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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
OR
[ ] 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 75-2544994
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
545 E. JOHN CARPENTER FRWY., SUITE 1300, IRVING, TEXAS 75062
(Address of principal executive offices) (Zip Code)
(972) 444-4900
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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NONE
Securities registered pursuant to Section 12(g) of the Act:
NONE
(Title of class)
Indicate by check mark whether the registrant (i) 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 (ii) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting and non-voting limited
partnership interest held by non-affiliates of the registrant, as of March 15,
2001, was approximately $55.8 million.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
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FELCOR LODGING LIMITED PARTNERSHIP
INDEX
FORM 10-K
REPORT
ITEM NO. PAGE
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PART I
1. Business...................................................................................1
2. Properties................................................................................16
3. Legal Proceedings.........................................................................19
4. Submission of Matters to a Vote of Security Holders.......................................19
PART II
5. Market for Registrant's Common Equity and Related Stockholder Matters.....................20
6. Selected Financial Data...................................................................22
7. Management's Discussion and Analysis of Financial Condition and Results of Operations.....23
7A. Quantitative and Qualitative Disclosures About Market Risk................................38
8. Financial Statements and Supplementary Data...............................................38
9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure......38
PART III
10. Directors and Executive Officers of the Company ..........................................39
11. Executive Compensation....................................................................39
12. Security Ownership of Certain Beneficial Owners and Management............................39
13. Certain Relationships and Related Transactions............................................39
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K..........................40
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PART I
ITEM 1. BUSINESS
At December 31, 2000, FelCor Lodging Limited Partnership and its
subsidiaries (the "Company") owned interests in 186 hotels with nearly 50,000
rooms and suites (collectively the "Hotels"). The sole general partner of the
Company is FelCor Lodging Trust Incorporated ("FelCor"), a Maryland corporation,
the nation's second largest hotel real estate investment trust ("REIT"). At
December 31, 2000, FelCor owned a greater than 86% equity interest in the
Company. The Company owns 100% interests in 161 of the Hotels, a 90% or greater
interest in entities owning seven hotels, a 60% interest in an entity owning two
hotels and 50% interests in separate entities that own 16 hotels. The Hotels are
located in the United States (35 states) and Canada, with concentrations in
Texas (41 hotels), California (19 hotels), Florida (18 hotels) and Georgia (15
hotels).
The Company is the owner of the largest number of Embassy Suites(R),
Crowne Plaza(R), Holiday Inn(R), and independently owned Doubletree(R) branded
hotels in the world. The following table provides a schedule of the Hotels, by
brand, at December 31, 2000:
BRAND TOTAL
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Hilton(R) Brands:
Embassy Suites .................................................... 59
Doubletree and Doubletree Guest Suites(R) ......................... 14
Hampton Inn(R) .................................................... 9
Hilton Suites(R) .................................................. 1
Homewood Suites(R) ................................................ 1
Bass Brands:
Holiday Inn ....................................................... 44
Crowne Plaza and Crowne Plaza Suites(R) ........................... 18
Holiday Inn Select(R) ............................................. 10
Holiday Inn Express(R) ............................................ 5
Starwood Brands:
Sheraton(R)and Sheraton Suites(R) ................................. 10
Westin(R) ......................................................... 1
Other Brands ............................................................. 14
---
Total Hotels ................................................. 186
===
The Company seeks to increase operating cash flow through both
internal growth and selective acquisitions, while maintaining a flexible and
conservative capital structure. In addition to renovating, redeveloping and
repositioning the Company's acquired hotels, the Company may seek to acquire new
upscale properties that will benefit from affiliation with one of the premium
brands available to the Company through its strategic brand owner and manager
relationships with Hilton Hotels Corporation ("Hilton"), Bass plc ("Bass") and
Starwood Hotels & Resorts Worldwide, Inc. ("Starwood").
On July 28, 1998, the Company merged Bristol Hotel Company into
FelCor. FelCor then contributed the assets so acquired to the Company in
exchange for approximately 31 million units of partnership interest, resulting
in the Company acquiring 107 primarily full-service hotels (the "Merger"). These
hotels added more than 28,000 rooms and suites to the Company's portfolio, more
than doubling the Company's size. The merger also provided diversification, both
geographically and by asset class, by adding hotels in many of its key markets
and broadening its portfolio in the full-service, upscale and midscale hotel
markets.
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In the second quarter of 2000, the Company identified 25
non-strategic hotels and indicated its intent to sell these hotels. The Company
expects gross sale proceeds from these sales to be approximately $150 million
and net proceeds to be approximately $137 million (after deducting estimated
transaction costs). The Company anticipates that the sale of these 25 hotels
will result in a book loss of approximately $63 million. Accordingly, FelCor's
Board of Directors approved the establishment of a $63 million reserve in the
second quarter of 2000 for hotels held for sale, to reflect the difference
between book value and the estimated market value of these hotels. In December
2000, the Company completed the sale of one of these hotels held for sale and
recorded a gain of approximately $135,000.
In March 2001, the Company contributed eight of the hotels held for
sale to an entity in which the Company holds a 50% equity interest, and
subsidiary of Interstate Hotels Corporation ("IHC") holds the other 50% equity
interest. Another subsidiary of IHC manages each of these hotels.
On January 1, 2001, the provisions of the REIT Modernization Act
became effective. These provisions:
o reduce the percentage of taxable income required to be distributed
by a REIT from 95% to 90% for taxable years after 2000; and
o subject to certain limitations, permit a REIT to own taxable
subsidiaries that engage in businesses previously prohibited to a
REIT, including, among other things, leasing hotels from a hotel
REIT, provided that the hotels in question continue to be managed by
unrelated third parties.
As a result of the REIT Modernization Act's enactment, the Company
undertook steps to realize the benefits the Act offers to REIT's by
o effective January 1, 2001, acquiring DJONT Operations, L.L.C. and
its consolidated subsidiaries ("DJONT") which leased 85 of the
Company's hotels at December 31, 2000. The management contracts for
all of the DJONT leased hotels remained in place.
o effective January 1, 2001, completing the acquisition of 12 hotels
leased to Bristol Hotels & Resorts and its consolidated subsidiaries
("Bristol"), entering into management contracts with a subsidiary of
Bass for two of the hotels, a subsidiary of IHC for eight of the
hotels, with a subsidiary of Hilton for one of the hotels and one
hotel was sold.
o effective July 1, 2001, acquiring leases for the remaining 88 hotels
leased to Bristol and entering into long term management agreements
with a subsidiary of Bass to manage these hotels.
o contributing the acquired Lessee and/or leases as acquired, to newly
created wholly owned taxable REIT subsidiaries ("TRS").
The Company believes that the advantages of holding the Lessees in a
TRS include (i) a more direct relationship with the hotel and the brand
managers, (ii) elimination of potential conflicts of interest and (iii) the
ability to present consolidated hotel level financial reporting.
As the Hotel leases are acquired, the Company's results of
operations reflect hotel revenues and expenses rather than percentage lease
revenue. Pro forma consolidated statements of operations for the years ended
December 31, 2000 and 1999, which reflect the acquisition of all the Hotel
leases, are contained in the Notes to the Consolidated Financial Statements of
FelCor Lodging Limited Partnership appearing elsewhere herein.
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The Leases
At December 31, 2000, the Company leased 85 hotels to DJONT and
leased 99 hotels to Bristol (Bristol together with DJONT, the "Lessees").
Bristol became a subsidiary of Bass by virtue of a merger between Bristol and a
subsidiary of Bass in March 2000. Two of the Hotels were operated without a
lease.
At December 31, 2000, DJONT was a private company controlled by
Thomas J. Corcoran, Jr. the President, Chief Executive Officer and a Director of
FelCor. Subject to the receipt of certain lender consents, effective January 1,
2001, the Company acquired and contributed to a newly formed taxable REIT
subsidiary, all of the equity interests in DJONT. In consideration for the
acquisition of DJONT, the Company issued an aggregate of 416,667 units valued at
approximately $10 million, which, together with DJONT's accumulated
shareholders' deficit of $24.5 million, will be expensed in the first quarter of
2001 as a lease termination cost.
Effective January 1, 2001, the Company completed the acquisition of
12 of the Bristol leases which were held by Bass. In consideration for the
acquisition of such leases, FelCor issued to Bass 413,585 shares of FelCor's
common stock valued at approximately $10 million. FelCor then transferred these
leases to the Company and the Company then issued a corresponding number of
units. The Company has entered into an agreement with IHC to manage eight of the
hotels, two hotels are being managed by a subsidiary of Bass under short term
management contracts, one hotel is being managed by a subsidiary of Hilton and
one hotel was sold. In March 2001, the Company entered into an agreement with
Bass to acquire the remaining 88 leases effective July 1, 2001. In consideration
for the acquisition of such leases, the Company will enter into long term
management agreements with Bass with regard to these hotels and FelCor will
issue to Bass 100 shares of FelCor common stock. A portion of the management
fees with respect to the 88 hotels managed by Bass under long term management
agreements will be considered to be lease termination costs and the Company will
record a lease termination expense of approximately $125 million in the third
quarter of 2001. The Company will record a corresponding liability of
approximately $125 million that will be amortized over the term of the
applicable management agreements.
At January 1, 2001, (i) subsidiaries of Bass managed 91 of the
Hotels, (ii) subsidiaries of Hilton managed 72 of the Hotels, (iii) subsidiaries
of Starwood managed 11 of the Hotels, (iv) subsidiaries of IHC managed eight of
the Hotels and (v) three independent management companies managed the four
remaining Hotels.
THE INDUSTRY
The United States hotel industry profitability has improved each
year since 1992, the longest sustained growth in history. According to
PricewaterhouseCoopers LLP's Lodging Research Journal, after a period of
extended unprofitability in the late 1980's and early 1990's, during which time
the increase in supply of new hotel rooms significantly outpaced growth in room
demand, lodging industry revenues increased every year from 1992 through 2000.
The percentage growth in room demand exceeded percentage growth in new room
supply from 1992 through 1996. While 1997 and 1998 experienced the highest
number of new room starts in the prior 10 years, 1999 showed a decline in new
room starts from 1997-1998 levels. In spite of above-average increases in room
supply, according to PricewaterhouseCoopers LLP's January 2001 Lodging Research
Journal, room demand for the year 2000 reflected a growth rate of 3.7 percent,
which was the strongest since 1989. Increases in room rates of an estimated 4.9
percent contributed to a growth in revenue per available room ("RevPAR") of 5.5
percent for the year. Although 2000 was the first year in which hotel occupancy
had risen since 1995, PricewaterhouseCoopers indicated that occupancy in the
U.S. lodging industry is expected to fall and estimated slower RevPAR growth
during the first two quarters of 2001. However, it anticipates the lodging
industry will regain momentum towards the end of 2001 and estimates RevPAR
growth for 2001 to be 2.8%.
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Smith Travel Research, another leading provider of industry data,
classifies hotel chains into five distinct categories: Upper Upscale, Upscale,
Midscale with Food & Beverage, Midscale Without Food & Beverage, and Economy.
The Company remains focused primarily on properties in the Upper Upscale
(including Doubletree Guest Suites, Embassy Suites, Sheraton and Westin hotels),
Upscale (including Crowne Plaza, Doubletree hotels and Homewood Suites), and
Midscale With Food & Beverage (including Holiday Inn and Holiday Inn Select
hotels) categories, from which the Company derived approximately 97% of its room
and suite revenues in 2000. PricewaterhouseCoopers LLP's January 2001 Lodging
Research Journal projects that for 2001, RevPAR growth will be 2.3% for Upper
Upscale hotels, 2.4% for Upscale hotels, and 2.1% for hotels in the Midscale
With Food & Beverage category. The same publication projects 2001 changes in
supply and demand for each segment: Upper Upscale hotels, supply growth of 3.7%
with a demand growth of 2.3%; Upscale hotels, supply growth of 4.2% with a
demand growth of 3.7%; and hotels in the Midscale With Food & Beverage category
with a supply growth of 0.3% and a decline in demand of 0.5%.
BUSINESS STRATEGY
The Company seeks to increase operating cash flow through active
asset management. In addition to actively overseeing the operation of its hotels
by its lessees and their managers, the Company applies its asset management
expertise to the renovation, redevelopment and rebranding of its hotels, to the
maintenance of strong strategic relationships with its brand owners and
managers, and to maintaining financial flexibility and a conservative balance
sheet.
