FelCor LP's Consolidating Financial Information

9 Months Ended

Sep. 30, 2016

FelCor LP's Consolidating Financial Information

FelCor LP’s Consolidating Financial Information

Certain of FelCor LP’s 100% owned subsidiaries (FCH/PSH, L.P.; FelCor/CMB Buckhead Hotel, L.L.C.; FelCor/CMB Marlborough Hotel, L.L.C.; FelCor/CMB Orsouth Holdings, L.P.; FelCor/CMB SSF Holdings, L.P.; FelCor/CSS Holdings, L.P.; FelCor Dallas Love Field Owner, L.L.C.; FelCor Milpitas Owner, L.L.C.; FelCor TRS Borrower 4, L.L.C.; FelCor TRS Holdings, L.L.C.; FelCor Canada Co.; FelCor Hotel Asset Company, L.L.C.; FelCor St. Pete (SPE), L.L.C.; FelCor Esmeralda (SPE), L.L.C.; FelCor S-4 Hotels (SPE), L.L.C.; Madison 237 Hotel, L.L.C.; Myrtle Beach Owner, L.L.C.; and Royalton 44 Hotel, L.L.C., collectively, “Subsidiary Guarantors”), together with FelCor, guaranty, fully and unconditionally, except where subject to customary release provisions as described below, and jointly and severally, our senior debt.

The guaranties by the Subsidiary Guarantors may be automatically and unconditionally released upon (i) the sale or other disposition of all of the capital stock of the Subsidiary Guarantor or the sale or disposition of all or substantially all of the assets of the Subsidiary Guarantor, if, in each case, as a result of such sale or disposition, such Subsidiary Guarantor ceases to be a subsidiary of FelCor LP, (ii) the consolidation or merger of any such Subsidiary Guarantor with any person other than FelCor LP, or a subsidiary of FelCor LP, if, as a result of such consolidation or merger, such Subsidiary Guarantor ceases to be a subsidiary of FelCor LP, (iii) a legal defeasance or covenant defeasance of the indenture, (iv) the unconditional and complete release of such Subsidiary Guarantor in accordance with the modification and waiver provisions of the indenture, or (v) the designation of a restricted subsidiary that is a Subsidiary Guarantor as an unrestricted subsidiary under and in compliance with the indenture.


17.	FelCor LP’s Consolidating Financial Information — (continued)

The following tables present consolidating information for the Subsidiary Guarantors.

FELCOR LODGING LIMITED PARTNERSHIP

CONDENSED CONSOLIDATING BALANCE SHEET

September 30, 2016

(in thousands)



	FelCor LP			Subsidiary Guarantors			Non-Guarantor Subsidiaries		Eliminations			Total Consolidated
Net investment in hotels	$	—		$	492,022		$	1,080,060	$	—		$	1,572,082
Equity investment in consolidated entities	1,204,612			—			—		(1,204,612		)	—
Investment in unconsolidated entities	2,962			5,213			1,230		—			9,405
Cash and cash equivalents	18,989			30,623			738		—			50,350
Restricted cash	—			16,897			5,233		—			22,130
Accounts receivable, net	1,741			38,124			6,880		—			46,745
Deferred expenses, net	—			—			4,996		—			4,996
Other assets	5,284			8,346			3,373		—			17,003

Total assets	$	1,233,588		$	591,225		$	1,102,510	$	(1,204,612	)	$	1,722,711

Debt, net	$	985,372		$	—		$	378,489	$	(39,436	)	$	1,324,425
Distributions payable	14,849			—			120		—			14,969
Accrued expenses and other liabilities	31,587			86,095			12,331		—			130,013

Total liabilities	1,031,808			86,095			390,940		(39,436		)	1,469,407

Redeemable units, at redemption value	3,923			—			—		—			3,923

Preferred units	309,337			—			—		—			309,337
Common units	(111,480		)	506,062			659,114		(1,165,176		)	(111,480		)
Total FelCor LP partners’ capital	197,857			506,062			659,114		(1,165,176		)	197,857
Noncontrolling interests	—			(932		)	8,673		—			7,741
Preferred capital in consolidated joint venture	—			—			43,783		—			43,783
Total partners’ capital	197,857			505,130			711,570		(1,165,176		)	249,381
Total liabilities and partners’ capital	$	1,233,588		$	591,225		$	1,102,510	$	(1,204,612	)	$	1,722,711

