taxes in
accordance with the provisions of SFAS No. 109, "Accounting for Income Taxes."
Under SFAS 109, the Company accounts for income taxes using the asset and
liability method under which deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. The Company has a deferred tax asset of
approximately $100,000, prior to any valuation allowance, relating to losses of
the taxable REIT subsidiaries during the six months ended June 30, 2001.
Management has provided a 100 percent valuation allowance against this asset due
to uncertainty of realization and accordingly, no provision or benefit from
income taxes is reflected in the accompanying Consolidated Statements of
Operations.

10. GAIN ON SALE OF ASSETS

During the six months ended June 30, 2001, the Company received $3.9
million for the condemnation of three parcels of land and recorded a gain of
$3.0 million.

11. PURCHASE OF DJONT

Effective January 1, 2001, the Company acquired all the equity interests in
DJONT. In consideration for the acquisition, the Company issued 416,667 units of
limited partnership interest valued at approximately $10 million which, together
with DJONT's accumulated shareholders' deficit of $24.5 million, was expensed as
lease termination cost in the first quarter of 2001.

The Company purchased certain assets and assumed certain liabilities with
this acquisition. The fair values of the acquired assets and liabilities at
January 1, 2001, are as follows (in thousands):

<Table>

Cash and cash equivalents................................... $25,583
Accounts receivable......................................... 30,689
Investment in real estate................................... 10,954
Other assets................................................ 10,358
-------
Total assets acquired............................. 77,584
-------
Accounts payable............................................ 18,656
Due to FelCor Lodging Trust................................. 39,466
Accrued expenses and other liabilities...................... 43,999
-------
Total liabilities assumed......................... 102,121
-------
Liabilities assumed in excess of assets acquired............ 24,537
Value of units issued....................................... 9,896
-------
Lease termination costs..................................... $34,433
=======
</Table>

12. SEGMENT INFORMATION

Following the acquisition of certain of the Company's leases at January 1,
2001, the Company has determined that its reportable segments are those that are
consistent with the Company's method of internal reporting, which segments its
business in 2001 by those hotels that the Company leases to

F-11
158
FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

12. SEGMENT INFORMATION -- (CONTINUED)

DJONT (whose operations are consolidated for financial reporting purposes
beginning January 1, 2001) and those hotels that the Company leases to Six
Continents Hotels.

For the six months ended June 30, 2000, the Company segmented its business
between its two lessees, DJONT and Six Continents Hotels.

The following tables present information for the reportable segments for
the six months ended June 30, 2001 and 2000 (in thousands):

<Table>
<Caption>
SIX
CONTINENTS CORPORATE
DJONT HOTELS SEGMENT NOT ALLOCABLE CONSOLIDATED
SIX MONTHS ENDED JUNE 30, 2001 LEASED LEASED TOTAL TO SEGMENTS TOTAL
- ------------------------------ -------- ---------- -------- ------------- ------------

Total revenues....................... $443,283 $115,137 $558,420 $ 1,882 $560,302
Net income (loss).................... $ 80,431 $ 21,855 $102,286 $(85,945) $ 16,341
Funds from operations................ $160,706 $ 62,161 $222,867 $(87,184) $135,683
Weighted average units
outstanding(1)..................... 66,759
</Table>

<Table>
<Caption>
SIX
CONTINENTS CORPORATE
DJONT HOTELS SEGMENT NOT ALLOCABLE CONSOLIDATED
SIX MONTHS ENDED JUNE 30, 2000 LEASED LEASED TOTAL TO SEGMENTS TOTAL
- ------------------------------ -------- ---------- -------- ------------- ------------

Total revenues....................... $137,813 $118,522 $256,335 $ 1,824 $258,159
Net income (loss).................... $ 69,892 $ (1,059) $ 68,833 $(81,205) $(12,372)
Funds from operations................ $132,459 $104,459 $236,918 $(87,538) $149,380
Weighted average units
outstanding(1)..................... 67,987
</Table>

- ---------------

(1) Weighted average units outstanding are computed including dilutive options,
unvested stock grants, and assuming conversion of Series A preferred units
to units.

13. TREASURY STOCK REPURCHASE PROGRAM

On January 4, 2000, FelCor announced that its Board of Directors had
approved a $200 million increase in its stock repurchase program, authorizing
FelCor to purchase up to an aggregate of $300 million of its outstanding common
shares. Approximately 179,000 of FelCor common shares for approximately $4.0
million have been purchased from January 1, 2001 through March 27, 2001. FelCor
has not repurchased any additional shares since March 27, 2001. These
repurchases have been recorded as a reduction to partners' capital as a result
of the redemption of units held by FelCor to fund the repurchases. Since the
inception of the stock repurchase program FelCor has repurchased approximately
10.5 million shares of FelCor common stock for approximately $189.1 million.

F-12
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FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

14. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted
earnings per unit for the six months ended June 30, 2001 and 2000 (in thousands,
except per unit data):

<Table>
<Caption>
SIX MONTHS ENDED
JUNE 30,
-------------------
2001 2000
-------- --------

Numerator:
Income (loss) before extraordinary items.................. $ 16,566 $(12,372)
Extraordinary charge...................................... (225)
-------- --------
Net income (loss)......................................... 16,341 (12,372)
Preferred distributions................................... (12,300) (12,358)
-------- --------
Net income (loss) applicable to unitholders............... $ 4,041 $(24,730)
======== ========
Denominator:
Denominator for basic earnings per unit -- weighted
average units.......................................... 61,628 63,066
Effect of dilutive securities:
Stock options.......................................... 90
Restricted units....................................... 351 231
-------- --------
Denominator for diluted earnings per unit -- adjusted
weighted average units and assumed conversions........ 61,069 63,297
======== ========
Earnings (loss) per unit data:
Basic
Net income (loss) before extraordinary item............ $ 0.07 $ (0.39)
Extraordinary item.....................................
-------- --------
Net income (loss)...................................... $ 0.07 $ (0.39)
======== ========
Diluted
Net income (loss) before extraordinary item............ $ 0.07 $ (0.39)
Extraordinary item.....................................
-------- --------
Net income (loss)...................................... $ 0.07 $ (0.39)
======== ========
</Table>

The Series A preferred units and most of the options granted are
anti-dilutive and not included in the calculation of diluted earnings per unit.

F-13
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FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

15. CONSOLIDATING FINANCIAL INFORMATION

Certain of the Company's wholly-owned subsidiaries (FelCor/CSS Holdings,
L.P.; FelCor/CSS Hotels, L.L.C.; FelCor/LAX Hotels L.L.C.; FelCor Eight Hotels,
L.L.C.; FelCor/St. Paul Holdings, L.P.; FelCor/LAX Holdings, L.P.; FHAC Nevada
Holding, L.L.C.; FelCor TRS Holdings, L.P.; Kingston Plantation Development
Corp.; FHAC Texas Holdings, L.P.; FelCor Omaha Hotel Company, L.L.C.; FelCor
Country Villa Hotel, L.L.C.; FelCor Moline Hotel, L.L.C.; FelCor Canada Co. and
FelCor Hotel Asset Company, L.L.C., collectively "Subsidiary Guarantors"),
together with FelCor and one of its wholly-owned subsidiaries (FelCor Nevada
Holdings, L.L.C.), are guarantors of senior debt. The following tables present
consolidating information for the Subsidiary Guarantors.

CONSOLIDATING BALANCE SHEET
JUNE 30, 2001
(IN THOUSANDS)

<Table>
<Caption>
SUBSIDIARY NON-GUARANTOR TOTAL
FELCOR L.P. GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
----------- ---------- ------------- ------------ ------------

ASSETS

Net investment in hotel properties..... $ 512,786 $1,638,108 $1,559,800 $3,710,694
Investment in consolidated entities.... 4,096,294 $(4,096,294)
Investment in unconsolidated
entities............................. 136,814 18,166 154,980
Assets held for sale................... 4,391 43,595 4,136 52,122
Cash and cash equivalents.............. 20,586 27,806 15,828 64,220
Restricted cash........................ 323,555 323,555
Due (to) from subsidiary............... (1,604,725) 478,252 1,126,473
Accounts receivable.................... 10,636 35,813 46,449
Deferred assets........................ 26,594 1,174 4,433 32,201
Other assets........................... 6,412 8,188 4,707 19,307
----------- ---------- ---------- ----------- ----------
Total assets.................. $ 3,533,343 $2,251,102 $2,715,377 $(4,096,294) $4,403,528
=========== ========== ========== =========== ==========

LIABILITIES AND PARTNERS' CAPITAL

Debt................................... $ 1,413,691 $ 145,409 $ 574,993 $2,134,093
Distributions payable.................. 34,199 34,199
Accrued expenses and other
liabilities.......................... 46,436 79,080 20,561 146,077
Minority interest in other
partnerships......................... 332 50,142 50,474
----------- ---------- ---------- ----------
Total liabilities............. 1,494,658 224,489 645,696 2,364,843
----------- ---------- ---------- ----------
Redeemable units at redemption value... 210,929 210,929
Preferred units........................ 293,265 293,265
Partners' capital...................... 1,534,491 2,026,613 2,069,681 $(4,096,294) 1,534,491
----------- ---------- ---------- ----------- ----------
Total liabilities and
partners' capital........... $ 3,533,343 $2,251,102 $2,715,377 $(4,096,294) $4,403,528
=========== ========== ========== =========== ==========
</Table>

F-14
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FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

15. CONSOLIDATING FINANCIAL INFORMATION -- (CONTINUED)

CONSOLIDATING BALANCE SHEET
JUNE 30, 2000
(IN THOUSANDS)

<Table>
<Caption>
SUBSIDIARY NON-GUARANTOR TOTAL
FELCOR L.P. GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
----------- ---------- ------------- ------------ ------------

ASSETS

Net investment in hotel properties...... $ 593,248 $1,663,611 $1,539,896 $3,796,755
Investment in consolidated entities..... 2,814,305 $(2,814,305)
Investment in unconsolidated entities... 116,811 16,227 133,038
Assets held for sale.................... 4,582 118,510 12,555 135,647
Cash and cash equivalents............... 21,582 8,269 21,001 50,852
Due from Lessee......................... 14,278 18,218 (3,898) 28,598
Due (to) from subsidiary................ (244,385) 263,404 (19,019)
Note receivable from unconsolidated
entity................................ 7,728 7,728
Deferred assets......................... 10,772 1,245 5,076 17,093
Other assets............................ 5,215 1,834 5 7,054
---------- ---------- ---------- ----------- ----------
Total assets................... $3,344,136 $2,091,318 $1,555,616 $(2,814,305) $4,176,765
========== ========== ========== =========== ==========

LIABILITIES AND PARTNERS' CAPITAL

Debt.................................... $1,117,360 $ 118,227 $ 647,156 $1,882,743
Distributions payable................... 35,237 35,237
Accrued expenses and other
liabilities........................... 73,335 73,335
Deferred rent........................... 2,068 7,771 8,765 18,604
Minority interest in other
partnerships.......................... 50,710 50,710
---------- ---------- ---------- ----------
Total liabilities.............. 1,228,000 125,998 706,631 2,060,629
---------- ---------- ---------- ----------
Redeemable units at redemption value.... 151,948 151,948
Preferred units......................... 294,515 294,515
Partners' capital....................... 1,669,673 1,965,320 848,985 $(2,814,305) 1,669,673
---------- ---------- ---------- ----------- ----------
Total liabilities and partners'
capital ..................... $3,344,136 $2,091,318 $1,555,616 $(2,814,305) $4,176,765
========== ========== ========== =========== ==========
</Table>

F-15
162
FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

15. CONSOLIDATING FINANCIAL INFORMATION -- (CONTINUED)

CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2001
(IN THOUSANDS)

<Table>
<Caption>
SUBSIDIARY NON-GUARANTOR TOTAL
FELCOR L.P. GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
----------- ---------- ------------- ------------ ------------

Revenues:
Hotel operating revenue................ $441,434 $ 1,849 $443,283
Percentage lease revenue............... $ 42,818 121,932 94,809 $(144,422) 115,137
Other revenue.......................... 1,458 351 73 1,882
-------- -------- -------- --------- --------
Total revenue................. 44,276 563,717 96,731 (144,422) 560,302
-------- -------- -------- --------- --------
Expenses:
Hotel operating expenses............... 266,657 1,064 267,721
Taxes, insurance and other............. 5,215 203,040 12,627 (144,422) 76,460
Corporate expenses..................... 907 3,328 2,137 6,372
Depreciation........................... 13,596 35,719 30,198 79,513
Lease termination costs................ 34,456 1,770 36,226
-------- -------- -------- --------- --------
Total operating expenses...... 54,174 510,514 46,026 (144,422) 466,292
-------- -------- -------- --------- --------
Operating income (loss)................ (9,898) 53,203 50,705 94,010
Interest expense, net.................. (48,343) (5,693) (25,585) (79,621)
Swap termination expense............... (4,824) (4,824)
-------- -------- -------- --------- --------
Income (loss) before equity in income
from unconsolidated entities,
minority interests, and gain on sale
of assets............................ (63,065) 47,510 25,120 9,565
Equity in income from consolidated
entities............................. (72,863) 72,863
-------- ---------
Equity in income from unconsolidated
entities............................. 6,358 (30) 6,328
Minority interests in other
partnerships......................... (235) (2,047) (2,282)
Gain on sale of assets................. 645 2,310 2,955
-------- -------- -------- --------- --------
Income (loss) before extraordinary
items................................ 16,566 47,480 25,383 (72,863) 16,566
Extraordinary charge from writeoff of
deferred financing fees.............. (225) (225) 225 (225)
-------- -------- -------- --------- --------
Net income (loss)...................... 16,341 47,480 25,158 16,341
Preferred distributions................ (12,300) (12,300)
-------- -------- -------- --------- --------
Net income (loss) applicable to
unitholders.......................... $ 4,041 $ 47,480 $ 25,158 $ (72,638) $ 4,041
======== ======== ======== ========= ========
</Table>

F-16
163
FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

15. CONSOLIDATING FINANCIAL INFORMATION -- (CONTINUED)

CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2001
(IN THOUSANDS)

<Table>
<Caption>
SUBSIDIARY NON-GUARANTOR TOTAL
FELCOR L.P. GUARANTORS SUBSIDIARIES CONSOLIDATED
----------- ---------- ------------- ------------

Cash flows from operating activities......... $ (47,075) $ 84,999 $ 55,706 $ 93,630
Cash flows from (used in) investing 19,180 (8,249)
activities................................. (276,345) (265,414)
Cash flows from (used in) financing (79,405) (49,544)
activities................................. 338,893 209,944
--------- -------- -------- --------
Change in cash and cash equivalents.......... 15,473 24,774 (2,087) 38,160
Cash and cash equivalents at beginning of 3,032 17,915
period..................................... 5,113 26,060
--------- -------- -------- --------
Cash and cash equivalents at end of period... $ 20,586 $ 27,806 $ 15,828 $ 64,220
========= ======== ======== ========
</Table>

CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(IN THOUSANDS)

<Table>
<Caption>
SUBSIDIARY NON-GUARANTOR TOTAL
FELCOR L.P. GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
----------- ---------- ------------- ------------ ------------

Revenues:
Percent rent...................... $ 55,332 $123,202 $77,801 $256,335
Other revenue..................... 1,824 1,824
-------- -------- ------- -------- --------
Total revenue........... 57,156 123,202 77,801 258,159
-------- -------- ------- -------- --------
Expenses:
General and administrative........ 1,319 2,937 1,856 6,112
Depreciation...................... 17,803 37,591 26,086 81,480
Taxes, insurance and other........ 7,480 15,292 13,105 35,877
Land leases....................... 965 9,491 1,255 11,711
-------- -------- ------- -------- --------
Total operating
expenses.............. 27,567 65,311 42,302 135,180
-------- -------- ------- -------- --------
Operating income.................. 29,589 57,891 35,499 122,979
Interest expense, net............. (53,711) (5,454) (17,616) (76,781)
Loss on assets held for sale...... (6,170) (53,200) (3,630) (63,000)
-------- -------- ------- -------- --------
Income (loss) before equity in
income from unconsolidated
entities, minority interests and
gain on sale of assets.......... (30,292) (763) 14,253 (16,802)
Equity in income from consolidated
entities........................ 14,480 $(14,480)
Equity in income from
unconsolidated entities......... 4,933 715 5,648
Minority interest other
partnerships.................... (1,493) (600) (2,093)
Gain on sale of assets............ 875 875
-------- -------- ------- -------- --------
Net income (loss)................. (12,372) 827 13,653 (14,480) (12,372)
Preferred distributions........... 12,358 12,358
-------- -------- ------- -------- --------
Net income (loss) applicable to
unitholders..................... $(24,730) $ 827 $13,653 $(14,480) $(24,730)
======== ======== ======= ======== ========
</Table>

F-17
164
FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

15. CONSOLIDATING FINANCIAL INFORMATION -- (CONTINUED)

CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(IN THOUSANDS)

<Table>
<Caption>
SUBSIDIARY NON-GUARANTOR TOTAL
FELCOR L.P. GUARANTORS SUBSIDIARIES CONSOLIDATED
----------- ---------- ------------- ------------

Cash flows from operating activities......... $ 4,335 $ 90,052 $ 44,356 $138,743
Cash flows from (used in) investing (16,628) (10,827)
activities................................. (1,174) (28,629)
Cash flows from (used in) financing (77,573) (33,140)
activities................................. 15,328 (95,385)
------- -------- -------- --------
Change in cash and cash equivalents.......... 18,489 (4,149) 389 14,729
Cash and cash equivalents at beginning of 12,418 20,612
period..................................... 3,093 36,123
------- -------- -------- --------
Cash and cash equivalents at end of period... $21,582 $ 8,269 $ 21,001 $ 50,852
======= ======== ======== ========
</Table>

16. PRO FORMA INFORMATION (UNAUDITED)

The following unaudited pro forma information for the six months ended June
30, 2001 and 2000 is based in part upon the Consolidated Statements of
Operations of the Company, DJONT, Six Continents Hotels and MeriStar for the six
months ended June 30, 2001 and 2000.

The Pro Forma Combined Statements of Operations for the six months ended
June 30, 2001 and 2000 assumes that all the following occurred on January 1 of
the fiscal period presented:

- the Company's acquisition of DJONT, effective January 1, 2001, for
416,667 units of limited partnership interest valued at approximately $10
million;

- the Company's acquisition of 12 leases held by Bristol Tenant Company,
effective January 1, 2001, for 413,585 shares of FelCor common stock
valued at approximately $10 million;

- the Company's acquisition of the remaining 88 leases held by Bristol
Tenant Company, effective July 1, 2001;

- the assignment of the leases from MeriStar Hotels & Resorts, Inc. to
taxable REIT subsidiaries; and

- the completion of the MeriStar merger and related financings and the
application of the net proceeds.

F-18
165
FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

16. PRO FORMA INFORMATION (UNAUDITED) -- (CONTINUED)

<Table>
<Caption>
PRO FORMA
SIX MONTHS ENDED
JUNE 30,
-----------------------
2001 2000
---------- ----------

Total revenue............................................... $1,412,155 $1,471,031
Net income applicable to unitholders........................ 73,771 $ 88,395
Basic:
Net income applicable to unitholders...................... $ 0.74 $ 0.88
Weighted average units outstanding........................ 100,020 100,701
Diluted:
Net income applicable to unitholders...................... $ 0.73 $ 0.87
Weighted average units outstanding........................ 101,352 101,746
</Table>

17. SUBSEQUENT EVENTS

On July 18, 2001, the Company announced the commitment of a $500 million
standby loan facility. The loan facility will be available to fund any purchases
of MeriStar's existing 9 percent Senior Notes due 2009 or 9 1/8 percent Senior
Notes due 2011 pursuant to change in control provisions contained in the
indentures.

On July 26, 2001, the Company announced the increase of its line of credit
from $600 million to $700 million contingent upon the merger with MeriStar
closing. The new unsecured facility has similar terms as the existing facility.
The facility has a term of up to five years, a floating interest rate, and a
tiered spread based on the Company's leverage ratio. The increased line will be
available to refinance a portion of MeriStar's debt and for general corporate
purposes.

The Company has filed a registration statement on Form S-4 with the SEC in
connection with the merger. The registration statement is currently being
reviewed by the SEC but has not been declared effective. The Form S-4 contains a
prospectus, a proxy statement, and other documents for FelCor's and MeriStar's
stockholder meetings at which time the proposed merger will be considered. It is
planned to mail the proxy statement and prospectus contained in the Form S-4 to
our respective stockholders after the registration statement is declared
effective by the SEC. The Form S-4, proxy statement and prospectus will contain
important information about FelCor, MeriStar, the merger and related matters.

F-19
166

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)

<Table>
<Caption>
JUNE 30, DECEMBER 31,
2001 2000
------------- -----------------
(UNAUDITED)

ASSETS

Investments in hotel properties............................. $3,209,185 $3,193,730
Accumulated depreciation.................................... (342,051) (287,229)
---------- ----------
2,867,134 2,906,501
Cash and cash equivalents................................... 20,550 242
Accounts receivable, net.................................... 57,040 2,833
Prepaid expenses and other.................................. 15,765 2,767
Note receivable from OpCo................................... 36,000 --
Due from OpCo............................................... 10,893 22,221
Investments in and advances to affiliates................... 41,714 42,196
Restricted cash............................................. 20,201 19,918
Intangible assets, net of accumulated amortization of $6,205
and $5,575................................................ 15,684 9,822
---------- ----------
$3,084,981 $3,006,500
========== ==========

LIABILITIES, MINORITY INTERESTS AND PARTNERS' CAPITAL

Accounts payable, accrued expenses and other liabilities.... $ 126,870 $ 72,197
Accrued interest............................................ 44,352 28,365
Income taxes payable........................................ 1,420 921
Distributions payable....................................... 24,245 24,581
Deferred income taxes....................................... 8,409 8,113
Interest rate swaps......................................... 7,110 --
Notes payable to MeriStar................................... 356,923 356,729
Mortgages and notes payable................................. 1,296,127 1,281,590
---------- ----------
Total liabilities................................. 1,865,456 $1,772,496
---------- ----------
Minority interests.......................................... 2,693 2,687
Redeemable OP units at redemption value..................... 99,898 88,545
Partners' capital -- common OP units 44,479,899 and
44,403,034 issued and outstanding......................... 1,116,934 1,142,772
---------- ----------
$3,084,981 $3,006,500
========== ==========
</Table>

See accompanying notes to condensed consolidated financial statements.

