UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2005

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from     to

Commission file number 333-3959-01

FelCor Lodging Limited Partnership

(Exact name of registrant as specified in its charter)

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

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

(972) 444-4900
(Registrant’s telephone number, including area code)

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

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). o Yes þ No

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes o No

FELCOR LODGING LIMITED PARTNERSHIP

INDEX

	Page
PART I. — FINANCIAL INFORMATION
Item 1. Financial Statements	3
Consolidated Balance Sheets September 30, 2005 and December 31, 2004 (unaudited)	3
Consolidated Statements of Operations – For the Three and Nine Months Ended September 30, 2005 and 2004 (unaudited)	4
Consolidated Statements of Comprehensive Income (Loss) – For the Three and Nine Months Ended September 30, 2005 and 2004 (unaudited)	5
Consolidated Statements of Cash Flows – For the Nine Months Ended September 30, 2005 and 2004 (unaudited)	6
Notes to Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
General	24
Financial Comparison	24
Results of Operations	25
Non-GAAP Financial Measures	28
Hotel Portfolio Composition	34
Hotel Operating Statistics	35
Liquidity and Capital Resources	37
Inflation	39
Seasonality	39
Disclosure Regarding Forward-Looking Statements	39
Item 3. Quantitative and Qualitative Disclosures About Market Risk	40
Item 4. Controls and Procedures	41
PART II. – OTHER INFORMATION
Item 6. Exhibits	42
SIGNATURE	43
Certification of the CEO Pursuant to Section 302
Certification of the CFO Pursuant to Section 302
Certification of the CEO Pursuant to Section 302
Certification of the CFO Pursuant to Section 906

2

PART I. — FINANCIAL INFORMATION

Item 1. Financial Statements

FELCOR LODGING LIMITED PARTNERSHIP

CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)

	September 30,		December 31,
	2005		2004
ASSETS
Investment in hotels, net of accumulated depreciation of $1,008,200 at September 30, 2005 and $948,631 at December 31, 2004	$	2,862,103	$	2,955,766
Investment in unconsolidated entities		107,621		110,843
Hotels held for sale		2,599		255
Cash and cash equivalents		170,923		119,310
Restricted cash		27,170		34,736
Accounts receivable, net of allowance for doubtful accounts of $2,294 at September 30, 2005 and $905 at December 31, 2004		58,945		51,845
Deferred expenses, net of accumulated amortization of $12,049 at September 30, 2005 and $14,935 at December 31, 2004		15,483		18,804
Condominium development project		9,326		1,613
Other assets		23,810		24,486
Total assets	$	3,277,980	$	3,317,658
LIABILITIES AND PARTNERS’ CAPITAL
Debt, net of discount of $3,657 at September 30, 2005 and $4,529 at December 31, 2004	$	1,708,642	$	1,767,122
Distributions payable		8,592		8,867
Accrued expenses and other liabilities		158,987		124,922
Minority interest in other partnerships		48,605		46,765
Total liabilities and minority interest		1,924,826		1,947,676
Commitments and contingencies
Redeemable units at redemption value, 2,763 and 2,788 units issued and outstanding at September 30, 2005 and December 31, 2004, respectively		41,859		40,846
Preferred units, $.01 par value, 20,000 units authorized:
Series A Cumulative Convertible Preferred Units, 12,880, issued and outstanding at September 30, 2005 and December 31, 2004		309,362		309,362
Series B Cumulative Redeemable Preferred Units, 68 units issued and outstanding at December 31, 2004		—		169,395
Series C Cumulative Redeemable Preferred Units, 68 units issued and outstanding at September 30, 2005		169,412		—
Common units, $.01 par value, 200,000 shares authorized and 60,210 and 59,817 units issued and outstanding at September 30, 2005 and December 31, 2004, respectively		813,076		834,599
Accumulated other comprehensive income		19,445		15,780
Total partners’ capital		1,311,295		1,329,136
Total liabilities, redeemable units and partners’ capital	$	3,277,980	$	3,317,658

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

3

FELCOR LODGING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three and Nine Months Ended September 30, 2005 and 2004
(unaudited, in thousands, except for per unit data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2005			2004			2005			2004
Revenues:
Hotel operating revenue	$	313,018		$	287,154		$	922,959		$	857,493
Retail space rental and other revenue		1,632			2,166			1,908			2,590
Total revenues		314,650			289,320			924,867			860,083
Expenses:
Hotel departmental expenses		108,405			103,078			317,692			305,105
Other property operating costs		92,758			83,026			267,744			246,430
Management and franchise fees		16,100			15,355			47,087			44,712
Taxes, insurance and lease expense		31,792			28,389			94,359			87,006
Corporate expenses		4,839			3,787			14,108			11,529
Depreciation		30,390			28,533			89,534			83,943
Total operating expenses		284,284			262,168			830,524			778,725
Operating income		30,366			27,152			94,343			81,358
Interest expense, net		(33,173	)		(34,303	)		(98,960	)		(113,090	)
Charge-off of deferred financing costs		—			(1,920	)		—			(6,094	)
Loss on early extinguishment of debt		—			(10,987	)		—			(39,233	)
Impairment loss		(569	)		—			(569	)		—
Hurricane loss		(2,309	)		(2,125	)		(2,309	)		(2,125	)
Gain on swap termination		—			—			—			1,005
Loss before equity in income of unconsolidated entities, minority interests and gain on sales of assets		(5,685	)		(22,183	)		(7,495	)		(78,179	)
Equity in income from unconsolidated entities		3,260			12,019			8,229			15,692
Gain on sale of assets		344			1,094			733			1,094
Minority interests		400			(644	)		415			(960	)
Income (loss) from continuing operations		(1,681	)		(9,714	)		1,882			(62,353	)
Discontinued operations		12,944			(29,493	)		10,658			(32,711	)
Net income (loss)		11,263			(39,207	)		12,540			(95,064	)
Preferred distributions		(9,829	)		(9,343	)		(29,729	)		(25,039	)
Issuance costs of redeemed preferred units		(1,324	)		—			(6,522	)		—
Net income (loss) applicable to common unitholders	$	110		$	(48,550	)	$	(23,711	)	$	(120,103	)
Basic and diluted loss per common unit data:
Net loss from continuing operations	$	(0.21	)	$	(0.31	)	$	(0.55	)	$	(1.41	)
Net income (loss)	$	0.00		$	(0.78	)	$	(0.38	)	$	(1.94	)
Weighted average common units outstanding		62,205			61,978			62,181			61,982

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

4

FELCOR LODGING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

For the Three and Nine Months Ended September 30, 2005 and 2004
(unaudited, in thousands)

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2005		2004			2005		2004
Net income (loss)	$	11,263	$	(39,207	)	$	12,540	$	(95,064	)
Unrealized gain (loss) on swaps		1,020		—			1,767		—
Foreign currency translation adjustment		2,891		4,489			1,897		3,519
Comprehensive income (loss)	$	15,174	$	(34,718	)	$	16,204	$	(91,545	)

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

5

FELCOR LODGING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30, 2005 and 2004
(unaudited, in thousands)

	Nine Months Ended September 30,
	2005			2004
Cash flows from operating activities:
Net income (loss)	$	12,540		$	(95,064	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation		91,795			92,242
Loss (gain) on sale of assets		(10,022	)		(3,210	)
Amortization of deferred financing fees		2,522			3,230
Accretion of debt, net of discount		871			200
Amortization of unearned compensation		2,171			1,750
Equity in income from unconsolidated entities		(8,229	)		(15,692	)
Distributions of income from unconsolidated entities		670			11,339
Impairment loss		1,860			33,027
Bad debt reserve		1,389			4
Charge-off of deferred financing costs		—			6,094
Gain (loss) on early extinguishment of debt		(2,538	)		39,233
Minority interests		(415	)		(321	)
Changes in assets and liabilities:
Accounts receivable		(9,518	)		(12,340	)
Restricted cash — operations		(7,784	)		(19,698	)
Other assets		569			4,912
Accrued expenses and other liabilities		41,295			8,413
Net cash flow provided by operating activities		117,176			54,119
Cash flows (used in) provided by investing activities:
Acquisition of hotel		—			(27,759	)
Acquisition of interest in venture		(1,197	)		—
Cash from consolidation of venture		3,204			—
Improvements and additions to hotels		(76,632	)		(58,597	)
Additions to condominium project		(7,778	)		—
Proceeds from sale of assets		52,354			66,866
Increase in restricted cash — investing		8,454			2,058
Capital contributions to unconsolidated entities		(700	)		—
Distributions of capital from unconsolidated entities		6,021			4,602
Net cash flow used in investing activities		(16,274	)		(12,830	)
Cash flows (used in) provided by financing activities:
Proceeds from borrowings		6,002			483,802
Repayment of borrowings		(25,951	)		(732,458	)
Payment of deferred financing fees		—			(4,283	)
Increase in restricted cash – financing		4,429			—
Contributions from minority interest holders		1,591			2,436
Net proceeds from sale of preferred units		164,221			156,094
Redemption of preferred units		(169,395	)		—
Distributions paid to minority interest holders		—			(4,000	)
Distributions paid to preferred unitholders		(30,231	)		(21,676	)
Net cash flow used in financing activities		(49,334	)		(120,085	)
Effect of exchange rate changes on cash		45			1,020
Net change in cash and cash equivalents		51,613			(77,776	)
Cash and cash equivalents at beginning of periods		119,310			231,885
Cash and cash equivalents at end of periods	$	170,923		$	154,109
Supplemental cash flow information — Interest paid	$	85,626		$	118,427

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

6

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization

     In 1994, FelCor Lodging Limited Partnership, or FelCor LP, was established with six hotels. At September 30, 2005, we held ownership interests in 134 hotels. Our sole general partner is FelCor Lodging Trust Incorporated, or FelCor, one of the nation’s largest lodging Real Estate Investment Trusts, or REITs, based on total assets and number of hotels owned. At September 30, 2005, FelCor owned an approximately 95% interest in our operations. We are the owner of the largest number of Embassy Suites Hotels^® and Doubletree Guest Suites^® hotels in North America. Our portfolio includes 68 full service, all suite hotels.

     At September 30, 2005, we had ownership interests in 134 hotels. We owned a 100% real estate interest in 105 hotels, a 90% or greater interest in entities owning seven hotels, a 60% interest in an entity owning two hotels, a 75% interest in an entity owning one hotel and 50% interests in unconsolidated entities that own 19 hotels. As a result of our ownership interests in the operating lessees of 129 of these hotels, we reflect their operating revenues and expenses in our consolidated statements of operations. The operations of 128 of the 129 consolidated hotels were included in continuing operations at September 30, 2005. The remaining hotel was subject to a firm sale contract at September 30, 2005, and its operations were included in discontinued operations. The operating revenues and expenses of the remaining five hotels are unconsolidated.

     At September 30, 2005, we had an aggregate of 62,972,039 redeemable and common units of FelCor LP limited partnership interest outstanding.

     The following table reflects the distribution, by brand, of the 128 hotels included in our consolidated continuing operations at September 30, 2005:

Brand	Hotels		Rooms
Embassy Suites Hotels		55		13,922
Doubletree® and Doubletree Guest Suites		10		2,206
Holiday Inn® — branded		34		11,644
Crowne Plaza® and Crowne Plaza Suites®		12		4,025
Sheraton® and Sheraton Suites®		10		3,269
Other brands		7		1,811
Total hotels		128

     The hotels shown in the above table are located in the United States (30 states) and Canada (two hotels), with concentrations in Texas (25 hotels), California (19 hotels), Florida (16 hotels) and Georgia (12 hotels). Approximately 55% of our hotel room revenues in continuing operations were generated from hotels in these four states during the nine months ended September 30, 2005.

     At September 30, 2005, of the 128 consolidated hotels included in continuing operations, (i) subsidiaries of Hilton Hotels Corporation, or Hilton, managed 65, (ii) subsidiaries of InterContinental Hotels Group, or IHG, managed 49 (iii) subsidiaries of Starwood Hotels & Resorts Worldwide, Inc., or Starwood, managed 11, and (iv) other independent management companies managed three.

     Certain reclassifications have been made to prior period financial information to conform to the current period’s presentation with no effect on previously reported net loss or partners’ capital.