17. FelCor LP’s Consolidating Financial Information — (continued)

FELCOR LODGING LIMITED PARTNERSHIP

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2015

(in thousands)



	FelCor LP			Subsidiary Guarantors			Non-Guarantor Subsidiaries		Eliminations			Total Consolidated
Net investment in hotels	$	—		$	625,835		$	1,103,696	$	—		$	1,729,531
Equity investment in consolidated entities	1,260,779			—			—		(1,260,779		)	—
Investment in unconsolidated entities	4,440			3,871			1,264		—			9,575
Cash and cash equivalents	21,219			34,294			4,273		—			59,786
Restricted cash	—			15,442			2,260		—			17,702
Accounts receivable, net	644			25,575			1,917		—			28,136
Deferred expenses, net	—			—			6,390		—			6,390
Other assets	3,587			8,786			2,419		—			14,792
Total assets	$	1,290,669		$	713,803		$	1,122,219	$	(1,260,779	)	$	1,865,912

Debt, net	$	984,226		$	—		$	465,099	$	(39,436	)	$	1,409,889
Distributions payable	15,016			—			124		—			15,140
Accrued expenses and other liabilities	26,810			83,787			14,677		—			125,274

Total liabilities	1,026,052			83,787			479,900		(39,436		)	1,550,303

Redeemable units, at redemption value	4,464			—			—		—			4,464

Preferred units	309,337			—			—		—			309,337
Common units	(49,184		)	630,833			590,510		(1,221,343		)	(49,184		)
Total FelCor LP partners’ capital	260,153			630,833			590,510		(1,221,343		)	260,153
Noncontrolling interests	—			(817		)	8,623		—			7,806
Preferred capital in consolidated joint venture	—			—			43,186		—			43,186
Total partners’ capital	260,153			630,016			642,319		(1,221,343		)	311,145
Total liabilities and partners’ capital	$	1,290,669		$	713,803		$	1,122,219	$	(1,260,779	)	$	1,865,912

. FelCor LP’s Consolidating Financial Information — (continued)

FELCOR LODGING LIMITED PARTNERSHIP

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS

For the Three Months Ended September 30, 2016

(in thousands)



	FelCor LP			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Revenues:
Hotel operating revenue	$	—		$	221,172		$	—		$	—		$	221,172
Percentage lease revenue	—			—			45,242			(45,242		)	—
Other revenue	15			1,622			172			—			1,809
Total revenues	15			222,794			45,414			(45,242		)	222,981

Expenses:
Hotel operating expenses	—			137,001			—			—			137,001
Taxes, insurance and lease expense	26			54,293			6,065			(45,242		)	15,142
Corporate expenses	—			3,517			2,727			—			6,244
Depreciation and amortization	49			11,285			16,946			—			28,280
Impairment	—			20,126			—			—			20,126
Other expenses	6,124			1,309			148			—			7,581
Total operating expenses	6,199			227,531			25,886			(45,242		)	214,374
Operating income	(6,184		)	(4,737		)	19,528			—			8,607
Interest expense, net	(14,513		)	6			(4,921		)	—			(19,428		)
Loss before equity in income from unconsolidated entities	(20,697		)	(4,731		)	14,607			—			(10,821		)
Equity in income from consolidated entities	17,088			—			—			(17,088		)	—
Equity in income from unconsolidated entities	378			447			(11		)	—			814
Loss from continuing operations before income tax	(3,231		)	(4,284		)	14,596			(17,088		)	(10,007		)
Income tax	576			(484		)	154			—			246
Loss from continuing operations	(2,655		)	(4,768		)	14,750			(17,088		)	(9,761		)
Loss from discontinued operations	(3,131		)	—			—			—			(3,131		)
Loss before gain on sale of hotels	(5,786		)	(4,768		)	14,750			(17,088		)	(12,892		)
Gain on sale of hotels, net	637			7,445			(84		)	—			7,998
Net loss and comprehensive loss	(5,149		)	2,677			14,666			(17,088		)	(4,894		)
Loss attributable to noncontrolling interests	—			100			14			—			114
Preferred distributions - consolidated joint venture	—			—			(369		)	—			(369		)
Net loss and comprehensive loss attributable to FelCor LP	(5,149		)	2,777			14,311			(17,088		)	(5,149		)
Preferred distributions	(6,279		)	—			—			—			(6,279		)
Net loss attributable to FelCor LP common unitholders	$	(11,428	)	$	2,777		$	14,311		$	(17,088	)	$	(11,428	)