F-20
167

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
UNAUDITED
(IN THOUSANDS)

<Table>
<Caption>
(SIX MONTHS ENDED
JUNE 30,)
--------------------
2001 2000
-------- --------

Revenue:
Hotel operations:
Rooms................................................... $402,760 $ --
Food and beverage....................................... 145,383 --
Other operating departments............................. 46,005 --
Participating lease revenue............................... 10,736 145,031
Office rental and other revenues.......................... 4,967 3,556
-------- --------
Total revenue...................................... 609,851 148,587
-------- --------
Hotel operating expenses by department:
Rooms..................................................... 92,287 --
Food and beverage......................................... 103,890 --
Other operating departments............................... 23,616 --
Office rental, parking and other operating expenses......... 1,625 1,343
Undistributed operating expenses:
Administrative and general................................ 88,055 4,150
Property operating costs.................................. 84,977 --
Property taxes, insurance and other....................... 36,902 25,093
Depreciation and amortization............................. 57,787 54,102
Write down of investment in STS Hotel Net................. 2,112 --
Swap termination costs.................................... 9,297 --
FelCor merger costs....................................... 3,789 --
Costs to terminate leases with Prime Hospitality
Corporation............................................. 1,315 --
-------- --------
Total operating expenses........................... 505,652 84,688
-------- --------
Net operating income........................................ 104,199 63,899
Interest expense, net....................................... 60,261 58,417
-------- --------
Income before minority interests, income taxes, gain (loss)
on sale of asset and extraordinary gain (loss)............ 43,938 5,482
Minority interests.......................................... 6 25
-------- --------
Income before income taxes, gain (loss) on sale of asset and
extraordinary gain (loss)................................. 43,932 5,457
Income tax expense.......................................... 1,242 59
-------- --------
Income (loss) before loss on sale of asset and extraordinary
gain (loss)............................................... 42,690 5,398
Gain (loss) on sale of asset, net of tax effect of ($19) and
($56)..................................................... (1,062) 3,439
Extraordinary gain (loss) on early extinguishments of debt,
net of tax effect of ($17) and $50........................ (1,226) 3,400
-------- --------
Net income.................................................. 40,402 12,237
Other comprehensive income (loss):
Transition adjustment..................................... (2,842) --
Foreign currency translation adjustment................... (159) (534)
Change in fair value of cash flow hedges.................. (4,268) --
-------- --------
Comprehensive income........................................ $ 33,133 $ 11,703
======== ========
Net income applicable to common unitholders................. $ 40,120 $ 11,955
======== ========
Net income applicable to general partner common
unitholder................................................ $ 36,887 $ 10,939
======== ========
Net income applicable to third party limited partner common
unitholders............................................... $ 3,233 $ 1,016
======== ========
Earnings per unit:
Basic:
Income before extraordinary gain (loss)................. $ 0.85 $ 0.16
Extraordinary gain (loss)............................... (0.03) 0.07
-------- --------
Net income.............................................. $ 0.82 $ 0.23
======== ========
Diluted:
Income before extraordinary gain (loss)................. $ 0.83 $ 0.16
Extraordinary gain (loss)............................... (0.02) 0.07
-------- --------
Net income.............................................. $ 0.81 $ 0.23
======== ========
</Table>

See accompanying notes to condensed consolidated financial statements.

F-21
168

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
UNAUDITED
(IN THOUSANDS)

<Table>
<Caption>
SIX MONTHS ENDED JUNE 30,
--------------------------
2001 2000
----------- -----------

Balance at beginning of period.............................. $1,142,772 $1,203,518
Contributions............................................... 6,737 10,692
Contribution from general partner related to amortization of
unearned stock-based compensation......................... 1,842 395
Repurchase of units......................................... (3,280) (42,003)
Allocations from redeemable OP units........................ (15,601) (20,344)
Distributions............................................... (48,387) (52,669)
Net income applicable to common unitholders............... 40,120 11,955
Transition adjustment..................................... (2,842) --
Foreign currency translation adjustment................... (159) (534)
Change in fair value of cash flow hedges.................. (4,268) --
---------- ----------
Balance at end of period.................................... $1,116,934 $1,111,010
========== ==========
</Table>

F-22
169

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
(IN THOUSANDS)

<Table>
<Caption>
SIX MONTHS ENDED JUNE 30,
--------------------------
2001 2000
----------- -----------

Operating activities:
Net income................................................ $ 40,402 $ 12,237
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization............................. 57,787 54,102
Loss (gain) on sale of assets, before tax effect.......... 1,081 (3,495)
Write down of investment in STS Hotel Net................. 2,112 --
Extraordinary loss (gain) on early extinguishment of debt,
before tax effect...................................... 1,243 (3,450)
Minority interests........................................ 6 24
Amortization of stock based compensation.................. 1,842 395
Deferred income taxes..................................... 296 43
Changes in operating assets and liabilities:
Accounts receivable, net............................... (7,007) (3,638)
Prepaid expenses and other............................. 502 8,295
Due from OpCo.......................................... 11,328 (11,449)
Accounts payable, accrued expenses, accrued interest
and other liabilities................................. 4,471 67,845
Income taxes payable................................... 499 (238)
--------- ---------
Net cash provided by operating activities......... 114,562 120,671
--------- ---------
Investing activities:
Investment in hotel properties, net....................... (23,782) (61,243)
Proceeds from disposition of assets....................... 7,274 24,148
Hotel operating cash received in lease conversions........ 3,257 --
Investments in and advances to affiliates, net............ -- (5,511)
(Increase in) repayments of notes receivable.............. (36,000) 57,110
Change in restricted cash................................. (283) (1,477)
--------- ---------
Net cash (used in) provided by investing
activities...................................... (49,534) 13,027
--------- ---------
Financing activities:
Deferred financing costs.................................. (9,906) (1,412)
Proceeds from mortgages and notes payable................. 599,529 100,194
Principal payments on mortgages and notes payable......... (584,830) (126,469)
Repayments of MeriStar borrowings......................... -- (14,556)
Contributions from partners............................... 3,169 1,286
Repurchase of units....................................... (3,280) (42,003)
Distributions paid to partners............................ (49,685) (52,669)
--------- ---------
Net cash used in financing activities............. (45,003) (135,629)
--------- ---------
Effect of exchange rate changes on cash and cash
equivalents............................................... 283 (22)
--------- ---------
Net increase (decrease) in cash and cash equivalents........ 20,308 (1,953)
Cash and cash equivalents, beginning of period.............. 242 2,549
--------- ---------
Cash and cash equivalents, end of period.......... $ 20,550 $ 596
========= =========
</Table>

See accompanying notes to condensed consolidated financial statements.

F-23
170

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2001
UNAUDITED
(DOLLARS IN THOUSANDS)

1. ORGANIZATION

MeriStar Hospitality Operating Partnership, L.P. ("the Partnership") owns a
portfolio of primarily upscale, full-service hotels in the United States and
Canada. The portfolio is diversified by franchise and brand affiliations. As of
June 30, 2001, the Partnership owned 113 hotels, with 28,877 rooms, 109 of which
are leased by the Partnership's taxable subsidiaries and managed by MeriStar
Hotels & Resorts, Inc., ("OpCo"). Four of the hotels are leased by affiliates of
Prime Hospitality Corporation. During 2000, substantially all of the hotels were
leased to and operated by OpCo.

The Partnership was formed on August 3, 1998, as a result of the merger
between CapStar Hotel Company ("CapStar") and American General Hospitality
Corporation ("AGH") and the subsequent formation of MeriStar Hospitality
Corporation ("MeriStar") , the merged entity. MeriStar, a real estate investment
trust ("REIT") is the general partner and owns a one percent interest as of June
30, 2001. The limited partners are MeriStar LP, Inc., a wholly owned subsidiary
of MeriStar, which held approximately a 90 percent interest as of June 30, 2001
and various third parties, which owned an aggregate interest of nine percent at
June 30, 2001. Partners' capital includes the partnership interests of MeriStar
and MeriStar LP, Inc. MeriStar held 483,202 and 484,591 common OP units as of
June 30, 2001 and December 31, 2000, respectively. MeriStar LP, Inc. held
43,996,697 and 43,918,443 common OP units as of June 30, 2001 and December 31,
2000 respectively. Due to the redemption rights of the limited partnership units
held by third parties, these units have been excluded from partner's capital and
classified as Redeemable OP units and recorded at redemption value. At June 30,
2001 and December 31, 2000 there were 4,232,497 and 4,448,268 redeemable units
outstanding.

On January 1, 2001, changes to the federal tax laws governing real estate
investment trusts, commonly know as the REIT Modernization Act, or RMA, became
effective. The REIT Modernization Act permits the Partnership to create taxable
REIT subsidiaries on or after January 1, 2001, which are subject to taxation
similar to subchapter C corporations. Because of the RMA, the Partnership has
created a number of these taxable REIT subsidiaries that are the lessees of its
real property. The REIT Modernization Act prohibits the taxable REIT
subsidiaries from engaging in the following activities:

- they may not manage the properties themselves; they need to enter into
"arms length" management agreements with an independent third-party
manager that is actively involved in the trade or business of hotel
management and manages properties on behalf of other owners,

- they may not lease a property that contains gambling operations, and

- they may not own a brand or franchise under which hotels are operated.

The Partnership believes that establishing taxable REIT subsidiaries to
lease the properties provides a more efficient alignment of and ability to
capture the economic interest of property ownership. Under the prior lease
structure with MeriStar Hotels, we received lease payments based on the revenues
generated by the properties, but MeriStar Hotels operated the properties in
order to maximize net operating income from the properties. This inconsistency
could potentially result in the properties being operated in a way that did not
maximize revenues. With the assignment of the leases for each of the 106
properties managed by MeriStar Hotels to the taxable REIT subsidiaries and the
execution of the new management agreements, we gained the economic risks and
rewards related to the properties that are usually associated with ownership of
real estate, and property revenues become the basis for MeriStar Hotels'
management fees.

F-24
171
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Subsidiaries of OpCo assigned their participating leases to the
wholly-owned taxable REIT subsidiaries as of January 1, 2001. In connection with
the assignment, the taxable subsidiaries executed new management agreements with
a subsidiary of OpCo to manage the hotels. Under these management agreements,
the taxable subsidiaries pay a management fee to OpCo for each property. The
taxable subsidiaries in turn make rental payments to the Partnership under the
participating leases. The management agreements have been structured to
substantially mirror the economics of the former leases. The transactions did
not result in any cash consideration exchanged among the parties except in
regard to the transfer of hotel operating assets and liabilities to the taxable
subsidiaries. Under the new management agreements, the base management fee is
2.5% of total hotel revenue plus incentive payments, based on meeting
performance thresholds, that could total up to 1.5% of total hotel revenue. The
agreements have an initial term of 10 years with three renewal periods of five
years each at the option of OpCo, subject to some exceptions. Because these
leases have been assigned to the taxable subsidiaries, the Partnership now bears
the operating risk associated with the hotels.

On May 9, 2001, the Partnership and MeriStar entered into an agreement and
Plan of Merger with FelCor Lodging Trust Incorporated ("FelCor") and its
operating partnership. Under the merger agreement, a wholly-owned subsidiary of
FelCor's operating partnership will merge with and into the Partnership, and
MeriStar will merge with and into FelCor. Holders of MeriStar common stock will
receive 0.784 of a share of FelCor common stock and $4.60 in cash for each share
of MeriStar's common stock. Holders of OP Units will receive $4.60 in cash and
0.784 FelCor operating partnership units. Class D Preferred OP Units will get
Series D preferred units in FelCor operating partnership on a one for one basis.
The merger agreement requires the approval of holders of a majority of
MeriStar's outstanding shares of common stock and holders of a majority of the
outstanding shares of common stock of FelCor. MeriStar currently expects the
merger to close during the third quarter of 2001. The Partnership has incurred
$3,789 of costs related to this merger through June 30, 2001.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These unaudited interim financial statements have been prepared according
to the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures that are normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted. These interim financial statements should be read in
conjunction with the financial statements, accompanying notes and other
information for the year ended December 31, 2000. Certain 2000 amounts have been
reclassified to conform to the 2001 presentation.

In management's opinion, the accompanying unaudited condensed consolidated
interim financial statements reflect all adjustments, which are of a normal and
recurring nature, necessary for a fair presentation of the financial condition
and results of operations and cash flows for the periods presented. The
preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions.
Such estimates and assumptions affect the reported amounts of assets and
liabilities, as well as the disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. The actual results could differ from those
estimates. The results of operations for the interim periods are not necessarily
indicative of the results for the entire year.

Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information" requires a public entity to
report selected information about operating segments in financial reports issued
to shareholders. Based on the guidance provided in the standard, the Partnership
has determined that its business is conducted in one reportable segment. It also
establishes standards for related disclosures about products and services,
geographic areas and major customers. Revenues for Canadian operations totaled
$11,583 and $3,178 for the six months ended June 30, 2001 and 2000.

F-25
172
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin or SAB No. 101, "Revenue Recognition in Financial
Statements." SAB No. 101 addresses lessor revenue recognition in interim periods
related to rental agreements which provide for minimum rental payments, plus
contingent rents based on the lessee's operations, such as a percentage of sales
in excess of an annual specified revenue target. SAB No. 101 requires the
deferral of contingent rental income until specified targets are met. This SAB
relates only to the recognition of the lease revenue in interim periods for
financial reporting purposes; it has no effect on the timing of rent payments
under the leases. The effect of SAB No. 101 was to defer additional contingent
rental income of $425 and $59,322 for the six months ended June 30, 2001 and
2000.

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which requires that an entity recognize all derivatives
as either assets or liabilities in the balance sheet and measure those
instruments at fair value. In June 1999, the Financial Accounting Standard Board
issued Statement of Financial Accounting Standard No. 137 which amended
Statement of Financial Accounting Standard No. 133 to defer the effective date
to all fiscal quarters of all fiscal years beginning after June 15, 2000. In
June 2000, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 138 which provides additional guidance and
amendments to Statement of Financial Accounting Standard No. 133.

The Partnership's interest rate risk management objective is to limit the
impact of interest rate changes on earnings and cash flows. The Partnership
assesses interest rate cash flow risk by continually identifying and monitoring
changes in interest rate exposures that may adversely impact expected future
cash flows, and by evaluating hedging opportunities. The Partnership does not
enter into derivative instruments for any purpose other than cash flow hedging
purposes.

The Partnership's interest rate swap agreements are considered to be a
hedge against changes in the amount of future cash flows associated with the
interest payments of the Partnership's variable rate debt obligations.
Accordingly, the interest rate swap agreements are reflected at fair value in
the Partnership's consolidated balance sheet as of June 30, 2001 and the related
unrealized gains or losses on these contracts are recorded in partner's capital
as a component of accumulated other comprehensive income.

The Partnership recognized a transition adjustment of $2,842 as the fair
value of these derivative instruments at January 1, 2001. The Partnership
recorded a liability and corresponding charge to other comprehensive loss for
this amount. As of June 30, 2001, the fair value of the Partnership's derivative
instruments represents a liability of $7,110. The estimated net amount recorded
in accumulated other comprehensive income expected to be reclassified to the
statement of operations within the next six months is approximately $3,065.

During June, 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 141, "Business Combinations," and
No. 142 "Goodwill and other Intangible Assets". We are currently in the process
of evaluating the effect these new standards will have on our financial
statements.

3. NOTE RECEIVABLE FROM OPCO

The Partnership may lend OpCo up to $50,000 for general corporate purposes
pursuant to a revolving credit agreement. The interest rate on this credit
agreement is 650 basis points over the 30-day London Interbank Offered Rate. As
of June 30, 2001, $36,000 was outstanding under this revolving credit agreement.

F-26
173
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. LONG-TERM DEBT

Long-term debt consisted of the following:

<Table>
<Caption>
JUNE 30, DECEMBER 31,
2001 2000
---------- ------------

Senior Unsecured Notes...................................... $ 498,367 $ --
Credit Facility............................................. 422,000 898,000
Secured Facility............................................ 322,218 324,554
Mortgage Debt and Other..................................... 53,542 59,036
---------- ----------
Mortgages and Notes payable............................... $1,296,127 $1,281,590
Notes payable to MeriStar................................... 356,923 356,729
---------- ----------
$1,653,050 $1,638,319
========== ==========
</Table>

As of June 30, 2001, aggregate future maturities of the above obligations
are as follows:

<Table>

2001.................................................... $ 19,697
2002.................................................... 47,897
2003.................................................... 313,589
2004.................................................... 240,168
2005.................................................... 9,265
Thereafter.............................................. 1,022,434
----------
$1,653,050
==========
</Table>

On January 26, 2001, the Partnership sold $300,000 of 9.0% senior notes due
2008 and $200,000 of 9.13% senior notes due 2011. The notes are unsecured
obligations of the Partnership. MeriStar, together with a number of the
subsidiaries of the Partnership, guarantees payment of principal and interest on
the notes on a senior unsecured basis. The net proceeds from the sale of
$492,000 were used to repay amounts outstanding under the Credit Facility and to
make payments to terminate some swap agreements that hedged variable interest
rates of the loans that were repaid. The terminated swap agreements had notional
amounts totaling $300,000. The Partnership recognized a loss of $9,297 to
terminate these swap agreements. The repayments of term loans under the Credit
Facility resulted in an extraordinary loss of $1,243 ($1,226, net of tax) from
the write-off of deferred financing costs.

5. DISTRIBUTIONS PAYABLE

On June 28, 2001, the Partnership declared a distribution for the three
months ended June 30, 2001 of $0.505 per Common and Class B OP Unit and $0.5575
per Class C OP Unit. The distribution was paid on July 13, 2001.

F-27
174
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. EARNINGS PER UNIT

The following is a reconciliation of the numerators and denominators of the
basic and diluted earnings per unit ("EPU") computations for income before
extraordinary gain (loss):

<Table>
<Caption>
SIX MONTHS ENDED
JUNE 30,
-----------------
2001 2000
------- -------

Basic EPU Computation:
Net income before extraordinary gain (loss)............... $41,628 $ 8,837
Distributions paid related to unvested restricted stock of
MeriStar............................................... (403) (335)
Preferred distributions................................... (282) (282)
------- -------
Income before extraordinary gain (loss) available to
common unitholders..................................... 40,943 8,220
Weighted average number of OP Units outstanding........... 48,383 50,269
------- -------
Basic EPU before extraordinary gain (loss)................ $ 0.85 $ 0.16
======= =======
Diluted EPU Computation:
Income before extraordinary gain (loss) available to
common unitholders..................................... 40,943 8,220
Preferred distributions................................... 282 --
Interest on convertible debt of MeriStar.................. 3,591 --
Adjusted net income....................................... 44,816 8,220
Weighted average number of OP units outstanding........... 48,383 50,269
Stock options of MeriStar................................. 359 149
Class D Preferred OP Units................................ 392 --
Convertible debt of MeriStar.............................. 4,538 --
------- -------
Total weighted average number of diluted OP units
outstanding............................................ 53,672 50,418
------- -------
Diluted EPU before extraordinary gain (loss).............. $ 0.83 $ 0.16
======= =======
</Table>

The effects of Class D Preferred OP Units, convertible debt of MeriStar,
and restricted stock of MeriStar were not included in the computation of EPU for
periods in which their effect was anti-dilutive.

F-28
175
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. SUPPLEMENTAL CASH FLOW INFORMATION

<Table>
<Caption>
SIX MONTHS ENDED
JUNE 30,
------------------
2001 2000
-------- -------

Cash paid for interest and income taxes:
Interest, net of capitalized interest of $3,822 and
$3,530, respectively................................... $ 44,274 $59,471
Income taxes.............................................. 511 211
Non-cash investing and financing activities:
Deferred purchase price................................... -- 8,000
Redemption of redeemable OP Units......................... 2,845 24
Operating assets received and liabilities assumed from
lease conversions:
Accounts receivable.................................... 47,200 --
Prepaid expenses and other............................. 13,500 --
Furniture and fixtures................................. 315 --
Accumulated depreciation............................... (163) --
Investment in affiliates, net.......................... 1,629 --
-------- -------
Total operating assets received................... 62,481 --
======== =======
Accounts payable and accrued expenses.................. (65,706) --
Long-term debt......................................... (32) --
-------- -------
Total liabilities assumed......................... (65,738) --
======== =======
</Table>

8. PARTICIPATING LEASE AGREEMENTS

Changes to the federal tax laws governing REITs became effective on January
1, 2001. Under those changes, the Partnership created taxable REIT subsidiaries
that lease the hotels the Partnership currently owns. The taxable subsidiaries
are wholly-owned and are similar to a subchapter C corporation. Accordingly, as
of January 1, 2001, OpCo assigned the participating leases to the taxable REIT
subsidiaries and the taxable subsidiaries entered into management agreements
with OpCo to manage the properties. Under these management agreements, the
taxable REIT subsidiaries pay OpCo a management fee. The taxable REIT
subsidiaries in turn make rental payments to the Partnership under the
participating leases. The management agreements have been structured to
substantially mirror the economics and terms of the former leases.

As of June 30, 2001, the Partnership leases four hotels to Prime
Hospitality. These leases continue to have non-cancelable remaining terms
ranging from 8 to 10 years, subject to earlier termination on the occurrence of
certain contingencies, as defined. The rent due under each percentage lease is
the greater of base rent or percentage rent, as defined. Percentage rent
applicable to room and food and beverage revenue varies by lease and is
calculated by multiplying fixed percentages by the total amounts of such
revenues over specified threshold amounts. Both the minimum rent and the revenue
thresholds used in computing percentage rents are subject to annual adjustments
based on increases in the United States Consumer Price Index. Percentage rent
applicable to other revenues is calculated by multiplying fixed percentages by
the total amounts of such revenues. During interim reporting periods, the
Partnership defers recognition of revenue for lease payments considered to be
contingent until specified percentage rent thresholds are met.

Total lease payments on the Prime Hospitality leases were $7,536 for the
six months ended June 30, 2001. Total lease payment on all of the leases were
$201,385 for the six months ended June 30, 2000.

F-29
176
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9. STOCK-BASED COMPENSATION

As of March 31, 2001, MeriStar has granted 586,500 shares of MeriStar
restricted stock to the Partnership's employees. This restricted stock vests
ratably over a three-year or five-year period.

On March 29, 2000, the Partnership granted 462,500 Profits-Only OP Units,
or POPs, to some of the executive officers pursuant to the POPs Plan. The units
vest ratably over three years based on achieving certain operating performance
criteria and upon the occurrence of certain other events. The Profits-Only OP
Units are subject to variable plan accounting.

On April 16, 2001, the Partnership granted 350,000 POPs to some of our
executives pursuant to our POPs plan. The units vest ratably over three years
and upon the occurrence of certain other events.