     The financial information for the three and nine months ended September 30, 2005 and 2004, is unaudited. The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America, or GAAP, requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The accompanying financial statements for the three and nine months ended September 30, 2005 and 2004, include adjustments based on management’s estimates (consisting of normal and recurring accruals), which we consider

7

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization ¾ (continued)

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, 2004, included in our Annual Report on Form 10-K for the year ended December 31, 2004 (“Form 10-K”). Operating results for the three and nine months ended September 30, 2005, are not necessarily indicative of the results that may be expected for the entire year.

2. Foreign Currency Translation

     Results of operations for our 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 rates in effect at the balance sheet date. Resulting translation adjustments are reflected in accumulated other comprehensive income included in partners’ capital.

3. Investment in Unconsolidated Entities

     We owned 50% interests in joint venture entities that owned 19 hotels at September 30, 2005, and 20 hotels at December 31, 2004. We also owned a 50% interest in entities that own real estate in Myrtle Beach, South Carolina, provide condominium management services, and lease four hotels. We account for our investments in these unconsolidated entities under the equity method. We do not have any majority-owned subsidiaries that are not consolidated in our financial statements. We make adjustments to our equity in income from unconsolidated entities related to the difference between our basis in investment in unconsolidated entities compared to the historical basis of the assets recorded by the joint ventures.

     Summarized unaudited combined financial information for 100% of these unconsolidated entities is as follows (in thousands):

	September 30,		December 31,
	2005		2004
Balance sheet information:
Investment in hotels, net of accumulated depreciation	$	259,875	$	282,028
Total assets	$	287,672	$	313,104
Debt	$	205,783	$	218,292
Total liabilities	$	208,825	$	237,597
Equity	$	78,847	$	75,507

     Debt of our unconsolidated entities at September 30, 2005, consisted entirely of non-recourse mortgage debt.

     Summarized combined statement of operations information for 100% of our unconsolidated entities is as follows (in thousands):

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2005		2004			2005		2004
Total revenues	$	20,384	$	17,212		$	57,652	$	49,623
Net income	$	6,543	$	20,828	(a)	$	16,962	$	29,610	(a)

(a) Includes $15.9 million from the gain on the sale of residential condominium units development in Myrtle Beach, South Carolina, which was realized in September 2004. Our share of the gain was approximately $7.9 million. We included additional gains of approximately $1.9 million in our equity in income from unconsolidated entities to reflect the differences between our historical basis in the assets sold and the basis recorded by the condominium development joint venture.

8

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. Investment in Unconsolidated Entities – (continued)

     In May 2005, but effective as of February 28, 2005, we acquired for $1.2 million an additional 25% interest in a joint venture in which we had previously owned a 50% interest. This joint venture owns a single hotel and has been consolidated in our financial statements since the acquisition of our additional interest.

4. Debt

Debt at September 30, 2005 and December 31, 2004, consisted of the following (in thousands):

						Balance Outstanding
	Encumbered	Interest Rate at			Maturity	September 30,		December 31,
	Hotels	September 30, 2005			Date	2005		2004
Promissory note	none		5.92	(a)	June 2016	$	650	$	650
Senior unsecured term notes	none		7.63		October 2007		123,125		122,426
Senior unsecured term notes	none		9.00		June 2011		298,597		298,409
Senior unsecured term notes	none		7.79	(b)	June 2011		290,000		290,000
Total unsecured debt			8.27				712,372		711,485
Mortgage debt	9 hotels		6.52		July 2009 - 2014		104,586		105,951
Mortgage debt	6 hotels		5.74	(c)	August 2007		85,053		86,412
Mortgage debt	10 hotels		6.13	(c)	May 2006		142,008		144,669
Mortgage debt	15 hotels		7.24		Nov. 2007		125,017		127,316
Mortgage debt	7 hotels		7.32		April 2009		128,218		130,458
Mortgage debt	6 hotels		7.55		June 2009		66,768		67,959
Mortgage debt	8 hotels		8.70		May 2010		173,363		175,504
Mortgage debt	7 hotels		8.73		May 2010		133,809		135,690
Mortgage debt	1 hotel		6.77	(a)	August 2008		15,500		15,500
Mortgage debt	1 hotel		7.91		December 2007		10,523		—
Mortgage debt	—		—		—		—		49,476
Mortgage debt	—		—		—		—		10,521
Other	1 hotel		9.17		August 2011		5,423		6,181
Construction loan	—	5.76dc)			October 2007		6,002		—
Total secured debt(e)	71 hotels		7.36				996,270		1,055,637
Total(e)			7.74	%		$	1,708,642	$	1,767,122

(a)	Variable interest rate based on LIBOR. The six month LIBOR was 3.53% at September 30, 2005.
(b)	The stated interest rate on this debt is six month LIBOR plus 4.25%. We have swapped $100 million of this floating rate debt for a fixed rate of 7.80%. The resulting weighted average rate on these notes was 7.79% at September 30, 2005.
(c)	Variable interest rate based on LIBOR. This debt has two, one-year extension options, subject to certain contingencies.
(d)	This represents a $69.8 million recourse construction loan facility for the development of a 184-unit condominium project in Myrtle Beach, South Carolina. The interest on this facility is currently based on LIBOR plus 225 basis points and is being capitalized as part of the cost of the project. The interest rate may be reduced to LIBOR plus 200 basis points when the project is 55% complete and upon satisfaction of certain other requirements.
(e)	Interest rates are calculated based on the weighted average outstanding debt at September 30, 2005.

     We reported interest expense of $33.2 million and $34.3 million, which is net of interest income of $1.2 million and $0.5 million and capitalized interest of $0.4 million and $0.4 million for the three months ended September 30, 2005 and 2004, respectively. We reported interest expense of $99.0 million and $113.1 million, which is net of interest income of $2.6 million and $1.9 million and capitalized interest of $1.4 million and $0.6 million for the nine months ended September 30, 2005 and 2004, respectively.

9

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. Debt ¾ (continued)

     At September 30, 2005, we had aggregate mortgage indebtedness of approximately $1.0 billion that was secured by 71 of our consolidated hotels with an aggregate book value of approximately $1.7 billion. With the exception of the $6.0 million construction loan, all of this debt is recourse solely to the specific assets securing the debt, except in the case of fraud, misapplication of funds and other customary recourse carve-out provisions. Loans secured by 33 hotels provide for lock-box arrangements. With respect to loans secured by 15 of these hotels, if the debt service coverage ratios fall below certain levels and certain other conditions are met, the lender is entitled to apply the revenues from the hotels securing the loan to satisfy current requirements for debt service, taxes, insurance and other reserves, and to hold the balance of the revenues, if any, until debt service coverage ratios again reach specified levels.

     With respect to loans secured by the remaining 18 hotels, the owner is permitted to retain 115% of budgeted hotel operating expenses before the remaining revenues would become subject to a lock-box arrangement if a specified debt service coverage ratio was not met. The lender is entitled to apply the remaining revenues to satisfy current requirements for debt service, taxes, insurance and other reserves with any excess cash being returned to the owner. The mortgage loans secured by 16 of these 18 hotels also provide that, so long as the debt service coverage ratios remain below a second, even lower minimum level, the lender may retain any excess cash (after deduction for the 115% of budgeted operating expenses, debt service, tax, insurance and other reserve requirements) and, if the debt service coverage ratio remains below this lower minimum level for 12 consecutive months, apply any accumulated excess cash to the prepayment of the principal amount of the debt. If the debt service coverage ratio exceeds the lower minimum level for three consecutive months, any then accumulated excess cash will be returned to the owner. Ten of these 18 hotels, which accounted for 6% of our total revenues in 2004, fell below the applicable debt service coverage ratio in 2004 and are currently subject to the lock-box provisions. None of the hotels are currently below the second, even lower minimum debt service coverage ratio that would permit the lender to retain excess cash after deduction for the 115% of budgeted operating expenses, debt service, tax, insurance and other reserve requirements.

5. Derivatives

     In the normal course of business, we are exposed to the effect of interest rate changes. We limit these risks by following established risk management policies and procedures, including the use of derivatives. It is our objective to use interest rate hedges to manage our fixed and floating interest rate position and not to engage in speculation on interest rates. We manage interest rate risk based on the varying circumstances of anticipated borrowings and existing floating and fixed rate debt. We will generally seek to pursue interest rate risk mitigation strategies that will result in the least amount of reported earnings volatility under GAAP while still meeting strategic economic objectives and maintaining adequate liquidity and flexibility. Instruments that meet these hedging criteria are formally designated as hedges at the inception of the derivative contract.

     To determine the fair values of our derivative instruments, we use 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 September 30, 2005, we had three interest rate swaps, with an aggregate notional amount of $100 million, maturing in December 2007. These interest rate swaps are designated as cash flow hedges and are marked to market through other comprehensive income. The estimated unrealized net gain on these interest rate swap agreements was approximately $1.9 million at September 30, 2005, and represents the amount we would receive if the agreements were terminated, based on current market rates. The interest rate received on these interest rate swaps is 4.25% plus LIBOR and the interest rate paid is 7.80%. These swaps were 100% effective through September 30, 2005.

10

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. Derivatives – (continued)

     The amounts paid or received by us under the terms of the interest rate swap agreements are accrued as interest rates change, and we recognize them as an adjustment to interest expense, which will have a corresponding effect on our future cash flows. The interest rate swaps increased interest expense by $6,100 and by $0.4 million during the three and nine months ended September 30, 2005, respectively.

     Our interest rate swaps have monthly to semi-annual settlement dates. Agreements such as these contain a credit risk in that the counterparties may be unable to fulfill the terms of the agreement. We minimize that risk by evaluating the creditworthiness of our counterparties, who are limited to major banks and financial institutions, and we do not anticipate nonperformance by the counterparties. The Standard & Poor’s credit ratings for each of the financial institutions that are counterparties to our interest rate swap agreements are AA- or better.

     We had fair value hedges with a notional amount of $400 million that we terminated in 2004. These fair value hedges decreased interest by $4.2 million during the nine months ended September 30, 2004. In June 2004, we unwound six interest rate swap agreements with an aggregate notional amount of $175 million that were matched with the $175 million notes due 2004 that were redeemed. A $1.0 million gain was recorded, offsetting the loss on the redemption of the debt. Also in June 2004, five additional swaps with an aggregate notional amount of $125 million, that were matched to the $125 million senior unsecured notes due 2007, were unwound at a cost of $2.3 million. The $2.3 million cost decreased the book value of these notes and is being amortized to interest expense over the life of the debt. In July 2004, the remaining four interest rate swap agreements, having a notional value of $100 million, were unwound at a cost of $1.3 million. The $1.3 million cost decreased the mortgage debt due November 2007 and is being amortized to interest expense over the life of this debt.

     To fulfill requirements under the $150 million secured loan facility executed in April 2003, we purchased 6% interest rate caps with a notional amount of $142.9 million. We concurrently sold interest rate caps with identical terms. In July 2004, we purchased 6.5% interest rate caps on LIBOR, with a notional amount of $86 million, to fulfill requirements under an $86 million cross-collateralized floating rate CMBS loan and concurrently sold interest rate caps with identical terms. These interest rate cap agreements have not been designated as hedges. The fair value of both the purchased and sold interest rate caps were insignificant at September 30, 2005, and resulted in no net earnings impact.

6. Preferred Units

     FelCor completed the issuance of 5.4 million depositary shares, each depositary share representing 1/100 of a share of its 8% Series C Cumulative Redeemable Preferred Stock, on April 8, 2005, and issued an additional 1.4 million depositary shares on August 30, 2005, with gross proceeds of $135 million and $34.4 million, respectively. FelCor contributed the gross proceeds to us in exchange for newly issued Series C preferred units. The preference on these units is the same as FelCor’s Series C preferred stock. The gross proceeds were used to redeem a like number of units of our 9% Series B preferred units held by FelCor. FelCor then used the proceeds to redeem a like number of shares of its 9% Series B Cumulative Redeemable Preferred Stock. The redemption of the Series B preferred units resulted in a reduction in income available to common unitholders representing the original issuance cost of the Series B preferred units redeemed, of $1.3 million and $6.5 million for the three and nine months ended September 30, 2005, respectively.