HOTEL RENOVATION, REDEVELOPMENT AND REBRANDING
The Company has historically sought to enhance the value of its
portfolio through:
o its practice of upgrading, renovating and/or redeveloping most
of its recently acquired hotels to enhance their competitive
position, and, in certain instances, rebranding them to improve
their revenue generating capacity; and
o its ongoing program for the maintenance of the Company's
upgraded hotel assets, which includes:
o the contribution of approximately 4% of total annual room
and suite revenue to a capital reserve, for routine capital
replacements and improvements; and
o ensuring that the Lessees' adhere to a rigorous maintenance
and repair program, resulting in the expenditure of more
than 4% of annual hotel revenues on maintenance of the
Hotels.
For information regarding the Company's renovation, redevelopment
and rebranding activities during 2000 and 1999, see "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of
Operations-Renovations, Redevelopments and Rebrandings" contained elsewhere in
this Annual Report on Form 10-K for the year ended December 31, 2000.
MAINTENANCE OF STRONG STRATEGIC RELATIONSHIPS
The Company benefits from strategic brand owner and manager
relationships with Hilton (Embassy Suites and Doubletree), Bass (Crowne Plaza
and Holiday Inn) and Starwood (Sheraton and Westin).
o Hilton, which acquired Promus Hotel Corporation on November 30,
1999, has a hotel portfolio of more than 1,800 hotels with more
than 300,000 guest rooms in 50 states and the District of
Columbia, and is the largest operator of full-service, all-suite
hotels in the United States. In addition to its Hilton and
Conrad International(R)-branded hotels, Hilton owns the Embassy
Suites, Doubletree and Doubletree Guest Suites brands and at
December 31, 2000, managed 71 of the
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Company's hotels. As a result of its acquisition of Promus Hotel
Corporation, Hilton acquired an equity interest in the Company
having an aggregate value of approximately $34 million at
December 31, 2000, and became a 50% partner in unconsolidated
entities with the Company in the ownership of 12 hotels and the
holder of a 10% equity interest in certain consolidated
subsidiaries owning six hotels. The relationship with Promus
Hotel Corporation and its Embassy Suites brand provided the
foundation for the Company's historical growth, and it expects
to expand its relationship with Hilton, as the successor to
Promus.
o Bass is one of the largest hotel operating companies in the
world. Bass owns, operates or franchises more than 3,000 hotels
worldwide, with over 490,000 guest rooms in more than 100
countries around the world. Among the brands owned by Bass are
Crowne Plaza, Holiday Inn, Holiday Inn Select, Holiday Inn
Express and Inter-Continental(R). Bass, which acquired Bristol
on March 31, 2000, managed 99 of our hotels at December 31,
2000. Bass also owns FelCor common stock and limited partnership
units of the Company aggregating approximately 16.2% of the
Company and FelCor's outstanding common stock.
o Starwood is one of the world's largest hotel operating
companies. Directly and through subsidiaries, Starwood owns,
leases, manages or franchises more than 725 properties in 80
countries. The Company's strategic alliance with Starwood,
coupled with the purchase of seven Sheraton hotels in 1997,
provided the Company with its initial entry into the upscale,
full-service, non-suite hotel market. Starwood manages 11 of the
Company's hotels and is a 40% joint venture partner in the
ownership of two hotels and a 50% joint venture partner in the
ownership of one hotel.
MAINTENANCE OF FINANCIAL FLEXIBILITY
The Company is committed to maintaining substantial financial
flexibility. In funding its growth, the Company has used a broad selection of
financing sources to minimize the cost of capital, including public equity,
collateralized mortgage-backed securities, public and private debt, and asset
divestitures. It believes that its capital structure will continue to be among
the most conservative in the hotel REIT industry. It further believes its
financial flexibility should enable it to pursue selective expansion
opportunities and to take advantage of renovation, redevelopment and rebranding
opportunities to help it improve its hotels' competitive position.
FINANCING TRANSACTIONS
On April 26, 2000, the Company closed a 10-year, $145 million First
Mortgage Term Loan, which is collateralized by seven Sheraton hotels and carries
an 8.73% fixed interest rate. On May 2, 2000, the Company closed $186 million of
10-year, First Mortgage Term Loans which are collateralized by eight Embassy
Suites hotels and carry an 8.70% fixed interest rate. These loans are
non-recourse, mature in May 2010, and amortize over 25 years. The proceeds of
these loans were used to reduce borrowings under the Company's Line of Credit.
On August 1, 2000, the Company renewed its Line of Credit. The Line
of Credit was reduced from $850 million to $600 million and the maturity was
extended from July 2001 to August 2003. The effective interest rate on the
renewed Line of Credit ranges from 87.5 basis points to 250 basis points above
LIBOR depending on the Company's leverage and corporate rating. An extraordinary
charge of approximately $578,000 was recorded to write-off a portion of the
deferred financing costs associated with the Line of Credit.
On September 15, 2000, the Company completed the private placement
of $400 million of senior unsecured notes which mature in September, 2008 and
bear an interest rate of 9 1/2%. The notes were issued at a discount to yield
9.75%. The proceeds were used to retire the $375 million floating rate senior
term loan,
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which matured in 2004, and to pay down the Line of Credit. An extraordinary
charge of approximately $3.3 million was recorded to write-off unamortized
deferred financing costs associated with the $375 million loan. On October 30,
2000, the Company subsequently completed an offer to exchange up to $400 million
in aggregate principal amount of the private placement senior notes for notes
with identical terms which were registered under the Securities Act of 1933.
On January 11, 2001, the Company completed the private placement of
an additional $100 million in 9 1/2% senior unsecured notes that mature in
December, 2008. These notes were issued at a premium to yield an effective
interest rate of 91/8%. The proceeds were used initially to pay down the
Company's Line of Credit.
HOTEL OPERATING PERFORMANCE
Upscale and full service hotels like Embassy Suites, Crowne Plaza,
Holiday Inn and Holiday Inn Select, Doubletree Guest Suites, and Sheraton and
Sheraton Suites hotels account for approximately 97% of the Company's Percentage
Lease revenue.
For a detailed discussion of the Company's hotel operating
performance, see "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations-Results of Operations-The Hotels-Actual"
contained elsewhere in this Annual Report on Form 10-K for the year ended
December 31, 2000.
SEASONALITY
The Hotels' operations historically have been seasonal in nature,
reflecting higher occupancy rates primarily during the first three quarters of
each year. This seasonality can be expected to cause fluctuations in quarterly
hotel income, particularly during the fourth quarter. To the extent cash flow
from operations is insufficient during any quarter, due to temporary or seasonal
fluctuations, the Company expects to utilize other cash on hand or borrowings
under the Line of Credit to make distributions to its equity holders.
COMPETITION
The hotel industry is highly competitive. Each of the Company's
hotels is located in a developed area that includes other hotel properties and
competes for guests primarily with other full-service hotels in its immediate
vicinity and secondarily with other hotel properties in its geographic market.
An increase in the number of competitive hotel properties in a particular area
could have a material adverse effect on the occupancy, average daily rate
("ADR") and RevPAR of the Company's hotels in that area. The Company believes
that brand recognition, location, the quality of the hotel and services
provided, and price are the principal competitive factors affecting the
Company's hotels.
The Company competes for investment opportunities with other
entities, some of which have substantially greater financial resources than the
Company. These larger entities may generally be able to accept more risk than
the Company can prudently manage. Competition may generally reduce the number of
suitable investment opportunities offered to the Company and may increase the
bargaining power of owners seeking to sell their hotels.
PROPERTY TAXES
Each Hotel is subject to real and personal property taxes. During
2000, real and personal property taxes incurred by the Company amounted to $63.2
million, or 11.4 % of the Company's total revenues. Real and personal property
taxes on the Hotels may increase as property tax rates change and as the
properties are assessed or reassessed by taxing authorities. FelCor's Vice
President, Taxes, Michael L. Hunter and his staff,
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work with the numerous taxing authorities, both directly and through independent
agents, to assure that the Hotels are fairly assessed and to minimize the
Company's tax liabilities.
TAX STATUS OF FELCOR
FelCor has elected to be taxed as a REIT under Sections 856 through
860 of the Internal Revenue Code of 1986, as amended (the "Code"), commencing
with its initial taxable year ending December 31, 1994. As a REIT, FelCor
generally is not subject to federal income taxation at the corporate level, on
its taxable income that is distributed to its shareholders. FelCor may, however,
be subject to certain state and local taxes on its income and property. A REIT
is subject to a number of organizational and operational requirements, including
a requirement that it distribute annually at least 90% of its taxable income. In
connection with FelCor's election to be taxed as a REIT, FelCor's Charter
imposes restrictions on the ownership and transfer of shares of its common
stock. The Company expects to make distributions on its units sufficient to
enable FelCor to meet its distribution obligations as a REIT. FelCor and the
Company have adopted the calendar year as its taxable year.
REIT Modernization Act
On December 17, 1999, the provisions of the REIT Modernization Act
were enacted into law. These provisions, which became effective January 1, 2001,
will, among other things:
o reduce the percentage of taxable income required to be distributed
by a REIT from 95% to 90%, and
o subject to certain limitations, permit a REIT to own taxable
subsidiaries that engage in businesses previously prohibited to a
REIT, including, among other things, leasing hotels from its parent
hotel REIT, provided that the hotels in question continue to be
managed by unrelated third parties.
This act and its potential impact on the Company are discussed in
further detail in "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations" contained elsewhere in this Annual Report
on Form 10-K for the year December 31, 2000.
LESSEE OPERATIONS
At December 31, 2000, the Lessees leased all but two of the Hotels
under Percentage Leases, pursuant to which the Lessee is obligated to pay the
Company the greater of a minimum Base Rent or Percentage Rent based on a
percentage of revenues. The Lessees have entered into and are responsible for
the payment of all fees under the franchise licenses and management agreements
relating to the Hotels, may hold the liquor licenses applicable to the Hotels,
own and maintain the inventories required for the operation of the Hotels, pay
for normal maintenance and repair expenses, enter into various operating,
maintenance and service agreements with respect to the Hotels, and are
responsible for compliance with the license, management and other agreements
affecting hotel operations. In addition, the Lessees provide asset management
services to the Hotels, including the supervision of the day-to-day operations
of the Hotels by the management companies engaged to manage such Hotels and the
establishment and implementation of capital expenditure programs.
Audited financial statements for DJONT and Bristol Tenant Companies
are filed with FelCor Lodging Trust Incorporated's annual report on Form 10-K
for the year ended December 31, 2000.
REPAIRS AND MAINTENANCE
During the year ended December 31, 2000, approximately $41.0 million
and $32.2 million was spent by the Lessees on routine repairs and maintenance at
the Hotels leased by DJONT and Bristol, respectively. This represents
approximately 4.4% of total hotel revenues.
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EMPLOYEES
The Company has no employees. Management functions of the Company
are performed by FelCor as the sole general partner. Mr. Corcoran entered into
an employment agreement with FelCor in 1994 that continues through 2001. None of
FelCor's other executive officers has an employment agreement with FelCor. In
addition to Mr. Corcoran, FelCor had 50 other full-time employees at December
31, 2000. All persons employed in the day-to-day operation of the Company's
Hotels are employees of the management companies engaged by the Lessees to
operate such Hotels and are not employees of FelCor or the Company.
PERSONNEL AND OFFICE SHARING ARRANGEMENTS
The Company's general partner, FelCor, shares executive offices and
certain employees with DJONT and FelCor, Inc. (a private company controlled by
Mr. Corcoran). Each entity bears an allocated share of the costs thereof,
including but not limited to rent, compensation of certain personnel (other than
Mr. Corcoran, whose compensation is borne solely by FelCor), office supplies,
telephones and depreciation of office furniture, fixtures and equipment. The
Company reimburses FelCor for its share of such allocated costs. Any such
allocation of shared expenses to the Company is required to be approved by a
majority of FelCor's Independent Directors. During 2000, approximately $7.5
million (approximately 89.5% of all allocable expenses) were paid by the Company
and FelCor under this arrangement.
CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS
CERTAIN STATEMENTS AND ANALYSES CONTAINED IN THIS ANNUAL REPORT ON
FORM 10-K, OR THAT MAY IN THE FUTURE BE MADE BY, OR BE ATTRIBUTABLE TO, THE
COMPANY, MAY CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, AND CAN BE IDENTIFIED BY THE
USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS "MAY," "WILL," "EXPECT,"
"ANTICIPATE," "ESTIMATE" OR "CONTINUE" OR THE NEGATIVE THEREOF OR OTHER
VARIATIONS THEREON OR COMPARABLE TERMINOLOGY. ALL OF SUCH FORWARD-LOOKING
STATEMENTS ARE BASED UPON PRESENT EXPECTATIONS AND ASSUMPTIONS THAT MAY OR MAY
NOT ACTUALLY OCCUR. THE FOLLOWING FACTORS CONSTITUTE CAUTIONARY STATEMENTS
IDENTIFYING IMPORTANT FACTORS, INCLUDING MATERIAL RISKS AND UNCERTAINTIES, WITH
RESPECT TO SUCH FORWARD-LOOKING STATEMENTS THAT COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY FROM THOSE REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS OR IN
THE COMPANY'S HISTORICAL RESULTS. EACH OF THE FOLLOWING FACTORS, AMONG OTHERS,
COULD ADVERSELY AFFECT THE ABILITY OF THE COMPANY TO MEET ITS CURRENT
EXPECTATIONS.
The Company has had increases in leverage that could adversely affect its
financial condition and the Company's corresponding unit redemptions
As a result of its 1998 merger with Bristol Hotel Company, the
Company's leverage increased during 1998, and has increased further to fund its
renovation, redevelopment and rebranding program and FelCor's share repurchases
(and the Company's corresponding unit redemptions). FelCor's share repurchase
program authorizes repurchases up to an aggregate maximum of $300 million.
Through December 31, 2000, FelCor had repurchased approximately 10.2 million
shares of common stock under this program at an aggregate cost of approximately
$185 million.
At December 31, 2000 the Company had:
o approximately $1.8 billion in consolidated debt, of which
approximately $783 million was collateralized by mortgages or
capital leases;
o a ratio of consolidated debt to investment in hotels at cost of
39.9%;
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o a ratio of EBITDA to interest expense for the year ended
December 31, 2000, of 2.8-to-1; and
o $175 million of floating rate debt, which constituted 9.5% of
its total debt.
Most of the Company's floating rate debt bears interest at a rate
equal to 2.00% plus the one month LIBOR rate. At December 31, 2000, the one
month LIBOR rate was 6.565%. Changes in economic conditions could result in
higher interest rates, thereby increasing the Company's interest expense on its
floating rate debt and reducing funds available for its current renovation,
redevelopment and rebranding plans and its share repurchase program.
The Company's leverage could have important consequences. For
example, it could:
o limit the Company's ability to obtain additional financing, if
needed, for working capital, renovation, redevelopment and
rebranding plans, acquisitions, debt service requirements or
other purposes;
o increase the Company's vulnerability to adverse economic and
industry conditions;
o require it to dedicate a substantial portion of its cash flow
from operations to payments on its debt, thereby reducing funds
available for operations, future business opportunities or other
purposes;
o limit its flexibility in planning for, or reacting to, changes
in its business and the industry in which it competes; and
o place it at a competitive disadvantage compared to competitors
that have less debt.
The Company may be unable to realize the anticipated benefits of its
renovations
The majority of its hotels either recently have been, or are in the
process of being, substantially renovated, redeveloped and, in certain cases,
rebranded. If the completion of the current renovation projects are
significantly delayed, the Company's operating results could be adversely
affected. In addition, no assurance can be given that the recently completed and
ongoing improvements will achieve the results anticipated when the decision was
made to invest in the improvements.
Conflicts of interest could adversely affect the Company's business
Certain FelCor directors. Subsidiaries of Bass currently manage 89
of our hotels. Richard C. North, who joined FelCor's Board during 1998, is the
Group Finance Director of Bass plc, which is also the parent of Holiday
Hospitality Franchising, Inc. Holiday Hospitality is the franchisor of most of
the hotels managed by Bass and, together with its affiliates, owns FelCor common
stock and FelCor LP units aggregating approximately 16.2% of the Company's
outstanding common stock and units.
Issues may arise under the franchise agreements and management
contracts, and in the allocation of acquisition opportunities, that present
conflicts of interests due to the relationship of Mr. North to the companies
with which he is associated. As an example, in the event the Company enters into
new or additional transactions with Bristol, the interests of Mr. North, by
virtue of his relationship with Bass, may conflict with the Company's interests.
For example, in the selection of franchises under which the Company's hotels
will be operated, Mr. North by virtue of his relationship with Holiday
Hospitality, may have interests that conflict with the Company's interest. It is
anticipated that any director who has a conflict of interest with respect to an
issue presented to the FelCor board will abstain from voting upon that issue,
although he will have no legal obligation to do so. There are no provisions in
FelCor's bylaws or charter that require an interested director to abstain from
voting upon an issue. Although each director has a fiduciary duty of loyalty
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to FelCor, there is a risk that, should an interested director vote upon an
issue in which he or one of his affiliates has an interest, his vote may reflect
a bias that could be contrary to the Company's or FelCor's best interests. In
addition, even if an interested director abstains from voting, the director's
participation in the meeting and discussion of an issue in which he or companies
with which he is associated have an interest could influence the votes of other
directors regarding the issue.
Acquisition of lessees. As a result of the passage of the REIT
Modernization Act, FelCor was able to form or acquire taxable REIT subsidiaries
(TRSs) to acquire its existing hotel leases, and to serve as the lessee for any
hotels acquired after January 1, 2001. Subject to the receipt of consents from
certain lenders, the acquisition of DJONT was completed effective January 1,
2001. The acquisition of DJONT required negotiations between the Company and the
owners of DJONT, including Mr. Corcoran and the children of Charles N.
Mathewson, a director of FelCor. The interests of Mr. Corcoran and Mr. Mathewson
were in direct conflict with the interest of the Company and FelCor in these
negotiations and, accordingly, they abstained from participation in the
discussion and vote on this matter. In December 2000, the Company sold one
Bristol hotel and effective January 1, 2001 completed the acquisition of leases
with respect to 12 hotels. In consideration for the acquisition and termination
of such leases, 413,585 shares of FelCor common stock valued at approximately
$10 million were issued to Bass with a corresponding number of units issued. In
March 2001, the Company entered into an agreement with Bass to acquire the
remaining 88 leases held by Bristol effective July 1, 2001. The acquisition of
the leases held by Bristol involved negotiations between the Company and Bass.
Richard C. North, a director of FelCor, is the Group Finance Director of Bass
plc. The interest of Bass in those negotiations was in direct conflict with the
interests of the Company and FelCor. Mr. North abstained from participating in
any discussion or vote by FelCor's Board of Directors relating to these
transactions.
Adverse tax consequences to certain affiliates on a sale of certain
hotels. Messrs. Corcoran and Mathewson may incur additional tax liability if the
Company sells its investments in six hotels that were acquired in July 1994 from
partnerships controlled by these individuals. Consequently, the Company's
interests could differ from Messrs. Corcoran and Mathewson's interests in the
event that a sale of any of these hotels is considered. Decisions regarding a
sale of any of these six hotels must be made by a majority of FelCor's
independent directors.
The Company has restrictive debt covenants that could adversely affect its
ability to run its business
At December 31, 2000, it had approximately $362 million borrowed
under its line of credit. It also had issued and outstanding an aggregate of
$700 million of senior notes. The indentures governing the senior notes and the
agreements governing the line of credit contain various restrictive covenants
including, among others, provisions restricting the Company from:
o incurring indebtedness;
o making distributions;
o making investments;
o engaging in transactions with affiliates;
o incurring liens;
o merging or consolidating with another person;
o disposing of all or substantially all of its assets; or
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o permitting limitations on the ability of its subsidiaries to
make payments to it.
These restrictions may adversely affect the Company's ability to
finance its operations or engage in other business activities that may be in its
best interest.
In addition, certain of these agreements require the Company to
maintain certain specified financial ratios. Its ability to comply with such
ratios may be affected by events beyond its control. Under the most restrictive
of these provisions, the maximum additional debt that the Company could incur
for investment in hotel properties was limited to approximately $1 billion at
December 31, 2000. These covenants also may restrict its ability to engage in
certain transactions. In addition, any breach of these limitations could result
in the acceleration of most of the Company's debt. It may not be able to
refinance or repay this debt in full under such circumstances.
The Company will encounter industry related risks that may adversely
affect its business
Investing in hotel assets involves special risks. The Company has invested
only in hotel-related assets, and its hotels are subject to all of the risks
common to the hotel industry. These risks could adversely affect hotel occupancy
and the rates that can be charged for hotel rooms, and generally include:
o competition from other hotels;
o construction of more hotel rooms in a particular area than
needed to meet demand;
o increases in energy costs and other travel expenses that reduce
business and leisure travel;
o adverse effects of declines in general and local economic
activity;
o fluctuations in revenue caused by the seasonal nature of the
hotel industry;
o adverse effects of a downturn in the hotel industry; and
o risks generally associated with the ownership of hotels and real
estate, as discussed below.
The Company will be subject to the risks of hotel operations. Prior
to January 1, 2001, substantially all of its hotels were leased to Bristol or
DJONT under leases providing for the payment of rent based, in part, upon
revenues from the hotels. Accordingly, the Company's operating risks were
essentially limited to changes in hotel revenues and to the lessees' ability to
pay the rent due under the leases. Following completion of the acquisition of
DJONT and leases held by Bristol, the acquisition of such leases, in addition to
the ownership expenses previously not borne by it, the Company will become
subject to the risk of fluctuating hotel operating expenses, including but not
limited to:
o wage and benefit costs;
o repair and maintenance expenses;
o the costs of gas and electricity, which have increased
significantly in recent months;
o the costs of liability insurance; and
o other operating expenses.
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These operating expenses are more difficult to predict and control than revenue,
resulting in an increased risk of volatility in the Company's results of
operations.
The Company could face increased competition. Each of its hotels
competes with other hotels in a given geographic area. A number of additional
hotel rooms have been or may be built in a number of the geographic areas in
which the Company's hotels are located, which could adversely affect the results
of operations of these hotels. An oversupply of hotel rooms could adversely
affect both occupancy and rates in the markets in which the Company's hotels are
located. A significant increase in the supply of Midprice, Upscale and Upper
Upscale hotel rooms and suites, if demand fails to increase proportionately,
could have a severe adverse effect on the Company's business, financial
condition, and results of operations.
Acquisition growth opportunities have decreased. There has been
substantial consolidation in, and capital allocated to, the U.S. lodging
industry since the early 1990's. This generally has resulted in higher prices
for hotels. In addition, current market prices of FelCor's common stock make its
cost of equity capital relatively high. These conditions have resulted in fewer
attractive acquisition opportunities. An important part of the Company's
historical growth strategy has been the acquisition and, in many instances, the
renovation and repositioning of hotels at less than replacement cost. Continued
industry consolidation and competition for acquisitions could adversely affect
its growth prospects. The Company competes for hotel investment opportunities
with other companies, some of which have greater financial or other resources
than it has. Certain competitors may have a lower cost of capital and may be
able to pay higher prices or assume greater risks than would be prudent for the
Company to pay or assume.
The Company must comply with requirements of franchise agreements.
Most of its hotels are operated under various franchise licenses. Each license
agreement requires that the franchised hotel be maintained and operated in
accordance with certain standards. The franchisors also may require substantial
improvements to the hotels as a condition to the renewal or continuation of
these franchise licenses. If a franchise license terminates due to the Company's
failure to make required improvements or to otherwise comply with its terms, the
Company may be liable to the franchisor for a termination payment. These
termination payments would vary by franchise agreement and by hotel. The loss of
a substantial number of franchise licenses and the related termination payments
could have a material adverse effect on the Company's business, financial
condition and results of operations.