10. ACQUISITIONS AND DISPOSITIONS

On March 21, 2001, the Partnership sold one hotel and received proceeds of
$7,274. The sale resulted in a loss of $1,081 ($1,062, net of tax).

On May 2, 2001, the Partnership terminated the leases of four hotels from
affiliates of Prime Hospitality Corporation for a total cost of $1,315.
Concurrently, the Partnership signed long-term management agreements with
MeriStar Hotels for these properties.

F-30
177
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. CONSOLIDATING FINANCIAL INFORMATION

Certain of the Partnership's wholly-owned subsidiaries, together with the
Partnership, are guarantors of debt. The following tables present consolidating
information for the guarantor subsidiaries:

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

CONSOLIDATING BALANCE SHEET

JUNE 30, 2001

<Table>
<Caption>
MERISTAR NON-
HOSPITALITY GUARANTOR GUARANTOR TOTAL
OP, L.P. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
----------- ------------ ------------ ------------ ------------

ASSETS

Investments in hotel properties,
net............................... $ 7,864 $1,401,820 $1,457,450 $ -- $2,867,134
Cash and cash equivalents........... 20,550 -- -- -- 20,550
Accounts receivable, net............ 691 1,955 54,394 -- 57,040
Prepaid expenses and other.......... 1,124 587 14,054 -- 15,765
Notes receivable.................... 123,423 -- -- (87,423) 36,000
Due from OpCo....................... (18,407) (3,357) 32,657 -- 10,893
Due from subsidiaries............... (192,998) 262,116 (69,118) -- --
Investments in and advances to
affiliates........................ 2,635,521 58,911 10,116 (2,662,834) 41,714
Restricted cash..................... 13,872 -- 6,329 -- 20,201
Intangible assets, net.............. 13,700 1,149 835 -- 15,684
---------- ---------- ---------- ----------- ----------
$2,605,340 $1,723,181 $1,506,717 $(2,750,257) $3,084,981
========== ========== ========== =========== ==========

LIABILITIES, MINORITY INTERESTS AND PARTNERS' CAPITAL

Accounts payable, accrued expenses
and other liabilities............. $ 29,497 $ 20,260 $ 77,113 $ -- $ 126,870
Accrued interest.................... 39,983 27 4,342 -- 44,352
Income taxes payable................ 1,420 -- -- -- 1,420
Distributions payable............... 24,245 -- -- -- 24,245
Deferred income taxes............... 8,409 -- -- -- 8,409
Interest rate swaps................. 7,110 -- -- -- 7,110
Notes payable to MeriStar........... 356,923 -- -- -- 356,923
Mortgages and notes payable......... 920,921 87,484 375,145 (87,423) 1,296,127
---------- ---------- ---------- ----------- ----------
Total liabilities......... 1,388,508 107,771 456,600 (87,423) 1,865,456
Minority interests.................. -- 2,693 -- -- 2,693
Redeemable OP units at redemption
value............................. 99,898 -- -- -- 99,898
Partners' capital................... 1,116,934 1,612,717 1,050,117 (2,662,834) 1,116,934
---------- ---------- ---------- ----------- ----------
$2,605,340 $1,723,181 $1,506,717 $(2,750,257) $3,084,981
========== ========== ========== =========== ==========
</Table>

F-31
178
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 2001

<Table>
<Caption>
MERISTAR NON-
HOSPITALITY GUARANTOR GUARANTOR TOTAL
OP, L.P. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
----------- ------------ ------------ ------------ ------------

Revenue:
Hotel operations:
Rooms.............................. $ -- $ -- $402,760 $ -- $402,760
Food and beverage.................. -- -- 145,383 -- 145,383
Other operating departments........ -- -- 46,005 -- 46,005
Participating lease revenue........... 1,237 90,616 96,414 (177,531) 10,736
Office rental, parking and other
revenue............................ 1,963 153 2,851 -- 4,967
-------- -------- -------- --------- --------
Total revenue................. 3,200 90,769 693,413 (177,531) 609,851
Hotel operating expenses by
department:
Rooms.............................. -- -- 92,287 -- 92,287
Food and beverage.................. -- -- 103,890 103,890
Other operating departments........ -- -- 23,616 -- 23,616
Office rental, parking and other
operating expenses................. -- 111 1,514 -- 1,625
Undistributed operating expenses:
Administrative and general......... 2,350 318 85,387 -- 88,055
Property operating costs........... -- 352 84,625 -- 84,997
Property taxes, insurance and
other............................ 2,787 8,267 203,379 (177,531) 36,902
Depreciation and amortization...... 3,431 27,154 27,202 -- 57,787
Write down of investment in STS
Hotel Net........................ 2,112 -- -- -- 2,112
Swap termination costs............. 9,297 -- -- -- 9,297
FelCor merger costs................ 3,789 -- -- -- 3,789
Cost to terminate leases with Prime
Hospitality Corporation.......... 1,315 -- -- -- 1,315
-------- -------- -------- --------- --------
Total operating expenses...... 25,081 36,202 621,900 (177,531) 505,652
-------- -------- -------- --------- --------
Net operating income (loss)............. (21,881) 54,567 71,513 -- 104,199
Interest expense, net................... 44,322 2,583 13,356 -- 60,261
Equity in income from consolidated
entities.............................. 109,073 -- -- (109,073) --
-------- -------- -------- --------- --------
Income before minority interests, income
taxes, loss on sale of assets and
extraordinary loss.................... 42,870 51,984 58,157 (109,073) 43,938
Minority interests...................... -- 6 -- -- 6
-------- -------- -------- --------- --------
Income before income taxes, loss on sale
of assets and extraordinary loss...... 42,870 51,978 58,157 (109,073) 43,932
Income taxes............................ 1,242 -- -- 1,242
-------- -------- -------- --------- --------
Income before loss on sale of assets and
extraordinary loss.................... 41,628 51,978 58,157 (109,073) 42,690
Loss on sale of assets, net............. -- (1,062) -- -- (1,062)
Extraordinary loss on early
extinguishment of debt, net of tax
effect................................ (1,226) -- -- -- (1,226)
-------- -------- -------- --------- --------
Net income.............................. $ 40,402 $ 50,916 $ 58,157 $(109,073) $ 40,402
======== ======== ======== ========= ========
</Table>

F-32
179
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2001

<Table>
<Caption>
MERISTAR NON-
HOSPITALITY GUARANTOR GUARANTOR TOTAL
OP, L.P. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
----------- ------------ ------------ ------------ ------------

Cash flows provided by (used in)
operating activities................. $(164,661) $ 8,714 $ 270,509 $ -- $114,562
Cash flows provided by (used in)
investing activities................. 218,243 7,274 72,488 (347,539) (49,534)
Cash flows provided by (used in)
financing activities................. (33,274) (16,271) (342,997) 347,539 (45,003)
Effect of exchange rate changes on cash
and cash
equivalents.......................... -- 283 -- -- 283
--------- -------- --------- --------- --------
Change in cash and cash equivalents.... 20,308 -- -- -- 20,308
Cash and cash equivalents, beginning of
year................................. 242 -- -- -- 242
--------- -------- --------- --------- --------
Cash and cash equivalents, end of
year................................. $ 20,550 $ -- $ -- $ -- $ 20,550
========= ======== ========= ========= ========
</Table>

12. RECENT DEVELOPMENTS

On May 9, 2001, the Partnership and MeriStar entered into an Agreement and
Plan of Merger with FelCor Lodging Trust Incorporated ("FelCor")and its
operating partnership. Under the merger agreement, a wholly-owned subsidiary of
FelCor's operating partnership will merge with and into the Partnership, and
MeriStar will merge with and into FelCor. Holders of MeriStar common stock will
receive 0.784 of a share of FelCor common stock and $4.60 in cash for each share
of MeriStar's common stock. Holders of OP Units will receive $4.60 in cash and
0.784 of FelCor Operating Partnership Units. Class D Preferred OP Units will get
Series D preferred Units in FelCor Operating Partnership on a one for one basis.
The merger agreement requires the approval of holders of a majority of
MeriStar's outstanding shares of common stock and holders of a majority of the
outstanding shares of common stock of FelCor. MeriStar currently expect the
merger to close during the third quarter of 2001.

FelCor has filed a registration statement on Form S-4 with the SEC in
connection with the merger transaction. The registration statement has not yet
been declared effective. The Form S-4 contains a prospectus, a proxy statement,
and other documents for MeriStar's stockholder meeting and that of FelCor, at
which time the proposed transaction will be considered. MeriStar and FelCor plan
to mail the proxy statement and prospectus contained in the Form S-4 to their
respective stockholders after the registration statement is declared effective
by the SEC. The Form S-4, proxy statement and prospectus will contain important
information about MeriStar, FelCor, the merger and related matters. Investors
and stockholders should read the Form S-4, proxy statement and the prospectus
and the other documents filed with the SEC in connection with the merger
carefully before they make any decision with respect to the merger. For more
information regarding the persons participating in the solicitation and their
interest in the merger, please see MeriStar's Statement on Schedule 14A, filed
on May 10, 2001.

F-33
180

INDEPENDENT AUDITORS' REPORT

The Partners
MeriStar Hospitality Operating Partnership, L.P.

We have audited the accompanying consolidated balance sheets of MeriStar
Hospitality Operating Partnership, L.P. and subsidiaries (the "Partnership") as
of December 31, 2000 and 1999 and the related consolidated statements of
operations, partners' capital, and cash flows for each of the years in the
three-year period ended December 31, 2000. In connection with our audits of the
consolidated financial statements, we have also audited the financial statement
schedule of real estate and accumulated depreciation. These consolidated
financial statements and financial statement schedule are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these consolidated financial statements and financial statement schedule based
on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of MeriStar
Hospitality Operating Partnership, L.P. and subsidiaries as of December 31, 2000
and 1999, and the results of their operations and their cash flows for each of
the years in the three-year period ended December 31, 2000, in conformity with
accounting principles generally accepted in the United States of America. Also,
in our opinion, the financial statement schedule, when considered in relation to
the basic consolidated financial statements taken as a whole, presents fairly,
in all material respects, the information set forth therein.

KPMG LLP

Washington, D.C.
May 30, 2001

F-34
181

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
(DOLLARS IN THOUSANDS)

<Table>
<Caption>
2000 1999
---------- ----------

ASSETS

Investments in hotel properties............................. $3,193,730 $3,118,723
Accumulated depreciation.................................... (287,229) (182,430)
---------- ----------
2,906,501 2,936,293
Cash and cash equivalents................................... 242 2,549
Accounts receivable, net.................................... 2,833 1,328
Prepaid expenses and other.................................. 2,767 9,137
Note receivable from Lessee................................. -- 57,110
Due from Lessee............................................. 22,221 11,476
Investments in and advances to affiliates................... 42,196 40,085
Restricted cash............................................. 19,918 17,188
Intangible assets, net of accumulated amortization of $5,575
and $2,847................................................ 9,822 10,930
---------- ----------
$3,006,500 $3,086,096
========== ==========

LIABILITIES, MINORITY INTERESTS AND PARTNERS' CAPITAL

Accounts payable, accrued expenses and other liabilities.... $ 72,197 $ 55,866
Accrued interest............................................ 28,365 31,380
Income taxes payable........................................ 921 730
Distributions payable....................................... 24,581 26,263
Deferred income taxes....................................... 8,113 7,477
Notes payable to MeriStar................................... 356,729 374,541
Mortgages and notes payable................................. 1,281,590 1,302,230
---------- ----------
Total liabilities................................. 1,772,496 1,798,487
---------- ----------
Minority interests.......................................... 2,687 2,690
Redeemable OP units at redemption value..................... 88,545 81,401
Partners' capital -- Common OP units, 44,403,034 and
47,256,468 issued and outstanding......................... 1,142,772 1,203,518
---------- ----------
$3,006,500 $3,086,096
========== ==========
</Table>

See accompanying notes to consolidated financial statements.

F-35
182

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
(IN THOUSANDS)

<Table>
<Caption>
2000 1999 1998
-------- -------- --------

Revenue:
Participating lease revenue.............................. $391,729 $368,012 $135,994
Hotel operations:
Rooms................................................. -- -- 275,610
Food and beverage..................................... -- -- 85,374
Other operating departments........................... -- -- 19,496
Office rental, parking and other revenue................. 8,956 6,808 5,557
-------- -------- --------
Total revenue.................................... 400,685 374,820 522,031
-------- -------- --------
Hotel operating expenses by department:
Rooms................................................. -- -- 65,048
Food and beverage..................................... -- -- 67,493
Other operating departments........................... -- -- 9,975
Office rental, parking and other operating expenses...... 2,731 1,964 2,713
Undistributed operating expenses:
Administrative and general............................ 9,445 5,735 52,213
Property operating costs.............................. -- -- 58,611
Property taxes, insurance and other................... 47,481 47,027 29,240
Lease expense......................................... -- -- 34,641
Depreciation and amortization......................... 110,688 101,795 58,842
Spin-off costs........................................ -- -- 7,345
-------- -------- --------
Total operating expenses......................... 170,345 156,521 386,121
-------- -------- --------
Net operating income....................................... 230,340 218,299 135,910
Interest expense, net...................................... 117,524 100,387 50,492
-------- -------- --------
Income before minority interests, income taxes, gain on
sale of assets, and extraordinary gain (loss)............ 112,816 117,912 85,418
Minority interests......................................... (3) 24 (2,185)
-------- -------- --------
Income before income taxes, gain on sale of assets, and
extraordinary gain (loss)................................ 112,819 117,888 87,603
Income taxes............................................... 1,622 1,681 1,299
-------- -------- --------
Income before gain on sale of assets and extraordinary gain
(loss)................................................... 111,197 116,207 86,304
Gain on sale of assets, net of tax effect of $56........... 3,439 -- --
Extraordinary gain (loss) on early extinguishment of debt,
net of tax effect of $50 in 2000, ($74) in 1999, and
($207) in 1998........................................... 3,400 (4,551) (1,238)
-------- -------- --------
Net income................................................. 118,036 111,656 85,066
Preferred distributions.................................... (565) (565) (650)
-------- -------- --------
Net income available to common unitholders................. $117,471 $111,091 $ 84,416
======== ======== ========
Net income applicable to general partner common
unitholder............................................... 107,638 101,345 77,225
======== ======== ========
Net income applicable to third party limited partner common
unitholders.............................................. 9,833 9,746 7,191
======== ======== ========
Earnings per unit:
Basic:
Income before extraordinary gain...................... $ 2.25 $ 2.22 $ 2.38
Extraordinary gain (loss)............................. 0.07 (0.09) (0.03)
-------- -------- --------
Net income............................................ $ 2.32 $ 2.13 $ 2.35
======== ======== ========
Diluted:
Income before extraordinary gain...................... $ 2.18 $ 2.15 $ 2.25
Extraordinary gain (loss)............................. 0.06 (0.08) (0.03)
-------- -------- --------
Net income............................................ $ 2.24 $ 2.07 $ 2.22
======== ======== ========
</Table>

See accompanying notes to consolidated financial statements.

F-36
183

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
(IN THOUSANDS)

<Table>

Balance, January 1, 1998.................................... $ 396,838
Contributions............................................... 777,862
Allocation from redeemable OP units......................... 12,234
Distributions............................................... (97,170)
Net income available to common unitholders................ 84,416
Foreign currency translation adjustment................... (3,960)
----------
Comprehensive income........................................ 80,456
----------
Balance, December 31, 1998.................................. 1,170,220
Contributions............................................... 33,459
Distributions............................................... (117,885)
Allocation from redeemable OP units......................... 11,645
Repurchase of OP units...................................... (6,252)
Net income available to common unitholders................ 111,091
Foreign currency translation adjustment................... 1,240
----------
Comprehensive income........................................ 112,331
----------
Balance, December 31, 1999.................................. 1,203,518
Contributions............................................... 9,872
Distributions............................................... (101,730)
Allocation from redeemable OP units......................... (14,957)
Repurchase of OP units...................................... (73,638)
Contribution from general partner related to amortization of
stock-based compensation.................................. 3,070
Net income available to common unitholders................ 117,471
Foreign currency translation adjustment................... (834)
----------
Comprehensive income........................................ 116,637
----------
Balance, December 31, 2000.................................. $1,142,772
==========
</Table>

See accompanying notes to the consolidated financial statements.

F-37
184

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
(IN THOUSANDS)

<Table>
<Caption>
2000 1999 1998
--------- --------- ----------

Operating activities:
Net income.............................................. $ 118,036 $ 111,656 $ 85,066
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization........................ 110,688 101,795 58,842
Gain on assets sold, before tax effect............... (3,495) --
Extraordinary (gain)loss on early extinguishment of
debt, before tax effect............................ (3,450) 4,625 1,445
Minority interests................................... (3) 24 (2,185)
Non-cash spin-off costs.............................. -- -- 3,205
Amortization of stock based compensation............. 3,070 -- --
Deferred income taxes................................ 636 715 (270)
Changes in operating assets and liabilities:
Accounts receivable, net........................... (1,505) 1,716 29,673
Prepaid expenses and other......................... 6,370 (5,262) 24,760
Due from Lessee.................................... (10,745) (4,039) (7,437)
Accounts payable, accrued expenses, accrued
interest and other liabilities.................. 4,295 16,098 (5,485)
Income taxes payable............................... 191 1,001 (723)
--------- --------- ----------
Net cash provided by operating activities....... 224,088 228,329 186,891
--------- --------- ----------
Investing activities:
Investment in hotel properties, net..................... (90,703) (170,063) (701,710)
Proceeds from disposition of assets..................... 24,148 8,900 --
Purchases of intangible assets.......................... -- -- (5,584)
Investments in and advances to affiliates, net.......... (2,111) (31,298) (2,320)
Purchases of minority interests......................... -- (72) (44)
Repayments of notes receivable.......................... 57,110 9,890 (67,000)
Change in restricted cash............................... (2,730) (5,309) (8,847)
--------- --------- ----------
Net cash used in investing activities........... (14,286) (187,952) (785,505)
--------- --------- ----------
Financing activities:
Deferred financing costs................................ (1,615) (6,005) --
Proceeds from mortgages and notes payable............... 179,388 429,636 1,407,261
Principal payments on mortgages and notes payable....... (200,028) (407,432) (821,051)
Borrowings from MeriStar................................ -- 55,000 --
Repayments to MeriStar on borrowings.................... (14,362) (2,785) --
Repurchase of units..................................... (73,638) (6,252) --
Contributions from partners............................. 1,356 2,249 1,870
Distributions paid to partners.......................... (103,274) (106,359) (67,623)
--------- --------- ----------
Net cash (used in) provided by financing
activities.................................... (212,173) (41,948) 520,457
--------- --------- ----------
Effect of exchange rate changes on cash and cash
equivalents............................................. 64 (53) 204
Net decrease in cash and cash equivalents................. (2,307) (1,624) (77,953)
Cash and cash equivalents, beginning of year.... 2,549 4,173 82,126
--------- --------- ----------
Cash and cash equivalents, end of year.......... $ 242 $ 2,549 $ 4,173
========= ========= ==========
</Table>

See accompanying notes to consolidated financial statements.

F-38
185

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000, 1999 AND 1998
(DOLLARS IN THOUSANDS)

1. ORGANIZATION

MeriStar Hospitality Operating Partnership, L.P. (the "Partnership") owns a
portfolio of primarily upscale, full-service hotels, diversified by franchise
and brand affiliations, in the United States and Canada. Substantially all of
the Partnership's hotels are leased to and operated by MeriStar Hotel & Resorts,
Inc. ("OpCo"), an affiliated entity. As of December 31, 2000, the Partnership
owned 114 hotels with 29,090 rooms, 106 of which are leased and operated by
OpCo.

The Partnership was formed on August 3, 1998, as a result of the merger
("the Merger") between CapStar Hotel Company ("CapStar") and American General
Hospitality Corporation ("AGH") and the subsequent formation of MeriStar
Hospitality Corporation ("MeriStar"), the merged entity. MeriStar, a real estate
investment trust ("REIT") is the general partner and owns a one percent interest
as of December 31, 2000. The limited partners are MeriStar LP, Inc., a wholly
owned subsidiary of MeriStar, which held approximately a 90 percent interest as
of December 31, 2000 and various third parties, which owned an aggregate
interest of nine percent at December 31, 2000.

In order for MeriStar to maintain its tax status as a REIT, the Partnership
has not been permitted to engage in the operations of its hotel properties. To
comply with this requirement, the Partnership has leased all of its real
property to third-party lessee/managers -- OpCo and Prime Hospitality
Corporation.

On January 1, 2001, the REIT Modernization Act (the "RMA") became law. The
RMA permits the Partnership to create wholly-owned taxable REIT subsidiaries
(the "TRS") on or after January 1, 2001, which will be subject to taxation
similar to a subchapter C-Corporation. A TRS will be allowed to lease the real
property owned by the Partnership. Also, the RMA prohibits a TRS from engaging
in certain activities. First, a TRS may not manage the properties itself; it
will need to enter into an "arms length" management agreement with an
independent third-party manager that is actively involved in the trade or
business of hotel management and manages properties on behalf of other owners.
Second, a TRS may not lease a property that contains gambling operations. Third,
a TRS may not own a brand or franchise. The Partnership believes that
establishing these taxable REIT subsidiaries to lease its properties will
provide a more efficient alignment of and ability to capture the economic
interests of property ownership.

Until January 1, 2001, the Partnership leased 106 hotels to OpCo. Each of
the leases was a 12-year participating lease under which OpCo paid the
Partnership a fixed base rent plus participating rent based on a percentage of
hotel revenues. Because of the RMA, the Partnership has created a number of
taxable REIT subsidiaries. The Partnership and OpCo have also agreed to assign
the leases for the 106 hotels to these taxable REIT subsidiaries. The new
management agreements have been structured to mirror the current economics of
the existing leases. The transactions did not result in any cash consideration
exchanged among the parties. Under the new management agreements, the base
management fee is 2.5 percent of total hotel operating revenue with incentives
up to an additional 1.5 percent of total revenue if certain operating thresholds
are achieved. The agreements have an initial term of 10 years with three renewal
periods of five years each at OpCo's option, subject to some exceptions. Because
of these changes, the Partnership now bears the operating risk associated with
its properties.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation -- The consolidated financial statements
include the accounts of the Partnership and all of its majority owned
subsidiaries. All significant intercompany balances and transactions have been
eliminated.

Investments in unconsolidated joint ventures and affiliated companies in
which the Partnership holds a voting interest of 50% or less and exercises
significant influence are accounted for using the equity method.
F-39
186
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Partnership uses the cost method to account for its investment in entities
in which it does not have the ability to exercise significant influence.