11

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2005		2004		2005		2004
Room revenue	$	256,721	$	232,089	$	748,519	$	688,339
Food and beverage revenue		40,123		39,960		127,993		124,176
Other operating departments		16,174		15,105		46,447		44,978
Total hotel operating revenue	$	313,018	$	287,154	$	922,959	$	857,493

     For the first nine months of both 2005 and 2004, over 99% of our revenue was comprised of hotel operating revenue, which included room revenue, food and beverage revenue, and revenue from other hotel operating departments (such as telephone, parking and business centers). These revenues are recorded net of any sales or occupancy taxes collected from our guests. All rebates or discounts are recorded, when allowed, as a reduction in revenue, and there are no material contingent obligations with respect to rebates or discounts offered by us. All revenues are recorded on an accrual basis, as earned. Appropriate allowances are made for doubtful accounts and are recorded as a bad debt expense. The remaining 1% of our revenue was from retail space rental revenue and other sources.

     Hotel departmental expenses from continuing operations were comprised of the following:

	Three Months Ended September 30,
	2005				2004
			% of Total				% of Total
			Hotel				Hotel
	Dollars in		Operating		Dollars in		Operating
	Thousands		Revenue		Thousands		Revenue
Room	$	67,307		21.5	$	63,166		22.0
Food and beverage		32,890		10.5		32,461		11.3
Other operating departments		8,208		2.6		7,451		2.6
Total hotel departmental expenses	$	108,405		34.6	$	103,078		35.9

	Nine Months Ended September 30,
	2005				2004
			% of Total				% of Total
			Hotel				Hotel
	Dollars in		Operating		Dollars in		Operating
	Thousands		Revenue		Thousands		Revenue
Room	$	193,581		21.0	$	183,633		21.4
Food and beverage		100,829		10.9		99,240		11.6
Other operating departments		23,282		2.5		22,232		2.6
Total hotel departmental expenses	$	317,692		34.4	$	305,105		35.6

12

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

	Three Months Ended September 30,
	2005				2004
			% of Total				% of Total
	Dollars in		Hotel		Dollars in		Hotel
	Thousands		Operating Revenue		Thousands		Operating Revenue
Hotel general and administrative expense	$	31,249		9.9	$	26,810		9.3
Marketing		26,471		8.5		24,234		8.4
Repair and maintenance		17,114		5.5		15,676		5.5
Energy		17,924		5.7		16,306		5.7
Total other property operating costs	$	92,758		29.6	$	83,026		28.9

	Nine Months Ended September 30,
	2005				2004
			% of Total				% of Total
			Hotel				Hotel
	Dollars in		Operating		Dollars in		Operating
	Thousands		Revenue		Thousands		Revenue
Hotel general and administrative expense	$	88,221		9.6	$	80,459		9.4
Marketing		79,584		8.6		74,191		8.7
Repair and maintenance		51,010		5.5		47,461		5.5
Energy		48,929		5.3		44,319		5.1
Total other property operating costs	$	267,744		29.0	$	246,430		28.7

     Included in hotel departmental expenses and other property operating costs are hotel employee compensation and benefit expenses of $98.6 million and $93.8 million for the three months ended September 30, 2005 and 2004, respectively, and $292.3 million and $279.8 million for the nine months ended September 30, 2005 and 2004, respectively.

8. Taxes, Insurance and Lease Expense

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2005		2004		2005		2004
Operating lease expense (a)	$	17,239	$	15,132	$	49,892	$	45,726
Real estate and other taxes		11,289		9,608		34,266		31,140
Property insurance, general liability insurance and other		3,264		3,649		10,201		10,140
Total taxes, insurance and lease expense	$	31,792	$	28,389	$	94,359	$	87,006

(a) Includes hotel lease expense of $14.7 million and $13.1 million associated with 14 hotels and 15 hotels owned by unconsolidated entities for the three months ended September 30, 2005 and 2004, respectively, and $42.8 million and $39.2 million for the nine months ended September 30, 2005 and 2004, respectively. Included in lease expense are $8.7 million and $6.6 million in percentage rent based on operating results for the three months ended September 30, 2005 and 2004, respectively, and $23.4 million and $18.8 million in percentage rent for the nine months ended September 30, 2005 and 2004, respectively.

13

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. Impairment

     Our hotels are comprised of operations and cash flows that can clearly be distinguished, both operationally and for financial reporting purposes. Accordingly, we consider our hotels to be components as defined by Statement of Financial Accounting Standards 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” or SFAS 144, for purposes of determining impairment charges and reporting discontinued operations. We recorded impairment charges under the provisions of the SFAS 144 of $1.3 million during the nine months ended September 30, 2005. We recorded $0.7 million of impairment charge in June 2005, with respect to one of our non-strategic hotels included in continuing operations. In July 2005, we entered into a contract for sale of this hotel and reduced its carrying value to the purchase contract amount. We recorded $0.6 million of impairment charges in September 2005, with respect to one of our non-strategic hotels included in continuing operations. In October 2005, we entered into a contract for sale of this hotel and reduced its carrying value to the purchase contract amount.

     We continue to review and evaluate our hotel portfolio on an ongoing basis and may identify additional non-strategic hotels for sale based upon various factors. If we decide to sell additional hotels, or if our estimates of market value for hotels currently designated as non-strategic decline, we could incur future impairment charges.

10. Discontinued Operations

     Included in discontinued operations are the results of operations, through the date of dispositions, of 15 hotels sold or otherwise disposed of in 2005, one hotel designated as held for sale at September 30, 2005, and 18 hotels disposed of in 2004. Condensed financial information for the hotels included in discontinued operations is as follows (in thousands):

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2005		2004			2005			2004
Operating revenue	$	4,881	$	30,212		$	29,655		$	110,501
Operating expenses		3,924		29,421			28,516			110,474
Operating income		957		791			1,139			27
Direct interest costs		—		(1,037	)		(963	)		(3,108	)
Gain on early extinguishment of debt		2,538		—			2,538			—
Impairment loss		—		(33,027	)		(1,291	)		(33,027	)
Gain on sale of assets		9,449		3,058			9,235			2,116
Minority interest		—		722			—			1,281
Income (loss) from discontinued operations	$	12,944	$	(29,493	)	$	10,658		$	(32,711	)

     In the first quarter of 2005, we sold the Holiday Inn Salt Lake City, Utah, for $1.2 million.

     In the second quarter of 2005 we sold the Whispering Woods Conference Center in Olive Branch, Mississippi, and the Holiday Inn and Holiday Inn Select hotels in Moline, Illinois, for aggregate gross proceeds of $12.3 million.

     In the third quarter of 2005, we sold the Holiday Inn Jackson North, Mississippi, the Holiday Inn Waco, Texas, and the Embassy Suites St. Louis, Missouri, for aggregate gross proceeds of $44.1 million.

     In the second and third quarter of 2005, we surrendered eight limited service hotels, owned by a consolidated joint venture, to their non-recourse mortgage holder. We recorded a gain of $2.5 million representing the debt extinguished in excess of the book value of these hotels.

     During 2004, we sold 17 hotels for gross proceeds of $157 million. Also in 2004, we terminated a hotel lease and incurred $4.9 million in lease termination charges upon the return of the asset to the lessor.

14

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. Earnings (Loss) Per Unit

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

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2005			2004			2005			2004
Numerator:
Income (loss) from continuing operations	$	(1,681	)	$	(9,714	)	$	1,882		$	(62,353	)
Less: Preferred distributions		(9,829	)		(9,343	)		(29,729	)		(25,039	)
Issuance costs of redeemed preferred units		(1,324	)		—			(6,522	)		—
Loss from continuing operations applicable to common unitholders		(12,834	)		(19,057	)		(34,369	)		(87,392	)
Discontinued operations		12,944			(29,493	)		10,658			(32,711	)
Net loss applicable to common unitholders	$	110		$	(48,550	)	$	(23,711	)	$	(120,103	)
Denominator:
Denominator for basic earnings per unit		62,215			61,978			62,181			61,982
Denominator for diluted earnings per unit		62,215			61,978			62,181			61,982
Earnings (loss) per unit data:
Basic:
Loss from continuing operations	$	(0.21	)	$	(0.31	)	$	(0.55	)	$	(1.41	)
Discontinued operations	$	0.21		$	(0.47	)	$	0.17		$	(0.53	)
Net loss	$	0.00		$	(0.78	)	$	(0.38	)	$	(1.94	)
Diluted:
Loss from continuing operations	$	(0.21	)	$	(0.31	)	$	(0.55	)	$	(1.41	)
Discontinued operations	$	0.21		$	(0.47	)	$	0.17		$	(0.53	)
Net loss	$	0.00		$	(0.78	)	$	(0.38	)	$	(1.94	)

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2005		2004		2005		2004
FelCor restricted shares granted but not vested		620		405		543		306
Series A convertible preferred units		9,985		9,985		9,985		9,985

     Series A preferred distributions that would be excluded from net loss applicable to common unitholders, if these Series A preferred units were dilutive, were $6.3 million and $5.5 million for the three months ended September 30, 2005 and 2004, respectively, and $18.8 million and $13.6 million for the nine months ended September 30, 2005 and 2004, respectively.

15

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12. FelCor Stock Based Compensation Plans

     FelCor applies Accounting Principles Board Opinion 25, or APB 25, and related interpretations in accounting for its stock based compensation plans for stock based compensation issued prior to January 1, 2003. In 1995, Statement of Financial Accounting Standards 123, “Accounting for Stock-Based Compensation,” or SFAS 123 was issued, which, if fully adopted by us, would have changed the methods we apply in recognizing the cost of the plans. As permitted under the transition provisions of Statement of Financial Accounting Standards 148, “Accounting for Stock-Based Compensation – Transition and Disclosure,” FelCor began recognizing compensation expense in accordance with SFAS 123 for all new awards issued after December 31, 2002. Had the compensation cost for FelCor’s stock-based compensation plans been determined in accordance with SFAS 123 prior to January 1, 2003, our net income or loss from continuing operations and net income or loss from continuing operations per common unit for the periods presented would approximate the pro forma amounts below (in thousands, except per unit data):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2005			2004			2005			2004
Income (loss) from continuing operations, as reported	$	(1,681	)	$	(9,714	)	$	1,882		$	(62,353	)
Add stock based compensation included in the net income or loss, as reported		954			484			2,171			1,615
Less stock based compensation expense that would have been included in the determination of net income or loss if the fair value method had been applied to all awards		(957	)		(638	)		(2,180	)		(1,685	)
Income (loss) from continuing operations, pro forma	$	(1,684	)	$	(9,868	)	$	1,873		$	(62,423	)
Basic and diluted net loss from continuing operations per common unit:
As reported	$	(0.21	)	$	(0.31	)	$	(0.55	)	$	(1.41	)
Pro forma	$	(0.21	)	$	(0.31	)	$	(0.55	)	$	(1.41	)

     The effects of applying SFAS 123 in this pro forma disclosure are not indicative of future amounts.

13. Subsequent Events

     In October 2005, we refinanced certain mortgage debt in conjunction with the recapitalization of our taxable REIT subsidiaries. As a result of these refinancings, we incurred prepayment penalties and will write-off deferred debt costs aggregating $12.7 million, which will be recorded in the fourth quarter of 2005.

     In October 2005, Hurricane Wilma struck southern Florida and our six hotels in the area were affected to varying degrees. We have not yet been able to determine the full extent of damage to our hotels or estimate our ultimate cost from this hurricane. However, five of the six hotels are at least partially open for business and we expect the sixth hotel to reopen by mid-November 2005. We anticipate recording an expense in fourth quarter to reflect our best estimate of the costs related to this hurricane, which we expect to be less than $5 million, representing our aggregate insurance deductible for the six hotels.

     FelCor’s board of directors has declared a fourth quarter common distribution of $0.15 per common unit payable on December 1, 2005, to our common unitholders of record on November 15, 2005. Future distributions will be determined by FelCor’s board of directors, based primarily upon its expected annual cash flow from operations in excess of approximately five percent of total revenues, for maintenance capital.