The ability to grow may be limited by the Company's ability to attract
debt financing
Since the merger with Bristol Hotel Company, the Company has focused
on its internal growth strategy, which includes the renovation, redevelopment
and rebranding of the Hotels to achieve improved revenue performance. It may not
be able to fund growth solely from cash provided from operating activities
because FelCor must distribute at least 90% of taxable income each year to
maintain its status as a REIT. Consequently, the Company must rely primarily
upon the availability of debt or equity capital to fund hotel acquisitions and
improvements. The ability of the Company to issue new equity securities is
largely dependent on the market prices of such securities, which have not been
high enough to effect a public offering of equity securities in recent years.
Consequently, the Company may be largely dependent upon its ability to attract
debt financing from public or institutional lenders. The Company can make no
assurance that it will be successful in attracting sufficient debt financing to
fund future growth at an acceptable cost. In addition, it currently has a policy
of limiting debt to not more than 50% of its investment in hotel assets, at
cost, which (unless waived or modified by its board of directors) could also
limit its ability to incur additional debt to fund continued growth. At December
31, 2000, the Company's consolidated debt represented 39.9% of its investment in
hotels at cost.
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The recent mergers of Promus and Bristol create uncertainties for the
future
While the Company expects its positive historical relationships with
Promus and Bristol to continue with their successors, the mergers of Promus
Hotel Corporation into a subsidiary of Hilton Hotels Corporation, and of Bristol
Hotels & Resorts into a subsidiary of Bass plc, give rise to some uncertainties.
Changes in personnel, brand standards or operating methods could adversely
affect relationships, result in increases in required capital expenditures,
reductions in hotel revenues or other adverse consequences of which the Company
is not presently aware.
FelCor is subject to potential tax risks
The federal income tax laws governing REITs are complex. FelCor has
operated and intends to continue to operate in a manner that is intended to
qualify it as a REIT under the federal income tax laws. The REIT qualification
requirements are extremely complicated, however, and interpretations of the
federal income tax laws governing qualification as a REIT are limited.
Accordingly, FelCor cannot be certain that it has been or will continue to be
successful in operating so as to qualify as a REIT. At any time, new laws,
interpretations or court decisions may change the federal tax laws or the
federal income tax consequences of qualification as a REIT.
Failure to make required distributions would subject FelCor to tax.
In order to qualify as a REIT, each year FelCor must pay out to its shareholders
at least 90% of its taxable income (other than any net capital gain). To the
extent that FelCor satisfies the applicable distribution requirement, but
distributes less than 100% of its taxable income, it will be subject to federal
corporate income tax on its undistributed taxable income. In addition, FelCor
will be subject to a 4% nondeductible tax if the actual amount it pays out to
its shareholders in a calendar year is less than a minimum amount specified
under federal tax laws. FelCor's only source of funds to make such distributions
comes from distributions to FelCor from the Company on its units. Accordingly,
the Company may be required to borrow money or sell assets to make distributions
sufficient to enable FelCor to pay out enough of its taxable income to satisfy
the applicable distribution requirement and to avoid corporate income tax and
the 4% tax in a particular year.
Failure to qualify as a REIT would subject FelCor to federal income
tax. If FelCor fails to qualify as a REIT, FelCor would be subject to federal
income tax on its taxable income. The Company might need to borrow money or sell
hotels in order to distribute to FelCor the funds to pay any such tax. If FelCor
ceases to be a REIT, it no longer would be required to distribute most of its
taxable income to its shareholders. Unless its failure to qualify as a REIT were
excused under federal income tax laws, FelCor could not re-elect REIT status
until the fifth calendar year following the year in which it failed to qualify.
Failure to have distributed Bristol Hotel Company's earnings and
profits in 1998 could cause FelCor to fail to qualify as a REIT. At the end of
any taxable year, a REIT may not have any accumulated earnings and profits
(described generally for federal income tax purposes as cumulative undistributed
net income) from a non-REIT corporation. Arthur Andersen LLP prepared and
provided to FelCor its computation of the accumulated earnings and profits of
Bristol Hotel Company through the date of the merger of Bristol Hotel Company
into FelCor, and FelCor made a corresponding special one-time distribution to
its shareholders. Corresponding distributions were made by the Company on its
units. However, the determination of accumulated earnings and profits for
federal income tax purposes is extremely complex and the computations by Arthur
Andersen LLP are not binding upon the IRS. Should the IRS successfully assert
that the accumulated earnings and profits of Bristol Hotel Company were greater
than the amount so distributed by FelCor, it may fail to qualify as a REIT.
Sale of assets acquired from Bristol Hotel Company within ten years
after the merger may result in tax. If, within ten years after the Bristol
merger, the Company sells any assets acquired in the merger and
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recognizes a taxable gain on such sale, FelCor will be taxed at the highest
corporate rate on an amount equal to the lesser of (i) the amount of gain that
FelCor recognizes at the time of the sale or (ii) the amount of gain that FelCor
would have recognized if it had sold the asset at the time of the merger for its
then fair market value. The sales of Bristol hotels that have been made to date
have not resulted in any material amount of tax liability. If FelCor is
successful in selling all of the hotels shown as assets held for sale, FelCor
could incur a significant tax liability, the amount of which cannot yet be
determined.
Departure of key personnel, including Mr. Corcoran, could adversely affect
the Company's future operating results
The Company will encounter risks that may adversely affect real estate
ownership
General Risks. The Company's investments in hotels are subject to
the numerous risks generally associated with owning real estate, including among
others:
o adverse changes in general or local economic or real estate
market conditions;
o changes in zoning laws;
o changes in traffic patterns and neighborhood characteristics;
o increases in assessed valuation and tax rates;
o increases in the cost of property insurance;
o governmental regulations and fiscal policies;
o the potential for uninsured or underinsured property losses;
o the impact of environmental laws and regulations; and
o other circumstances beyond its control.
Moreover, real estate investments are relatively illiquid, and the
Company may not be able to vary its portfolio in response to changes in economic
and other conditions.
Compliance with environmental laws may adversely affect the
Company's financial condition. Real estate owners are subject to numerous
federal, state and local environmental laws and regulations. Under these laws, a
current or prior owner of real estate may be liable for costs of cleaning up and
removing hazardous or toxic substances found on his property, whether or not he
was responsible for their presence. In addition, if an owner of real property
arranges for the disposal of hazardous or toxic substances at another site, it
may also be liable for the costs of cleaning up and removing such substances
from the disposal site, even if it did not own or operate the disposal site. A
property owner may also be liable to third parties for personal injuries or
property damage sustained as a result of its release of hazardous or toxic
substances (including asbestos-containing materials) into the environment.
Environmental laws may require one to incur substantial expenses and limit the
use of his properties. The Company could be liable for substantial amounts for a
failure to comply with applicable environmental laws, which may be enforced by
the government or, in certain instances, by private parties. The existence of
hazardous or toxic substances on a property can also adversely affect the value
of, and the owner's ability to use, sell or borrow against, the property.
No assurances can be given that future or amended laws, ordinances
or regulations or more stringent interpretations or enforcement policies of
existing environmental requirements, will not impose any material environmental
liability, or that the environmental condition of the hotels will not be
affected by changes (of which the Company is unaware) occurring subsequent to
the dates of such audits, by the condition of properties in the vicinity of such
hotels (such as the presence of leaking underground storage tanks) or by the
actions or unrelated third parties.
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Compliance with Americans with Disabilities Act may adversely affect
the Company's financial condition. Under the Americans with Disabilities Act of
1990, all public accommodations (including hotels) are required to meet certain
federal requirements for access and use by disabled persons. The Company
believes that its hotels substantially comply with the requirements of the
Americans with Disabilities Act. However, a determination that the hotels are
not in compliance with that Act could result in liability for both governmental
fines and damages to private parties. If the Company were required to make
unanticipated major modifications to the hotels to comply with the requirements
of the Americans with Disabilities Act, it could adversely affect its ability to
pay its obligations.
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ITEM 2. PROPERTIES
THE HOTELS
The following table sets forth certain descriptive information
regarding the Hotels in which the Company had ownership interests at December
31, 2000:
YEAR NUMBER OF
LOCATION FRANCHISE BRAND ACQUIRED ROOMS/SUITES
- -------- --------------- -------- ------------
Birmingham, AL(1)......................................... Embassy Suites 1996 242
Montgomery (East I-85), AL................................ Holiday Inn 1998 213
Texarkana (I-30), AR(2)................................... Holiday Inn 1998 210
Flagstaff, AZ............................................. Embassy Suites 1995 119
Phoenix (Airport - 44th St.), AZ.......................... Embassy Suites 1998 229
Phoenix (Camelback), AZ................................... Embassy Suites 1996 233
Phoenix, (Crescent), AZ(1)................................ Sheraton 1997 342
Scottsdale (Downtown), AZ(2)(3)........................... Fairfield Inn 1998 218
Tempe (ASU), AZ(1)........................................ Embassy Suites 1998 224
Anaheim (Disney(R)Area), CA(1)............................ Embassy Suites 1996 222
Burlingame (S.F. Airport So.), CA(2)...................... Embassy Suites 1995 339
Covina (I-10), CA(1)(4)................................... Embassy Suites 1997 264
Dana Point, CA............................................ Doubletree Guest Suites 1997 198
El Segundo (LAX Airport South), CA........................ Embassy Suites 1996 350
Irvine (Orange County Airport), CA........................ Crowne Plaza 1998 335
Milpitas, CA(1)........................................... Embassy Suites 1996 267
Milpitas (San Jose North), CA............................. Crowne Plaza 1998 305
Napa, CA(1)............................................... Embassy Suites 1996 205
Oxnard (Mandalay Beach), CA............................... Embassy Suites 1996 249
Palm Desert, CA(1) ....................................... Embassy Suites 1998 198
Pleasanton, CA............................................ Crowne Plaza 1998 244
Santa Barbara, CA(1)...................................... Holiday Inn 1998 160
San Diego (On the Bay), CA(2)............................. Holiday Inn 1998 600
San Francisco (Financial District), CA(2)................. Holiday Inn 1998 566
San Francisco (Fisherman's Wharf), CA(2).................. Holiday Inn 1998 584
San Francisco (Union Square), CA.......................... Crowne Plaza 1998 400
San Rafael (Marin Co.), CA(1)(4).......................... Embassy Suites 1996 235
South San Francisco (S.F. Airport North), CA(1)........... Embassy Suites 1996 312
Aurora (Denver Southeast), CO(7).......................... Doubletree 1998 248
Avon (Beaver Creek Resort), CO............................ Independent 1996 72
Hartford (Downtown), CT................................... Crowne Plaza 1998 342
Stamford, CT(2)........................................... Holiday Inn Select 1998 383
Wilmington, DE(7)......................................... Doubletree 1998 244
Boca Raton, FL(3)......................................... Doubletree Guest Suites 1995 182
Boca Raton, FL............................................ Embassy Suites 1996 263
Cocoa Beach (Oceanfront Resort), FL....................... Holiday Inn 1998 500
Deerfield Beach, FL(1).................................... Embassy Suites 1996 244
Ft. Lauderdale, FL(1)..................................... Embassy Suites 1996 359
Ft. Lauderdale (Cypress Creek), FL(1)..................... Sheraton Suites 1998 253
Jacksonville, FL.......................................... Embassy Suites 1994 277
Kissimmee (Nikki Bird Resort), FL(2)...................... Holiday Inn 1998 529
Lake Buena Vista (Walt Disney World(R)), FL(2)............ Doubletree Guest Suites 1997 229
Miami (Airport), FL(2).................................... Crowne Plaza 1998 304
Miami (Airport), FL(1).................................... Embassy Suites 1996 314