Cash Equivalents and Restricted Cash -- The Partnership considers all
highly liquid investments with an original maturity of three months or less to
be cash equivalents. Restricted cash represents amounts required to be
maintained in escrow under certain of the Partnership's credit facilities.

Investments in Hotel Properties -- Investments in hotel properties are
recorded at cost, which includes the allocated purchase price for hotel
acquisitions, or at fair value at the time of contribution for contributed
property. Property and equipment balances are depreciated using the
straight-line method over lives ranging from five to 40 years. For the years
ended December 31, 2000, 1999 and 1998, the Partnership capitalized interest of
$8,613, $12,540, and $5,182, respectively. Properties held for sale are carried
at the lower of their carrying values or estimated fair values less costs to
sell. Depreciation of these properties is discontinued when an operating
property is classified as held for sale. Properties held for sale are not
material and, therefore, are included in investments in hotel properties.

Intangible Assets -- Intangible assets consist primarily of deferred
financing fees. These deferred fees are amortized on a straight-line basis over
the lives of the related borrowings for up to 10 years. Total accumulated
amortization at December 31, 2000 and 1999 was $5,575 and $2,847, respectively.
In 1999 and 1998, the Partnership recognized extraordinary losses of $4,551 and
$1,238 (net of tax effect of $74 and $207), respectively, due to the write-off
of unamortized deferred financing fees in conjunction with refinancing certain
credit facilities.

Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed
of -- The carrying values of long-lived assets, which include property and
equipment and all intangibles, are evaluated periodically in relation to the
operating performance and future undiscounted cash flows of the underlying
assets. Adjustments are made if the sum of expected undiscounted future net cash
flows is less than book value. No impairment losses were recorded during 2000,
1999 or 1998.

Income Taxes -- No provision for federal income taxes has been reflected in
the financial statements because all taxable income or loss, or tax credits are
passed through to the partners. The Partnership is subject to state, local and
foreign taxes in certain jurisdictions.

Foreign Currency Translation -- Results of operations for the Partnership's
Canadian hotels are maintained in Canadian dollars and translated using the
average exchange rates during the period. Assets and liabilities are translated
to U.S. dollars using the exchange rate in effect at the balance sheet date.
Resulting translation adjustments are reflected in accumulated other
comprehensive income.

Revenue Recognition -- Prior to the Merger, revenue was earned through the
operations and management of the hotel properties and was recognized when
earned. Subsequent to the Merger, the Partnership earns participating lease
revenue. Participating lease revenue represents lease payments from lessees
pursuant to participating lease agreements. Office, retail and parking rental is
generally recognized on a straight-line basis over the terms of the respective
leases.

Participating Lease Agreements -- The Partnership's participating leases
have non-cancelable remaining terms ranging from 8 to 10 years, subject to
earlier termination on the occurrence of certain contingencies, as defined. The
rent due under each percentage lease is the greater of base rent or percentage
rent, as defined. Percentage rent applicable to room and food and beverage
revenue varies by lease and is calculated by multiplying fixed percentages by
the total amounts of such revenues over specified threshold amounts. Both the
minimum rent and the revenue thresholds used in computing percentage rents are
subject to annual adjustments based on increases in the United States Consumer
Price Index. Percentage rent applicable to other revenues is calculated by
multiplying fixed percentages by

F-40
187
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

the total amounts of such revenues. During interim reporting periods, the
Partnership defers recognition of revenue for lease payments considered to be
contingent until specified percentage rent thresholds are met.

Changes to the federal tax laws governing REITs were enacted in 1999 and
became effective on January 1, 2001. Under those changes, the Partnership is
permitted to create subsidiaries that lease the property the Partnership
currently owns and are taxable, similar to a subchapter C-Corporation. The
Partnership's taxable REIT subsidiaries are wholly-owned. Accordingly, the
Partnership and OpCo assigned the participating leases to the taxable REIT
subsidiaries and the taxable REIT subsidiaries entered into management
agreements with OpCo to manage the Partnership's properties. Under these
management agreements, the taxable subsidiaries pay OpCo a management fee. The
taxable REIT subsidiaries in turn make rental payments to the Partnership under
the participating leases. The management agreements have been structured to
substantially mirror the economics of the former leases.

Financial Instruments -- From time to time the Partnership enters into swap
and collar agreements that are designated as, and are effective as, hedges
against the impact of interest rate fluctuation on certain of the Partnership's
existing and probable future long-term debt instruments. Because these
agreements qualify for hedge accounting treatment, any gains or losses are
recognized as adjustments to interest expense over the lives of the underlying
debt instruments. For hedge agreements associated with anticipated future debt
instruments, gains or losses are deferred until those debt instruments are
entered into. If the Partnership determines it is no longer probable that the
Partnership will enter into an anticipated debt instrument, any related deferred
gains or losses are recognized in the current period.

Use of Estimates -- The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

Segment Information -- SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information" requires a public entity to report selected
information about operating segments in financial reports issued to
shareholders. It also establishes standards for related disclosures about
product and services, geographic areas and major customers. Based on the
guidance provided in the standard, the Partnership has determined that its
business is conducted in one operating segment.

The following table summarizes geographic information required to be
disclosed under SFAS No. 131:

<Table>
<Caption>
2000 1999 1998
-------- -------- --------

REVENUE:
U.S. ............................................. $394,264 $367,809 $507,078
Foreign........................................... 6,521 7,011 14,953
-------- -------- --------
$400,785 $374,820 $522,031
======== ======== ========
</Table>

<Table>

INVESTMENTS IN HOTEL PROPERTIES, NET:
U.S. ............................................. $2,850,348 $2,876,909
Foreign........................................... 56,153 59,384
---------- ----------
$2,906,501 $2,936,293
========== ==========
</Table>

Comprehensive Income -- SFAS No. 130, "Reporting Comprehensive Income,"
requires an enterprise to display comprehensive income and its components in a
financial statement to be included in an enterprise's full set of annual
financial statements or in the notes to financial statements. Comprehensive
F-41
188
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

income represents a measure of all changes in equity of an enterprise that
result from recognized transactions and other economic events for the period
other than transactions with owners in their capacity as owners. Comprehensive
income of the Partnership includes net income and other comprehensive income
from foreign currency items. Accumulated other comprehensive loss included in
partners' capital was $6,081 and $5,247 as of December 31, 2000 and 1999,
respectively.

New Accounting Pronouncements -- In June 1998, the Financial Accounting
Standards Board ("FASB") issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which requires that an entity recognize all
derivatives as either assets or liabilities in balance sheets and measure those
instruments at fair value. In June 1999, the FASB issued SFAS No. 137 which
amended SFAS No. 133 to defer the effective date to all fiscal quarters of
fiscal years beginning after June 15, 2000. In June 2000, the FASB issued SFAS
No. 138 which provides additional guidance and amendments to SFAS No. 133. The
Partnership recognized a transition adjustment of $2,842 as the fair value of
its derivative instruments at January 1, 2001. The transition adjustment
resulted in an interest rate swap liability and a corresponding charge to other
comprehensive income.

3. INVESTMENTS IN HOTEL PROPERTIES

Investments in hotel properties consists of the following:

<Table>
<Caption>
DECEMBER 31,
-----------------------
2000 1999
---------- ----------

Land........................................................ $ 317,072 $ 318,360
Buildings................................................... 2,461,089 2,378,318
Furniture, fixtures and equipment........................... 338,350 320,787
Construction-in-progress.................................... 77,219 101,258
---------- ----------
Total............................................. $3,193,730 $3,118,723
========== ==========
</Table>

4. INVESTMENTS IN AND ADVANCES TO AFFILIATES

The Partnership has ownership interests in certain unconsolidated joint
ventures and affiliated companies.

In 2000, the Partnership invested $2,100 in STS Hotel Net, a Partnership
that provides high-speed internet portals to guest rooms. This investment is
accounted for using the cost method.

In 1999, the Partnership invested $40,000 in MeriStar Investment Partners,
LP ("MIP"), a joint venture established to acquire upscale, full-service hotels.
The Partnership's investment is in the form of a preferred partnership interest.
The Partnership receives a 16% preferred return on its investment.

5. NOTE RECEIVABLE FROM LESSEE

On March 1, 2000, OpCo repaid the remaining balance of $57,110 on its
revolving credit agreement with the Partnership upon closing its bank revolving
credit facility. At that time, OpCo's revolving credit agreement with the
Partnership was also amended to reduce the maximum borrowing limit from $75,000
to $50,000. Any amounts outstanding will bear interest at the rate of the 30-day
London Interbank Offered Rate plus 650 basis points.

F-42
189
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. LONG-TERM DEBT

Long-term debt consists of the following:

<Table>
<Caption>
DECEMBER 31,
-----------------------
2000 1999
---------- ----------

Credit Facility............................................. $ 898,000 $ 908,000
Secured Facility............................................ 324,554 328,954
Mortgage Debt and Other..................................... 59,036 65,276
---------- ----------
Mortgages and Notes Payable............................... 1,281,590 1,302,230
Notes Payable to MeriStar................................... 356,729 374,541
---------- ----------
$1,638,319 $1,676,771
========== ==========
</Table>

Credit Facility -- In conjunction with the Merger, the Partnership entered
into a $1,000,000 senior secured credit facility (the "Credit Facility"). The
Credit Facility is structured as a $300,000, five-year term loan facility; a
$200,000, five-and-a-half year term loan facility; and a $500,000, three-year
revolving credit facility with two one-year optional extensions. The Credit
Facility is secured by MeriStar's common stock, and the partners' ownership
interests in the Partnership and its subsidiaries. The interest rate on the term
loans and revolving facility ranges from 100 to 200 basis points over the 30-day
London Interbank Offered Rate ("LIBOR"), depending on certain financial
performance covenants and long-term senior unsecured debt ratings. The weighted
average interest rate on borrowings outstanding under the Credit Facility as of
December 31, 2000 and 1999 was 8.3% and 8.4%, respectively. As of December 31,
2000, the Partnership had $98.0 million available under the Credit Facility's
revolving facility.

Secured Facility -- In 1999, the Partnership completed a $330,000 10-year
non-recourse financing ("Secured Facility") secured by a portfolio of 19 hotels.
The loan bears a fixed interest rate of 8.01% and matures in 2009. The
Partnership used most of the net proceeds to repay the amounts outstanding under
prior credit facilities.

Mortgage Debt -- In connection with the Merger, the Partnership assumed
mortgage debt secured by seven hotels. The mortgage debt matures between 2001
and 2012 and the interest rates on the mortgages range from 7.5% to 10.5%.

Notes Payable to MeriStar -- In 1997, MeriStar completed the offering of
$150,000 aggregate principal amount (issue price of $149,799, net of discount)
of its 8.75% senior subordinated notes due 2007 (the "Subordinated Notes"). In
conjunction with this transaction, the Partnership borrowed $150,000 from
MeriStar under terms matching those of the Subordinated Notes; however, the
interest rate on the Partnership's note to MeriStar is 8.69%, the effective rate
on the Subordinated Notes. The indenture pursuant to which the Subordinated
Notes were issued contains certain covenants, including maintenance of certain
financial ratios, reporting requirements, and other customary restrictions. The
note provides for semi-annual payments of interest on February 15 and August 15,
commencing on February 15, 1998.

In 1999, under terms matching those of the Subordinated Notes, MeriStar
completed an "add-on" offering of $55,000 of Subordinated Notes. In conjunction
with the "add-on" sale of Subordinated Notes, the Partnership borrowed $55,000
from MeriStar under terms matching those of the Subordinated Notes however, the
interest rate on the Partnership's note to MeriStar is 8.69%, the effective rate
on the Subordinated Notes. The Partnership used the net proceeds to repay
indebtedness under its Credit Facility and to invest in MIP. These notes are
unsecured obligations of the Partnership and provide for semi-annual payments of
interest on February 15 and August 15, commencing on August 15, 1999. The
outstanding balance on these notes payable to MeriStar is $202,429 and $202,041
at December 31, 2000 and 1999, respectively.

F-43
190
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In 1997, MeriStar completed the offering of $172,500 aggregate principal
amount of its 4.75% convertible subordinated notes due 2004 (the "Convertible
Notes"). In conjunction with this transaction, the Partnership borrowed $172,500
from MeriStar under terms matching those of the Convertible Notes. The proceeds
were used to repay outstanding indebtedness under a prior credit facility and to
finance certain hotel acquisitions. The note provides for semi-annual payments
of interest on April 15 and October 15, commencing on April 15, 1998. During
2000, the Partnership repaid $18,200 of its note to MeriStar at a discount in
connection with MeriStar's repurchase of its Convertible Notes at an equal
discount. This resulted in an extraordinary gain of $3,450 ($3,400, net of
taxes). The outstanding balance on this note payable to MeriStar is $154,300 and
$172,500 at December 31, 2000 and 1999, respectively.

Hedge Agreements -- As of December 31, 2000, the Partnership has seven swap
agreements with notional principal amounts totaling $700,000. These swap
agreements provide hedges against the impact future interest rates have on the
Partnership's floating London Interbank Offered Rate ("LIBOR") debt instruments.
The swap agreements effectively fix the 30-day LIBOR between 6.0% and 7.2%. The
swap agreements expire between September 2001 and July 2003. For the year ended
December 31, 2000, the Partnership has received net payments of $3,081 on these
swaps and other similar swaps that expired during the year.

In anticipation of the August 1999 completion of the Secured Facility, the
Partnership entered into two separate hedge transactions during July 1999. Upon
completion of the Secured Facility, the Partnership terminated the underlying
treasury lock agreements, resulting in a net payment to the Partnership of
$5,100. The amount was deferred and is being recognized as a reduction to
interest expense over the life of the underlying debt. As a result, the
effective interest rate on the Secured Facility is 7.76%.

As of December 31, 2000, after consideration of the hedge agreements
described above, the Partnership has fixed the effective interest rate on 88% of
its long-term debt and its overall weighted average interest rate is 7.93%.

Future Maturities -- Aggregate future maturities of the above obligations
are as follows:

<Table>

2001.................................................... $ 28,288
2002.................................................... 47,897
2003.................................................... 667,589
2004.................................................... 361,168
2005.................................................... 9,265
Thereafter.............................................. 524,112
----------
$1,638,319
==========
</Table>

Management has determined that the fair value of the outstanding balance of
the Partnership's long-term debt approximates $1,589,311 at December 31, 2000.

F-44
191
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. INCOME TAXES

The Partnership's income taxes were allocated as follows:

<Table>
<Caption>
2000 1999 1998
------ ------ ------

Taxes on income before gain on sale of assets, and
extraordinary gain (loss)................................ $1,622 $1,681 $1,299
Taxes on gain on sale of assets............................ 56 -- --
Tax expense or (benefit) on extraordinary gain (loss)...... 50 (74) (207)
------ ------ ------
$1,728 $1,607 $1,092
====== ====== ======
</Table>

The Partnership's effective income tax rate is as follows:

<Table>
<Caption>
2000 1999 1998
---- ---- ----

State and local taxes....................................... 1.1% 1.1% 1.1%
Difference in effective rate on foreign subsidiaries........ 0.3 0.3 0.3
Other....................................................... -- -- 0.1
--- --- ---
1.4% 1.4% 1.5%
=== === ===
</Table>

The components of income tax expense related to income before gain on sale
of assets, and extraordinary gain (loss) are as follows:

<Table>
<Caption>
2000 1999 1998
------ ------ ------

Current:
State.................................................... $ 640 $ 815 $1,408
Foreign.................................................. 346 151 161
------ ------ ------
986 966 1,569
Deferred:
State.................................................... 548 675 (270)
Foreign.................................................. 88 40 --
------ ------ ------
636 715 (270)
------ ------ ------
$1,622 $1,681 $1,299
====== ====== ======
</Table>

The tax effects of the principal temporary differences that give rise to
the Partnership's net deferred tax liability are as follows:

<Table>
<Caption>
DECEMBER 31,
----------------
2000 1999
------ ------

Accelerated depreciation.................................... $2,089 $1,477
Fair value of hotel assets acquired......................... 5,440 5,440
Allowance for doubtful accounts............................. (24) (24)
Accrued vacation............................................ (12) (12)
Accrued expenses............................................ 386 386
Other....................................................... 234 210
------ ------
Net deferred tax liability.................................. $8,113 $7,477
====== ======
</Table>

There is no valuation allowance for deferred tax assets as of December 31,
2000 or 1999 as management believes it is more likely than not that these
deferred tax assets will be fully realized.

F-45
192
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In conjunction with the Merger and related transactions, the Partnership
established a new accounting basis for AGH's assets and liabilities based on
their fair values. In accordance with accounting principles generally accepted
in the United States of America, the Partnership has provided a deferred income
tax liability for the estimated future tax effect of differences between the
accounting and tax bases of assets acquired from AGH. This deferred income tax
liability, related to future state and local income taxes, is estimated as
$5,440, based on information available at the date of the Merger and
subsequently.

8. PARTNERSHIP UNITS

The outstanding units of limited partnership interest in the Partnership
are redeemable at the option of the holder for a like number of shares of common
stock of MeriStar, or cash, or a combination thereof, at the election of
MeriStar. Due to these redemption rights, these limited partnership units have
been excluded from partners' capital and are included in redeemable OP units and
measured at redemption value as of the end of the periods presented. At December
31, 2000 and 1999 there were 4,056,111 and 4,544,420 redeemable units
outstanding, respectively. The value of these redeemable units is based on the
closing market price of MeriStar's common stock at the balance sheet date, which
at December 31, 2000 and 1999 was $19.70 and $16.00, respectively. In addition,
there were 392,157 Class D Preferred OP Units outstanding at December 31, 2000
and 1999 with a redemption value of $22.16 per unit.

The Partnership's agreement provides for four classes of partnership
interests ("OP Units"): Common OP Units, Class B OP Units, Class C OP Units and
Class D OP Units. Common OP Units and Class B OP Units receive quarterly
distributions per OP Unit equal to the dividend paid on each share of MeriStar's
common stock. Class C OP Units receive a non-cumulative, quarterly distribution
equal to $0.5575 per Class C OP Unit until such time as the dividend rate on
MeriStar's common stock exceeds $0.5575 whereupon the Class C OP Units
automatically convert into Common OP Units. Class D OP Units pay a 6.5%
cumulative annual preferred return based on an assumed price per common share of
$22.16, compounded quarterly to the extent not paid on a current basis. The
Partnership may redeem them at any time after April 1, 2000 at a price of $22.16
per share for cash or, at MeriStar's option, for shares of MeriStar common stock
having a value equal to the redemption price. The holders have the option to
redeem the Class D OP Units at any time after April 1, 2004 for cash or, at the
holders option, for shares of MeriStar common stock having a value equal to
$22.16. All net income earned and capital proceeds received by the Partnership,
after payment of the annual preferred return on Class D OP units, are shared by
the holders of the Common OP Units. As of December 31, 2000 and 1999,
outstanding OP Units were 48,459,145 and 51,800,888 respectively.

During 1999, 65,875 Common OP Units were issued to partially finance the
purchase of a hotel and 974,588 Common OP units were issued as a conditional
component of a purchase agreement for a hotel purchased in 1998. During 1998,
962,858 Common and Class B OP Units were issued to partially finance the
purchases of certain hotels and 3,305,175 Common OP Units were issued to former
holders of AGH OP Units. During 1997, the Partnership issued 1,483,759 Common
and Class B OP Units and 392,157 Class D OP Units to partially finance the
purchases of certain hotels and lease contracts on other hotels.

On March 21, 2000, June 21, 2000, September 25, 2000, and December 20,
2000, the Partnership declared its first, second, third and fourth quarter
distributions, respectively, equivalent to an annual rate of $2.02 per Common
and Class B OP Unit and $2.23 per Class C OP Unit in the Partnership. The amount
of the distribution for each quarter was $0.505 per Common and Class B OP Unit
and $0.5575 per Class C OP Unit and was paid on April 28, 2000, July 31, 2000,
October 31, 2000 and January 31, 2001, respectively.

On March 17, 1999, June 21, 1999, September 15, 1999, and December 6, 1999,
the Partnership declared its first, second, third and fourth quarter
distributions, respectively, equivalent to an annual rate of
F-46
193
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

$2.02 per Common and Class B OP Unit and $2.23 per Class C OP Unit in the
Partnership. The amount of the distribution for each quarter was $0.505 per
Common and Class C OP Unit and $0.5575 per Class C OP Unit and was paid on April
30, 1999, July 30, 1999, October 29, 1999 and January 31, 2000, respectively.

On September 2, 1998 and November 4, 1998, respectively, the Partnership
declared its third and fourth quarter distributions, equivalent to an annual
rate of $2.02 per Common and Class B OP Unit and $2.23 per Class C OP Unit in
the Partnership. The third quarter distribution was paid on a prorated basis
from August 4, 1998 (the first day of operations following the Merger) through
September 30, 1998. The amount of the distribution was $0.31837 per Common and
Class B OP Unit and was paid on October 30, 1998. The fourth quarter
distribution of $0.505 per Common and Class B OP Unit and $0.5575 per Class C OP
Unit was paid on January 29, 1999.

When MeriStar, the general partner, repurchases its outstanding common
stock, the Partnership repurchases a matching number of units held by MeriStar
at an equal price. In September 1999, MeriStar's Board of Directors authorized
the repurchase of up to five million shares of its common stock from time to
time in open market or privately negotiated transactions. As of December 31,
2000, MeriStar has repurchased a total of 4,083,204 shares for $72,354 which has
been recorded as a reduction to partners' capital as a result of the redemption
of units held by MeriStar to fund the repurchase.