16

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14. 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 Holdings, 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
September 30, 2005
(in thousands)

			Subsidiary			Non-Guarantor						Total
	FelCor L.P.		Guarantors			Subsidiaries			Eliminations			Consolidated
ASSETS
Net investment in hotel properties	$	120,480	$	804,907		$	1,936,716		$	—		$	2,862,103
Equity investment in consolidated entities		1,824,726		—			—			(1,824,726	)		—
Investment in unconsolidated entities		74,318		33,303			—			—			107,621
Assets held for sale		—		2,599			—			—			2,599
Cash and cash equivalents		120,790		40,690			9,443			—			170,923
Restricted cash		3,501		2,161			21,508			—			27,170
Accounts receivable		5,178		54,067			(300	)		—			58,945
Deferred assets		6,866		1,214			7,403			—			15,483
Condominium development project		9,326		—			—			—			9,326
Other assets		3,843		19,619			348			—			23,810
Total assets	$	2,169,028	$	958,560		$	1,975,118		$	(1,824,726	)	$	3,277,980
LIABILITIES AND PARTNERS’ CAPITAL
Debt	$	733,924	$	157,259		$	817,459		$	—		$	1,708,642
Distributions payable		8,592		—			—			—			8,592
Accrued expenses and other liabilities		34,923		107,034			17,030			—			158,987
Minority interest — other partnerships		38,435		(182	)		10,352			—			48,605
Total liabilities		815,874		264,111			844,841			—			1,924,826
Redeemable units, at redemption value		41,859		—			—			—			41,859
Preferred units		478,774		—			—			—			478,774
Common units		830,606		676,919			1,130,277			(1,824,726	)		813,076
Accumulated other comprehensive income		1,915		17,530			—			—			19,445
Total partners’ capital		1,311,295		694,449			1,130,277			(1,824,726	)		1,311,295
Total liabilities, redeemable units and partners’ capital	$	2,169,028	$	958,560		$	1,975,118		$	(1,824,726	)	$	3,277,980

17

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14. Consolidating Financial Information ¾ (continued)

CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2004
(in thousands)

				Subsidiary			Non-Guarantor					Total
	FelCor L.P.			Guarantors			Subsidiaries		Eliminations			Consolidated
ASSETS
Net investment in hotel properties	$	193,695		$	1,015,155		$	1,746,916	$	—		$	2,955,766
Equity investment in consolidated entities		1,769,874			—			—		(1,769,874	)		—
Investment in unconsolidated entities		76,190			34,653			—		—			110,843
Assets held for sale		—			255			—		—			255
Cash and cash equivalents		84,829			29,387			5,094		—			119,310
Restricted cash		9,287			2,195			23,254		—			34,736
Accounts receivable		3,426			48,411			8		—			51,845
Deferred assets		8,917			1,218			8,669		—			18,804
Condominium development project		1,613			—			—		—			1,613
Other assets		8,239			16,185			62		—			24,486
Total assets	$	2,156,070		$	1,147,459		$	1,784,003	$	(1,769,874	)	$	3,317,658
LIABILITIES AND PARTNERS’ CAPITAL
Debt	$	776,790		$	160,337		$	829,995	$	—		$	1,767,122
Distributions payable		8,867			—			—		—			8,867
Accrued expenses and other liabilities		(764	)		106,047			19,639		—			124,922
Minority interest — other partnerships		1,195			(5,353	)		50,923		—			46,765
Total liabilities		786,088			261,031			900,557		—			1,947,676
Redeemable units, at redemption value		40,846			—			—		—			40,846
Preferred units		478,757			—			—		—			478,757
Common units		850,379			870,648			883,446		(1,769,874	)		834,599
Accumulated other comprehensive income		—			15,780			—		—			15,780
Total partners’ capital		1,329,136			886,428			883,446		(1,769,874	)		1,329,136
Total liabilities, redeemable units and partners’ capital	$	2,156,070		$	1,147,459		$	1,784,003	$	(1,769,874	)	$	3,317,658

18

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14. Consolidating Financial Information ¾ (continued)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Three Months Ended September 30, 2005
(in thousands)

				Subsidiary			Non-Guarantor						Total
	FelCor L.P.			Guarantors			Subsidiaries			Eliminations			Consolidated
Revenues:
Hotel operating revenue	$	—		$	313,018		$	—		$	—		$	313,018
Percentage lease revenue		8,215			33,749			59,611			(101,575	)		—
Other revenue		1,632			—			—			—			1,632
Total revenue		9,847			346,767			59,611			(101,575	)		314,650
Expenses:
Hotel operating expense		—			217,263			—			—			217,263
Taxes, insurance and lease expense		1,168			124,075			8,124			(101,575	)		31,792
Corporate expenses		280			2,636			1,923			—			4,839
Depreciation		1,824			10,208			18,358			—			30,390
Total operating expenses		3,272			354,182			28,405			(101,575	)		284,284
Operating income (loss)		6,575			(7,415	)		31,206			—			30,366
Interest expense, net		(14,477	)		(2,616	)		(16,080	)		—			(33,173	)
Impairment loss		—			(569	)		—			—			(569	)
Hurricane loss		(1,890	)		(419	)		—			—			(2,309	)
Income (loss) before equity in income from unconsolidated entities, minority interests and gain on sale of assets		(9,792	)		(11,019	)		15,126			—			(5,685	)
Equity in income from consolidated entities		7,841			—			—			(7,841	)		—
Equity in income from unconsolidated entities		2,285			975			—			—			3,260
Gain (loss) on sale of assets		8,391			(8,109	)		62			—			344
Minority interests in other partnerships		—			844			(444	)		—			400
Income (loss) from continuing operations		8,725			(17,309	)		14,744			(7,841	)		(1,681	)
Discontinued operations from consolidated entities		2,538			10,406			—			—			12,944
Net income (loss)		11,263			(6,903	)		14,744			(7,841	)		11,263
Preferred distributions		(9,829	)		—			—			—			(9,829	)
Issuance costs of redeemed preferred units		(1,324	)		—			—			—			(1,324	)
Net income (loss) applicable to unitholders	$	110		$	(6,903	)	$	14,744		$	(7,841	)	$	110

19

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14. Consolidating Financial Information ¾ (continued)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Three Months Ended September 30, 2004
(in thousands)

				Subsidiary			Non-Guarantor						Total
	FelCor L.P.			Guarantors			Subsidiaries			Eliminations			Consolidated
Revenues:
Hotel operating revenue	$	—		$	287,154		$	—		$	—		$	287,154
Percentage lease revenue		6,558			41,979			50,196			(98,733	)		—
Other revenue		1,166			1,000			—			—			2,166
Total revenue		7,724			330,133			50,196			(98,733	)		289,320
Expenses:
Hotel operating expense		—			201,459			—			—			201,459
Taxes, insurance and lease expense		(332	)		120,035			7,419			(98,733	)		28,389
Corporate expenses		193			2,235			1,359			—			3,787
Depreciation		1,770			10,524			16,239			—			28,533
Total operating expenses		1,631			334,253			25,017			(98,733	)		262,168
Operating income (loss)		6,093			(4,120	)		25,179			—			27,152
Interest expense, net		(17,000	)		(2,540	)		(14,763	)		—			(34,303	)
Charge-off of deferred financing cost		(1,920	)		—			—			—			(1,920	)
Early extinguishment of debt		(10,987	)		—			—			—			(10,987	)
Hurricane loss		(1,750	)		(375	)		—			—			(2,125	)
Income (loss) before equity in income from unconsolidated entities, minority interests and gain on sale of assets		(25,564	)		(7,035	)		10,416			—			(22,183	)
Equity in income from consolidated entities		8,885			—			—			(8,885	)		—
Equity in income from unconsolidated entities		551			11,468			—			—			12,019
Gain (loss) on sale of assets		—			(11	)		1,105			—			1,094
Minority interests in other partnerships		—			528			(1,172	)		—			(644	)
Income (loss) from continuing operations		(16,128	)		4,950			10,349			(8,885	)		(9,714	)
Discontinued operations from consolidated entities		(23,079	)		(6,414	)		—			—			(29,493	)
Net income (loss)		(39,207	)		(1,464	)		10,349			(8,885	)		(39,207	)
Preferred distributions		(9,343	)		—			—			—			(9,343	)
Net income (loss) applicable to unitholders	$	(48,550	)	$	(1,464	)	$	10,349		$	(8,885	)	$	(48,550	)

20

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14. Consolidating Financial Information ¾ (continued)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 2005
(in thousands)

				Subsidiary			Non-Guarantor						Total
	FelCor L.P.			Guarantors			Subsidiaries			Eliminations			Consolidated
Revenues:
Hotel operating revenue	$	—		$	922,959		$	—		$	—		$	922,959
Percentage lease revenue		19,235			110,801			174,743			(304,779	)		—
Other revenue		2,245			(337	)		—			—			1,908
Total revenue		21,480			1,033,423			174,743			(304,779	)		924,867
Expenses:
Hotel operating expense		—			632,523			—			—			632,523
Taxes, insurance and lease expense		4,707			373,002			21,429			(304,779	)		94,359
Corporate expenses		819			7,475			5,814			—			14,108
Depreciation		5,151			31,950			52,433			—			89,534
Total operating expenses		10,677			1,044,950			79,676			(304,779	)		830,524
Operating income (loss)		10,803			(11,527	)		95,067			—			94,343
Interest expense, net		(42,920	)		(8,716	)		(47,324	)		—			(98,960	)
Impairment loss		—			(569	)		—			—			(569	)
Hurricane loss		(1,890	)		(419	)		—			—			(2,309	)
Income (loss) before equity in income from unconsolidated entities, minority interests and gain on sale of assets		(34,007	)		(21,231	)		47,743			—			(7,495	)
Equity in income from consolidated entities		27,381			—			—			(27,381	)		—
Equity in income from unconsolidated entities		7,086			1,143			—			—			8,229
Gain on sale of assets		388			283			62			—			733
Minority interests in other partnerships		—			1,562			(1,147	)		—			415
Income (loss) from continuing operations		848			(18,243	)		46,658			(27,381	)		1,882
Discontinued operations from consolidated entities		11,692			(1,034	)		—			—			10,658
Net income (loss)		12,540			(19,277	)		46,658			(27,381	)		12,540
Preferred distributions		(29,729	)		—			—			—			(29,729	)
Issuance costs of redeemed preferred units		(6,522	)		—			—			—			(6,522	)
Net income (loss) applicable to unitholders	$	(23,711	)	$	(19,277	)	$	46,658		$	(27,381	)	$	(23,711	)

21

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14. Consolidating Financial Information ¾ (continued)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 2004
(in thousands)

				Subsidiary			Non-Guarantor						Total
	FelCor L.P.			Guarantors			Subsidiaries			Eliminations			Consolidated
Revenues:
Hotel operating revenue	$	—		$	857,493		$	—		$	—		$	857,493
Percentage lease revenue		18,406			126,676			157,502			(302,584	)		—
Other revenue		1,590			1,000			—			—			2,590
Total revenue		19,996			985,169			157,502			(302,584	)		860,083
Expenses:
Hotel operating expense		—			596,247			—			—			596,247
Taxes, insurance and lease expense		(38	)		367,624			22,004			(302,584	)		87,006
Corporate expenses		1,193			6,109			4,227			—			11,529
Depreciation		5,627			30,013			48,303			—			83,943
Total operating expenses		6,782			999,993			74,534			(302,584	)		778,725
Operating income		13,214			(14,824	)		82,968			—			81,358
Interest expense, net		(64,917	)		(7,990	)		(40,183	)		—			(113,090	)
Charge-off of deferred financing cost		(6,094	)		—			—			—			(6,094	)
Early extinguishment of debt		(39,233	)		—			—			—			(39,233	)
Hurricane loss		(1,750	)		(375	)		—			—			(2,125	)
Gain on swap termination		1,005			—			—			—			1,005
Income (loss) before equity in income from unconsolidated entities, minority interests and gain on sale of assets		(97,775	)		(23,189	)		42,785			—			(78,179	)
Equity in income from consolidated entities		20,083			—			—			(20,083	)		—
Equity in income from unconsolidated entities		4,647			11,045			—			—			15,692
Gain (loss) on sale of assets		—			(22	)		1,116			—			1,094
Minority interests in other partnerships		—			528			(1,488	)		—			(960	)
Income from continuing operations		(73,045	)		(11,638	)		42,413			(20,083	)		(62,353	)
Discontinued operations from consolidated entities		(22,019	)		(10,699	)		7			—			(32,711	)
Net income (loss)		(95,064	)		(22,337	)		42,420			(20,083	)		(95,064	)
Preferred distributions		(25,039	)		—			—			—			(25,039	)
Net loss applicable to unitholders	$	(120,103	)	$	(22,337	)	$	42,420		$	(20,083	)	$	(120,103	)

22

FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14. Consolidating Financial Information ¾ (continued)

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Nine Months Ended September 30, 2005
(in thousands)