Orlando (North), FL....................................... Embassy Suites 1994 277
Orlando (South), FL(1).................................... Embassy Suites 1994 244
Orlando (International Drive Resort), FL.................. Holiday Inn 1998 652
Orlando (Airport), FL..................................... Holiday Inn Select 1998 288
Tampa (Busch Gardens), FL(3).............................. Doubletree Guest Suites 1995 129
Tampa (Rocky Point), FL................................... Doubletree Guest Suites 1997 203
Tampa (Near Busch Gardens), FL(2)......................... Holiday Inn 1998 395
Atlanta (Downtown), GA(3)................................. Courtyard by Marriott 1998 211
Atlanta (Airport), GA..................................... Crowne Plaza 1998 378
Atlanta (Powers Ferry), GA(1)............................. Crowne Plaza 1998 296
Atlanta (Buckhead), GA(1)................................. Embassy Suites 1996 317
Atlanta (Airport), GA..................................... Embassy Suites 1998 233
Atlanta (Perimeter Center), GA(1)(4)...................... Embassy Suites 1997 241
Atlanta (Downtown), GA(3)................................. Fairfield Inn 1998 242
Atlanta (Airport North), GA(1)............................ Holiday Inn 1998 493
Atlanta (Jonesboro South), GA(1).......................... Holiday Inn 1998 180
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YEAR NUMBER OF
LOCATION FRANCHISE BRAND ACQUIRED ROOMS/SUITES
- -------- --------------- -------- ------------
Atlanta (Perimeter Dunwoody), GA(1)....................... Holiday Inn Select 1998 250
Atlanta (Airport Gateway), GA............................. Sheraton 1997 395
Atlanta (Galleria), GA(1)................................. Sheraton Suites 1997 278
Brunswick, GA............................................. Embassy Suites 1995 130
Columbus (Airport North), GA(2)........................... Holiday Inn 1998 223
Marietta, GA(3)........................................... Hampton Inn 1998 140
Davenport, IA(3).......................................... Hampton Inn 1998 132
Davenport, IA(3).......................................... Holiday Inn 1998 287
Chicago (Allerton), IL.................................... Crowne Plaza 1998 443
Chicago (Lombard), IL(1)(4)............................... Embassy Suites 1995 262
Chicago (O'Hare), IL(1)................................... Sheraton Suites 1997 297
Deerfield, IL(1).......................................... Embassy Suites 1996 237
Moline, IL(3)............................................. Hampton Inn 1998 138
Moline (Airport), IL(3)................................... Holiday Inn 1998 216
Moline (Airport), IL(3)................................... Holiday Inn Express 1998 111
Indianapolis (North), IN(1)(4)............................ Embassy Suites 1996 222
Colby, KS(3).............................................. Holiday Inn Express 1998 72
Great Bend, KS(3)......................................... Holiday Inn 1998 175
Hays, KS(3)............................................... Hampton Inn 1998 116
Hays, KS(3)............................................... Holiday Inn 1998 190
Overland Park, KS(1)(4)................................... Embassy Suites 1997 199
Salina, KS(1)(3).......................................... Holiday Inn 1998 192
Salina (I-70), KS(2)(3)................................... Holiday Inn Express Hotel & Suites 1998 93
Lexington, KY............................................. Hilton Suites 1996 174
Lexington, KY(1).......................................... Sheraton Suites 1998 155
Baton Rouge, LA(1)........................................ Embassy Suites 1996 224
New Orleans, LA(1)........................................ Embassy Suites 1994 372
New Orleans (Chateau LeMoyne), LA(1)(2)(4)................ Holiday Inn 1998 171
New Orleans (French Quarter), LA(1)(2).................... Holiday Inn 1998 276
Boston (Marlborough), MA(1)............................... Embassy Suites 1995 229
Boston (Government Center), MA(2)......................... Holiday Inn Select 1998 303
Baltimore (BWI), MD(7).................................... Embassy Suites 1997 251
Troy, MI(7)............................................... Embassy Suites 1997 251
Bloomington, MN........................................... Embassy Suites 1997 219
Minneapolis (Airport), MN(1).............................. Embassy Suites 1995 311
Minneapolis (Downtown), MN................................ Embassy Suites 1995 218
St. Paul, MN(5)........................................... Embassy Suites 1995 210
Kansas City (Country Club Plaza), MO (1)(2)(4)............ Embassy Suites 1997 266
Kansas City (Northeast), MO............................... Holiday Inn 1998 167
St. Louis (Downtown), MO.................................. Embassy Suites 1998 297
St. Louis (Westport), MO(1)............................... Holiday Inn 1998 318
Jackson (Downtown), MS(1)................................. Crowne Plaza 1998 354
Jackson (Briarwood), MS(1)(3)............................. Hampton Inn 1998 119
Jackson (North), MS(1).................................... Holiday Inn Hotel & Suites 1998 224
Olive Branch (Whispering Woods Hotel and
Conference Center), MS.................................. Independent 1998 179
Charlotte, NC(1)(4)....................................... Embassy Suites 1996 274
Raleigh/Durham, NC........................................ Doubletree Guest Suites 1997 203
Raleigh, NC(1)(4)......................................... Embassy Suites 1997 225
Omaha, NE................................................. Doubletree Guest Suites 1998 189
Omaha (Central), NE(1).................................... Hampton Inn 1998 132
Omaha (Southwest), NE..................................... Hampton Inn 1998 131
Omaha (I-80), NE(1)....................................... Holiday Inn 1998 383
Omaha (Old Mill Northwest), NE............................ Crowne Plaza 1998 213
Omaha (Southwest), NE..................................... Holiday Inn Express Hotel & Suites 1998 78
Omaha (Southwest), NE..................................... Homewood Suites 1998 108
Parsippany, NJ(1)(4)...................................... Embassy Suites 1996 274
Piscataway, NJ(1)......................................... Embassy Suites 1996 225
Secaucus (Meadowlands), NJ(2)(4).......................... Embassy Suites 1997 261
Secaucus (Meadowlands), NJ................................ Crowne Plaza 1998 301
Albuquerque (Mountain View), NM........................... Holiday Inn 1998 360
Syracuse, NY.............................................. Embassy Suites 1997 215
Cleveland, OH............................................. Embassy Suites 1995 268
Columbus, OH.............................................. Doubletree Guest Suites 1998 194
Dayton, OH(1)............................................. Doubletree Guest Suites 1997 138
Tulsa, OK................................................. Embassy Suites 1994 240
Philadelphia (Center City), PA(1)......................... Crowne Plaza 1998 445
Philadelphia (Independence Mall), PA(1)................... Holiday Inn 1998 364
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YEAR NUMBER OF
LOCATION FRANCHISE BRAND ACQUIRED ROOMS/SUITES
- -------- --------------- -------- ------------
Philadelphia (Society Hill), PA(1)........................ Sheraton 1997 365
Pittsburgh, PA(1)(2)...................................... Holiday Inn Select 1998 251
Charleston (Mills House), SC.............................. Holiday Inn 1998 214
Greenville (Roper), SC.................................... Crowne Plaza 1998 208
Myrtle Beach (Kingston Plantation), SC.................... Embassy Suites 1996 255
Knoxville (Central), TN(2)................................ Holiday Inn 1998 242
Nashville (Airport), TN(3)................................ Doubletree Guest Suites 1997 138
Nashville, TN............................................. Embassy Suites 1994 296
Nashville (Opryland/Airport), TN(2)....................... Holiday Inn Select 1998 385
Addison (North Dallas), TX(1)............................. Crowne Plaza 1998 429
Amarillo (I-40), TX(2).................................... Holiday Inn 1998 247
Austin (Downtown), TX(7).................................. Doubletree Guest Suites 1997 189
Austin (Airport North), TX(1)(4).......................... Embassy Suites 1997 261
Austin (Town Lake), TX.................................... Holiday Inn 1998 320
Beaumont (Midtown I-10), TX............................... Holiday Inn 1998 253
Corpus Christi, TX(1)..................................... Embassy Suites 1995 150
Dallas (Alpha Road), TX................................... Bristol House(R) 1998 127
Dallas (Market Center), TX(1)............................. Crowne Plaza 1998 354
Dallas (Park Central), TX (1)............................. Crowne Plaza Suites 1998 295
Dallas (Campbell Centre), TX(7)........................... Doubletree 1998 302
Dallas (DFW Airport South), TX............................ Embassy Suites 1998 305
Dallas (Love Field), TX(1)................................ Embassy Suites 1995 248
Dallas (Market Center), TX(1)............................. Embassy Suites 1997 244
Dallas (Park Central), TX................................. Embassy Suites 1994 279
Dallas (Regal Row), TX(3)................................. Fairfield Inn 1998 204
Dallas (Downtown West End), TX............................ Hampton Inn 1998 311
Dallas, TX(1)............................................. Harvey Hotel 1998 313
Dallas (Park Central), TX(6).............................. Sheraton 1998 438
Dallas (Park Central), TX(6).............................. Westin 1997 545
Houston (Near the Galleria), TX(3)........................ Courtyard by Marriott 1998 209
Houston (Medical Center), TX(1)........................... Crowne Plaza 1998 297
Houston (Near the Galleria), TX(3)........................ Fairfield Inn 1998 107
Houston (I-10 East), TX(3)................................ Fairfield Inn 1998 160
Houston (I-10 East), TX(3)................................ Hampton Inn 1998 90
Houston (Medical Center), TX(1)(2)........................ Holiday Inn Hotel & Suites 1998 285
Houston (International Airport), TX(1).................... Holiday Inn 1998 401
Houston (I-10 West), TX................................... Holiday Inn Select 1998 345
Houston (Near Greenway Plaza), TX(1)...................... Holiday Inn Select 1998 355
Irving (DFW Airport North), TX(1)......................... Harvey Hotel 1998 506
Irving (DFW Airport North), TX(1)......................... Harvey Suites 1998 164
Midland (Country Villa), TX............................... Holiday Inn 1998 250
Odessa (Parkway Blvd.), TX................................ Holiday Inn Express Hotel & Suites 1998 186
Odessa (Centre), TX....................................... Holiday Inn Hotel & Suites 1998 245
Plano, TX(1).............................................. Harvey Hotel 1998 279
Plano, TX................................................. Holiday Inn 1998 161
San Antonio (Airport), TX(1)(2)(4)........................ Embassy Suites 1997 261
San Antonio (Northwest), TX(1)(4)......................... Embassy Suites 1997 217
San Antonio (Downtown), TX(2)............................. Holiday Inn 1998 315
San Antonio (International Airport), TX................... Holiday Inn Select 1998 397
Waco (I-35), TX........................................... Holiday Inn 1998 171
Salt Lake City (Airport), UT(2)........................... Holiday Inn 1998 191
Tyson's Corner, VA (1)(4)................................. Sheraton 1999 437
Burlington, VT(1)......................................... Sheraton 1997 309
Cambridge, Canada......................................... Holiday Inn 1998 139
Kitchener (Waterloo), Canada.............................. Holiday Inn 1998 182
Peterborough (Waterfront), Canada ........................ Holiday Inn 1998 155
Sarnia, Canada............................................ Holiday Inn 1998 151
Toronto (Yorkdale), Canada................................ Holiday Inn 1998 370
Toronto (Airport), Canada................................. Holiday Inn Select 1998 444
- ----------
(1) Encumbered by mortgage debt.
(2) Situated on land leased under a long-term ground lease.
(3) This hotel is one of the 24 remaining non-strategic hotels that the Company
intends to sell.
(4) This hotel is one of 16 hotels owned by unconsolidated entities in which the
Company owns a 50% equity interest.
(5) Owned subject to a capitalized industrial revenue bond lease that expires in
2011 and permits the Company to purchase the fee interest at expiration for
a nominal amount.
(6) This hotel is one of 2 hotels owned by a joint venture in which the Company
owns a 60% equity interest.
(7) This hotel is one of 6 hotels in which the Company owns a 90% equity
interest.
-18-
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THE PERCENTAGE LEASES
At December 31, 2000, each of the Hotels (with two exceptions) was
leased pursuant to a Percentage Lease. As a result of the acquisition of DJONT
on January 1, 2001, and acquisition of the Bristol leases on July 1, 2001, all
of the hotel leases will be held by our taxable REIT subsidiaries.
ITEM 3. LEGAL PROCEEDINGS
There is no litigation pending or known to be threatened against the
Company or affecting any of its Hotels other than claims arising in the ordinary
course of business or which are not considered to be material. Furthermore, most
of such claims are substantially covered by insurance. FelCor's management does
not believe that any claims known to it (individually or in the aggregate) will
have a material adverse effect on the Company, without regard to any potential
recoveries from insurers or other third parties.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
-19-
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
There is not established public trading market for the Company's
units. The units, however, are redeemable at the option of the holder for a like
number of shares of common stock of FelCor or, at the option of FelCor, for the
cash equivalent thereof. The following information is provided regarding the
common stock of FelCor.