F-47
194
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9. EARNINGS PER UNIT

The following is a reconciliation of the numerators and denominators of the
basic and diluted earnings per unit ("EPU") computations for income before
extraordinary gain (loss):

<Table>
<Caption>
YEAR ENDED DECEMBER 31,
-----------------------------
2000 1999 1998
-------- -------- -------

Basic EPU Computation:
Net income before extraordinary gain (loss)......... $114,636 $116,207 $86,304
Distributions paid related to unvested restricted
stock of MeriStar................................ (1,168) -- --
Preferred distributions............................. (565) (565) (650)
-------- -------- -------
Income before extraordinary gain (loss) available to
common unitholders............................... 112,903 115,642 85,654
Weighted average number of OP Units outstanding..... 50,122 52,153 36,021
-------- -------- -------
Basic EPU before extraordinary gain (loss).......... $ 2.25 $ 2.22 $ 2.38
======== ======== =======
Diluted EPU Computation:
Income before extraordinary gain (loss) available to
common unitholders............................... $112,903 $115,642 $85,654
Preferred distributions............................. 565 565 650
Interest on convertible debt of MeriStar............ 7,338 8,137 6,377
Distributions paid related to unvested restricted
stock of MeriStar................................ 254 -- --
-------- -------- -------
Adjusted net income................................. 121,060 124,344 92,681
Weighted average number of OP units outstanding..... 50,122 52,153 36,021
OP Unit equivalents:
Stock options of MeriStar........................ 208 102 383
Class D Preferred OP Units....................... 392 392 392
Convertible debt of MeriStar..................... 4,612 5,066 4,454
Restricted stock of MeriStar..................... 126 -- --
-------- -------- -------
Weighted average number of diluted OP units
outstanding.................................... 55,460 57,713 41,250
-------- -------- -------
Diluted EPU before extraordinary gain (loss)..... $ 2.18 $ 2.15 $ 2.25
======== ======== =======
</Table>

10. RELATED-PARTY TRANSACTIONS

Pursuant to an intercompany agreement, the Partnership and OpCo provide
each other with, among other things, reciprocal rights to participate in certain
transactions entered into by each party. In particular, OpCo has a right of
first refusal to become the lessee of any real property acquired by the
Partnership. OpCo also may provide the Partnership with certain services
including administrative, renovation supervision, corporate, accounting,
finance, insurance, legal, tax, information technology, human resources,
acquisition identification and due diligence, and operational services, for
which OpCo is compensated in an amount that the Partnership would be charged by
a third party for comparable services. During the years ended December 31, 2000,
1999 and 1998, the Partnership paid OpCo $1,165, $1,600 and $781 respectively,
for such services.

F-48
195
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Summarized financial information of the Partnership's significant lessee,
OpCo, is as follows:

<Table>
<Caption>
2000 1999
---------- ----------

BALANCE SHEET DATA:
Total assets...................................... $ 339,118 $ 258,931
Total liabilities................................. $ 254,673 $ 179,168
</Table>

<Table>
<Caption>
2000 1999 1998
---------- ---------- --------

OPERATING DATA:
Revenue........................................... $1,411,619 $1,292,114 $562,347
Net income (loss)................................. $ (9,380) $ 6,685 $ 3,950
</Table>

OpCo has a revolving credit facility with the Partnership. On March 1,
2000, OpCo repaid the remaining balance of $57,110 on its revolving credit
agreement with the Partnership upon closing its bank revolving credit facility.
At this time, the revolving credit agreement was amended to reduce the maximum
borrowing limit from $75,000 to $50,000 and the interest rate on the facility
was changed from LIBOR plus 350 basis points to LIBOR plus 650 basis points.
During 2000, 1999 and 1998, the Partnership earned interest of $955, $4,907, and
$1,967, respectively, from this facility. There were no amounts outstanding
under this facility at December 31, 2000.

In order for AGH to qualify as a REIT prior to the Merger, AGH's operating
partnership sold certain personal property relating to certain of the hotels
acquired by AGH in connection with its initial public offering to AGH Leasing,
L.P. (which has since come under the control of OpCo) for $315, which amount was
paid by issuance of a promissory note to AGH's operating partnership. The note
was transferred to the Partnership in connection with the Merger. The promissory
note bears interest at the rate of 10.0% per annum and requires the payment of
quarterly installments of principal and interest over a five-year period ending
on July 31, 2000. This note was repaid during 2000.

Certain members of management and their respective affiliates owned equity
interests relating to a hotel which was acquired by the Partnership in January
1999. Such persons and affiliates received an aggregate of $1,488 of the
Partnership's OP Units in exchange for such interests in the hotel.

11. STOCK-BASED COMPENSATION

MeriStar sponsors a restricted stock plan and a stock option plan (the
"Plans") in which Partnership employees participate. Upon issuance of any stock,
MeriStar is obligated to contribute the proceeds to the Company in exchange for
an equal number of OP units.

Stock Options

At the date of the Merger, CapStar had outstanding approximately 1,758,000
options (the "CapStar Options") under an equity incentive plan. As a result of
the Merger, all holders of CapStar Options received one option in MeriStar and
one option in OpCo, and the original exercise price of the CapStar Options was
allocated between the two companies. In addition, approximately 1,060,000 of the
CapStar Options became fully vested as of the Merger date.

In connection with the Merger, a new equity incentive plan (the "Equity
Incentive Plan") was adopted. This plan authorizes 4,549,561 shares of common
stock to be awarded. Awards may be granted to officers or other key employees of
MeriStar or an affiliate. These shares are exercisable in three annual
installments and expire ten years from the grant date.

F-49
196
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Stock option activity for 2000, 1999 and 1998 is as follows:

<Table>
<Caption>
NUMBER OF AVERAGE
SHARES OPTION PRICE
--------- ------------

Balance, January 1, 1998.................................... 1,601,406 $26.28
Granted................................................... 2,171,796 24.78
Exercised................................................. (37,823) 17.45
Forfeited................................................. (32,000) 29.44
--------- ------
Balance, December 31, 1998.................................. 3,703,379 24.80
Granted................................................... 1,015,750 19.37
Exercised................................................. (94,012) 15.64
Forfeited................................................. (264,064) 27.87
--------- ------
Balance, December 31, 1999.................................. 4,361,053 23.56
Granted................................................... 584,875 16.13
Exercised................................................. (47,153) 17.26
Forfeited................................................. (113,441) 28.62
--------- ------
Balance, December 31, 2000.................................. 4,785,334 $22.68
========= ======
Shares exercisable at December 31, 1998..................... 2,231,072 $24.63
========= ======
Shares exercisable at December 31, 1999..................... 2,577,620 $24.53
========= ======
Shares exercisable at December 31, 2000..................... 3,482,816 $23.99
========= ======
</Table>

The following table summarizes information about stock options outstanding
at December 31, 2000:

<Table>
<Caption>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------ ----------------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
REMAINING AVERAGE AVERAGE
RANGE OF NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
EXERCISE PRICES OUTSTANDING LIFE PRICE EXERCISABLE PRICE
- --------------- ----------- ----------- -------- ----------- --------

$14.88 to $19.19 1,978,572 7.58 $17.17 1,051,410 $16.59
$19.75 to $25.31 1,160,502 7.04 21.62 852,206 21.68
$25.80 to $31.42 1,435,280 6.02 29.98 1,435,280 29.98
$31.51 to $32.08 210,980 7.00 32.05 143,920 32.04
--------- ---- ------ --------- ------
$14.88 to $32.08 4,785,334 6.96 $22.75 3,482,816 $23.99
========= ==== ====== ========= ======
</Table>

Other Stock Compensation

In conjunction with the Merger, holders of CapStar options were granted a
total of 150,000 shares of stock with a value of $3,205. This restricted stock
vests ratably over a three-year period.

As of December 31, 2000, MeriStar granted 586,500 shares of restricted
stock. This restricted stock vests ratably over a three-year or five-year
period. The Partnership incurred $3,070 in compensation expense in 2000 related
to the amortization of this restricted stock.

As of December 31, 2000, the Partnership has issued 462,500 Profits-Only OP
Units to certain of the Partnership's executive officers pursuant to a
Profits-Only Operating Partnership Units Plan. The units vest over three years
based on achieving certain operating performance criteria and upon the
occurrence of certain other events. The Profits-Only OP Units are subject to
variable plan accounting.
$16,932 of OP Units. The cash portions of these acquisitions were funded through
borrowings on the Credit Facility and a prior credit facility.

F-50
197
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following unaudited pro forma information is presented as if the
Merger, the Spin-Off and all 117 hotels owned at December 31, 1998 had been
acquired at the beginning of 1998. The pro forma information is provided for
informational purposes only. It is based on historical information and does not
necessarily reflect the actual results that would have occurred nor is it
necessarily indicative of future results of operations of the Company. Pro forma
information for 1998 for total revenue, net income and diluted EPU is $332,299,
$107,698 and $2.44, respectively.

F-51
198
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

14. CONSOLIDATING FINANCIAL INFORMATION

Certain of the Partnership's wholly-owned subsidiaries, together with the
Partnership, are guarantors of the Credit Facility and $500 million of senior
unsecured notes issued subsequent to December 31, 2000. The following tables
present consolidating information for the guarantor subsidiaries.

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

CONSOLIDATING BALANCE SHEET

DECEMBER 31, 2000

<Table>
<Caption>
MERISTAR
HOSPITALITY GUARANTOR NON-GUARANTOR TOTAL
OP, L.P. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
----------- ------------ ------------- ------------ ------------

ASSETS

Investments in hotel
properties, net.............. $ 7,443 $1,448,104 $1,450,954 $ -- $2,906,501
Cash and cash equivalents...... 242 -- -- -- 242
Accounts receivable, net....... 94 1,525 1,214 -- 2,833
Prepaid expenses and other..... 2,563 381 (177) -- 2,767
Notes receivable............... 87,887 -- -- (87,887) --
Due from Lessee................ (12,130) (450) 34,801 -- 22,221
Due from subsidiaries.......... (194,739) 193,304 1,435 -- --
Investments in and advances to
affiliates................... 2,661,521 59,662 8,487 (2,687,474) 42,196
Restricted cash................ 14,709 -- 5,209 -- 19,918
Intangible assets, net......... 7,531 1,432 859 -- 9,822
---------- ---------- ---------- ----------- ----------
$2,575,121 $1,703,958 $1,502,782 $(2,775,361) $3,006,500
========== ========== ========== =========== ==========

LIABILITIES, MINORITY INTERESTS AND PARTNERS' CAPITAL

Accounts payable, accrued
expenses and other
liabilities.................. $ 32,061 $ 24,189 $ 15,947 $ -- $ 72,197
Accrued interest............... 23,701 -- 4,664 -- 28,365
Income taxes payable........... 921 -- -- -- 921
Distributions payable.......... 24,581 -- -- -- 24,581
Deferred income taxes.......... 8,113 -- -- -- 8,113
Notes payable to MeriStar...... 356,729 -- -- -- 356,729
Mortgages and notes payable.... 897,698 88,189 383,590 (87,887) 1,281,590
---------- ---------- ---------- ----------- ----------
Total liabilities.... 1,343,804 112,378 404,201 (87,887) 1,772,496
Minority interests............. -- 2,687 -- -- 2,687
Redeemable OP units at
redemption value............. 88,545 -- -- -- 88,545
Partners' capital.............. 1,142,772 1,588,893 1,098,581 (2,687,474) 1,142,772
---------- ---------- ---------- ----------- ----------
$2,575,121 $1,703,958 $1,502,782 $(2,775,361) $3,006,500
========== ========== ========== =========== ==========
</Table>

F-52
199
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

CONSOLIDATING BALANCE SHEET

DECEMBER 31, 1999

<Table>
<Caption>
MERISTAR
HOSPITALITY GUARANTOR NON-GUARANTOR TOTAL
OP, L.P. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
----------- ------------ -------------- ------------ ------------

ASSETS

Investments in hotel
properties, net............. $ 2,129 $1,378,706 $1,555,458 $ -- $2,936,293
Cash and cash equivalents..... 2,549 -- -- -- 2,549
Accounts receivable, net...... -- 1,076 252 -- 1,328
Prepaid expenses and other.... 5,873 2,698 566 -- 9,137
Notes receivable.............. 144,319 -- -- (87,209) 57,110
Due from Lessee............... (20,583) (3,472) 35,531 -- 11,476
Due from subsidiaries......... (181,843) 70,174 111,669 -- --
Investments in and advances to
affiliates.................. 2,674,559 60,097 8,487 (2,703,058) 40,085
Restricted cash............... 13,100 43 4,045 -- 17,188
Intangible assets, net........ 8,088 2,071 771 -- 10,930
---------- ---------- ---------- ----------- ----------
$2,648,191 $1,511,393 $1,716,779 $(2,790,267) $3,086,096
========== ========== ========== =========== ==========

LIABILITIES, MINORITY INTERESTS AND PARTNERS' CAPITAL

Accounts payable, accrued
expenses and other
liabilities................. $ 23,607 $ 17,793 $ 14,466 $ -- $ 55,866
Accrued interest.............. 26,072 -- 5,308 -- 31,380
Income taxes payable.......... 730 -- -- -- 730
Distributions payable......... 26,263 -- -- -- 26,263
Deferred income taxes......... 7,477 -- -- -- 7,477
Note payable to MeriStar...... 374,541 -- -- -- 374,541
Mortgages and notes payable... 904,582 90,627 394,230 (87,209) 1,302,230
---------- ---------- ---------- ----------- ----------
Total liabilities... 1,363,272 108,420 414,004 (87,209) 1,798,487
Minority interests............ -- 2,690 -- -- 2,690
Redeemable OP units at
redemption value............ 81,401 -- -- -- 81,401
Partners' capital............. 1,203,518 1,400,283 1,302,775 (2,703,058) 1,203,518
---------- ---------- ---------- ----------- ----------
$2,648,191 $1,511,393 $1,716,779 $(2,790,267) $3,086,096
========== ========== ========== =========== ==========
</Table>

F-53
200
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

CONSOLIDATING STATEMENT OF OPERATIONS

DECEMBER 31, 2000

<Table>
<Caption>
MERISTAR
HOSPITALITY GUARANTOR NON-GUARANTOR TOTAL
OP, L.P. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
----------- ------------ ------------- ------------ ------------

Revenue:
Participating lease revenue....... $ 6,544 $183,959 $201,226 -- $391,729
Office rental, parking and other
revenue........................ 2,149 2,404 4,403 -- 8,956
-------- -------- -------- --------- --------
Total revenue............. 8,693 186,363 205,629 -- 400,685
Expenses:
Office rental, parking and other
operating expenses............. -- 928 1,803 -- 2,731
Undistributed operating expenses:
Administrative and general..... 8,820 475 150 -- 9,445
Property taxes, insurance and
other........................ 2,732 22,822 21,927 -- 47,481
Depreciation and
amortization................. 4,588 52,767 53,333 -- 110,688
-------- -------- -------- --------- --------
Total operating
expenses................ 16,140 76,992 77,213 -- 170,345
-------- -------- -------- --------- --------
Net operating income (loss)......... (7,447) 109,371 128,416 -- 230,340
Interest expense, net............... 86,748 4,619 26,157 -- 117,524
Equity in earnings of consolidated
entities.......................... 210,453 -- -- (210,453) --
-------- -------- -------- --------- --------
Income before minority interests,
income taxes, gain on sale of
assets, and extraordinary gain.... 116,258 104,752 102,259 (210,453) 112,816
Minority interests.................. -- (3) -- -- (3)
-------- -------- -------- --------- --------
Income before income taxes, gain on
sale of assets, and extraordinary
gain.............................. 116,258 104,755 102,259 (210,453) 112,819
Income taxes........................ 1,622 -- -- -- 1,622
-------- -------- -------- --------- --------
Income before gain on sale of
assets, and extraordinary gain.... 114,636 104,755 102,259 (210,453) 111,197
Gain on sale of assets, net......... -- -- 3,439 -- 3,439
Extraordinary gain on early
extinguishment of debt, net....... 3,400 -- -- -- 3,400
-------- -------- -------- --------- --------
Net income.......................... $118,036 $104,755 $105,698 $(210,453) $118,036
======== ======== ======== ========= ========
</Table>

F-54
201
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

CONSOLIDATING STATEMENT OF OPERATIONS

DECEMBER 31, 1999

<Table>
<Caption>
MERISTAR
HOSPITALITY GUARANTOR NON-GUARANTOR
OP, L.P. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL CONSOLIDATED
------------ ------------ -------------- ------------ ------------------

Revenue:
Participating lease revenue.... $ 7,373 $169,392 $191,247 -- $368,012
Office rental, parking and
other revenue............... 656 2,012 4,140 -- 6,808
-------- -------- -------- --------- --------
Total revenue.......... 8,029 171,404 195,387 -- 374,820
Expenses:
Office rental, parking and
other operating expenses.... 21 578 1,365 -- 1,964
Undistributed operating
expenses:
Administrative and
general................... 5,209 444 82 -- 5,735
Property taxes, insurance
and other................. 2,818 23,819 20,390 -- 47,027
Depreciation and
amortization.............. 4,196 46,442 51,157 -- 101,795
-------- -------- -------- --------- --------
Total operating
expenses............. 12,244 71,283 72,994 -- 156,521
-------- -------- -------- --------- --------
Net operating income (loss)...... (4,215) 100,121 122,393 -- 218,299
Interest expense, net............ 80,798 3,083 16,506 -- 100,387
Equity in earnings of
consolidated entities.......... 200,350 -- -- (200,350) --
-------- -------- -------- --------- --------
Income before minority interests,
income taxes, and extraordinary
loss........................... 115,337 97,038 105,887 (200,350) 117,912
Minority interests............... -- 24 -- -- 24
-------- -------- -------- --------- --------
Income before income taxes and
extraordinary loss............. 115,337 97,014 105,887 (200,350) 117,888
Income taxes..................... 1,681 -- -- -- 1,681
-------- -------- -------- --------- --------
Income before extraordinary
loss........................... 113,656 97,014 105,887 (200,350) 116,207
Extraordinary loss on early
extinguishment of debt, net.... (2,000) (703) (1,848) -- (4,551)
-------- -------- -------- --------- --------
Net income....................... $111,656 $ 96,311 $104,039 $(200,350) $111,656
======== ======== ======== ========= ========
</Table>

F-55
202
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

CONSOLIDATING STATEMENT OF OPERATIONS

DECEMBER 31, 1998

<Table>
<Caption>
MERISTAR
HOSPITALITY GUARANTOR NON-GUARANTOR TOTAL
OP, L.P. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------ -------------- ------------ ------------

Revenue:
Participating lease
revenue................... $ 411 $ 51,007 $ 84,576 -- $135,994
Hotel operations:
Rooms..................... -- 131,729 143,881 -- 275,610
Food and beverage......... -- 53,437 31,937 -- 85,374
Other operating
departments............ -- 11,298 8,198 -- 19,496
Office rental, parking and
other revenue............. 356 3,014 2,187 -- 5,557
-------- -------- -------- --------- --------
Total revenue.......... 767 250,485 270,779 -- 522,031
Hotel operating expenses by
department:
Rooms..................... -- 32,378 32,670 -- 65,048
Food and beverage......... -- 42,941 24,552 -- 67,493
Other operating
departments............ -- 5,831 4,144 -- 9,975
Office rental, parking and
other operating
expenses.................. 1 1,586 1,126 -- 2,713
Undistributed operating
expenses:
Administrative and
general................ 1,504 27,343 23,366 -- 52,213
Property operating
costs.................. -- 29,920 28,691 -- 58,611
Property taxes, insurance
and other.............. 2,815 14,161 12,264 -- 29,240
Lease expense............. -- 1,449 33,192 -- 34,641
Depreciation and
amortization........... 338 28,095 30,409 -- 58,842
Spin-off costs............ 7,345 -- -- -- 7,345
-------- -------- -------- --------- --------
Total operating
expenses............. 12,003 183,704 190,414 -- 386,121
Net operating income (loss)...... (11,236) 66,781 80,365 -- 135,910
Interest expense, net............ 28,350 12,283 9,859 -- 50,492
Equity in earnings of
consolidated entities.......... 126,635 -- -- (126,635) --
Income before minority interests,
income taxes, and extraordinary
loss........................... 87,049 54,498 70,506 (126,635) 85,418
Minority interests............... -- (2,185) -- -- (2,185)
-------- -------- -------- --------- --------
Income before income taxes and
extraordinary loss............. 87,049 56,683 70,506 (126,635) 87,603
Income taxes..................... 1,299 -- -- -- 1,299
-------- -------- -------- --------- --------
Income before and extraordinary
loss........................... 85,750 56,683 70,506 (126,635) 86,304
Extraordinary loss on early
extinguishment of debt, net of
tax effect..................... (684) (390) (164) -- (1,238)
-------- -------- -------- --------- --------
Net income....................... $ 85,066 $ 56,293 $ 70,342 $(126,635) $ 85,066
======== ======== ======== ========= ========
</Table>

F-56
203
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

CONSOLIDATING STATEMENT OF CASH FLOWS

DECEMBER 31, 2000

<Table>
<Caption>
MERISTAR
HOSPITALITY GUARANTOR NON-GUARANTOR TOTAL
OP, L.P. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------ -------------- ------------ ------------

Cash flows provided by (used in)
operating activities.......... $ (74,731) $ 31,632 $ 267,187 $ -- $ 224,088
Cash flows provided by (used in)
investing activities.......... 360,238 (118,154) 53,522 (309,892) (14,286)
Cash flows provided by (used in)
financing activities.......... 287,814 86,458 (320,709) 309,892 (212,173)
Effect of exchange rate changes
on cash and cash
equivalents................... -- 64 -- -- 64
--------- --------- --------- --------- ---------
Net decrease in cash and cash
equivalents................... (2,307) -- -- -- (2,307)
Cash and cash equivalents,
beginning of year............. 2,549 -- -- -- 2,549
--------- --------- --------- --------- ---------
Cash and cash equivalents, end
of year....................... $ 242 $ -- $ -- $ -- $ 242
========= ========= ========= ========= =========
</Table>

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

CONSOLIDATING STATEMENT OF CASH FLOWS

DECEMBER 31, 1999

<Table>
<Caption>
MERISTAR
HOSPITALITY GUARANTOR NON-GUARANTOR TOTAL
OP, L.P. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
----------- ------------ -------------- ------------ ------------

Cash flows provided by (used in)
operating activities............ $184,109 $126,905 $ 285,533 $ -- $ 228,329
Cash flows provided by (used in)
investing activities............ 277,432 (85,854) 137,685 (517,215) (187,952)
Cash flows provided by used in
financing activities............ (93,411) (42,534) (423,218) 517,215 (41,948)
Effect of exchange rate changes on
cash and cash equivalents....... -- (53) -- -- (53)
-------- -------- --------- --------- ---------
Net decrease in cash and cash
equivalents..................... (88) (1,536) -- -- (1,624)
Cash and cash equivalents,
beginning of year............... 2,637 1,536 -- -- 4,173
-------- -------- --------- --------- ---------
Cash and cash equivalents, end of
year............................ $ 2,549 $ -- $ -- $ -- $ 2,549
======== ======== ========= ========= =========
</Table>

F-57
204
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

CONSOLIDATING STATEMENT OF CASH FLOWS

DECEMBER 31, 1998

<Table>
<Caption>
MERISTAR
HOSPITALITY GUARANTOR NON-GUARANTOR TOTAL
OP, L.P. SUBSIDIARIES SUBSIDIARIES CONSOLIDATED
--------------- ------------ -------------- ------------

Cash flows provided by (used in) operating
activities.............................. $(232,033) $ 435,117 $ (16,193) $ 186,891
Cash flows used in investing activities... (134,404) (520,784) (130,317) (785,505)
Cash flows provided by financing
activities.............................. 291,881 84,575 144,001 520,457
Effect of exchange rate changes on cash
and cash equivalents.................... -- 204 -- 204
--------- --------- --------- ---------
Net decrease in cash and cash
equivalents............................. (74,556) (888) (2,509) (77,953)
Cash and cash equivalents, beginning of
year.................................... 77,193 2,424 2,509 82,126
--------- --------- --------- ---------
Cash and cash equivalents, end of year.... $ 2,637 $ 1,536 $ -- $ 4,173
========= ========= ========= =========
</Table>

15. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The following is a summary of the Partnership's quarterly results of
operations:

<Table>
<Caption>
2000 1999
--------------------------------------- ---------------------------------------
FIRST SECOND THIRD FOURTH FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER
------- ------- -------- -------- ------- ------- -------- --------

Total revenue........... $67,080 $81,515 $117,607 $134,483 $64,072 $74,034 $103,193 $133,521
Total operating
expenses.............. 41,339 43,331 42,206 43,469 39,210 38,355 37,388 41,568
Net operating income.... 25,741 38,184 75,401 91,014 24,682 35,679 65,805 91,953
Income before
extraordinary (loss)
gain.................. (2,986) 11,851 45,633 60,138 755 9,150 41,145 65,157
Net income.............. 414 11,851 45,633 60,138 755 9,150 36,594 65,157
Diluted earnings per
unit.................. $ (0.06) $ 0.23 $ 0.85 $ 1.15 $ 0.01 $ 0.17 $ 0.75 $ 1.17
</Table>

16. SUPPLEMENTAL CASH FLOW INFORMATION

<Table>
<Caption>
2000 1999 1998
-------- ------- ----------

Cash paid for interest:
Interest, net of capitalized interest of $8,613,
$12,540 and $5,182, respectively................ $120,539 $93,491 $ 48,156
Income taxes....................................... 699 1,009 2,388
Non-cash investing and financing activities:
Long-term debt assumed in purchase of property and
equipment....................................... -- -- 543
OP Units issued in purchase of property and
equipment....................................... -- 1,488 16,932
Redemption of redeemable OP Units.................. 24 29,412 31,430
Deferred purchase price............................ 8,000 -- --
Book value of assets distributed to spun-off
affiliate....................................... -- -- 41,449
Book value of liabilities distributed to spun-off
affiliate....................................... -- -- (11,768)
Book value of debt distributed to spun-off
affiliate....................................... -- -- (1,116)
Fair value of assets acquired in Merger............ -- -- 1,306,018
Fair value of liabilities assumed in Merger........ -- -- (26,167)
Fair value of debt assumed in Merger............... -- -- (523,944)
</Table>

F-58
205
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

17. SUBSEQUENT EVENTS

On January 26, 2001, the Partnership sold $300,000 of 9.0% senior notes due
2008 and $200,000 of 9.13% senior notes due 2011 (collectively the "Senior
Unsecured Notes"). The notes are unsecured obligations of the Partnership.
MeriStar, together with a number of the Partnership's subsidiaries, guarantee
payment of principal and interest on the notes on a senior unsecured basis. The
net proceeds from the sale of $492,000 were used to repay amounts outstanding
under the Credit Facility and to make $16,932 of OP Units. The cash portions of
these acquisitions were funded through borrowings on the Credit Facility and a
prior credit facility.