			Subsidiary			Non-Guarantor			Total
	FelCor L.P.		Guarantors			Subsidiaries			Consolidated
Cash flows from (used in) operating activities	$	3,434	$	12,883		$	100,859		$	117,176
Cash flows from (used in) investing activities		18,095		487			(34,856	)		(16,274	)
Cash flows from (used in) financing activities		14,432		(2,112	)		(61,654	)		(49,334	)
Effect of exchange rates changes on cash		—		45			—			45
Change in cash and cash equivalents		35,961		11,303			4,349			51,613
Cash and cash equivalents at beginning of period		84,829		29,387			5,094			119,310
Cash and equivalents at end of period	$	120,790	$	40,690		$	9,443		$	170,923

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Nine Months Ended September 30, 2004
(in thousands)

				Subsidiary		Non-Guarantor			Total
	FelCor L.P.			Guarantors		Subsidiaries			Consolidated
Cash flows from (used in) operating activities	$	(42,886	)	$	16,362	$	80,643		$	54,119
Cash flows from (used in) investing activities		448			696		(13,974	)		(12,830	)
Cash flows from (used in) financing activities		(52,747	)		681		(68,019	)		(120,085	)
Effect of exchange rates changes on cash		—			1,020		—			1,020
Change in cash and cash equivalents		(95,185	)		18,759		(1,350	)		(77,776	)
Cash and cash equivalents at beginning of period		170,057			59,317		2,511			231,885
Cash and equivalents at end of period	$	74,872		$	78,076	$	1,161		$	154,109

23

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

     In the third quarter of 2005, revenue per available room, or RevPAR, increased 10.8% for our consolidated hotels in continuing operations and our average daily room rate, or ADR, comprised 55% of the increase in RevPAR. However, included in the third quarter results from operations is the impact of Hurricane Katrina. The net impact aggregates to approximately $2.6 million, including a $2.3 million charge for hurricane losses, representing our current best estimate of uninsured losses; estimates of our lost hotel operating profit of $1.0 million from our two owned hotels and one joint venture hotel in New Orleans, which were temporarily closed following the hurricane; and partially offset by the positive impact of approximately $0.7 million, from hotels in Texas, Louisiana, Alabama and Georgia, which benefited from the hurricane evacuees and relief workers.

     During 2005, through October 31, we have sold seven hotels for gross proceeds of $58 million, surrendered eight hotels in exchange for the extinguishment of $49 million of debt and have one hotel under a firm sale contract for $7 million, which is expected to close in November 2005.

     After disposing of the previously mentioned hotels, we will have 11 hotels remaining that we are currently marketing for sale. We estimate that the gross proceeds from the disposition of these hotels will be approximately $96 million.

     We continue to invest in our core hotels to maintain their competitive position and to take advantage of the current phase of the lodging cycle. During the first nine months of 2005, we spent $86 million on capital improvements and replacements (including our pro rata share of capital for unconsolidated ventures), and anticipate capital expenditures of at least $100 million for the full year.

     We continue to review and evaluate our hotel portfolio on an ongoing basis and may identify additional non-strategic hotels for sale based upon various factors. If we decide to sell additional hotels or if our estimates of market value for the hotels currently designated as non-strategic decline, we could incur future impairment charges.

Financial Comparison (in thousands of dollars, except RevPAR and hotel operating margin)

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
							% Change								% Change
	2005			2004			2004-2005		2005			2004			2004-2005
RevPAR	$	76.43		$	68.98			10.8	$	74.31		$	68.18			9.0
Hotel operating profit(1)		63,963			57,306			11.6		196,077			174,240			12.5
Hotel operating margin(1)		20.4	%		20.0	%		2.0		21.2	%		20.3	%		4.4
Income (loss) from continuing operations(2)	$	(1,681	)	$	(9,714	)		82.7	$	1,882		$	(62,353	)		103.0
Funds From Operations (“FFO”)(1) (3)		23,705			(18,610	)		227.4		65,561			(24,536	)		367.2
Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”)(1)(4)		81,166			31,447			158.1		221,268			126,202			75.3

(1) Included in the Financial Comparison are non-GAAP financial measures, including FFO, EBITDA, hotel operating profit and hotel operating margin. Further discussions of the use, limitations and importance, and detailed reconciliations to the most comparable GAAP measure, of these non-GAAP financial measures are found elsewhere in this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

24

     (2) Included in the income (loss) from continuing operations are the following amounts (in thousands):

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2005			2004		2005			2004
Charge off of deferred debt costs	$	—		$	1,920	$	—		$	6,094
Loss (gain) on early extinguishment of debt		(2,538	)		10,987		(2,538	)		39,233
Hurricane loss		2,309			2,125		2,309			2,125
Gain on swap termination		—			—		—			(1,005	)
Impairment loss		569			—		569			—

(3) In accordance with the guidance provided by the Securities and Exchange Commission, or SEC, on non-GAAP financial measures, FFO has not been adjusted to add back the following items included in net income (loss) (in thousands):

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2005			2004		2005			2004
Charge-off of deferred debt costs	$	—		$	1,920	$	—		$	6,094
Loss (gain) on early extinguishment of debt		(2,538	)		10,987		(2,538	)		39,233
Issuance costs of redeemed preferred units.		1,324			—		6,522			—
Gain on swap termination		—			—		—			(1,005	)
Impairment loss		569			33,027		1,860			33,027
Asset disposition costs		—			—		1,300			4,900

(4) Consistent with SEC guidance on non-GAAP financial measures, EBITDA has not been adjusted for the following amounts included in net income (loss) (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2005			2004			2005			2004
Charge-off of deferred debt costs	$	—		$	1,920		$	—		$	6,094
Loss (gain) on early extinguishment of debt		(2,538	)		10,987			(2,538	)		39,233
Issuance costs of redeemed preferred units.		—			—			—			—
Gain on swap termination		—			—			—			(1,005	)
Impairment loss		569			33,027			1,860			33,027
Gain on sale of depreciable assets		(9,449	)		(3,058	)		(9,624	)		(2,116	)
Asset disposition costs		—			—			1,300			4,900

Results of Operations

Comparison of the Three Months Ended September 30, 2005 and 2004

     For the three months ended September 30, 2005, we recorded net income applicable to common unitholders of $0.1 million, or less than $0.01 per unit, compared to a loss of $48.6 million, or $0.78 per unit, for the three months ended September 30, 2004.

     Total revenue increased 8.8% to $314.7 million, compared to the prior year quarter. Hotel operating revenues from continuing operations made up more than 99% of the total revenues for both the third quarters of 2005 and 2004. Hotel operating revenues from continuing operations were $313.0 million for the third quarter 2005, an increase of $25.9 million, or 9.0%, compared to the same period in 2004. The increase in revenues was primarily related to a 10.8% increase in our hotel portfolio’s RevPAR, compared to the same period in 2004. The increase in RevPAR was driven by increases in ADR of 5.9% and in occupancy of 4.6%. The increase in ADR amounted to 55% of the improvement in RevPAR, as the trend of improving rates, that began in 2004, continued into the third quarter 2005. Increased ADR typically improves hotel operating margins because the hotels are receiving higher revenues for each guest served. Our hotel operating margins improved 48 basis points to prior year third quarter. The increase in our operating margins for the quarter were adversely affected by $1.6 million of bad debt charge-offs related to the bankruptcy filings of Delta^® Air Lines and Northwest^® Airlines. Also contributing to the sluggish margin growth were the effects of Hurricane Katrina.

25

     Operating expenses for the quarter increased by $22.1 million or 8.4%, compared to the prior year quarter. Operating income for the third quarter of 2005 increased by $3.2 million or 11.8% over the prior year period. The improvement in operating income was driven largely by increased revenue and improvements in operating margins, which resulted principally from increased ADR. The increase in operating expenses came principally from increases in hotel departmental expenses of $5.3 million; other property operating expenses of $9.7 million; taxes, insurance and lease expense of $3.4 million; and depreciation expense of $1.9 million. With the exception of other property related costs, which increased slightly as a percentage of total revenue, all of these expenses remained constant to the prior year as a percent of total revenue or decreased. The increase in hotel departmental expenses resulted largely from increases in occupancy, with the majority of the increase in labor related costs. The increase in other property operating expenses resulted from increased hotel occupancy, with increases in labor costs, utilities, maintenance, marketing expenses and the increased charge-off of $1.6 million related to airline bankruptcies. Management and franchise fees increased as a function of the increase in revenue. Taxes, insurance and lease expenses increased principally due to increased lease expense, which is a function of revenue, and increased property taxes, largely due to reductions recorded in the prior year related to two hotels. Depreciation expense increased as a result of the depreciation related to our 2004 capital expenditures of $96 million.

     Net interest expense included in continuing operations decreased $1.1 million, or 3.3%, compared to the third quarter in 2004. This reduction is principally related to a $110 million reduction in our average outstanding debt, largely resulting from the early retirement of a portion of our senior notes in 2004 and higher interest rates on invested cash, partially offset by higher average interest rates on our debt.

     At September 30, 2005, we had 128 hotels included in our consolidated continuing operations, of which 11 were non-strategic hotels identified for sale. The 11 non-strategic hotels included in continuing operations represented 8.5% of the rooms in our hotel portfolio, but only 3.4% of our calendar year 2004 consolidated hotel operating profit.

     We recorded an impairment charge of $0.6 million in the third quarter of 2005, related to one of our non-strategic hotels included in continuing operations. In October 2005, we accepted a contract for sale of this hotel and reduced its carrying value to the contract purchase amount. In the third quarter of 2005, we recorded $2.3 million in charges, representing our best estimate of uninsured losses from Hurricane Katrina, compared to $2.1 million for hurricane losses recorded in the third quarter of 2004. In the third quarter of 2004, we had $12.9 million of expenses related to the early extinguishment of senior debt.

     Equity in income from unconsolidated entities decreased by 72.9% to $3.2 million in the third quarter of 2005, compared to the same period last year. The decrease is attributed to the $11 million gain recorded in the third quarter 2004 by an unconsolidated entity from the development and sale of the Margate condominium project in Myrtle Beach, South Carolina, partially offset by the increased RevPAR for our unconsolidated hotels and an improvement in their operating margins in 2005.

     Loss from continuing operations was $1.7 million for the third quarter 2005, compared to a loss of $9.7 million in the same period in 2004.

     Discontinued operations for the quarter represent the operating income, direct interest costs, gain on early extinguishment of debt, and gains or losses on sale of 15 hotels disposed of during the first nine months of 2005, one hotel that was designated as held for sale at September 30, 2005, and 18 hotels disposed of in 2004 and impairment losses of $33 million in 2004.

     Net income for the third quarter 2005 was $11.3 million, compared to a net loss in the same period of 2004 of $39.2 million.

     In accordance with the Emerging Issues Task Force Topic D-42, “The Effect on the Calculation of Earnings per Share for the Redemption or Induced Conversion of Preferred Stock,” we have subtracted $1.3 million of the issuance costs of our Series B preferred units, which was redeemed in the quarter from net income to determine net loss applicable to common unitholders for the calculation of net loss per unit.

26

Comparison of the Nine Months Ended September 30, 2005 and 2004

     For the nine months ended September 30, 2005, we recorded a loss applicable to common unitholders of $23.7 million, or $0.38 per unit, compared to a loss of $120.1 million, or $1.94 per unit, for the nine months ended September 30, 2004.

     Total revenue increased 7.5% to $924.9 million, compared to the prior year period. Hotel operating revenues from continuing operations made up more than 99% of the total revenues for both the nine months ended September 2005 and 2004 and were $923.0 million for the nine month period ending September 30, 2005, reflecting an increase of $65.5 million, or 7.6%, compared to the same period in 2004. The increase in revenues was primarily related to a 9% increase in our hotel portfolio’s RevPAR, compared to the same period in 2004. The increase in RevPAR was driven by increases in ADR of 5.9% and occupancy of 2.9%. The increase in ADR amounted to 66% of the improvement in RevPAR, as the trend of improving rates, that began in 2004, continued through the third quarter 2005 and contributed to a 92 basis point improvement in hotel operating margins (hotel operating profit as a percentage of hotel revenue).