17. FelCor LP’s Consolidating Financial Information — (continued)

FELCOR LODGING LIMITED PARTNERSHIP

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS

For the Three Months Ended September 30, 2015

(in thousands)



	FelCor LP			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Revenues:
Hotel operating revenue	$	—		$	223,474		$	—		$	—		$	223,474
Percentage lease revenue	—			—			44,523			(44,523		)	—
Other revenue	3			1,497			178			—			1,678
Total revenues	3			224,971			44,701			(44,523		)	225,152

Expenses:
Hotel operating expenses	—			143,545			—			—			143,545
Taxes, insurance and lease expense	533			53,272			3,434			(44,523		)	12,716
Corporate expenses	—			2,718			1,954			—			4,672
Depreciation and amortization	49			11,876			17,063			—			28,988
Impairment	—			20,861			—			—			20,861
Other expenses	3,626			1,311			870			—			5,807
Total operating expenses	4,208			233,583			23,321			(44,523		)	216,589
Operating income	(4,205		)	(8,612		)	21,380			—			8,563
Interest expense, net	(14,302		)	3			(5,303		)	—			(19,602		)
Debt extinguishment	(13		)	—			—			—			(13		)
Loss before equity in income from unconsolidated entities	(18,520		)	(8,609		)	16,077			—			(11,052		)
Equity in income from consolidated entities	10,069			—			—			(10,069		)	—
Equity in income from unconsolidated entities	417			(85		)	(11		)	—			321
Loss from continuing operations before income tax	(8,034		)	(8,694		)	16,066			(10,069		)	(10,731		)
Income tax	(194		)	(860		)	—			—			(1,054		)
Loss from continuing operations	(8,228		)	(9,554		)	16,066			(10,069		)	(11,785		)
Income from discontinued operations	—			(2		)	500			—			498
Loss before gain on sale of hotels	(8,228		)	(9,556		)	16,566			(10,069		)	(11,287		)
Gain on sale of hotels, net	(41		)	(31		)	3,226			—			3,154
Net loss and comprehensive loss	(8,269		)	(9,587		)	19,792			(10,069		)	(8,133		)
Loss attributable to noncontrolling interests	—			81			146			—			227
Preferred distributions - consolidated joint venture	—			—			(363		)	—			(363		)
Net loss and comprehensive loss attributable to FelCor LP	(8,269		)	(9,506		)	19,575			(10,069		)	(8,269		)
Preferred distributions	(6,279		)	—			—			—			(6,279		)
Net loss attributable to FelCor LP common unitholders	$	(14,548	)	$	(9,506	)	$	19,575		$	(10,069	)	$	(14,548	)

17. FelCor LP’s Consolidating Financial Information — (continued)

FELCOR LODGING LIMITED PARTNERSHIP

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME

For the Nine Months Ended September 30, 2016

(in thousands)



	FelCor LP			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Revenues:
Hotel operating revenue	$	—		$	667,390		$	—		$	—		$	667,390
Percentage lease revenue	—			—			135,740			(135,740		)	—
Other revenue	202			3,076			363			—			3,641
Total revenues	202			670,466			136,103			(135,740		)	671,031