In the first quarter 2001, the Partnership wrote-off its $2,112 investment
in STS Hotel Net after determining that the carrying value of the investment was
not recoverable.

On May 2, 2001, the Partnership paid $1,504 to acquire four hotel leases
from affiliates of Prime Hospitality Corporation. Concurrently, the Partnership
signed long-term management contracts with OpCo for these properties.

On May 9, 2001, the Partnership and MeriStar entered into an Agreement and
Plan of Merger with FelCor Lodging Trust Incorporated ("FelCor")and its
operating partnership. Under the merger agreement, a wholly-owned subsidiary of
FelCor's operating partnership will merge with and into the Partnership, and
MeriStar will merge with and into FelCor. Holders of MeriStar common stock will
receive 0.784 of a share of FelCor common stock and $4.60 in cash for each share
of MeriStar's common stock. Holders of OP Units will receive $4.60 in cash and
0.784 FelCor operating partnership units. Class D Preferred OP Units will get
Series D preferred units in FelCor operating partnership on a one for one basis.
The merger agreement requires the approval of holders of a majority of
MeriStar's outstanding shares of common stock and holders of a majority of the
outstanding shares of common stock of FelCor. MeriStar currently expects the
merger to close during the third quarter of 2001.

F-59
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MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

SCHEDULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2000
(DOLLARS IN THOUSANDS)
<Table>
<Caption>
COSTS SUBSEQUENT
INITIAL COST TO COMPANY TO ACQUISITION
----------------------- ----------------
BUILDING BUILDING
AND AND
ENCUM- IMPROVE- IMPROVE-
DESCRIPTION BRANCES LAND MENTS LAND MENTS
- ----------- ------- --------- ----------- ----- --------

HOTEL ASSETS:
Salt Lake Airport Hilton, UT.............. -- $ 770 $ 12,828 $ -- $ 2,827
Radisson Hotel, Schaumburg, IL............ -- 1,080 5,131 -- 2,282
Sheraton Hotel, Colorado Springs, CO...... (1) 1,071 14,592 1 3,728
Hilton Hotel, Bellevue, WA................ 48 5,211 6,766 -- 3,186
Marriott Hotel, Somerset, NJ.............. (1) 1,978 23,001 -- 4,390
Westin Atlanta Airport, Atlanta, GA....... -- 2,650 15,926 (300) 9,403
Sheraton Hotel, Charlotte, NC............. (1) 4,700 11,057 -- 3,906
Radisson Hotel Southwest, Cleveland, OH... -- 1,330 6,353 -- 4,547
Orange County Airport Hilton, Irvine,
CA...................................... (1) 9,990 7,993 -- 3,133
The Latham Hotel, Washington, DC.......... -- 6,500 5,320 -- 3,889
Hilton Hotel, Arlington, TX............... (1) 1,836 14,689 79 2,828
Hilton Hotel, Arlington, VA............... -- 4,000 15,069 -- 496
Southwest Hilton, Houston, TX............. -- 2,300 15,665 -- 1,244
Embassy Suites, Englewood, CO............. (1) 2,500 20,700 -- 2,782
Holiday Inn, Colorado Springs, CO......... -- 1,600 4,232 -- 1,057
Embassy Row Hilton, Washington, DC........ -- 2,200 13,247 -- 2,240
Hilton Hotel & Towers, Lafayette, LA...... (1) 1,700 16,062 -- 1,808
Hilton Hotel, Sacramento, CA.............. (1) 4,000 16,013 -- 1,678
Santa Barbara Inn, Santa Barbara, CA...... -- 2,600 5,141 -- 1,110
San Pedro Hilton, San Pedro, CA........... -- 640 6,047 -- 2,300
Doubletree Hotel, Albuquerque, NM......... (1) 2,700 15,075 -- 823
Westchase Hilton & Towers, Houston, TX.... (1) 3,000 23,991 -- 1,531
Four Points Hotel, Cherry Hill, NJ........ -- 1,700 4,178 -- 2,181
Sheraton Great Valley Inn, Frazer, PA..... -- 2,150 11,653 11 2,712
Holiday Inn Calgary Airport, Calgary,
Alberta, Canada......................... -- 751 5,011 (36) 1,428
Sheraton Hotel Dallas, Dallas, TX......... -- 1,300 17,268 -- 2,358
Radisson Hotel Dallas, Dallas, TX......... -- 1,800 17,580 -- 1,466
Sheraton Hotel Guildford, Surrey, BC,
Canada.................................. -- 2,366 24,008 (112) (258)
Doubletree Guest Suites, Indianapolis,
IN...................................... 1,000 8,242 -- 893
Ramada Vancouver Centre, Vancouver, BC,
Canada.................................. -- 4,400 7,840 (208) 2,160
Holiday Inn Sports Complex, Kansas City,
MO...................................... -- 420 4,742 -- 1,551
Hilton Crystal City, Arlington, VA........ -- 5,800 29,879 -- 1,036
Doubletree Resort Hotel, Cathedral City,
CA...................................... -- 1,604 16,141 -- 2,837
Radisson Hotel & Suites, Chicago, IL...... 4,870 39,175 -- 1,793
Georgetown Inn, Washington, DC............ -- 6,100 7,103 -- 1,486
Embassy Suites Center City, Philadelphia,
PA...................................... (1) 5,500 26,763 -- 1,457
Doubletree Hotel Austin, Austin, TX....... (1) 2,975 25,678 -- 2,501
Radisson Plaza Hotel, Lexington, KY....... 240 1,100 30,375 -- 6,254
Jekyll Inn, Jekyll Island, GA............. -- -- 7,803 -- 3,218
Holiday Inn Metrotown, Burnaby, BC,
Canada.................................. -- 1,115 5,303 (53) 1,292
Embassy Suites International Airport,
Tucson, AZ.............................. -- 1,640 10,444 -- 2,214
Westin Morristown, NJ..................... -- 2,500 19,128 100 3,501
Doubletree Hotel Bradley International
Airport, Windsor Locks, CT.............. -- 1,013 10,228 87 1,422
Sheraton Hotel, Mesa, AZ.................. -- 1,850 16,938 -- 2,315
Metro Airport Hilton & Suites, Detroit,
MI...................................... -- 1,750 12,639 -- 1,311
Marriott Hotel, Los Angeles, CA........... -- 5,900 48,250 -- 7,208

GROSS AMOUNT AT END OF YEAR
---------------------------------
BUILDING ACCUM-
AND ULATED YEAR OF
IMPROVE- DEPRECIA- CONSTRUC- DATE
DESCRIPTION LAND MENTS TION TION ACQUIRED LIFE
- ----------- -------- ---------- --------- --------- -------- ----

HOTEL ASSETS:
Salt Lake Airport Hilton, UT.............. $ 770 $ 15,655 $ 2,184 1980 3/3/95 40
Radisson Hotel, Schaumburg, IL............ 1,080 7,413 908 1979 6/30/95 40
Sheraton Hotel, Colorado Springs, CO...... 1,072 18,320 2,387 1974 6/30/95 40
Hilton Hotel, Bellevue, WA................ 5,211 9,952 1,108 1979 8/4/95 40
Marriott Hotel, Somerset, NJ.............. 1,978 27,391 3,357 1978 10/3/95 40
Westin Atlanta Airport, Atlanta, GA....... 2,350 25,329 3,084 1982 11/15/95 40
Sheraton Hotel, Charlotte, NC............. 4,700 14,963 1,739 1985 2/2/96 40
Radisson Hotel Southwest, Cleveland, OH... 1,330 10,900 1,190 1978 2/16/96 40
Orange County Airport Hilton, Irvine,
CA...................................... 9,990 11,126 1,255 1976 2/22/96 40
The Latham Hotel, Washington, DC.......... 6,500 9,209 915 1981 3/8/96 40
Hilton Hotel, Arlington, TX............... 1,915 17,517 2,018 1983 4/17/96 40
Hilton Hotel, Arlington, VA............... 4,000 15,565 1,716 1990 8/23/96 40
Southwest Hilton, Houston, TX............. 2,300 16,909 1,728 1979 10/31/96 40
Embassy Suites, Englewood, CO............. 2,500 23,482 2,380 1986 12/12/96 40
Holiday Inn, Colorado Springs, CO......... 1,600 5,289 482 1974 12/17/96 40
Embassy Row Hilton, Washington, DC........ 2,200 15,487 1,482 1969 12/17/96 40
Hilton Hotel & Towers, Lafayette, LA...... 1,700 17,870 1,712 1981 12/17/96 40
Hilton Hotel, Sacramento, CA.............. 4,000 17,691 1,768 1983 12/17/96 40
Santa Barbara Inn, Santa Barbara, CA...... 2,600 6,251 602 1959 12/17/96 40
San Pedro Hilton, San Pedro, CA........... 640 8,347 753 1989 1/28/97 40
Doubletree Hotel, Albuquerque, NM......... 2,700 15,898 1,565 1975 1/31/97 40
Westchase Hilton & Towers, Houston, TX.... 3,000 25,522 2,485 1980 1/31/97 40
Four Points Hotel, Cherry Hill, NJ........ 1,700 6,359 553 1991 3/20/97 40
Sheraton Great Valley Inn, Frazer, PA..... 2,161 14,365 1,190 1971 3/27/97 40
Holiday Inn Calgary Airport, Calgary,
Alberta, Canada......................... 715 6,439 1,261 1981 4/1/97 40
Sheraton Hotel Dallas, Dallas, TX......... 1,300 19,626 1,771 1974 4/1/97 40
Radisson Hotel Dallas, Dallas, TX......... 1,800 19,046 1,746 1972 4/1/97 40
Sheraton Hotel Guildford, Surrey, BC,
Canada.................................. 2,254 23,750 3,558 1992 4/1/97 40
Doubletree Guest Suites, Indianapolis,
IN...................................... 1,000 9,135 824 1987 4/1/97 40
Ramada Vancouver Centre, Vancouver, BC,
Canada.................................. 4,192 10,000 1,605 1968 4/1/97 40
Holiday Inn Sports Complex, Kansas City,
MO...................................... 420 6,293 538 1975 4/30/97 40
Hilton Crystal City, Arlington, VA........ 5,800 30,915 2,681 1974 7/1/97 40
Doubletree Resort Hotel, Cathedral City,
CA...................................... 1,604 18,978 1,557 1985 7/1/97 40
Radisson Hotel & Suites, Chicago, IL...... 4,870 40,968 3,544 1971 7/15/97 40
Georgetown Inn, Washington, DC............ 6,100 8,589 655 1962 7/15/97 40
Embassy Suites Center City, Philadelphia,
PA...................................... 5,500 28,220 2,382 1963 8/12/97 40
Doubletree Hotel Austin, Austin, TX....... 2,975 28,179 2,295 1984 8/14/97 40
Radisson Plaza Hotel, Lexington, KY....... 1,100 36,629 2,876 1982 8/14/97 40
Jekyll Inn, Jekyll Island, GA............. -- 11,021 848 1971 8/20/97 40
Holiday Inn Metrotown, Burnaby, BC,
Canada.................................. 1,062 6,595 890 1989 8/22/97 40
Embassy Suites International Airport,
Tucson, AZ.............................. 1,640 12,658 901 1982 10/23/97 40
Westin Morristown, NJ..................... 2,600 22,629 1,626 1962 11/20/97 40
Doubletree Hotel Bradley International
Airport, Windsor Locks, CT.............. 1,100 11,650 838 1985 11/24/97 40
Sheraton Hotel, Mesa, AZ.................. 1,850 19,253 1,382 1985 12/5/97 40
Metro Airport Hilton & Suites, Detroit,
MI...................................... 1,750 13,950 995 1989 12/16/97 40
Marriott Hotel, Los Angeles, CA........... 5,900 55,458 3,956 1983 12/18/97 40
</Table>

F-60
207
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

SCHEDULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION -- (CONTINUED)
<Table>
<Caption>
COSTS SUBSEQUENT
INITIAL COST TO COMPANY TO ACQUISITION
----------------------- ----------------
BUILDING BUILDING
AND AND
ENCUM- IMPROVE- IMPROVE-
DESCRIPTION BRANCES LAND MENTS LAND MENTS
- ----------- ------- --------- ----------- ----- --------

Austin Hilton & Towers, TX................ -- 2,700 15,852 -- 2,674
Dallas Renaissance North, TX.............. -- 3,400 20,813 -- 3,550
Houston Sheraton Brookhollow Hotel, TX.... -- 2,500 17,609 -- 2,148
Seelbach Hilton, Louisville, KY........... -- 1,400 38,462 -- 5,550
Midland Hilton & Towers, TX............... -- 150 8,487 -- 1,715
Westin Oklahoma, OK....................... -- 3,500 27,588 -- 1,683
Sheraton Hotel, Columbia, MD.............. -- 3,600 21,393 -- 3,744
Radisson Cross Keys, Baltimore, MD........ -- 1,500 5,615 -- 1,492
Sheraton Fisherman's Wharf, San Francisco,
CA...................................... (1) 19,708 61,751 -- 2,985
Hartford Hilton, CT....................... -- 4,073 24,458 -- 2,824
Holiday Inn Dallas DFW Airport South,
TX...................................... 12,634 3,388 28,847 -- 8
Courtyard by Marriott Meadowlands, NJ..... 3,979 -- 9,649 -- 45
Hotel Maison de Ville, New Orleans, LA.... -- 292 3,015 -- (2)
Hilton Hotel Toledo, OH................... -- -- 11,708 -- 38
Holiday Inn Select Dallas DFW Airport
West, TX................................ -- 947 8,346 -- 213
Holiday Inn Select New Orleans
International Airport, LA............... (1) 3,040 25,616 -- 2,150
Crowne Plaza Madison, WI.................. (1) 2,629 21,634 -- 210
Wyndham Albuquerque Airport Hotel, NM..... -- -- 18,889 -- 112
Wyndham San Jose Airport Hotel, CA........ -- -- 35,743 -- 997
Holiday Inn Select Mission Valley, CA..... 2,410 20,998 -- 176
Sheraton Safari Hotel, Lake Buena Vista,
FL...................................... -- 4,103 35,263 -- 9,062
Hilton Monterey, CA....................... -- 2,141 17,666 -- 4,964
Hilton Hotel Durham, NC................... -- 1,586 15,577 -- 2,390
Wyndham Garden Hotel Marietta, GA......... -- 1,900 17,077 -- 611
Westin Resort Key Largo, FL............... -- 3,167 29,190 -- 340
Doubletree Guest Suites Atlanta, GA....... 8,678 2,236 18,514 -- 3,798
Radisson Hotel Arlington Heights, IL...... -- 1,540 12,645 -- 6,848
Holiday Inn Select Bucks County, PA....... -- 2,610 21,744 -- 2,773
Hilton Hotel Cocoa Beach, FL.............. -- 2,783 23,076 -- 1,784
Radisson Twin Towers Orlando, FL.......... -- 9,555 73,486 -- 8,209
Crowne Plaza Phoenix, AZ.................. -- 1,852 15,957 -- 3,448
Hilton Airport Hotel Grand Rapids, MI..... (1) 2,049 16,657 -- 539
Marriott West Loop Houston, TX............ (1) 2,943 23,934 -- 2,623
Courtyard by Marriott Durham, NC.......... -- 1,406 11,001 -- 47
Courtyard by Marriott, Marina Del Rey,
CA...................................... (1) 3,450 24,534 -- 359
Courtyard by Marriott, Century City, CA... -- 2,165 16,465 -- 20
Courtyard by Marriott, Lake Buena Vista,
FL...................................... -- -- 41,267 -- 2,438
Crowne Plaza, San Jose, CA................ (1) 2,130 23,404 (24) 1,501
Doubletree Hotel Westshore, Tampa, FL..... -- 2,904 23,476 -- 7,312
Howard Johnson Resort Key Largo, FL....... -- 1,784 12,419 -- 507
Radisson Annapolis, MD.................... -- 1,711 13,671 -- 1,945
Holiday Inn Fort Lauderdale, FL........... -- 2,381 19,419 -- 2,126
Holiday Inn Madeira Beach, FL............. -- 1,781 13,349 -- 26
Holiday Inn Chicago O'Hare, IL............ 19,080 4,290 72,631 -- 12,812
Holiday Inn & Suites Alexandria, VA....... -- 1,769 14,064 -- 52
Hilton Clearwater, FL..................... -- -- 69,285 -- 3,608
Radisson Rochester, NY.................... -- -- 6,499 -- 2,520
Radisson Old Towne Alexandria, VA......... -- 2,241 17,796 -- 3,690

Austin Hilton & Towers, TX................ 2,700 18,526 1,291 1974 1/6/98 40
Dallas Renaissance North, TX.............. 3,400 24,363 1,708 1979 1/6/98 40
Houston Sheraton Brookhollow Hotel, TX.... 2,500 19,757 1,467 1980 1/6/98 40
Seelbach Hilton, Louisville, KY........... 1,400 44,012 3,017 1905 1/6/98 40
Midland Hilton & Towers, TX............... 150 10,202 708 1976 1/6/98 40
Westin Oklahoma, OK....................... 3,500 29,271 2,159 1977 1/6/98 40
Sheraton Hotel, Columbia, MD.............. 3,600 25,137 1,513 1972 3/27/98 40
Radisson Cross Keys, Baltimore, MD........ 1,500 7,107 417 1973 3/27/98 40
Sheraton Fisherman's Wharf, San Francisco,
CA...................................... 19,708 64,736 4,356 1975 4/2/98 40
Hartford Hilton, CT....................... 4,073 27,282 1,642 1975 5/21/98 40
Holiday Inn Dallas DFW Airport South,
TX...................................... 3,388 28,855 1,747 1974 8/3/98 --
Courtyard by Marriott Meadowlands, NJ..... -- 9,694 581 1993 8/3/98 40
Hotel Maison de Ville, New Orleans, LA.... 292 3,013 181 1778 8/3/98 40
Hilton Hotel Toledo, OH................... -- 11,746 708 1987 8/3/98 40
Holiday Inn Select Dallas DFW Airport
West, TX................................ 947 8,559 812 1974 8/3/98 40
Holiday Inn Select New Orleans
International Airport, LA............... 3,040 27,766 1,610 1973 8/3/98 40
Crowne Plaza Madison, WI.................. 2,629 21,844 1,384 1987 8/3/98 40
Wyndham Albuquerque Airport Hotel, NM..... -- 19,001 1,146 1972 8/3/98 40
Wyndham San Jose Airport Hotel, CA........ -- 36,740 2,194 1974 8/3/98 40
Holiday Inn Select Mission Valley, CA..... 2,410 21,174 1,282 1970 8/3/98 40
Sheraton Safari Hotel, Lake Buena Vista,
FL...................................... 4,103 44,325 2,437 1985 8/3/98 40
Hilton Monterey, CA....................... 2,141 22,630 1,219 1971 8/3/98 40
Hilton Hotel Durham, NC................... 1,586 17,967 973 1987 8/3/98 40
Wyndham Garden Hotel Marietta, GA......... 1,900 17,688 1,038 1985 8/3/98 40
Westin Resort Key Largo, FL............... 3,167 29,530 1,814 1985 8/3/98 40
Doubletree Guest Suites Atlanta, GA....... 2,236 22,312 1,310 1985 8/3/98 40
Radisson Hotel Arlington Heights, IL...... 1,540 19,493 954 1981 8/3/98 40
Holiday Inn Select Bucks County, PA....... 2,610 24,517 1,335 1987 8/3/98 40
Hilton Hotel Cocoa Beach, FL.............. 2,783 24,860 1,494 1986 8/3/98 40
Radisson Twin Towers Orlando, FL.......... 9,555 81,695 4,701 1972 8/3/98 40
Crowne Plaza Phoenix, AZ.................. 1,852 19,405 1,145 1981 8/3/98 40
Hilton Airport Hotel Grand Rapids, MI..... 2,049 17,196 1,033 1979 8/3/98 40
Marriott West Loop Houston, TX............ 2,943 26,557 1,563 1976 8/3/98 40
Courtyard by Marriott Durham, NC.......... 1,406 11,048 659 1996 8/3/98 40
Courtyard by Marriott, Marina Del Rey,
CA...................................... 3,450 24,893 1,531 1976 8/3/98 40
Courtyard by Marriott, Century City, CA... 2,165 16,485 1,016 1986 8/3/98 40
Courtyard by Marriott, Lake Buena Vista,
FL...................................... -- 43,705 2,565 1972 8/3/98 40
Crowne Plaza, San Jose, CA................ 2,106 24,905 1,501 1975 8/3/98 40
Doubletree Hotel Westshore, Tampa, FL..... 2,904 30,788 1,596 1972 8/3/98 40
Howard Johnson Resort Key Largo, FL....... 1,784 12,926 767 1971 8/3/98 40
Radisson Annapolis, MD.................... 1,711 15,616 829 1975 8/3/98 40
Holiday Inn Fort Lauderdale, FL........... 2,381 21,545 1,225 1969 8/3/98 40
Holiday Inn Madeira Beach, FL............. 1,781 13,375 811 1972 8/3/98 40
Holiday Inn Chicago O'Hare, IL............ 4,290 85,443 4,638 1975 8/3/98 40
Holiday Inn & Suites Alexandria, VA....... 1,769 14,116 882 1985 8/3/98 40
Hilton Clearwater, FL..................... -- 72,893 4,298 1980 8/3/98 40
Radisson Rochester, NY.................... -- 9,019 438 1971 8/3/98 40
Radisson Old Towne Alexandria, VA......... 2,241 21,486 1,223 1975 8/3/98 40
</Table>