     Operating expenses for the nine months increased by $51.8 million or 6.7%, compared to the prior year period. Operating income for the nine month period in 2005 increased by $13.0 million, or 16.0%, over the prior year period. The improvement in operating income was driven largely by increased revenue and improvements in operating margins, which resulted principally from increased ADR. The increase in operating expenses came principally from increases in hotel departmental expenses of $12.6 million; other property operating expenses of $21.3 million; taxes, insurance and lease expense of $7.4 million; and depreciation expense of $5.6 million. With the exception of hotel departmental expenses, which decreased as a percentage of total revenue, all of these expenses remained constant to the prior year as a percent of total revenue. The increase in hotel departmental expenses resulted largely from increases in occupancy, with the majority of the increase in labor related costs. The increase in other property operating expenses resulted from increased hotel occupancy, with increases in labor costs, utilities, maintenance, and marketing expenses. Taxes, insurance and lease expense increased principally due to increased lease expense, which is a function of revenue. Depreciation expense increased as a result of the increased depreciation related to our 2004 capital expenditures of $96 million.

     Net interest expense included in continuing operations decreased $14.1 million, or 12.5%, compared to the same period in 2004. This reduction is principally related to a $210 million reduction in our average outstanding debt, largely resulting from the early retirement of a portion of our senior notes in 2004, partially offset by an increase in our average interest rate.

     At September 30, 2005, we had 128 hotels included in our consolidated continuing operations, of which 11 were non-strategic hotels identified for sale. The 11 non-strategic hotels included in continuing operations represented 8.5% of the rooms in our hotel portfolio, but only 3.4% of our calendar year 2004 consolidated hotel operating profit.

     We recorded an impairment charge of $0.6 million in the third quarter of 2005, related to one of our non-strategic hotels included in continuing operations. In October 2005, we accepted a contract for sale of this hotel and reduced its carrying value to the contract purchase amount. In the third quarter 2005, we recorded $2.3 million in charges representing our best estimates of uninsured losses from Hurricane Katrina and $2.1 million for hurricane losses in the third quarter of 2004. In the same nine month period of 2004, we recorded $44.3 million in charges related to the early retirement of a portion of our senior notes and cancellation of our line of credit.

     Equity in income from unconsolidated entities decreased by 47.6% to $8.2 million in the nine month period ended September 30, 2005, compared to the same period last year. The decrease is attributed to the $11 million gain recorded in the third quarter 2004, by an unconsolidated entity related to the development and sale of the Margate condominium project in Myrtle Beach, South Carolina, partially offset by the increased RevPAR for our unconsolidated hotels and an improvement in their operating margins in 2005.

27

     Income from continuing operations was $1.9 million for the nine month period of 2005, compared to a loss of $62.4 million in the same period in 2004.

     Discontinued operations for the period represent the operating income, direct interest costs, impairment losses and gains or losses on sale of 15 hotels disposed of during the first nine months of 2005, one hotel that was designated as held for sale at September 30, 2005, and 18 hotels disposed of in 2004.

     Net income for the nine months ended September 30, 2005, was $12.5 million, compared to a net loss in the same period of 2004 of $95.1 million.

     Preferred distributions increased by $4.7 million. This results from a full nine months of preferred distributions on the Series A preferred units issued in April 2004, partially offset by savings from the issuance of 54,000 Series C preferred units and the redemption of a corresponding number of Series B preferred units during the second quarter 2005.

     In accordance with the Emerging Issues Task Force Topic D-42, “The Effect on the Calculation of Earnings per Share for the Redemption or Induced Conversion of Preferred Stock,” we have subtracted $6.5 million of the issuance costs of our Series B preferred units, which were redeemed in the period, from net income to determine net loss applicable to common unitholders for the calculation of net loss per unit.

Non-GAAP Financial Measures

     We refer in this quarterly report on Form 10-Q to certain “non-GAAP financial measures.” These measures, including FFO, EBITDA, hotel operating profit and hotel operating margin, are measures of our financial performance that are not calculated and presented in accordance with generally accepted accounting principles (“GAAP”). The following tables reconcile each of these non-GAAP measures to the most comparable GAAP financial measure. Immediately following the reconciliations, we include a discussion of why we believe these measures are useful supplemental measures of our performance and of the limitations upon such measures.

     The following tables detail our computation of FFO and EBITDA (in thousands):

Reconciliation of Net Income (Loss) to FFO
(in thousands, except per unit data)

	Three Months Ended September 30,
	2005								2004
						Per Unit								Per Unit
	Dollars			Units		Amount			Dollars			Units		Amount
Net income (loss)	$	11,263							$	(39,207	)
Preferred distributions		(9,829	)							(9,343	)
Issuance costs of redeemed preferred units		(1,324	)							—
Net income (loss) applicable to common unitholders		110			62,215	$	—			(48,550	)		61,978	$	(0.78	)
Depreciation from continuing operations		30,390			—		0.49			28,533			—		0.46
Depreciation from unconsolidated entities and discontinued operations		2,654			—		0.04			4,465			—		0.07
Gain on sale of depreciable assets		(9,449	)		—		(0.15	)		(3,058	)		—		(0.05	)
Conversion of unvested restricted stock		—			620		—			—			—		—
FFO	$	23,705			62,835	$	0.38		$	(18,610	)		61,978	$	(0.30	)

28

Reconciliation of Net Income (Loss) to FFO
(in thousands, except per unit data)

	Nine Months Ended September 30,
	2005								2004
						Per Unit								Per Unit
	Dollars			Units		Amount			Dollars			Units		Amount
Net income (loss)	$	12,540							$	(95,064	)
Preferred distributions		(29,729	)							(25,039	)
Issuance costs of redeemed preferred units		(6,522	)							—
Net loss applicable to common unitholders		(23,711	)		62,181	$	(0.38	)		(120,103	)		61,982	$	(1.94	)
Depreciation from continuing operations		89,534			—		1.44			83,943			—		1.35
Depreciation from unconsolidated entities and discontinued operations		9,362			—		0.15			13,740			—		0.22
Gain on sale of depreciable assets		(9,624	)		—		(0.16	)		(2,116	)		—		(0.03	)
Conversion of unvested restricted stock		—			543		—			—			—		—
FFO	$	65,561			62,724	$	1.05		$	(24,536	)		61,982	$	(0.40	)

Consistent with SEC guidance on non-GAAP financial measures, FFO has not been adjusted for the following amounts included in net income or loss (in thousands):

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2005			2004		2005			2004
Charge-off of deferred financing costs	$	—		$	1,920	$	—		$	6,094
Asset disposition costs		—			—		1,300			4,900
Issuance costs of redeemed preferred units.		1,324			—		6,522			—
Loss (gain) on early extinguishment of debt		(2,538	)		10,987		(2,538	)		39,233
Impairment loss		569			33,027		1,860			33,027
Gain on swap termination		—			—		—			(1,005	)

29

Reconciliation of Net Income (Loss) to EBITDA
(in thousands)

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2005		2004			2005		2004
Net income (loss)	$	11,263	$	(39,207	)	$	12,540	$	(95,064	)
Depreciation from continuing operations		30,390		28,533			89,534		83,943
Depreciation from unconsolidated entities and discontinued operations		2,654		4,465			9,362		13,740
Interest expense		34,216		34,230			101,187		113,341
Interest expense from unconsolidated entities and discontinued operations		1,823		2,833			6,474		8,627
Amortization expense		820		593			2,171		1,615
EBITDA	$	81,166	$	31,447		$	221,268	$	126,202

Consistent with SEC guidance on non-GAAP financial measures, EBITDA has not been adjusted for the following amounts included in net income or loss (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2005			2004			2005			2004
Charge-off of deferred financing costs	$	—		$	1,920		$	—		$	6,094
Asset disposition costs		—			—			1,300			4,900
Gain on sale of depreciable assets		(9,449	)		(3,058	)		(9,624	)		(2,116	)
Loss (gain) from early extinguishment of debt		(2,538	)		10,987			(2,538	)		39,233
Impairment loss		569			33,027			1,860			33,027
Gain on swap termination		—			—			—			(1,005	)

     The following tables detail our computation of hotel operating profit, hotel operating margin, hotel operating expenses and the reconciliation of hotel operating expenses to total operating expenses with respect to our hotels included in continuing operations at September 30, 2005.

Hotel Operating Profit
(dollars in thousands)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2005			2004			2005			2004
Total revenue	$	314,650		$	289,320		$	924,867		$	860,083
Retail space rental and other revenue		(1,632	)		(2,166	)		(1,908	)		(2,590	)
Hotel operating revenue		313,018			287,154			922,959			857,493
Hotel operating expenses		(249,055	)		(229,848	)		(726,882	)		(683,253	)
Hotel operating profit	$	63,963		$	57,306		$	196,077		$	174,240
Hotel operating margin		20.4	%		20.0	%		21.2	%		20.3	%

30

Hotel Operating Expense Composition
(dollars in thousands)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2005			2004			2005			2004
Hotel departmental expenses:
Room	$	67,307		$	63,166		$	193,581		$	183,633
Food and beverage		32,890			32,461			100,829			99,240
Other operating departments		8,208			7,451			23,282			22,232
Other property related costs:
Administrative and general		31,249			26,810			88,221			80,459
Marketing and advertising		26,471			24,234			79,584			74,191
Repairs and maintenance		17,114			15,676			51,010			47,461
Energy		17,924			16,306			48,929			44,319
Taxes, insurance and lease expense		31,792			28,389			94,359			87,006
Total other property related costs		124,550			111,415			362,103			333,436
Management and franchise fees		16,100			15,355			47,087			44,712
Hotel operating expenses	$	249,055		$	229,848		$	726,882		$	683,253
Reconciliation of total operating expense to hotel operating expense:
Total operating expenses	$	284,284		$	262,168		$	830,524		$	778,725
Corporate expenses		(4,839	)		(3,787	)		(14,108	)		(11,529	)
Depreciation		(30,390	)		(28,533	)		(89,534	)		(83,943	)
Hotel operating expenses	$	249,055		$	229,848		$	726,882		$	683,253

31

     The following tables reconcile net income or loss to hotel operating profit and the ratio of operating income to total revenue to hotel operating margin.

Reconciliation of Net Income (Loss) to Hotel Operating Profit
(in thousands)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2005			2004			2005			2004
Net income (loss)	$	11,263		$	(39,207	)	$	12,540		$	(95,064	)
Discontinued operations		(12,944	)		29,493			(10,658	)		32,711
Equity in income from unconsolidated entities		(3,260	)		(12,019	)		(8,229	)		(15,692	)
Minority interests		(400	)		644			(415	)		960
Interest expense, net		33,173			34,303			98,960			113,090
Charge-off of deferred financing costs		—			1,920			—			6,094
Impairment loss		569			—			569			—
Hurricane loss		2,309			2,125			2,309			2,125
Loss on early extinguishment of debt		—			10,987			—			39,233
Gain on swap termination		—			—			—			(1,005	)
Corporate expenses		4,839			3,787			14,108			11,529
Depreciation		30,390			28,533			89,534			83,943
Retail space rental and other revenue.		(1,632	)		(2,166	)		(1,908	)		(2,590	)
Gain on sale of assets		(344	)		(1,094	)		(733	)		(1,094	)
Hotel operating profit	$	63,963		$	57,306		$	196,077		$	174,240

Reconciliation of Ratio of Operating Income to Total Revenue to Hotel Operating Margin

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2005			2004			2005			2004
Ratio of operating income to total revenue		9.7	%		9.4	%		10.2	%		9.5	%
Less:
Retail space and rental and other revenue		(0.5	)		(0.7	)		(0.2	)		(0.3	)
Plus:
Corporate expenses		1.5			1.3			1.5			1.3
Depreciation		9.7			10.0			9.7			9.8
Hotel operating margin		20.4	%		20.0	%		21.2	%		20.3	%

     Substantially all of our non-current assets consist of real estate. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminish predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most industry investors consider supplemental measures of performance, which are not measures of operating performance under GAAP, to be helpful in evaluating a real estate company’s operations. These supplemental measures, including FFO, EBITDA, hotel operating profit and hotel operating margin, are not measures of operating performance under GAAP. However, we consider these non-GAAP measures to be supplemental measures of a hotel REIT’s performance and should be considered along with, but not as an alternative to, net income as a measure of our operating performance.

FFO and EBITDA

     The White Paper on Funds From Operations approved by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT,”) defines FFO as net income or loss (computed in accordance with GAAP), excluding gains or losses from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships

32

and joint ventures are calculated to reflect FFO on the same basis. We compute FFO in accordance with standards established by NAREIT. This may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition, or that interpret the current NAREIT definition differently than we do.

     EBITDA is a commonly used measure of performance in many industries. We define EBITDA as net income or loss (computed in accordance with GAAP) plus interest expenses, income taxes, depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect EBITDA on the same basis.