FelCor's common stock is traded on the New York Stock Exchange under
the symbol "FCH." The following table sets forth for the indicated periods the
high and low sale prices for the common stock, as traded on such exchange.
HIGH LOW
--------- -------
1999
First quarter.............................................. $24 11/16 $21 5/8
Second quarter............................................. 26 1/8 20
Third quarter.............................................. 21 5/8 16 11/16
Fourth quarter............................................. 18 3/8 16 1/4
2000
First quarter.............................................. $18 3/4 $16 1/2
Second quarter............................................. 22 1/16 17 11/16
Third quarter.............................................. 23 3/4 19 11/16
Fourth quarter............................................. 24 1/2 21 1/2
STOCKHOLDER INFORMATION
At March 15, 2001, the Company had approximately 40 record and
beneficial owners of its units.
DISTRIBUTION INFORMATION
The Company has adopted a policy of paying regular quarterly
distributions on its units, and cash distributions have been paid on the
Company's units with respect to each quarter since its inception. The following
table sets forth information regarding the declaration and payment of
distributions by the Company on its units during 1999 and 2000.
-20-
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QUARTER TO DISTRIBUTION DISTRIBUTION PER SHARE
WHICH DISTRIBUTION RECORD PAYMENT DISTRIBUTION
RELATES DATE DATE AMOUNT
------------------ ------------ ------------ ------------
1999
----
First quarter....................................... 4/15/99 4/30/99 $0.55
Second quarter...................................... 7/15/99 7/30/99 $0.55
Third quarter....................................... 10/15/99 10/29/99 $0.55
Fourth quarter...................................... 12/30/99 1/31/00 $0.55
2000
----
First quarter....................................... 4/14/00 4/28/00 $0.55
Second quarter...................................... 7/14/00 7/31/00 $0.55
Third quarter....................................... 10/16/00 10/31/00 $0.55
Fourth quarter...................................... 12/29/00 1/31/01 $0.55
The foregoing distributions represent approximately a 0% return of
capital in 2000 and an approximate 7.2% return of capital in 1999. In order to
maintain its qualification as a REIT, FelCor must make annual distributions to
its shareholders of at least 90% (95% prior to January 1, 2001) of its taxable
income (which does not include net capital gains). For the years ended December
31, 2000 and December 31, 1999, FelCor had annual distributions totaling $2.20
per common share, of which only $2.09 and $1.84 per share, respectively, were
required to satisfy the 95% REIT distribution test in the respective years. All
of such funds were provided by the Company through distributions on its units.
Under certain circumstances the Company may be required to make distributions in
excess of cash available for distribution in order to meet FelCor's REIT
distribution requirements. In such event, the Company presently would expect to
borrow funds, or to sell assets for cash, to the extent necessary to obtain cash
sufficient to make the distributions required to enable FelCor to retain its
qualification as a REIT for federal income tax purposes.
The Company currently anticipates that it will maintain at least the
current distribution rate for the immediate future, unless actual results of
operations, economic conditions or other factors differ from its current
expectations. Future distributions, if any, paid by the Company will be at the
discretion of the Board of Directors of FelCor and will depend on the Company's
actual cash flow, its financial condition, capital requirements, the annual
distribution requirements under the REIT provisions of the internal revenue code
and such other factors as the Board of Directors deems relevant.
RECENT SALES OF UNREGISTERED SECURITIES
None
-21-
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ITEM 6. SELECTED FINANCIAL DATA
The following tables set forth selected financial data for the
Company for the years ended December 31, 2000, 1999, 1998, 1997 and 1996 that
has been derived from the financial statements of the Company and the notes
thereto, audited by PricewaterhouseCoopers LLP, independent accountants. Such
data should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Consolidated Financial
Statements and Notes thereto.
SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------------------
2000 1999 1998(2) 1997 1996
---------- ---------- ---------- ---------- ----------
STATEMENT OF OPERATIONS DATA:
Total revenue ......................... $ 556,692 $ 504,001 $ 339,617 $ 176,651 $ 100,944
Income before nonrecurring items ...... $ 65,868(1) $ 136,653 $ 123,937 $ 69,652 $ 48,881
Net income ............................ $ 66,391(1) $ 135,776 $ 121,339 $ 69,467 $ 46,527
Net income applicable to unitholders .. $ 41,709(1) $ 111,041 $ 99,916 $ 57,670 $ 38,793
DILUTED EARNINGS PER UNIT:
Income applicable to unitholders
before extraordinary charge ........... $ 0.73(1) $ 1.59 $ 1.93 $ 1.68 $ 1.58
Net income applicable to unitholders .. $ 0.67(1) $ 1.57 $ 1.87 $ 1.67 $ 1.49
OTHER DATA:
Cash dividends per unit ............... $ 2.20 $ 2.20 $ 2.545(3) $ 2.10 $ 1.92
Funds From Operations (4) ............. $ 288,636 $ 286,895 $ 217,363 $ 129,815 $ 77,141
EBITDA (4) ............................ $ 470,861 $ 432,690 $ 306,361 $ 165,613 $ 88,355
Weighted average units outstanding .... 67,239 75,251 58,013 39,157 29,306
BALANCE SHEET DATA:
Total assets .......................... $4,103,603 $4,255,751 $4,175,383 $1,673,364 $ 978,788
Debt .................................. $1,838,241 $1,833,954 $1,594,734 $ 476,819 $ 239,425
- ----------
(1) In the second quarter of 2000 the Company recorded a $63 million reserve for
the sale of non-strategic hotel assets, which is reflected in the income
statements presented for the period.
(2) On July 28, 1998, FelCor completed the merger of Bristol Hotel Company's
real estate holdings with and into FelCor. FelCor then contributed the
assets so acquired to the Company in exchange for approximately 31 million
units of partnership interest. The merger resulted in the net acquisition of
107 primarily full-service hotels.
(3) In 1998, the Company declared a special one-time distribution of accumulated
but undistributed earnings and profits as a result of the merger of Bristol
Hotel Company into FelCor, in addition to the regular quarterly dividend of
$0.55 per unit and $0.4875 per Series A preferred units. The amount of the
one-time distribution was $0.345 per unit and $0.207 per Series A preferred
unit.
(4) A more detailed description of FFO and EBITDA is contained in the "Funds
From Operations" section of Management's Discussion and Analysis of
Financial Condition and Results of Operations.
-22-
25
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
FelCor, the Company's sole general partner, is the nation's second
largest hotel REIT. At December 31, 2000, the Company owned interests in 186
hotels with nearly 50,000 rooms and suites. Additional organizational
information relating to the Company, and the definitions of certain capitalized
terms, are contained in the Notes to Consolidated Financial Statements of FelCor
Lodging Limited Partnership appearing elsewhere herein.
The Company is the owner of the largest number of Embassy Suites(R),
Crowne Plaza(R), Holiday Inn(R) and independently owned Doubletree(R) branded
hotels in the world. The Hotels are located in 35 states and Canada with
concentrations in Texas (41), California (19), Florida (18) and Georgia (15
hotels). The following table provides a schedule of the Hotels, by brand,
operated by each of the Company's Lessees at December 31, 2000:
NOT OPERATED
BRAND DJONT BRISTOL UNDER A LEASE TOTAL
----- ----- ------- ------------- -----
Hilton(R) Brands:
Embassy Suites...................................................... 59 59
Doubletree and Doubletree Guest Suites(R)........................... 14 14
Hampton Inn(R)...................................................... 9 9
Hilton Suites(R).................................................... 1 1
Homewood Suites(R).................................................. 1 1
Bass Brands:
Holiday Inn......................................................... 43 1 44
Crowne Plaza and Crowne Plaza Suites(R)............................. 18 18
Holiday Inn Select(R)............................................... 10 10
Holiday Inn Express(R).............................................. 5 5
Starwood Brands:
Sheraton(R)and Sheraton Suites(R)................................... 10 10
Westin(R)........................................................... 1 1
Other Brands............................................................... 13 1 14
--- --- --- ----
Total Hotels................................................... 85 99 2 186
=== === === ====
The principal factors affecting the Company's results of operations
are changes in room and suite revenues reflected by revenue per available room
("RevPAR"), renovations, redevelopments, and rebrandings of hotels and
acquisitions.
The Company seeks to increase operating cash flow through both internal
growth and selective acquisitions, while maintaining a flexible and conservative
capital structure. In addition to renovating, redeveloping and repositioning the
Company's acquired hotels, the Company may seek to acquire existing or new
upscale properties that will benefit from affiliation with one of the premium
brands available to the Company through its strategic brand owner and manager
relationships with Hilton Hotels Corporation ("Hilton"), Bass plc ("Bass") and
Starwood Hotels & Resorts Worldwide, Inc. ("Starwood").
On July 28, 1998, the Company merged Bristol Hotel Company into FelCor,
acquiring its 107 primarily full-service hotels (the "Merger"). These hotels
added more than 28,000 rooms and suites to the Company's portfolio, more than
doubling the Company's size. The Merger also provided diversification, both
geographically and by asset class, by adding hotels in many of its key markets
and broadening its portfolio in the full-service, upscale and midscale hotel
markets.
-23-
26
In 1999 and 2000, the Company completed the major portion of its
program of renovation, redevelopment and rebranding of hotels, which was
undertaken to improve under-performing assets and increase revenues. The Company
spent nearly $220 million in 1998, $222 million in 1999 and $95 million in 2000
on renovations, redevelopment, rebrandings, room additions to existing hotels
and other hotel improvements. Management believes that its strategy of
renovating, redeveloping and rebranding selected hotels continues to be
effective in improving revenue performance.
The Company's historical results of operations for 2000, 1999, and
1998 are summarized as follows (in millions, except percentages and hotel
counts):
YEARS ENDED DECEMBER 31, PERCENTAGE CHANGE
------------------------------------------ --------------------------
2000 1999 1998(b) 00 VS 99 99 VS 98(b)
---------- ---------- ---------- ---------- ------------
Hotels owned at year end ........................ 186 188 193 (1.1)% (2.6)%
Revenues ........................................ $ 556.7 $ 504.0 $ 339.6 10.5% 48.4%
Income before nonrecurring items ................ $ 65.9(a) $ 136.7 $ 123.9 (51.8)%(a) 10.3%
Net income applicable to unitholders ............ $ 41.7(a) $ 111.0 $ 99.9 (62.4)%(a) 11.1%
Funds From Operations (FFO) ..................... $ 288.6 $ 286.9 $ 217.4 0.6% 32.0%
Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA) ........................ $ 470.9 $ 432.7 $ 306.4 8.9% 41.2%
(a) Includes a reserve of $63 million established for the proposed
sale of 25 non-strategic hotels described under "Liquidity and
Capital Resources" below.
(b) Reflects the acquisition of the Bristol hotels effective July
28, 1998.
Historically the Company has been financed primarily with equity,
resulting in a conservative financial structure. The Company's emphasis on
maintaining this conservative approach is evidenced in part, by the following,
as of December 31, 2000:
o Interest coverage ratio of 2.8x
o Total debt to annual EBITDA of 4.1x
o Borrowing capacity under its Line of Credit of $238 million
o Consolidated debt equal to 39.9% of its investment in hotels at
cost
o Fixed interest rate debt comprising 91% of total debt
o Secured mortgage debt to total assets of 19%
o Debt of approximately $24 million maturing in 2001
On January 1, 2001, the provisions of the REIT Modernization Act
became effective. These provisions:
o reduce the percentage of taxable income required to be
distributed by a REIT from 95% to 90% for taxable years after
2000; and
o subject to certain limitations, permit a REIT to own taxable
subsidiaries that engage in businesses previously prohibited to
a REIT, including, among other things, leasing hotels from a
hotel REIT, provided that the hotels continue to be managed by
unrelated third parties.
As a result of the REIT Modernization Act's enactment, the Company,
undertook steps to realize the benefits the Act offers to REIT's by:
o effective January 1, 2001, acquiring DJONT which leased 85 of
the Company's hotels at December 31, 2000. The management
contracts for all of the DJONT leased hotels remained in place.
o effective January 1, 2001, completing the acquisition of 12
hotels leased to Bristol and entering into management contracts
with a subsidiary of Bass for two of the hotels, a subsidiary of
Interstate Hotels Corporation for eight hotels, with a
subsidiary of Hilton for one of the hotels and one hotel was
sold.