F-61
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MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

Ramada Inn Clearwater, FL................. -- 1,270 13,453 -- 89
Richmond Hotel and Conference Center...... -- 245 3,380 -- 58
Crowne Plaza Las Vegas, NV................ -- 3,006 24,011 -- 15
Crowne Plaza Portland, OR................. 4,917 2,950 23,254 -- 58
Four Points Hotel, Mt Arlington, NJ....... 4,328 6,553 6,058 -- 64
Ramada Inn Mahwah, NJ..................... -- 1,117 8,994 -- 121
Ramada Plaza Meriden, CT.................. -- 1,247 10,057 -- 12
Ramada Plaza Shelton, CT.................. 4,567 2,040 16,235 -- 28
Sheraton Crossroads Mahwah, NJ............ -- 3,258 26,185 -- 188
St. Tropez Suites, Las Vegas, NV.......... -- 3,027 24,429 -- 24
Doral Forrestal, Princeton, NJ............ -- 9,578 57,555 -- 7,135
South Seas Plantation, Captiva, FL........ -- 3,084 83,573 -- 7,161
Radisson Suites Beach Resort, Marco
Island, FL.............................. -- 7,120 35,300 -- 2,103
Best Western Sanibel Island, FL........... -- 3,868 3,984 17 302
The Dunes Golf & Tennis Club, Sanibel
Island, FL.............................. -- 7,705 3,043 9 21
Sanibel Inn, Sanibel Island, FL........... -- 8,482 12,045 -- (74)
Seaside Inn, Sanibel Island, FL........... -- 1,702 6,416 22 73
Song of the Sea, Sanibel Island, FL....... -- 339 3,223 19 31
Sundial Beach Resort, Sanibel Island,
FL...................................... -- 320 12,009 -- 556
Holiday Inn, Madison, WI.................. -- 4,143 6,692 -- 78
Safety Harbor Resort and Spa, Sanibel
Island, FL.............................. -- 732 19,618 -- 1,538
-------- ---------- ----- --------
$317,460 $2,207,320 $(388) $253,769
======== ========== ===== ========

Ramada Inn Clearwater, FL................. 1,270 13,542 1,612 1969 8/3/98 40
Richmond Hotel and Conference Center...... 245 3,438 712 1975 8/3/98 40
Crowne Plaza Las Vegas, NV................ 3,006 24,026 2,593 1989 8/3/98 40
Crowne Plaza Portland, OR................. 2,950 23,312 2,623 1988 8/3/98 40
Four Points Hotel, Mt Arlington, NJ....... 6,553 6,122 645 1984 8/3/98 40
Ramada Inn Mahwah, NJ..................... 1,117 9,115 898 1972 8/3/98 40
Ramada Plaza Meriden, CT.................. 1,247 10,069 974 1985 8/3/98 40
Ramada Plaza Shelton, CT.................. 2,040 16,263 1,529 1989 8/3/98 40
Sheraton Crossroads Mahwah, NJ............ 3,258 26,373 2,785 1986 8/3/98 40
St. Tropez Suites, Las Vegas, NV.......... 3,027 24,453 2,360 1986 8/3/98 40
Doral Forrestal, Princeton, NJ............ 9,578 64,690 3,726 1981 8/11/98 40
South Seas Plantation, Captiva, FL........ 3,084 90,734 6,525 1975 10/1/98 40
Radisson Suites Beach Resort, Marco
Island, FL.............................. 7,120 37,403 4,106 1983 10/1/98 40
Best Western Sanibel Island, FL........... 3,885 4,286 665 1967 10/1/98 40
The Dunes Golf & Tennis Club, Sanibel
Island, FL.............................. 7,714 3,064 246 1964 10/1/98 40
Sanibel Inn, Sanibel Island, FL........... 8,482 11,971 989 1964 10/1/98 40
Seaside Inn, Sanibel Island, FL........... 1,724 6,489 481 1964 10/1/98 40
Song of the Sea, Sanibel Island, FL....... 358 3,254 280 1964 10/1/98 40
Sundial Beach Resort, Sanibel Island,
FL...................................... 320 12,565 806 1975 10/1/98 40
Holiday Inn, Madison, WI.................. 4,143 6,770 337 1965 1/11/99 40
Safety Harbor Resort and Spa, Sanibel
Island, FL.............................. 732 21,156 1,547 1926 5/31/00 40
-------- ---------- --------
$317,072 $2,461,089 $188,647
======== ========== ========
</Table>

- ---------------

(1) These properties secure the New Secured Facility which, as of December 31,
2000, had an outstanding balance of $324,554.

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209
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P.

SCHEDULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION -- (CONTINUED)

The components of hotel property and equipment are as follows:

<Table>
<Caption>
PROPERTY AND ACCUMULATED
EQUIPMENT DEPRECIATION
------------ ------------

Land........................................................ $ 317,072 $ --
Building and Improvements................................... 2,461,089 188,647
Furniture and equipment..................................... 338,350 98,582
Construction in progress.................................... 77,219 --
---------- --------
Total property and equipment...................... $3,193,730 $287,229
========== ========
</Table>

A reconciliation of the Company's investment in hotel property and
equipment and related accumulated depreciation is as follows:

<Table>
<Caption>
2000 1999 1998
---------- ---------- ----------

Hotel property and equipment
Balance, beginning of period..................... $3,118,723 $2,957,543 $ 947,597
Acquisitions during period....................... 19,618 12,081 1,865,142
Improvements and construction-in-progress........ 78,911 160,294 144,804
Cost of real estate sold......................... (23,522) (11,195) --
---------- ---------- ----------
Balance, end of period........................... 3,193,730 3,118,723 2,957,543
---------- ---------- ----------
Accumulated depreciation
Balance, beginning of period..................... 182,430 83,797 26,858
Additions-depreciation expense................... 107,363 99,297 56,939
Cost of real estate sold......................... (2,564) (664) --
---------- ---------- ----------
Balance, end of period........................... 287,229 182,430 83,797
---------- ---------- ----------
Net hotel property and equipment, end of
period......................................... $2,906,501 $2,936,293 $2,873,746
========== ========== ==========
</Table>

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210

APPENDIX I

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF MERISTAR LP

GENERAL

MeriStar LP was created on August 3, 1998, when American General
Hospitality Corporation, a corporation operating as a REIT, and its associated
entities merged with CapStar Hotel Company and its associated entities. In
connection with the merger between CapStar and American General, MeriStar Hotels
& Resorts, Inc., a separate publicly traded company, was created to be the
lessee and manager of all but eight of the MeriStar LP hotels. The eight hotels
not leased by MeriStar Hotels & Resorts were leased by affiliates of Prime
Hospitality Corporation.

Prior to January 1, 2001, in order for MeriStar to maintain its tax status
as a REIT, MeriStar LP was not permitted to participate in the operations of the
hotel properties. To comply with this requirement through December 31, 2000, all
of the properties were subject to leases involving two third-party lessees,
MeriStar Hotels & Resorts and Prime Hospitality Corporation.

On January 1, 2001, changes to the federal tax laws governing REITs,
commonly known as the REIT Modernization Act, became effective. The REIT
Modernization Act permits MeriStar LP to create taxable REIT subsidiaries on or
after January 1, 2001, which are subject to taxation as C corporations. Because
of the REIT Modernization Act, MeriStar LP created a number of these taxable
REIT subsidiaries that are the lessees of its real property. The REIT
Modernization Act prohibits the taxable REIT subsidiaries from engaging in the
following activities:

- they may not manage the properties themselves; they are required to enter
into arms length management agreements with independent third-party
managers that are actively involved in the trade or business of hotel
management and manage properties on behalf of other owners,

- they may not lease a property that contains gambling operations, and

- they may not own a brand or franchise under which hotels are operated.

MeriStar LP believes that establishing taxable REIT subsidiaries to lease
the properties provides a more efficient alignment of and ability to capture the
economic interests of property ownership. Under the prior lease structure with
MeriStar Hotels & Resorts, MeriStar LP received lease payments based on the
revenues generated by the properties, but MeriStar Hotels & Resorts operated the
properties in order to maximize net operating income from the properties. This
inconsistency could potentially result in the properties being operated in a way
that did not maximize revenues. With the assignment of the leases for each of
the 106 properties managed by MeriStar Hotels & Resorts to the taxable REIT
subsidiaries and the execution of the new management agreements, MeriStar LP
gained the economic risks and rewards related to the properties that are usually
associated with ownership of real estate, and property revenues became the basis
for MeriStar Hotels & Resorts' management fees. During the six months ended June
30, 2001, one hotel was sold, and MeriStar LP terminated four of the eight
leases with Prime Hospitality. At June 30, 2001, MeriStar Hotels & Resorts
manages 109 of MeriStar LP's hotels.

Subsidiaries of MeriStar Hotels & Resorts assigned their participating
leases to MeriStar LP's wholly-owned taxable REIT subsidiaries as of January 1,
2001. In connection with the assignment, MeriStar LP's taxable REIT subsidiaries
executed new management agreements with a subsidiary of MeriStar Hotels &
Resorts to manage the hotels. Under these management agreements, the taxable
REIT subsidiaries pay a management fee to MeriStar Hotels & Resorts for each
property. The taxable REIT subsidiaries in turn make rental payments to MeriStar
LP under the participating leases. The management agreements have been
structured to substantially mirror the economics of the former leases. The
transactions did not result in any cash consideration exchanged among the
parties except in regard to the transfer of hotel operating assets and
liabilities to the taxable REIT subsidiaries. Under the new management
agreements, the base

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management fee is 2.5% of total hotel revenue plus incentive payments, based on
meeting performance thresholds, that could total up to 1.5% of total hotel
revenue. The agreements have an initial term of 10 years with three renewal
periods of five years each at the option of MeriStar Hotels & Resorts, subject
to some exceptions. Because these leases have been assigned to MeriStar LP's
taxable REIT subsidiaries, MeriStar LP now bears the operating risk associated
with the hotels.

FINANCIAL CONDITION

June 30, 2001 Compared with December 31, 2000

MeriStar LP's total assets increased by $78.5 million to $3,085.0 million
at June 30, 2001 from $3,006.5 million at December 31, 2000 primarily due to:

- lending $36.0 million to MeriStar Hotels & Resorts under a revolving
credit agreement;

- deferring $8.1 million in financing costs related to issuing $500 million
of senior unsecured notes;

- capital expenditures at the hotels;

- the increase in cash and other operating assets of $65.7 million related
to the assignment of the hotel leases with MeriStar Hotels & Resorts to
the taxable subsidiaries; partially offset by

- the decrease of $11.3 million due from MeriStar Hotels & Resorts;

- the sale of one hotel and the use of the $7.3 million in proceeds to
paydown debt; and

- depreciation on hotel assets.

Total liabilities increased by $93.0 million to $1,865.5 million at June
30, 2001 from $1,772.5 million at December 31, 2000 due mainly to:

- net borrowings of long-term debt;

- a $16.0 million increase in accrued interest due to the $500 million
senior secured notes sold in January 2001;

- the adoption of FASB 133 and the related recording of a $7.1 million
liability for the derivative instruments; and

- the increase in operating liabilities of $65.7 million related to the
assignment of the hotel leases with MeriStar Hotels & Resorts to the
taxable REIT subsidiaries.

Long-term debt increased by $14.8 million to $1,653.1 million at June 30,
2001 from $1,638.3 million at December 31, 2000 due primarily to:

- $500 million in senior unsecured notes sold, partially offset set by

- the repayment of the revolving credit facility from the proceeds of the
senior unsecured notes borrowings and cash generated by operations.

Partners' capital decreased $25.9 million to $1,116.9 million at June 30,
2001 from $1,142.8 million at December 31, 2000 due primarily to:

- the payment of distributions;

- allocations of capital to redeemable unitholders as a result of increases
in MeriStar's stock price; and

- $7.1 million increase in accumulated other comprehensive loss due mainly
to the adoption of FASB 133 described above; partially offset by

- net income for 2001; and

- the issuance of additional common limited partnership units to MeriStar.
I-2
212

RESULTS OF OPERATIONS

Six Months Ended June 30, 2001 Compared with Six Months Ended June 30, 2000.

Until January 1, 2001, MeriStar Hotels & Resorts leased substantially all
of MeriStar LP's hotels. Under these leases, MeriStar Hotels & Resorts assumed
all of the operating risks and rewards of these hotels and paid MeriStar LP a
percentage of each hotel's revenue under the lease agreements. Therefore, for
financial statement purposes through December 31, 2000, MeriStar Hotels &
Resorts recorded all of the operating revenues and expenses of the hotels in its
statements of operations, and MeriStar LP recorded lease revenue earned under
the lease agreements in its statements of operations. Effective January 1, 2001,
MeriStar Hotels & Resorts assigned the hotel leases to MeriStar LP's newly
created, wholly owned, taxable REIT subsidiaries and its taxable REIT
subsidiaries, in turn, entered into management agreements with MeriStar Hotels &
Resorts to manage the hotels. As a result of this change in structure, MeriStar
LP's wholly-owned taxable REIT subsidiaries have assumed the operating risks and
rewards of the hotels and now pay MeriStar Hotels & Resorts a management fee to
manage the hotels. For consolidated financial statement purposes, effective
January 1, 2001, MeriStar LP now records all of the revenues and expenses of the
hotels in its statements of operations, including the management fee paid to
MeriStar Hotels & Resorts.

MeriStar LP's total revenues and total operating expenses increased $461.3
million and $421.0 million, respectively, for the six months ended June 30, 2001
as compared to the same period in 2000. As described in the preceding paragraph,
the significant increases result from the fact that MeriStar LP now records the
hotel operating revenue and expenses in its consolidated financial statements
effective January 1, 2001, while it only recorded lease revenue in 2000. As a
result, MeriStar LP's operating results for the six months ended June 30, 2001
are not directly comparable to the same period in 2000.

For comparative purposes, the following shows the results for the six
months ended June 30, 2000 on a pro forma basis assuming the leases with
MeriStar Hotels & Resorts were converted to management contracts on January 1,
2000 compared to actual results for the six months ended June 30, 2001 (in
thousands):

<Table>
<Caption>
2001 2000
-------- --------

Revenue..................................................... $609,851 $622,945
Total expenses.............................................. 565,913 548,125
Net income before loss on sale of assets and extraordinary
items..................................................... 42,690 73,601
Net income.................................................. 40,402 80,440
Recurring EBITDA............................................ 178,499 187,339
</Table>

The following table provides MeriStar LP's hotels' operating statistics on
a same store basis for the six months ended June 30, 2001 and 2000.

<Table>
<Caption>
2001 2000 CHANGE
------- ------- ------

Revenue per available room................................ $ 79.66 $ 81.18 (1.9)%
Average daily rate........................................ $112.28 $110.38 1.7%
Occupancy................................................. 70.9% 73.5% (3.6)%
</Table>

Total revenue decreased $13.0 million to $609.9 million in 2001 from $622.9
million in 2000, on a pro forma basis, due primarily to a $10.1 million decrease
in room revenue related to a 3.5% decrease in occupancy. This decrease is
attributable to the recent slowing of our national economy and its impact on
business and leisure travel.

The current economic slowdown and the resulting declines in RevPAR, which
began in March 2001, are currently continuing. MeriStar Partnership anticipates
that third quarter RevPAR will be less than that of the third quarter of 2000
and less than that of the second quarter of 2001. MeriStar Partnership expects
this decline in occupancy during the second and third quarters to lead to
declines in room rates as hotels

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compete more aggressively for guests. If the economic slowdown worsens or
continues for a protracted time, it could have a material adverse effect on
MeriStar Partnership's operations and earnings.

Total expenses increased $17.8 million to $565.9 million for the six months
ended June 30, 2001 from $548.1 million for the same period in 2000 on a pro
forma basis due primarily to:

- $9.3 million in swap termination costs;

- the $2.1 million write down of the investment in STS Hotel Net;

- $3.8 million in FelCor merger costs;

- $1.3 million in costs to terminate leases with Prime Hospitality
Corporation;

- an increase in depreciation on hotel assets; and

- a $4.2 million increase in property operating costs due primarily to a
$3.2 million increase in energy costs.

During the six months ended June 30, 2001, MeriStar LP recorded a charge in
the amount of $2.1 million to write-off its investment in STS Hotel Net, a
provider of internet access and related services to the hospitality industry.
During 2000, STS Hotel Net continued to pursue its business strategy and operate
its business. During the first quarter of 2001, STS Hotel Net secured additional
equity from an entity which is also engaged in providing similar services to the
hospitality industry. Also, during the first quarter of 2001, the operating
environment for STS Hotel Net deteriorated significantly and STS Hotel Net was
unable to generate adequate revenues or obtain needed additional financing. As a
result, STS Hotel Net significantly curtailed its operations and, accordingly,
MeriStar LP wrote off its investment in STS Hotel Net at March 31, 2001.

Recurring EBITDA is presented before the effect of non-recurring items; the
swap termination costs, the write down of the investment in STS Hotel Net,
FelCor merger costs and costs to terminate leases with Prime Hospitality
Corporation. Recurring EBITDA decreased $8.8 million to $178.5 million in 2001
from $187.3 million in 2000.

In 2001, MeriStar LP paid down $300 million of term loans under its
revolving credit facility. This resulted in an extraordinary loss of $1.2
million, net of tax effect.

In 2001, MeriStar LP sold one hotel and received $7.3 million. This
resulted in a loss on the sale of the asset of $1.1 million, net of tax.

Year Ended December 31, 2000 compared with the Year Ended December 31, 1999

Until January 1, 2001, substantially all of MeriStar LP's hotels were
leased to and operated by MeriStar Hotels & Resorts. Participating lease revenue
represents lease payments from the lessees under the participating lease
agreements. Total revenue increased by $25.9 million to $400.7 million in 2000
compared to $374.8 million in 1999. This increase was primarily attributable to
an increase of $23.7 million in participating lease revenue resulting from an
increase in room revenue at MeriStar LP's hotels under lease. The following
table provides MeriStar LP's hotels' operating statistics on a same-store basis
for the year:

<Table>
<Caption>
2000 1999 CHANGE
------- ------- ------

Revenue per available room................................ $ 77.71 $ 73.51 5.71%
Average daily rate........................................ $107.60 $101.92 5.57%
Occupancy................................................. 72.2% 72.1% 0.14%
</Table>

I-4
214

Operating expenses increased to $170.3 million for the year ended December
31, 2000 from $156.5 million for the same period in 1999 due primarily to:

- to an increase in depreciation on hotel assets;

- an increase in administrative costs, as MeriStar LP added personnel
during 2000 to address the operating changes associated with the REIT
Modernization Act; and

- increased insurance costs.

Net interest expense increased $17.1 million to $117.5 million for the year
ended December 31, 2000, from $100.4 million in 1999 due mainly to:

- lower capitalized interest due to a decrease in capital expenditures in
2000;

- an increase in variable interest rates during 2000 and higher interest
rates on swap arrangements executed in 2000; partially offset by

- a lower average debt balance during 2000.

In 2000, MeriStar LP repaid $18.2 million of its notes payable to MeriStar
at a discount in connection with its repurchase of its convertible notes at an
equal discount. This resulted in an extraordinary gain of $3.4 million.

In 2000, MeriStar LP sold three limited service hotels and received $24.1
million. This resulted in a gain on sale of assets of $3.4 million.

EBITDA grew $20.9 million to $341.0 million in 2000 from $320.1 million in
1999. This growth is due to:

- the increase in participating lease revenue; partially offset by

- the increase in administrative and insurance costs.

Year Ended December 31, 1999 compared with the Year Ended December 31, 1998

Substantially all of MeriStar LP's hotels were leased to and operated by
MeriStar Hotels & Resorts. Participating lease revenue represents lease payments
from the lessees under the participating lease agreements. Total revenue
decreased by $147.2 million to $374.8 million in 1999 compared to $522.0 million
in 1998. This decrease was primarily attributable to the change in the types of
revenues recorded in MeriStar LP's financial statements in periods before and
after August 2, 1998, the date of the merger of CapStar Hotel Company and
American General Hospitality Corporation and the spin-off of MeriStar Hotels &
Resorts.

The following table provides MeriStar LP's hotels' operating statistics on
a same-store basis for the year:

<Table>
<Caption>
1999 1998 CHANGE
------- ------- ------

Revenue per available room................................ $ 74.05 $ 71.80 3.1%
Average daily rate........................................ $102.39 $100.96 1.4%
Occupancy................................................. 72.3% 71.1% 1.7%
</Table>

There were no department operating expenses in 1999 compared to $142.5
million in 1998. This decrease was the result of the hotel operations being
leased to MeriStar Hotels & Resorts after August 2, 1998, in conjunction with
the merger and spin-off of MeriStar Hotels & Resorts.