Hotel Operating Profit and Operating Margin

     Hotel operating profit and operating margin are commonly used measures of performance in the hotel industry and give investors a more complete understanding of the operating results over which our individual hotels and operating managers have direct control. We believe that hotel operating profit and operating margin is useful to investors by providing greater transparency with respect to two significant measures used by us in our financial and operational decision-making. Additionally, these measures facilitate comparisons with other hotel REITs and hotel owners. We present hotel operating profit and hotel operating margin by eliminating corporate-level expenses, depreciation and expenses related to our capital structure. We eliminate corporate-level costs and expenses because we believe property-level results provide investors with supplemental information with respect to the ongoing operating performance of our hotels and the effectiveness of management in running our business on a property-level basis. We eliminate depreciation and amortization, even though they are property-level expenses, because we do not believe that these non-cash expenses, which are based on historical cost accounting for real estate assets and implicitly assume that the value of real estate assets diminish predictably over time, accurately reflect and adjustment in the value of our assets.

Use and Limitations of Non-GAAP Measures

     FelCor’s management and Board of Directors use FFO and EBITDA to evaluate the performance of our hotels and to facilitate comparisons between us and other lodging REITs, hotel owners who are not REITs and other capital intensive companies. We use hotel operating profit and hotel operating margin in evaluating hotel-level performance and the operating efficiency of our hotel managers.

     The use of these non-GAAP financial measures has certain limitations. FFO, EBITDA, hotel operating profit and hotel operating margin, as presented by us, may not be comparable to FFO, EBITDA, hotel operating profit and hotel operating margin as calculated by other real estate companies. These measures do not reflect certain expenses that we incurred and will incur, such as depreciation, interest and capital expenditures. Management compensates for these limitations by separately considering the impact of these excluded items to the extent they are material to operating decisions or assessments of our operating performance. Our reconciliations to the most comparable GAAP financial measures, and our consolidated statements of operations and cash flows, include interest expense, capital expenditures, and other excluded items, all of which should be considered when evaluating our performance, as well as the usefulness of our non-GAAP financial measures.

     These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP. They should not be considered as alternatives to operating profit, cash flow from operations, or any other operating performance measure prescribed by GAAP. Neither should FFO, FFO per unit or EBITDA be considered as measures of our liquidity or indicative of funds available for our cash needs, including our ability to make cash distributions or service our debt. FFO per unit does not measure, and should not be used as a measure of, amounts that accrue directly to the benefit of unitholders. FFO, EBITDA, hotel operating profit and hotel operating margin reflect additional ways of viewing our operations that we believe, when viewed with our GAAP results and the reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. Management strongly encourages investors to review our financial information in its entirety and not to rely on any single financial measure.

33

Hotel Portfolio Composition

     The following tables set forth, as of September 30, 2005, for 125 of our 128 hotels included in our consolidated portfolio of continuing operations, distribution by brand, by our top metropolitan markets, by selected states, by type of location, and by market segment. We have excluded two New Orleans hotels that were closed in September 2005 and our Cocoa Beach, Florida hotel that was closed in September 2004, all as a result of hurricane damage.

					% of			% of 2004 Hotel
Brand	Hotels		Rooms		Total Rooms			Operating Profit
Embassy Suites Hotels		54		13,550		38	%		53	%
Holiday Inn-branded		32		10,770		31			21
Sheraton-branded		10		3,269		9			10
Doubletree-branded		10		2,206		6			6
Crowne Plaza		12		4,025		11			5
Other		7		1,811		5			5

					% of			% of 2004 Hotel
Top Markets	Hotels		Rooms		Total Rooms			Operating Profit
Atlanta		10		3,060		9	%		9	%
Dallas		12		3,586		10			6
Los Angeles Area		6		1,435		4			5
Orlando		6		2,219		6			5
Boca Raton/Ft. Lauderdale		4		1,118		3			5
Minneapolis		4		955		3			4
Philadelphia		3		1,174		3			3
San Diego		1		600		2			3
Phoenix		3		798		2			3
San Antonio		4		1,188		3			3
Northern New Jersey		3		757		2			3
Chicago		4		1,239		3			3
San Francisco Bay Area		8		2,690		8			3
Houston		4		1,403		4			3
Washington, D.C.		1		437		1			3

					% of			% of 2004 Hotel
Top Four States	Hotels		Rooms		Total Rooms			Operating Profit
California		19		5,536		16	%		16	%
Texas		25		7,344		21			14
Florida		15		4,937		14			12
Georgia		12		3,414		10			10

					% of			% of 2004 Hotel
Location	Hotels		Rooms		Total Rooms			Operating Profit
Suburban		57		14,335		40	%		40	%
Urban		29		9,322		26			24
Airport		26		8,182		23			23
Resort		12		3,544		10			13
Interstate		1		248		1			0

					% of			% of 2004 Hotel
Segment	Hotels		Rooms		Total Rooms			Operating Profit
Upscale all-suite		67		16,416		46	%		60	%
Full service		33		10,934		31			21
Upscale		23		7,843		22			17
Limited service		2		438		1			1

34

Hotel Operating Statistics

     The following tables set forth historical occupancy, ADR and RevPAR at September 30, 2005 and 2004, and the percentage changes therein between the periods presented, for 125 of our 128 hotels included in our consolidated portfolio of continuing operations. We have excluded two New Orleans hotels that were closed in September 2005 and our Cocoa Beach, Florida hotel that was closed in September 2004, all as a result of hurricane damage .

Operating Statistics by Brand

	Occupancy (%)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2005		2004		%Variance		2005		2004		% Variance
Embassy Suites Hotels		75.1		71.7		4.7		74.1		71.4		3.9
Holiday Inn-branded hotels		71.7		69.9		2.5		68.4		67.5		1.3
Sheraton-branded hotels		67.1		64.2		4.6		65.4		64.8		1.0
Doubletree-branded hotels		71.6		66.3		8.0		69.6		68.3		1.9
Crowne Plaza hotels		71.5		66.6		7.3		68.4		64.5		6.0
Other hotels		65.0		61.0		6.7		61.2		59.5		2.1
Total hotels		72.2		69.0		4.6		70.0		68.1		2.9

	ADR ($)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2005		2004		% Variance		2005		2004		% Variance
Embassy Suites Hotels		120.79		115.59		4.5		122.02		116.61		4.6
Holiday Inn-branded hotels		88.73		82.23		7.9		86.95		81.84		6.2
Sheraton-branded hotels		106.06		97.70		8.6		108.30		97.36		11.2
Doubletree-branded hotels		105.57		102.75		2.7		109.96		103.90		5.8
Crowne Plaza hotels		100.16		94.02		6.5		98.26		93.22		5.4
Other hotels		103.29		97.79		5.6		99.46		93.61		6.2
Total hotels		105.87		99.94		5.9		106.12		100.18		5.9

	RevPAR ($)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2005		2004		% Variance		2005		2004		% Variance
Embassy Suites Hotels		90.70		82.93		9.4		90.47		83.22		8.7
Holiday Inn-branded hotels		63.60		57.48		10.7		59.51		55.28		7.6
Sheraton-branded hotels		71.21		62.70		13.6		70.82		63.05		12.3
Doubletree-branded hotels		75.58		68.11		11.0		76.58		70.98		7.9
Crowne Plaza hotels		71.56		62.58		14.4		67.16		60.10		11.8
Other hotels		67.19		59.64		12.7		60.85		56.11		8.4
Total hotels		76.43		68.98		10.8		74.31		68.18		9.0

35

Operating Statistics for Our Top Markets

	Occupancy (%)
	Three Months Ended September 30,							Nine Months Ended September 30,
	2005		2004		% Variance			2005		2004		% Variance
Atlanta		75.5		74.7		1.1			72.4		69.9		3.6
Dallas		53.8		49.0		9.7			52.8		51.6		2.3
Los Angeles Area		80.5		74.0		8.8			75.8		72.9		3.9
Orlando		69.3		78.5		(11.6	)		74.9		77.9		(3.9	)
Boca Raton/Ft. Lauderdale		74.6		75.9		(1.7	)		81.7		79.9		2.1
Minneapolis		79.7		77.8		2.5			73.6		70.0		5.2
Philadelphia		74.7		71.5		4.4			72.3		66.9		8.1
San Diego		88.2		83.8		5.3			84.6		84.5		0.1
Phoenix		64.5		61.9		4.3			73.6		71.6		2.8
San Antonio		80.0		74.5		7.4			77.1		72.2		6.8
Northern New Jersey		69.8		65.5		6.6			70.7		67.2		5.2
Chicago		79.3		73.2		8.4			74.0		70.6		4.7
San Francisco Bay Area		80.6		73.1		10.2			72.0		67.5		6.7
Houston		71.5		62.8		13.8			71.3		69.5		2.6
Washington, D.C.		76.1		76.3		(0.2	)		75.5		75.0		0.6

	ADR ($)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2005		2004		% Variance		2005		2004		% Variance
Atlanta		90.88		86.06		5.6		91.04		87.00		4.6
Dallas		91.94		91.15		0.9		93.84		90.87		3.3
Los Angeles Area		122.59		115.59		6.0		118.32		111.43		6.2
Orlando		77.63		70.50		10.1		85.75		76.39		12.3
Boca Raton/Ft. Lauderdale		102.24		93.98		8.8		129.19		114.48		12.9
Minneapolis		134.88		129.79		3.9		127.53		124.89		2.1
Philadelphia		114.12		108.22		5.5		114.65		105.57		8.6
San Diego		128.40		119.73		7.2		129.92		119.72		8.5
Phoenix		98.04		90.70		8.1		120.43		111.89		7.6
San Antonio		88.52		82.28		7.6		88.73		84.76		4.7
Northern New Jersey		137.98		133.94		3.0		137.31		135.00		1.7
Chicago		120.22		109.05		10.3		113.81		104.51		8.9
San Francisco Bay Area		120.95		115.70		4.5		115.93		112.89		2.7
Houston		74.38		66.92		11.1		72.39		69.84		3.7
Washington, D.C.		141.80		121.25		16.9		145.80		124.92		16.7

	RevPAR ($)
	Three Months Ended September 30,							Nine Months Ended September 30,
	2005		2004		% Variance			2005		2004		% Variance
Atlanta		68.62		64.30		6.7			65.93		60.85		8.4
Dallas		49.43		44.68		10.6			49.56		46.90		5.7
Los Angeles Area		98.72		85.55		15.4			89.67		81.28		10.3
Orlando		53.83		55.33		(2.7	)		64.19		59.52		7.8
Boca Raton/Ft. Lauderdale		76.32		71.33		7.0			105.50		91.52		15.3
Minneapolis		107.51		100.93		6.5			93.87		87.38		7.4
Philadelphia		85.20		77.40		10.1			82.89		70.57		17.4
San Diego		113.30		100.38		12.9			109.94		101.18		8.7
Phoenix		63.27		56.11		12.8			88.59		80.10		10.6
San Antonio		70.86		61.34		15.5			68.43		61.20		11.8
Northern New Jersey		96.37		87.77		9.8			97.07		90.71		7.0
Chicago		95.39		79.84		19.5			84.18		73.82		14.0
San Francisco Bay Area		97.43		84.54		15.2			83.43		76.15		9.6
Houston		53.18		42.06		26.4			51.60		48.52		6.4
Washington, D.C.		107.89		92.47		16.7			110.02		93.73		17.4

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Liquidity and Capital Resources

     Our principal source of cash to meet our cash requirements, including distributions to unitholders and repayments of indebtedness, is from the results of operations of our hotels. For the nine months ended September 30, 2005, net cash flow provided by operating activities, consisting primarily of hotel operations, was $117 million. At September 30, 2005, we had cash and cash equivalents of approximately $171 million. Included in cash and cash equivalents was approximately $37 million utilized to meet our hotel minimum working capital requirements.

     For 2005, our current operating plan contemplates common distribution payments of $9 million, preferred distribution payments of $39 million, capital expenditures of at least $100 million ($86 million has been spent through September 30, 2005), $21 million in normal recurring principal payments and proceeds of approximately $83 million from the sale of non-strategic hotels ($58 million was received through September, 2005).