Expenses:
Hotel operating expenses	—			425,117			—			—			425,117
Taxes, insurance and lease expense	79			161,889			17,360			(135,740		)	43,588
Corporate expenses	—			11,212			9,479			—			20,691
Depreciation and amortization	193			35,312			51,135			—			86,640
Impairment	—			26,459			—			—			26,459
Other expenses	6,543			3,522			486			—			10,551
Total operating expenses	6,815			663,511			78,460			(135,740		)	613,046
Operating income	(6,613		)	6,955			57,643			—			57,985
Interest expense, net	(43,775		)	24			(15,304		)	—			(59,055		)
Other gains, net	—			—			100			—			100
Loss before equity in income from unconsolidated entities	(50,388		)	6,979			42,439			—			(970		)
Equity in income from consolidated entities	54,930			—			—			(54,930		)	—
Equity in income from unconsolidated entities	1,094			326			(34		)	—			1,386
Income from continuing operations before income tax	5,636			7,305			42,405			(54,930		)	416
Income tax	411			(709		)	154			—			(144		)
Income from continuing operations	6,047			6,596			42,559			(54,930		)	272
Loss from discontinued operations	(3,131		)	—			—			—			(3,131		)
Loss before gain on sale of hotels	2,916			6,596			42,559			(54,930		)	(2,859		)
Gain on sale of hotels, net	387			6,688			(421		)	—			6,654
Net income and comprehensive income	3,303			13,284			42,138			(54,930		)	3,795
Loss attributable to noncontrolling interests	—			413			188			—			601
Preferred distributions - consolidated joint venture	—			—			(1,093		)	—			(1,093		)
Net income and comprehensive income attributable to FelCor LP	3,303			13,697			41,233			(54,930		)	3,303
Preferred distributions	(18,837		)	—			—			—			(18,837		)
Net loss attributable to FelCor LP common unitholders	$	(15,534	)	$	13,697		$	41,233		$	(54,930	)	$	(15,534	)

17. FelCor LP’s Consolidating Financial Information — (continued)

FELCOR LODGING LIMITED PARTNERSHIP

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME

For the Nine Months Ended September 30, 2015

(in thousands)



	FelCor LP			Subsidiary Guarantors				Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Revenues:
Hotel operating revenue	$	—		$	672,808			$	—		$	—		$	672,808
Percentage lease revenue	—			—				130,397			(130,397		)	—
Other revenue	111			6,645				386			—			7,142
Total revenues	111			679,453				130,783			(130,397		)	679,950

Expenses:
Hotel operating expenses	—			434,206				—			—			434,206
Taxes, insurance and lease expense	422			159,103				14,805			(130,397		)	43,933
Corporate expenses	—			11,010				8,765			—			19,775
Depreciation and amortization	138			37,770				47,602			—			85,510
Impairment	—			20,861				—			—			20,861
Other expenses	3,629			6,820				997			—			11,446
Total operating expenses	4,189			669,770				72,169			(130,397		)	615,731
Operating income	(4,078		)	9,683				58,614			—			64,219
Interest expense, net	(42,613		)	8				(16,756		)	—			(59,361		)
Debt extinguishment	(28,459		)	—				(2,450		)	—			(30,909		)
Other gains, net	—			—				166			—			166
Loss before equity in income from unconsolidated entities	(75,150		)	9,691				39,574			—			(25,885		)
Equity in income from consolidated entities	62,807			—				—			(62,807		)	—
Equity in income from unconsolidated entities	8,060			(43		)		(34		)	—			7,983
Loss from continuing operations before income tax	(4,283		)	9,648				39,540			(62,807		)	(17,902		)
Income tax	(256		)	(1,136		)		—			—			(1,392		)
Loss from continuing operations	(4,539		)	8,512				39,540			(62,807		)	(19,294		)
Income from discontinued operations	—			2				417			—			419
Loss before gain on sale of hotels	(4,539		)	8,514				39,957			(62,807		)	(18,875		)
Gain on sale of hotels, net	(320		)	(44		)		19,855			—			19,491
Net income and comprehensive income	(4,859		)	8,470				59,812			(62,807		)	616
Income attributable to noncontrolling interests	—			591				(4,996		)	—			(4,405		)
Preferred distributions - consolidated joint venture	—			—				(1,070		)	—			(1,070		)
Net loss and comprehensive loss attributable to FelCor LP	(4,859		)	9,061				53,746			(62,807		)	(4,859		)
Preferred distributions	(23,860		)	—				—			—			(23,860		)
Redemption of preferred units	(6,096		)	—			—	—			—			(6,096		)
Net loss attributable to FelCor LP common unitholders	$	(34,815	)	$	9,061			$	53,746		$	(62,807	)	$	(34,815	)

17. FelCor LP’s Consolidating Financial Information — (continued)

FELCOR LODGING LIMITED PARTNERSHIP

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Nine Months Ended September 30, 2016

(in thousands)