-24-
27
o effective July 1, 2001, acquiring leases for the remaining 88
hotels leased to Bristol and entering into long term management
agreements with a subsidiary of Bass to manage these hotels.
o contributing the acquired lessee and/or leases as acquired, to
newly created, wholly-owned taxable REIT subsidiaries ("TRS").
The Company believes that the advantages of holding the lessees and
leases in a TRS include (i) a more direct relationship with the hotel and the
brand managers, (ii) elimination of potential conflicts of interest and (iii)
the ability to present consolidated hotel level financial reporting.
As a result of the acquisition of the hotel leases the Company will
report its results of operations showing hotel revenues and expenses rather than
percentage lease revenue. Pro forma consolidated statements of operations for
the years ended December 31, 2000 and 1999, which reflect the acquisition of the
hotel leases, are contained in the Notes to the Consolidated Financial
Statements of FelCor Lodging Limited Partnership appearing elsewhere herein.
RESULTS OF OPERATIONS
THE COMPANY -- ACTUAL
Comparison of the Years Ended December 31, 2000 and 1999
For the year ended December 31, 2000, the Company recorded net
income of $66.4 million compared to $135.8 million for the year ended December
31, 1999. Included in expense for the year ended December 31, 2000, is a
one-time reserve of $63.0 million related to 25 non-strategic hotels that the
Company has identified as held for sale. The reserve represents the difference
between the net book value of the hotels and their estimated net sale proceeds.
Net income excluding the reserve would have been $129.4 million.
The Company's total revenues increased $52.7 million to $556.7
million for the year ended December 31, 2000, compared to $504.0 million for the
year end December 31, 1999. This increase is principally from increased
Percentage Lease revenues of $46.0 million, which increased to $536.9 million
from $490.9 million in the prior year.
Changes in the Hotels' room and suite revenues significantly affect
the Company because its principal source of revenue historically has been rent
payments from the Lessees under the Percentage Leases. The Percentage Leases
provide for rent based on a percentage of room and suite revenue, food and
beverage revenue, food and beverage rents, and in some instances, other hotel
revenues. During 2000 and 1999, Percentage Lease revenue derived from room and
suite revenue represented 90% and 91% of total Percentage Lease revenue,
respectively. RevPAR, which is a measure of room and suite revenue, increased by
7.0% in 2000 for all Hotels. This increase in RevPAR resulted from both
increases in average daily rate ("ADR") at the Hotels and increases in occupied
rooms ("Occupancy"). For the year ended December 31, 2000, ADR increased by 3.7%
over the prior year and Occupancy increased by 2.2 percentage points. The
Company's ability to achieve increases in room and suite revenue and RevPAR at
its Hotels is affected, among other things, by overall demand in the
marketplace, room supply and the success of the Company's renovation,
redevelopment and rebranding program. The Company had 59 hotels which had
undergone renovation, redevelopment or rebranding in either 1999 or 2000, which
are identified by the Company as non-comparable hotels. The non-comparable
hotels reflected increases in RevPAR of 10.1% which was greater than the results
for hotels that had not recently undergone renovation. (A more detailed
discussion of hotel room and suite revenue is contained in "The Hotels - Actual"
section of this Management's Discussion and Analysis of Financial Condition and
Results of Operations).
The Company generally seeks to improve those of its Hotels that
management believes can achieve increases in room and suite revenue and RevPAR
as a result of renovation, redevelopment and rebranding.
-25-
28
Since the beginning of 1998, the Company spent nearly $440 million in capital
improvements to its Hotels. Management attributes much of the improvement in
RevPAR to these capital improvements.
Equity in income from unconsolidated entities increased by $6.3
million in 2000 compared to 1999. The principal reasons for this increase in
2000 were (i) a $3.7 million gain recorded in 2000 from the development and sale
of the Brighton Beach condominiums at Kingston Plantation in Myrtle Beach, South
Carolina, by an entity in which the Company owns a 50% equity interest and (ii)
the operations of a hotel in which the Company acquired a 50% equity interest in
the fourth quarter of 1999.
Total expenses increased $123.5 million in the year ended December
31, 2000, to $490.8 million from $367.3 million in 1999. Included in total
expenses is a reserve of $63.0 million, recorded in the second quarter of 2000,
related to the 25 non-strategic hotels the Company has identified as held for
sale. Total expenses, excluding the $63.0 million reserve for sale of
non-strategic hotels, increased by $60.5 million, and as a percentage of total
revenue increased to 77% from 73% in 1999. The major components of the increase
in expenses were interest expense; taxes, insurance and other; and depreciation
expense.
Interest expense increased by $33.2 million for the year ended
December 31, 2000, compared to 1999, and increased as a percentage of total
revenue from 24.9% to 28.5%. This increase is principally the result of the
following items:
o The Company increased its average debt outstanding in 2000 by
approximately $197 million over the prior year. The increase in
average debt resulted principally from stock repurchases in 2000 of
approximately $87 million and capital expenditures in 2000 totaling
approximately $101.4 million.
o The average interest rate on the Company's indebtedness increased
from about 7% in 1999 to nearly 8% in 2000.
o The Company capitalized interest related to major renovations of
approximately $5.2 million in 1999, but because of reduced
renovation activity in 2000, the Company had only $1.1 million of
interest capitalized in 2000.
Taxes, insurance and other increased by $11.1 million in 2000,
compared to the prior year, and increased as a percentage of total revenue from
11.8% to 12.6%. This increase in expenses was principally from increases in real
estate and personal property taxes. The Company's real estate and personal
property taxes increased from higher assessed values generally resulting from
the major renovations completed over the past three years.
Depreciation expense increased by $7.8 million in 2000, compared to
the prior year, and decreased as a percentage of total revenue from 30.3% to
28.9%. Depreciation expense increased principally as a result of additional
depreciation related to fixed asset additions of $95 million in 2000 and $222
million in 1999.
The Company also recorded gains on the sale of two hotels of $2.6
million and $1.8 million for the sale of excess land during the year ended
December 31, 2000 and an extraordinary charge of $3.9 million for the write-off
of deferred loan costs associated with debt which was retired prior to maturity.
Comparison of the Years Ended December 31, 1999 and 1998
For the years 1999 and 1998, the Company had total revenue of $504.0
million and $339.6 million, respectively, consisting primarily of Percentage
Lease revenue of $490.9 million and $328.0 million. The increase in revenue is
primarily attributable to the Company's acquisition and subsequent leasing,
pursuant to Percentage Leases, of interests in more than 100 hotels in 1998,
including the hotels that were acquired
-26-
29
through the Merger on July 28, 1998. The hotels which were acquired during 1998,
including those acquired through the Merger, accounted for $151.1 million (93%)
of the change in Percentage Lease revenue for the twelve months ended December
31, 1999, compared to 1998. The 73 hotels owned throughout both of the years
ended December 31, 1999 and 1998 produced an increase in Percentage Lease
revenues of $10.9 million (or 1.9%) between 1998 and 1999.
Changes in room and suite revenues significantly affect the Company
because, historically, its principal source of revenue is rent payments from the
Lessees under the Percentage Leases. The Percentage Leases provide for rent
based on a percentage of room and suite revenue, food and beverage revenue, food
and beverage rents, and in some instances, other hotel revenues. In 1999 and
1998, Percentage Lease revenue derived from room and suite revenue represented
91% and 93% of total Percentage Lease revenue, respectively. The 73 hotels owned
throughout both 1999 and 1998 increased room and suite revenue by $11.6 million
(or 2%) in 1999, compared to 1998, and increased RevPAR by 1.4%. The RevPAR
increase was driven by an increase in ADR of 1.5%, despite a slight drop in
Occupancy of 0.1 percentage points. Of the 73 hotels, 18 had undergone
renovation in either 1998 or 1999. Those renovated hotels reflected increases in
ADR of 2.2% and in RevPAR of 1.9%, which was greater than the results for hotels
that had not undergone renovation. This reflects both the improvement from
renovation and the impact of taking rooms out of service for such renovation.
The Company generally seeks to improve those of its hotels that
management believes can achieve increases in room and suite revenue and RevPAR
as a result of renovation, redevelopment and rebranding. However, during the
course of such improvements hotel revenue performance is often adversely
affected, compared to the prior year, by such temporary factors as rooms and
suites out of service and disruptions of hotel operations. During 1999, the
Company spent $177 million on the renovation, redevelopment and rebranding of
its hotels. As a result of the extensive renovations, the Company's portfolio
experienced significant disruption during 1999, with approximately 350,000 room
nights out of service, or 2% of its portfolio. (A more detailed discussion of
hotel room and suite revenue is contained in the "The Hotels--Actual" section of
this Management's Discussion and Analysis of Financial Condition and Results of
Operations.)
Total expenses increased $151.7 million in the year ended December
31, 1999, to $367.3 million from $215.7 million in 1998. This increase resulted
primarily from the additional hotels acquired in July 1998 through the Merger.
Total expenses as a percentage of total revenue increased to 72.9%
for the twelve months ended December 31, 1999, compared to 63.4% in 1998. The
major components of the increase in expenses, as a percentage of total revenue,
are depreciation, land leases, and interest expense.
Depreciation increased, as a percentage of total revenue, to 30.4%
in the twelve months ended December 31, 1999, from 26.8% in 1998. The relative
increase in depreciation expense is primarily attributed to depreciation on
$341.4 million in capital expenditures made over the past two years,
approximately 40% of which are short-lived assets that are depreciated over 3 to
5 years.
Land lease expenses represent 3.5% of total revenue in 1999, as
compared to 2.4% in 1998. This increase, as a percentage of total revenue,
results primarily from the larger percentage of hotels subject to land leases
among those acquired through the Merger.
Interest expense increased, as a percentage of total revenue, to
24.9% in the twelve months ended December 31, 1999, from 21.6% in 1998. This
increase in interest expense is attributed to the increased debt used to finance
renovations, higher interest rates on debt that was refinanced to extend
maturities and convert such debt from variable to fixed rates, the assumption of
debt related to the more highly leveraged Bristol assets, and borrowings to fund
the Company's stock repurchase program.
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General and administrative expenses and taxes, insurance and other
expense remained relatively constant as a percentage of total revenue in 1999
and 1998.
FUNDS FROM OPERATIONS AND EBITDA
The Company and FelCor considers Funds From Operations ("FFO") and
earnings before interest, taxes, depreciation and amortization ("EBITDA") to be
key measures of a REIT's performance and should be considered along with, but
not as an alternative to, net income and cash flow as a measure of the Company's
and FelCor's operating performance and liquidity.
The White Paper on Funds From Operations approved by the Board of
Governors of the National Association of Real Estate Investment Trusts
("NAREIT") defines FFO as net income or loss (computed in accordance with GAAP),
excluding gains or losses from extraordinary items and sales of properties, plus
real estate related depreciation and amortization, after comparable adjustments
for the Company's portion of these items related to unconsolidated entities and
joint ventures. The Company and FelCor believes that FFO and EBITDA are helpful
to investors as a measure of the performance of an equity REIT because, along
with cash flow from operating activities, financing activities and investing
activities, they provide investors with an indication of the ability of the
Company and FelCor to incur and service debt, to make capital expenditures, to
pay dividends and to fund other cash needs. The Company computes 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 the Company. FFO and EBITDA do not represent cash generated
from operating activities as determined by GAAP, and should not be considered as
an alternative to net income (determined in accordance with GAAP) as an
indication of the Company's financial performance or to cash flow from operating
activities (determined in accordance with GAAP) as a measure of the Company 's
liquidity, nor do they necessarily reflect the funds available to fund the
Company's cash needs, including its ability to make cash distributions. FFO and
EBITDA may include funds that may not be available for management's
discretionary use due to functional requirements to conserve funds for capital
expenditures and property acquisitions, and other commitments and uncertainties.