     We are required to reinvest the proceeds from the further sale of IHG managed hotels in other hotels to be managed by IHG or pay substantial termination fees. As of September 30, 2005, we had an unsatisfied reinvestment obligation of $35 million from the sale of IHG managed hotels. If we do not fulfill this reinvestment obligation within 12 months of the date of sale, we will be required to pay liquidated damages to IHG aggregating $8 million. Additionally, until the earlier of either our satisfaction of the reinvestment requirement, or the payment of liquidated damages, we are required to pay monthly termination fees of $119,000 (based on the hotels we have sold through September 30, 2005), which payments will be offset against any liquidated damages payable with respect to these properties. In addition, seven of the 11 remaining hotels previously identified for sale are managed by IHG and subject to the reinvestment obligation in the event they are sold. We will incur additional reinvestment obligations of approximately $40 million if these hotels are sold at currently estimated prices or, if the proceeds of sale are not so reinvested, we will incur approximately $13 million in additional liquidated damages and termination fees for which we would be liable to IHG. We continue to explore our alternatives to resolve the liquidated damage liability to IHG.

     At September 30, 2005, approximately 25% of our outstanding debt had variable interest rates based on LIBOR. Variable interest rates have recently been increasing and, based on our debt outstanding at September 30, 2005, a one percent change in LIBOR would impact our annual interest expense by $4.3 million.

     In April 2005, FelCor completed the issuance of 5.4 million depositary shares representing its 8% Series C Preferred Stock, realizing gross proceeds of $135 million and in September 2005 FelCor completed the issuance of an additional 1.4 million depositary shares representing its Series C preferred stock, realizing gross proceeds of $34.4 million. FelCor contributed the gross proceeds to us in exchange for newly issued Series C preferred units. The preference on these units is the same as FelCor’s Series C preferred stock. The aggregate gross proceeds of these issuances were used to redeem a like number of depositary units representing our 9% Series B preferred units held by FelCor. FelCor then used the proceeds to redeem a like number of shares of its 9% Series B Cumulative Redeemable Preferred Stock.

     At September 30, 2005, we had aggregate mortgage indebtedness of approximately $1.0 billion that was secured by 71 of our consolidated hotels with an aggregate book value of approximately $1.7 billion. Substantially all of this debt is recourse solely to the specific assets securing the debt, except in the case of fraud, misapplication of funds and other customary recourse carve-out provisions. Loans secured by 33 hotels provide for lock-box arrangements. With respect to loans secured by 15 of these hotels, if the debt service coverage ratios fall below certain levels and certain other conditions are met, the lender is entitled to apply the revenues from the hotels securing the loan to satisfy current requirements for debt service, taxes, insurance and other reserves, and to hold the balance of the revenues, if any, until debt service coverage ratios again reach specified levels.

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     With respect to loans secured by the remaining 18 hotels, the owner is permitted to retain 115% of budgeted hotel operating expenses before the remaining revenues would become subject to a lock-box arrangement if a specified debt service coverage ratio was not met. The lender is entitled to apply the remaining revenues to satisfy current requirements for debt service, taxes, insurance and other reserves, with any excess cash returned to the owner. The mortgage loans secured by 16 of these 18 hotels also provide that, so long as the debt service coverage ratios remain below a second, even lower minimum level, the lender may retain any excess cash (after deduction for the 115% of budgeted operating expenses, debt service, tax, insurance and other reserve requirements) and, if the debt service coverage ratio remains below this lower minimum level for 12 consecutive months, apply any accumulated excess cash to the prepayment of the principal amount of the debt. If the debt service coverage ratio exceeds the lower minimum level for three consecutive months, any then accumulated excess cash will be returned to the owner. Ten of these 18 hotels, which accounted for 6% of our total revenues in 2004, fell below the applicable debt service coverage ratio in 2004 and are currently subject to the lock-box provisions. None of the hotels are currently below the second, even lower minimum debt service coverage ratio that would permit the lender to retain excess cash after deduction for the 115% of budgeted operating expenses, debt service, taxes, insurance and other reserve requirements.

     Through September 2005, we made draws of $6.0 million on our $69.8 million recourse construction loan for the development of a 184-unit condominium project in Myrtle Beach, South Carolina. The interest on this facility is based on LIBOR plus 225 basis points and will be capitalized as part of the cost of the project. The interest rate may be reduced to LIBOR plus 200 basis points when the project is 55% complete and upon the satisfaction of certain other requirements. The facility matures in the fourth quarter of 2007 .

     If actual operating results fail to meet our current expectations or if interest rates increase more than currently expected, we might be unable to continue to satisfy the incurrence test under the indentures governing our senior unsecured notes. In such an event, we would be prohibited from, among other things, incurring any additional indebtedness or paying distributions on our preferred or common units, except to the extent necessary to satisfy FelCor’s REIT qualification requirement that it distribute currently at least 90% of its taxable income. In the event of our failure of this incurrence test, we may be unable to distribute the full amount of distributions accruing under our outstanding preferred units and, accordingly, could be restricted in paying distributions on our common units. However, based on current operating trends and our current estimates of future performance, we consider the failure of this incurrence test to be unlikely in the foreseeable future.

     The fundamental operating assumptions upon which our previously announced fourth quarter and full year 2005 guidance were based have not changed, but the impact that hurricane Wilma may have on the remainder of the year is not yet known. Accordingly, we are not adjusting our prior guidance until the impact of hurricane Wilma becomes more clear. When that information becomes available, if necessary, we will publish an update to our prior guidance.

     In the third quarter of 2005, we expensed $1.6 million representing our aggregate receivables from Delta^® Air Lines and Northwest^® Airlines, both of which filed for bankruptcy protection in the quarter.

     FelCor’s board of directors has declared a fourth quarter common distribution of $0.15 per common unit payable on December 1, 2005, to our common unitholders of record on November 15, 2005. Future distributions will be determined by FelCor’s board of directors, based primarily upon its expected annual cash flow from operations in excess of approximately five percent of total revenues, for maintenance capital.

     FFO and EBITDA are non-GAAP financial measures, as previously discussed under the caption “Non-GAAP Financial Measures” elsewhere in this Quarterly Report on Form 10-Q, and reference is made to that discussion.

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Inflation

     Operators of hotels, in general, possess the ability to adjust room rates daily to reflect the effects of inflation. Competitive pressures may, however, require us to reduce room rates in the near term and may limit our ability to raise room rates in the future. We are also subject to the risk that inflation will cause increases in hotel operating expenses disproportionately to revenues.

Seasonality

     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. To the extent that cash flow from operations is insufficient during any quarter, due to temporary or seasonal fluctuations in revenues, we may utilize cash on hand or borrowings to satisfy our obligations or make distributions to our equity holders.

Disclosure Regarding Forward-Looking Statements

     This Quarterly Report on Form 10-Q and the documents incorporated by reference in this Quarterly Report on Form 10-Q include 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”, or other variations of these terms (including their use in the negative), or by discussions of strategies, plans or intentions. A number of factors could cause actual results to differ materially from those anticipated by these forward-looking statements. Among these factors are:

• general economic and lodging industry conditions, including the anticipated continuation of the current recovery in the economy, the realization of anticipated job growth, the impact of the United States’ military involvement in the Middle East and elsewhere, future acts of terrorism, the threat or outbreak of a pandemic disease affecting the travel industry, the impact on the travel industry of high fuel costs and increased security precautions, and the impact that the bankruptcy of additional major air carriers may have on our revenues and receivables;

• our overall debt levels and our 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 being marketed for sale at anticipated prices; and

• competitive conditions in the lodging industry.

     In addition, these 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 these forward-looking statements are reasonable, we cannot assure you that these plans, intentions or expectations will be achieved. The forward-looking statements included in this report, and all subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf, are expressly qualified in their entirety by the risk factors and cautionary statements discussed in our filings under the Securities Act of 1933 and the Securities Exchange Act of 1934. We undertake no obligation to update any forward-looking statements to reflect future events or circumstances.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk

     At September 30, 2005, approximately 75% of our consolidated debt had fixed interest rates, after considering interest rate swaps. Currently, market rates of interest are below the rates we are obligated to pay on our fixed-rate debt.

     The following table provides information about our financial instruments that are sensitive to changes in interest rates, including interest rate swaps and debt obligations. For debt obligations, the table presents scheduled maturities and weighted average interest rates, by maturity dates. For interest rate swaps, the table presents the notional amount and weighted average interest rate, by contractual maturity date. The fair value of our fixed rate debt indicates the estimated principal amount of debt having the same debt service requirements that could have been borrowed at the date presented, at then current market interest rates. The fair value of our interest rate swaps indicates the estimated amount that would have been received or paid by us had the swaps been terminated at the date presented.

Expected Maturity Date
at September 30, 2005
(dollars in thousands)

																						Fair
	2005			2006			2007			2008			2009			Thereafter			Total			Value
Liabilities
Fixed rate:
Debt	$	3,539		$	17,284		$	270,833		$	15,757		$	201,008		$	664,665		$	1,173,086		$	1,197,061
Average interest rate		7.82	%		7.80	%		7.48	%		7.96	%		7.40	%		8.57	%		8.09	%
Floating rate:
Debt		1,372			143,018			2,015			23,620			78,538			290,650			539,213			539,213
Average interest rate		6.00	%		6.12	%		5.74	%		6.42	%		5.74	%		7.78	%		6.97	%
Total debt	$	4,911		$	160,302		$	272,848		$	39,377		$	279,546		$	955,315		$	1,712,299
Net discount																				(3,657	)
Total debt																			$	1,708,642
Interest rate swaps Variable to fixed		—			—		$	100,000			—			—			—		$	100,000		$	1,914,813
Average pay rate		—			—			7.80	%		—			—			—			7.80	%
Average receive rate		—			—			7.79	%		—			—			—			7.79	%

     Swap contracts, such as described above, contain a credit risk, in that the counterparties may be unable to fulfill the terms of the agreement. We minimize that risk by evaluating the creditworthiness of our counterparties, who are limited to major banks and financial institutions, and we do not anticipate nonperformance by the counterparties. The Standard & Poor’s credit ratings for each of the financial institutions that are counterparties to our interest rate swap agreements are AA- or better.

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Item 4. Controls and Procedures

     (a) Evaluation of disclosure controls and procedures.

     We have no employees. FelCor as our sole general partner performs our management functions. Under the supervision and with the participation of FelCor’s management, including its chief executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report (the “Evaluation Date”). Based on this evaluation, FelCor’s chief executive officer and principal financial officer concluded, as of the Evaluation Date, that our disclosure controls and procedures were effective, such that the information relating to us required to be disclosed in our reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including FelCor’s chief executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.

     (b) Changes in internal control over financial reporting.

     There have not been any changes in our internal control over financial reporting (as defined in Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934) during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. — OTHER INFORMATION

Item 6. Exhibits.

     The following exhibits are furnished in accordance with the provisions of Item 601 of Regulation S-K:

Exhibit Number	Description of Exhibit
10.35	Term Credit Agreement, dated as of October 18, 2005, among FelCor TRS Borrower 1, L.P., as Initial Borrower, FelCor TRS Guarantor, L.P., FelCor Lodging Limited Partnership and the other guarantors named therein as Guarantors, Citigroup North America, Inc., as Initial Lender, as Administrative Agent, and as Collateral Agent, and Citigroup Global Markets, Inc., as Sole Lead Arranger and Sole Book Running Manager, for a maximum principal loan amount of $175 million (filed as Exhibit 10.35 to FelCor Lodging Trust Incorporated’s September 2005 10-Q and incorporated herein by reference).
31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
32.2	Certification of the Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

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SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: November 8, 2005

FELCOR LODGING LIMITED PARTNERSHIP
a Delaware Limited Partnership
By:	FelCor Lodging Trust Incorporated Its General Partner

By:	/s/ Lester C. Johnson
	Lester C. Johnson
	Senior Vice President and Principal Accounting Officer

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INDEX

Exhibit Number	Description of Exhibit
10.35	Term Credit Agreement, dated as of October 18, 2005, among FelCor TRS Borrower 1, L.P., as Initial Borrower, FelCor TRS Guarantor, L.P., FelCor Lodging Limited Partnership and the other guarantors named therein as Guarantors, Citigroup North America, Inc., as Initial Lender, as Administrative Agent, and as Collateral Agent, and Citigroup Global Markets, Inc., as Sole Lead Arranger and Sole Book Running Manager, for a maximum principal loan amount of $175 million (filed as Exhibit 10.35 to FelCor Lodging Trust Incorporated’s September 2005 10-Q and incorporated herein by reference).
31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
32.2	Certification of the Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

44