Undistributed operating expenses decreased significantly in 1999 as a
result of the merger. Prior to the spin-off of MeriStar Hotels & Resorts,
MeriStar LP was responsible for all hotel operating expenses. Subsequent to
August 3, 1998, MeriStar LP, as owner and lessor, was only responsible for real
estate taxes, property insurance and various other undistributed expenses.
Depreciation and amortization

I-5
215

increased $43.0 million to $101.8 million in 1999 from $58.8 million in 1998 as
a result of the assets acquired in the merger.

Net interest expense increased $49.9 million to $100.4 million for the year
ended December 31, 1999, from $50.5 million in 1998. This increase was
attributable to:

- the borrowings used to finance the acquisition of hotels during 1998;

- the borrowings used to finance renovations of hotels during 1998 and
1999;

- the new debt associated with the merger;

- higher average interest rates; and

- 1999 borrowings made to finance real estate ventures.

In 1999, MeriStar LP recognized extraordinary losses of $4.6 million due to
the write-off of unamortized deferred financing fees in conjunction with
refinancing some credit facilities.

EBITDA grew $125.3 million to $320.1 million in 1999 from $194.8 million in
1998. This growth is due to:

- the merger;

- other hotel acquisitions which occurred during 1998; partially offset by

- the spin-off of MeriStar Hotels & Resorts.

LIQUIDITY AND CAPITAL RESOURCES

Sources of Cash

MeriStar LP's principal sources of liquidity are cash on hand, cash
generated from operations, and funds from external borrowings and debt and
equity offerings. MeriStar LP expects to fund its continuing operations through
cash generated by its hotels. MeriStar LP also expects to finance hotel
acquisitions, hotel renovations and joint venture investments through a
combination of internally generated cash, external borrowings, and the issuance
of its limited partnership units. Additionally, MeriStar must distribute to
stockholders at least 90% of its taxable income, excluding net capital gains, to
preserve its status as a REIT. MeriStar, as general partner of MeriStar LP, is
required to use its best efforts to cause MeriStar LP's partnership
distributions to it to be sufficient to comply with this requirement. MeriStar
LP expects to fund these distributions through cash generated from operations,
borrowings on the credit facilities or through the preferred return on the
investment in MeriStar Investment Partners, LP. MeriStar LP generated $114.6
million of cash from operations during the first six months of 2001.

Uses of Cash

MeriStar LP used $49.6 million of cash in investing activities during the
six months ended June 30, 2001, primarily for:

- the $36.0 million note receivable from MeriStar Hotels & Resorts; and

- capital expenditures at hotels; partially offset by

- hotel operating cash received on lease conversions; and

- proceeds from selling one hotel.

I-6
216

MeriStar LP used $45.0 million of cash from financing activities during the
six months ended June 30, 2001 primarily for:

- payments of financing costs, distributions; and

- additional financing costs related to issuing the $500 million of senior
unsecured notes, partially offset by net borrowings on our credit
facilities.

In January 2001, MeriStar LP sold $500 million of senior unsecured notes.
The senior unsecured notes are structured as:

- $300 million in notes with a 9.0% interest rate which mature on January
15, 2008, and

- $200 million in notes with a 9.13% interest rate which mature on January
15, 2011.

The proceeds were used to repay outstanding debt under MeriStar LP's
revolving credit facility and to make payments to terminate some swap agreements
that hedged variable interest rates of the loans that it repaid. The repayments
of the term loans under the credit facility resulted in an extraordinary loss of
$1.2 million, net of tax. As of June 30, 2001, MeriStar LP had $273.0 million
available under its senior secured credit facility. The weighted average
interest rate on borrowings outstanding under MeriStar LP's credit facility as
of June 30, 2001 was 7.7%.

Capital for renovation work is expected to be provided by a combination of
internally generated cash and external borrowings. Initial renovation programs
for most of the hotels are complete or nearing completion. Once initial
renovation programs for a hotel are completed, MeriStar LP expects to spend
approximately 4% annually of hotel revenues for ongoing capital expenditure
programs, including room and facilities refurbishments, renovations, and
furniture and equipment replacements. For the six months ended June 30, 2001,
MeriStar LP spent $23.8 million on renovation and ongoing property capital
expenditure programs. MeriStar LP intends to spend an additional $28.0 million
during 2001 to complete the renovation programs and for the ongoing capital
expenditure programs.

MeriStar LP believes cash generated by operations, together with
anticipated borrowing capacity under the credit facilities, will be sufficient
to fund the existing working capital requirements, ongoing capital expenditures,
and debt service requirements. MeriStar LP believes, however, that future
capital decisions will also be made in response to specific acquisition and/or
investment opportunities, depending on conditions in the capital and/or other
financial markets. Accordingly, MeriStar LP may consider increasing the
borrowing capacity or issuing additional debt or partnership units and these
proceeds could be used to finance acquisitions or investments, refinance
existing debt, or repurchase common stock.

MeriStar LP is obligated to lend MeriStar Hotels & Resorts up to $50
million for general corporate purposes under a revolving credit agreement. As of
June 30, 2001, there was $36 million outstanding under this revolving credit
agreement.

FelCor, MeriStar Hotels & Resorts and MeriStar LP have agreed to amend,
effective when the merger is complete, the credit agreement to fix its maturity
at February 28, 2004, set the interest rate at 600 basis points over the 30-day
London Interbank Offered Rate and set the default rate of interest at 800 basis
points over the 30-day London Interbank Offered Rate. MeriStar LP has agreed to
use best efforts to obtain the consents of MeriStar Hotels & Resorts' senior
lenders to these amendments.

SEASONALITY

Demand in the lodging industry is affected by recurring seasonal patterns.
For non-resort properties, demand is lower in the winter months due to decreased
travel and higher in the spring and summer months during peak travel season. For
resort properties, demand is generally higher in winter and early spring. Since
the majority of the hotels are non-resort properties, the operations generally
reflect non-resort seasonality patterns. MeriStar LP has lower revenue,
operating income and cash flow in the first and fourth quarters and higher
revenue, operating income and cash flow in the second and third quarters.

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217

ALL TENDERED OLD NOTES, EXECUTED LETTERS OF TRANSMITTAL AND OTHER RELATED
DOCUMENTS SHOULD BE DELIVERED TO THE EXCHANGE AGENT. QUESTIONS AND REQUESTS FOR
ASSISTANCE AND REQUESTS FOR ADDITIONAL COPIES OF THIS PROSPECTUS, THE LETTER OF
TRANSMITTAL AND OTHER RELATED DOCUMENTS SHOULD BE ADDRESSED TO THE EXCHANGE
AGENT AS FOLLOWS:

BY REGISTERED OR CERTIFIED MAIL,
HAND DELIVERY OR
OVERNIGHT COURIER:

SunTrust Bank
Attention: George T. Hogan,
Corporate Trust Department
25 Park Place, 24th Floor
Atlanta, Georgia 30303-2900

SunTrust Bank
c/o Computershare
Attention: Mary Ann Luisi,
Corporate Trust Department
Wall Street Plaza
88 Pine Street, 19th Floor
New York, New York 10005

BY FACSIMILE:

(404) 588-7335 (GA)

(212) 701-7648 (NY)

ORIGINALS OF ALL DOCUMENTS
SUBMITTED BY FACSIMILE SHOULD BE SENT
PROMPTLY BY HAND, OVERNIGHT COURIER,
OR REGISTERED OR CERTIFIED MAIL.

WE HAVE NOT AUTHORIZED ANYONE TO GIVE YOU ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS ABOUT THE TRANSACTIONS WE DISCUSSED IN THIS PROSPECTUS OTHER
THAN THOSE CONTAINED HEREIN OR IN THE DOCUMENTS WE INCORPORATE HEREIN BY
REFERENCE. IF YOU ARE GIVEN ANY INFORMATION OR REPRESENTATIONS ABOUT THESE
MATTERS THAT IS NOT DISCUSSED OR INCORPORATED IN THIS PROSPECTUS, YOU MUST NOT
RELY ON THAT INFORMATION. THIS PROSPECTUS IS NOT AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY SECURITIES ANYWHERE OR TO ANYONE WHERE OR TO
WHOM WE ARE NOT PERMITTED TO OFFER OR SELL SECURITIES UNDER APPLICABLE LAW. THE
DELIVERY OF THIS PROSPECTUS OFFERED HEREBY DOES NOT, UNDER ANY CIRCUMSTANCES,
MEAN THAT THERE HAS NOT BEEN A CHANGE IN OUR AFFAIRS SINCE THE DATE HEREOF. IT
ALSO DOES NOT MEAN THAT THE INFORMATION IN THIS PROSPECTUS OR IN THE DOCUMENTS
WE INCORPORATE HEREIN BY REFERENCE IS CORRECT AFTER THIS DATE.
- ---------------------------------------------------------

OFFER TO EXCHANGE
ALL OUTSTANDING
8 1/2% SENIOR NOTES
DUE 2011
FOR
REGISTERED 8 1/2% SENIOR NOTES
DUE 2011
FELCOR LODGING
LIMITED PARTNERSHIP
PROSPECTUS
, 2001
218

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 6.7 of the Amended and Restated Agreement of Limited Partnership of
FelCor Lodging Limited Partnership ("FelCor LP"), as amended (the "Partnership
Agreement"), provides that, to the fullest extent permitted by law, but subject
to the limitations expressly provided in the Partnership Agreement, FelCor
Lodging Trust Incorporated ("FelCor"), or its successor or assigns, in its
capacity as the general partner of FelCor LP (the "General Partner"), and any
person who is or was an officer or director of the General Partner shall be
indemnified and held harmless by the Partnership from and against any and all
losses, claims, damages, liabilities (joint or several), expenses (including,
without limitation, legal fees and expenses), judgments, fines, settlements and
other amounts arising from any and all claims, demands, actions, suits or
proceedings, whether civil or criminal, administrative or investigative, in
which any such party may be involved, or is threatened to be involved, as a
party or otherwise, by reason of its status as (i) the General Partner, or any
of its affiliates, (ii) an officer, director, employee, partner, agent or
trustee of the General Partner, or any of its affiliates or (iii) a person
serving at the request of the Partnership in another entity in a similar
capacity; provided, that in each case such party acted in good faith, in a
manner which such party believed to be in, or not opposed to, the best interests
of the Partnership and, with respect to any criminal proceeding, had no
reasonable cause to believe its conduct was unlawful. Any indemnification
pursuant to Section 6.7 shall be made only out of the Partnership assets.

The charter of FelCor, generally, limits the liability of FelCor's
directors and officers to FelCor and the shareholders for money damages to the
fullest extent permitted from time to time by the laws of the State of Maryland.
The Maryland General Corporation Law ("MGCL") authorizes Maryland corporations
to limit the liability of directors and officers to the corporation and its
stockholders for money damages except (i) to the extent that it is proved that
the director or officer actually received an improper benefit or profit in
money, property or services, for the amount of the benefit or profit actually
received or (ii) to the extent that a judgment or other final adjudication
adverse to the director or officer is entered in a proceeding based on a finding
in the proceeding that the director's or officer's action, or failure to act,
was the result of active and deliberate dishonesty and was material to the cause
of action adjudicated in the proceeding.

The charter also provides, generally, for the indemnification of, and
advance of expense on behalf of, directors and officers, among others, to the
fullest extent permitted by Maryland law. The MGCL authorizes Maryland
corporations to indemnify present and past directors and officers of the
corporation or of another corporation for which they serve at the request of the
corporation against judgments, penalties, fines, settlements and reasonable
expenses (including attorneys' fees) actually incurred in connection with any
threatened, pending, or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation in respect of which the person is adjudicated to be
liable to the corporation), in which they are made parties by reason of being or
having been directors or officers, unless it is proved that (i) the act or
omission of the person was material to the matter giving rise to the proceeding
and was committed in bad faith or was the result of active and deliberate
dishonesty, (ii) the person actually received an improper personal benefit in
money, property or services or (iii) in the case of any criminal proceeding, the
person had reasonable cause to believe that the act or omission was unlawful.
The MGCL also provides that, unless limited by the corporation's charter, a
corporation shall indemnify present and past directors and officers of the
corporation who are successful, on the merits or otherwise, in the defense of
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, against reasonable expenses
(including attorneys' fees) incurred in connection with the proceeding. FelCor's
charter does not limit the extent of this indemnity.

II-1
219

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 ("Securities Act") may be permitted to directors and officers of FelCor
pursuant to the foregoing provisions or otherwise, FelCor has been advised that,
in the opinion of the Securities and Exchange Commission, such indemnification
is against public policy as expressed in the Securities Act, and is, therefore,
unenforceable.

FelCor may purchase director and officer liability insurance for the
purpose of providing a source of funds to pay any indemnification described
above. The MGCL authorizes Maryland corporations to purchase and maintain
insurance for former or existing directors or officers of the corporation
against any liability assisted against and incurred by such person in that
capacity or arising out of such person's position, whether or not the
corporation would have the power to indemnify against liability under the MGCL.
FelCor's charter does not limit this authority to obtain insurance.

ITEM 21. EXHIBITS

(a) Exhibits

<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------

4.1 -- Form of Second Amended and Restated Agreement of Limited
Partnership of FelCor LP (filed as Exhibit 4.4 to
FelCor's Registration Statement on Form S-4 (file no.
333-62510) and incorporated herein by reference).
4.2 -- Indenture dated as of October 1, 1997 by and among FelCor
LP, FelCor, the Subsidiary Guarantors named therein and
SunTrust Bank, Atlanta, Georgia, as Trustee (filed as
Exhibit 4.1 to FelCor LP's Registration Statement on Form
S-4 (file no. 333-39595) and the other co-registrants
named therein and incorporated herein by reference).
4.2.1 -- First Amendment to Indenture dated as of February 5, 1998
by and among FelCor LP, FelCor, the Subsidiary Guarantors
named therein and SunTrust Bank, Atlanta, Georgia, as
Trustee (filed as Exhibit 4.2 to FelCor LP's Registration
Statement on Form S-4 (file no. 333-39595) and
incorporated herein by reference).
4.2.2 -- Second Amendment to Indenture and First Supplemental
Indenture dated as of December 30, 1998, by and among
FelCor LP, FelCor, the Subsidiary Guarantors named
therein and SunTrust Bank, Atlanta, Georgia, as Trustee
(filed as Exhibit 4.7.2 to FelCor's Annual Report on Form
10-K for the year ended December 31, 1998 and
incorporated herein by reference).
4.2.3 -- Third Amendment to Indenture dated as of March 30, 1999
by and among FelCor LP, FelCor, the Subsidiary Guarantors
named therein and SunTrust Bank, Atlanta (filed as
Exhibit 4.7.3 to FelCor's Form 10-Q for the quarter ended
March 31, 1999 and incorporated herein by reference).
4.2.4 -- Second Supplemental Indenture dated as of August 1, 2000,
by and among FelCor LP, FelCor, the Subsidiary Guarantors
named therein, who are signatories thereto, and SunTrust
Bank (filed as Exhibit 4.2.4 to FelCor LP's Registration
Statement on Form S-4 (file no. 333-47506) and
incorporated herein by reference).
4.2.5* -- Third Supplemental Indenture dated as of July 26, 2001,
by and among FelCor LP, FelCor, the Subsidiary Guarantors
named therein, who are signatories thereto, and SunTrust
Bank (filed as Exhibit 4.2.5 to FelCor LP's Registration
Statement on Form S-4 (file no. 333-63092) and
incorporated herein by reference).
</Table>

II-2
220

<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------

4.3 -- Indenture dated as of September 15, 2000, by and among
FelCor LP, FelCor, the Subsidiary Guarantors named
therein, and SunTrust Bank, as Trustee (filed as Exhibit
4.3 to FelCor LP's Registration Statement on Form S-4
(file no. 333-47506) and incorporated herein by
reference).
4.3.1* -- First Supplemental Indenture dated as of July 26, 2001,
by and among FelCor LP, FelCor, the Subsidiary Guarantors
named therein, who are signatories thereto, and SunTrust
Bank (filed as Exhibit 4.3.1 to FelCor LP's Registration
Statement on Form S-4 (file no. 333-63092) and
incorporated herein by reference).
4.4 -- Indenture dated as of June 4, 2001, by and among FelCor
LP, FelCor, the Subsidiary Guarantors named therein, and
SunTrust Bank, as Trustee (filed as Exhibit 4.9 to
FelCor's Form 8-K dated as of June 14, 2001 and
incorporated herein by reference).
4.4.1* -- First Supplemental Indenture dated as of July 26, 2001,
by and among FelCor LP, FelCor, the Subsidiary Guarantors
named therein, who are signatories thereto, and SunTrust
Bank (filed as Exhibit 4.4.1 to FelCor LP's Registration
Statement on Form S-4 (file no. 333-63092) and
incorporated herein by reference).
5.1* -- Opinion of Jenkens & Gilchrist, a Professional
Corporation.
12.1 -- Statements regarding Computation of Ratios
23.1 -- Consent of Jenkens & Gilchrist, a Professional
Corporation (included in Exhibit 5.1).
23.2 -- Consent of PricewaterhouseCoopers LLP.
23.3 -- Consent of KPMG LLP.
23.4 -- Consent of Deloitte & Touche LLP.
24.1* -- Power of Attorney.
25.1* -- Statement of Eligibility of SunTrust Bank, as Trustee.
99.1* -- Form of Letter of Transmittal.
99.2* -- Form of Notice of Guaranteed Delivery.
</Table>

- ---------------

* Previously filed.

II-3
221

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 2 to Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Dallas,
State of Texas on the 10th day of September, 2001.

FELCOR LODGING TRUST INCORPORATED

FELCOR LODGING LIMITED PARTNERSHIP
a Delaware limited partnership
(Co-Registrant)

By: FelCor Lodging Trust Incorporated
its General Partner

By:/s/ LAWRENCE D. ROBINSON
---------------------------------
Lawrence D. Robinson
Executive Vice President,
Secretary and General Counsel

II-4
222

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.

<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----

* Chairman of the Board and
- ----------------------------------------------------- Director
Donald J. McNamara

* President and Chief
- ----------------------------------------------------- Executive Officer and
Thomas J. Corcoran Director

* Executive Vice President and
- ----------------------------------------------------- Chief Financial Officer
Richard J. O'Brien

* Senior Vice President and
- ----------------------------------------------------- Controller (Principal
Lester C. Johnson Accounting Officer)

* Director
- -----------------------------------------------------
Melinda J. Bush

Director
- -----------------------------------------------------
Richard S. Ellwood

* Director
- -----------------------------------------------------
Richard O. Jacobson

* Director
- -----------------------------------------------------
Charles A. Ledsinger, Jr.

* Director
- -----------------------------------------------------
Robert H. Lutz, Jr.

* Director
- -----------------------------------------------------
Charles N. Mathewson

* Director
- -----------------------------------------------------
Thomas A. McChristy

* Director
- -----------------------------------------------------
Richard C. North

* Director
- -----------------------------------------------------
Michael D. Rose

*By: /s/ LAWRENCE D. ROBINSON September 10, 2001
------------------------------------------------
Lawrence D. Robinson,
as Attorney-in-fact
</Table>

II-5
223

SIGNATURES

FELCOR/CSS HOTELS, L.L.C.
a Delaware limited liability company
FELCOR/LAX HOTELS, L.L.C.
a Delaware limited liability company
FELCOR/CSS HOLDINGS, L.P.
a Delaware limited partnership
By: FelCor/CSS Hotels, L.L.C.
its general partner
FELCOR/ST. PAUL HOLDINGS, L.P.
a Delaware limited partnership
By: FelCor/CSS Hotels, L.L.C.
its general partner
FELCOR/LAX HOLDINGS, L.P.
a Delaware limited partnership
By: FelCor/LAX Hotels, L.L.C.
its general partner
FELCOR EIGHT HOTELS, L.L.C.
a Delaware limited liability company
FELCOR HOTEL ASSET COMPANY, L.L.C.
a Delaware limited liability company
FELCOR NEVADA HOLDINGS, L.L.C.
a Nevada limited liability company
FHAC NEVADA HOLDINGS, L.L.C.
a Nevada limited liability company
FHAC TEXAS HOLDINGS, L.P.
a Texas limited partnership
By: FelCor Hotel Asset Company,
L.L.C.
its general partner
FELCOR OMAHA HOTEL COMPANY, L.L.C.
a Delaware limited liability company
FELCOR COUNTRY VILLA HOTEL, L.L.C.
a Delaware limited liability company
FELCOR MOLINE HOTEL, L.L.C.
a Delaware limited liability company
FELCOR CANADA CO.
a Nova Scotia unlimited liability
company
(each a Co-Registrant)

By: /s/ LAWRENCE D. ROBINSON
----------------------------------
Lawrence D. Robinson
Executive Vice President,
Secretary and Manager

II-6
224

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.

<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----

* President and Manager
- -----------------------------------------------------
Thomas J. Corcoran

* Senior Vice President and
- ----------------------------------------------------- Controller (Principal
Lester C. Johnson Financial Officer and
Principal Accounting
Officer)

/s/ LAWRENCE D. ROBINSON Executive Vice President, September 10, 2001
- ----------------------------------------------------- Secretary and Manager
Lawrence D. Robinson

* Manager
- -----------------------------------------------------
Thomas L. Wiese

*By /s/ LAWRENCE D. ROBINSON September 10, 2001
------------------------------------------------
Lawrence D. Robinson,
as attorney-in-fact
</Table>

II-7
225

INDEX TO EXHIBITS

<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------

226

<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------

4.4.1* -- First Supplemental Indenture dated as of July 26, 2001,
by and among FelCor LP, FelCor, the Subsidiary Guarantors
named therein, who are signatories thereto, and SunTrust
Bank (filed as Exhibit 4.4.1 to FelCor LP's Registration
Statement on Form S-4 (file no. 333-63092) and
incorporated herein by reference).
5.1* -- Opinion of Jenkens & Gilchrist, a Professional
Corporation.
12.1 -- Statements regarding Computation of Ratios
23.1 -- Consent of Jenkens & Gilchrist, a Professional
Corporation (included in Exhibit 5.1).
23.2 -- Consent of PricewaterhouseCoopers LLP.
23.3 -- Consent of KPMG LLP.
23.4 -- Consent of Deloitte & Touche LLP.
24.1* -- Power of Attorney.
25.1* -- Statement of Eligibility of SunTrust Bank, as Trustee.
99.1* -- Form of Letter of Transmittal.
99.2* -- Form of Notice of Guaranteed Delivery.
</Table>

- ---------------

* Previously filed.