	FelCor LP			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Operating activities:
Cash flows from operating activities	$	(47,665	)	$	60,960		$	100,749		$	—		$	114,044
Investing activities:
Acquisition of land	—			—			(8,209		)	—			(8,209		)
Improvements and additions to hotels	(2		)	(23,936		)	(27,390		)	—			(51,328		)
Net proceeds from asset sales	(1,104		)	103,077			(252		)	—			101,721
Insurance proceeds	—			—			94			—			94
Change in restricted cash - investing	—			(1,456		)	(2,972		)	—			(4,428		)
Distributions from unconsolidated entities	786			—			—			—			786
Intercompany financing	120,897			—			—			(120,897		)	—
Cash flows from investing activities	120,577			77,685			(38,729		)	(120,897		)	38,636
Financing activities:
Proceeds from borrowings	—			—			55,000			—			55,000
Repayment of borrowings	—			—			(141,989		)	—			(141,989		)
Payment of deferred financing fees	—			—			(12		)	—			(12		)
Distributions paid to noncontrolling interests	—			(14		)	(2		)	—			(16		)
Contributions from noncontrolling interests	—			313			239			—			552
Repurchase of common units	(30,462		)	—			—			—			(30,462		)
Distributions paid to preferred unitholders	(18,837		)	—			—			—			(18,837		)
Distributions paid to common unitholders	(25,141		)	—			—			—			(25,141		)
Net proceeds from issuance of preferred capital - consolidated joint venture	—			—			597			—			597
Intercompany financing	—			(142,606		)	21,709			120,897			—
Other	(702		)	—			(1,097		)	—			(1,799		)
Cash flows from financing activities	(75,142		)	(142,307		)	(65,555		)	120,897			(162,107		)
Effect of exchange rate changes on cash	—			(9		)	—			—			(9		)
Change in cash and cash equivalents	(2,230		)	(3,671		)	(3,535		)	—			(9,436		)
Cash and cash equivalents at beginning of period	21,219			34,294			4,273			—			59,786
Cash and cash equivalents at end of period	$	18,989		$	30,623		$	738		$	—		$	50,350

17. FelCor LP’s Consolidating Financial Information — (continued)

FELCOR LODGING LIMITED PARTNERSHIP

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Nine Months Ended September 30, 2015

(in thousands)



	FelCor LP			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Operating activities:
Cash flows from operating activities	$	(40,093	)	$	59,884		$	94,271		$	—		$	114,062
Investing activities:
Improvements and additions to hotels	(13		)	(21,664		)	(14,302		)	—			(35,979		)
Hotel development	—			—			(31,599		)	—			(31,599		)
Net proceeds from asset sales	(429		)	10			190,454			—			190,035
Insurance proceeds	274			—			—			—			274
Change in restricted cash - investing	—			(1,964		)	(2,240		)	—			(4,204		)
Distributions from unconsolidated entities	6,460			—			—			—			6,460
Intercompany financing	139,524			—			—			(139,524		)	—
Cash flows from investing activities	145,816			(23,618		)	142,313			(139,524		)	124,987
Financing activities:
Proceeds from borrowings	475,000			—			504,000			—			979,000
Repayment of borrowings	(545,453		)	—			(621,240		)	—			(1,166,693		)
Payment of deferred financing fees	(8,500		)	—			(5,848		)	—			(14,348		)
Distributions paid to preferred unitholders	(26,125		)	—			—			—			(26,125		)
Distributions paid to common unitholders	(16,498		)	—			—			—			(16,498		)
Net proceeds from common unit issuance	198,651			—			—			—			198,651
Distributions paid to noncontrolling interests	—			(401		)	(15,893		)	—			(16,294		)
Contributions from noncontrolling interests	—			513			2,031			—			2,544
Redemption of preferred units	(169,986		)	—			—			—			(169,986		)
Net proceeds from issuance of preferred capital- consolidated joint venture	—			—			1,744			—			1,744
Intercompany financing	—			(32,703		)	(106,821		)	139,524			—
Other	(76		)	—			(1,070		)	—			(1,146		)
Cash flows from financing activities	(92,987		)	(32,591		)	(243,097		)	139,524			(229,151		)
Effect of exchange rate changes on cash	—			(134		)	—			—			(134		)
Change in cash and cash equivalents	12,736			3,541			(6,513		)	—			9,764
Cash and cash equivalents at beginning of period	5,717			32,923			8,507			—			47,147
Cash and cash equivalents at end of period	$	18,453		$	36,464		$	1,994		$	—		$	56,911