The following table details the computation of Funds From Operations
(in thousands):
YEARS ENDED DECEMBER 31,
-----------------------------------
2000 1999 1998
--------- --------- ---------
FUNDS FROM OPERATIONS (FFO):
Net income ....................................................... $ 66,391 $ 135,776 $ 121,339
Reserve for hotels held for sale ................................ 63,000
Series B preferred unit distributions ........................... (12,937) (12,937) (8,373)
Gain on sale of hotels .......................................... (2,595)
Extraordinary charge from write off of deferred financing fees .. 3,865 1,113 3,075
Depreciation .................................................... 160,745 152,948 90,835
Depreciation for unconsolidated entities ........................ 10,167 9,995 10,487
--------- --------- ---------
FFO .............................................................. $ 288,636 $ 286,895 $ 217,363
========= ========= =========
Weighted average units outstanding (a) ........................... 67,239 75,251 58,013
(a) Weighted average units outstanding are computed including dilutive
options, unvested stock grants and assuming conversion of Series A preferred
units to units.
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The following table details the computation of EBITDA (in
thousands):
YEARS ENDED DECEMBER 31,
------------------------------
2000 1999 1998
-------- -------- --------
EBITDA:
Funds from operations ............................... $288,636 $286,895 $217,363
Interest expense ................................... 158,620 125,435 73,182
Interest expense of unconsolidated entities......... 9,188 6,729 6,521
Amortization expense ............................... 1,480 693 922
Series B preferred distributions ................... 12,937 12,937 8,373
-------- -------- --------
EBITDA .............................................. $470,861 $432,689 $306,361
======== ======== ========
Weighted average units outstanding (a) .............. 67,239 75,251 58,013
(a) Weighted average units outstanding are computed including dilutive
options, unvested stock grants and assuming conversion of Series A preferred
units to units.
THE HOTELS -- ACTUAL
Upscale and full service hotels like Embassy Suites, Crowne Plaza,
Holiday Inn and Holiday Inn Select, Doubletree and Doubletree Guest Suites, and
Sheraton and Sheraton Suites hotels account for approximately 97% of the
Company's Percentage Lease revenue and 98% of the Hotels' room and suite
revenue.
The Company believes that when analyzing the performance of the
Hotels, looking at "Comparable Hotels" is the most meaningful. The Company
defines "Comparable Hotels" as those not undergoing renovation, redevelopment or
rebranding in either of the comparison years. Major renovations generally have
an adverse affect on hotel earnings by taking rooms out of service and
disrupting hotel operations. "Non-comparable Hotels" are those undergoing
renovation, redevelopment or rebranding during either year.
-29-
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Comparison of the Hotels' Operating Statistics for the Years Ended
December 31, 2000 and 1999
The following table sets forth historical Occupancy, ADR and RevPAR
at December 31, 2000 and 1999, and the percentage changes therein between the
years presented for the Hotels in which the Company had an ownership interest at
December 31, 2000. This information is presented regardless of the date of
acquisition.
OCCUPANCY
---------------------------------------
2000 1999 VARIANCE
------ ------ ----------
Bristol Comparable Hotels.............................. 70.8% 69.9% 0.9 pts
DJONT Comparable Hotels................................ 73.3% 71.7% 1.6 pts
Total Comparable Hotels (a) .......................... 72.1% 70.8% 1.3 pts
Non-comparable Hotels (b) ............................. 70.4% 65.7% 4.7 pts
Total Hotels excluding hotels held for sale....... 71.5% 69.0% 2.5 pts
Hotels held for sale (c) .............................. 58.2% 59.4% (1.2) pts
Total Hotels................... 70.4% 68.2% 2.2 pts
ADR
-----------------------------------------
2000 1999 VARIANCE
------- ------- ----------
Bristol Comparable Hotels.............................. $ 94.87 $ 91.23 4.0%
DJONT Comparable Hotels................................ $126.57 $121.21 4.4%
Total Comparable Hotels (a) .......................... $111.71 $107.09 4.3%
Non-comparable Hotels (b).............................. $ 98.08 $ 95.42 2.8%
Total Hotels excluding hotels held for sale....... $106.87 $103.09 3.7%
Hotels held for sale (c)............................... $ 69.58 $ 68.89 1.0%
Total Hotels................... $104.42 $100.72 3.7%
REVPAR
-----------------------------------------
2000 1999 VARIANCE
------- ------- ----------
Bristol Comparable Hotels.............................. $67.13 $63.74 5.3%
DJONT Comparable Hotels................................ $92.75 $86.91 6.7%
Total Comparable Hotels (a)........................... $80.52 $75.85 6.2%
Non-comparable Hotels (b).............................. $69.03 $62.72 10.1%
Total Hotels excluding hotels held for sale........ $76.37 $71.13 7.4%
Hotels held for sale (c)............................... $40.46 $40.94 (1.2)%
Total Hotels................... $73.52 $68.72 7.0%
(a) Bristol Comparable Hotels include 44 hotels and DJONT Comparable
Hotels include 59 hotels which were not undergoing renovation,
redevelopment, or rebranding in either the 2000 or 1999 periods
reported and exclude hotels held for sale.
(b) Non-comparable Hotels include 59 hotels undergoing redevelopment in
either the 2000 or 1999 periods reported and exclude hotels held for
sale.
(c) Hotels held for sale include three DJONT leased hotels and 21
Bristol leased hotels, consisting of two Courtyard by Marriott
hotels, five Fairfield Inn hotels, six Hampton Inn hotels, eight
Holiday-branded hotels, and three Doubletree Guest Suites hotels.
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For the twelve months ended December 31, 2000, the Company's
Comparable Hotels' RevPAR increased compared to the same period in 1999, by
6.2%. For the same period, the Comparable Hotels' ADR and Occupancy increased
4.3% and 1.3 percentage points, respectively. The total hotel portfolio RevPAR,
excluding hotels held for sale, increased 7.4%. The ADR and Occupancy for these
hotels increased 3.7% and 2.5 percentage points, respectively.
The DJONT Comparable Hotels are predominately Embassy Suites,
Doubletree and Doubletree Guest Suites, and Sheraton hotels. The Bristol
Comparable Hotels are predominately Holiday Inn and Crowne Plaza hotels. The
following table shows the Comparable Hotel RevPAR changes for the year ended
December 31, 2000, compared to 1999, by brand:
REVPAR PERCENTAGE OF TOTAL ROOM
CHANGE REVENUE
------ ------------------------
Embassy Suites 47 hotels 7.0% 41.0%
Holiday Inn 25 hotels 7.7% 28.1%
Crowne Plaza 13 hotels 4.6% 13.1%
Doubletree-branded 6 hotels 6.7% 5.2%
Sheraton 3 hotels 1.3% 7.7%
Other 9 hotels 0.5% 4.9%
------
Total 103 hotels 6.2% 100.0%
======
The Company attributes much of the improvement in RevPAR to the
renovation, rebranding and repositioning program in which the Company and, prior
to the Merger, Bristol Hotel Company has spent nearly $500 million since the
beginning of 1998. The Company's Hotels outperformed most other hotels in their
respective markets during the year and the Company expects its Hotels to
continue to favorably compare to other hotels in their markets.
Through the fourth quarter of 2000, the Company's Embassy Suites
hotels had experienced their sixth consecutive quarterly increase in Occupancy.
The Company's 47 Comparable Embassy Suites hotels achieved a 7.0% growth in
RevPAR for 2000, compared to the prior year. These hotels, which provide 41.0%
of the Comparable Hotel room revenues, increased their ADR by 5.2% and Occupancy
by 1.3 percentage points. The Company's Comparable Doubletree-branded hotels had
a 6.7% RevPAR gain for the year, made up of increases in both Occupancy and ADR
of 3.4 percentage points and 1.7%, respectively. The Company believes that, in
addition to recent renovations at the majority of these hotels, the
Hilton/Promus merger and the addition of the Hilton HHonors(R) guest frequency
program has had and will continue to have a positive impact on its Embassy
Suites and Doubletree-branded hotel revenues.
Bass completed its merger with Bristol Hotels & Resorts at the end
of the first quarter of 2000. The Company expects the integration of the Bristol
management team with Bass will continue to be beneficial to the development and
strengthening of the Crowne Plaza and Holiday brands.
The Company's 13 Comparable Crowne Plaza hotels (all of which were
renovated and rebranded from Holiday Inn and Harvey hotels), reported increased
RevPAR of 4.6% for 2000, compared to 1999. This increase resulted primarily from
a 2.6 percentage point increase in Occupancy between the periods. In addition to
the recent renovations, the Company attributes a portion of this improvement to
the change in marketing for the brand, which now supports the marketing of
Crowne Plaza with the Inter-Continental(R) brand.
The Company's Comparable Holiday-branded hotels increased RevPAR for
the year by 7.7%. The increase in RevPAR resulted from a 1.1 percentage point
increase in Occupancy and a 6.1% increase in ADR. The Company's 29 Comparable
Holiday-branded hotels with greater than 250 rooms (representing nearly 80% of
the Company's Holiday-branded revenue) reported an increase in RevPAR of 6.8%
for the full year 2000, which came from Occupancy and ADR increases of 2.2
percentage points and 3.6%, respectively.
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34
Approximately 63% of the Company's 2000 Comparable Hotel room
revenues were derived from four states: Texas, California, Florida and Georgia.
Changes in Comparable Hotel RevPAR during 2000 for hotels in these states,
compared to the same period in 1999, are illustrated in the following table:
REVPAR PERCENTAGE OF TOTAL ROOM
CHANGE REVENUE
------ ------------------------
Texas 28 hotels 4.0% 20.9%
California 16 hotels 14.8% 25.7%
Florida 10 hotels 3.6% 11.0%
Georgia 7 hotels 2.0% 5.8%
The Comparable Hotels in Texas, which account for approximately
20.9% of the Company's Comparable Hotel total room revenue, experienced the
fourth consecutive quarter with positive RevPAR growth compared to prior year.
The growth in supply from new hotels in most major markets in Texas appears to
have slowed and management believes that their recently renovated hotels will
continue to effectively compete in their market segments. The Company's 14
Comparable Hotels located in Dallas, which had been adversely affected by new
competition in recent years, had RevPAR increases of 5.5% for the fourth quarter
2000 and 3.8% for the year.
The Company's 59 Non-comparable Hotels reported an increase in
RevPAR of 10.1% for the twelve months ended December 31, 2000. These hotels were
profoundly affected by the Allerton Crowne Plaza (increased RevPAR by 89.5% for
the twelve month period), which was closed for renovation in 1998 and partially
reopened in the second quarter of 1999. The Non-comparable Hotels, excluding the
Allerton, reported increased RevPAR of 7.5%.
RENOVATIONS, REDEVELOPMENTS AND REBRANDINGS
The Company has historically sought to enhance the value of its
portfolio through:
o its practice of upgrading, renovating and/or redeveloping most
of its recently acquired hotels to enhance their competitive
position, and, in certain instances, rebranding them to improve
their revenue generating capacity; and
o its ongoing program for the maintenance of the Company's
upgraded hotel assets, which includes:
o the contribution of approximately 4% of total annual hotel
revenue to a capital reserve, for routine capital
replacements and improvements; and
o ensuring that the Lessees' adhere to a rigorous maintenance
and repair program, resulting in the expenditure of more
than 4% of annual hotel revenues on maintenance of the
Hotels.
Renovation and Redevelopment Program
The Company has demonstrated its ability to successfully generate
returns on investments in renovations. Its renovation and rebranding of the 18
Crown Sterling Suites hotels, which were acquired during 1996 and 1997, achieved
an overall RevPAR increase of 47.7% between 1996 and 2000. During 1998, 1999,
and 2000, an aggregate of approximately $550 million in capital improvements and
other capital expenditures were made to the Company's hotels, with approximately
3% of total hotel room nights being lost due to renovation in 1998, 2% in 1999
and 1% in 2000. During 2000, the Company spent approximately $55.8 million under
its renovation and redevelopment program.
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35
During 2001, the Company currently expects to spend approximately
$20 million on the renovation of 8 hotels, approximately $28 million to complete
renovations started in 2000 at 46 hotels, and approximately $50 million for
other capital expenditures. The Company is currently reviewing the feasibility
of undertaking up to $64 million of additional renovations and room additions
during 2001. The Company currently expects an insignificant number of room
nights to be lost during 2001 as a result of renovations. By the end of 2001,
the Company will have spent more than $1 billion since 1994 on renovations and
other capital expenditures to its hotel portfolio, which should limit the need
for future renovation expenditures primarily to those necessary to maintain the
Hotels in their upgraded condition or to enhance a hotel's earning capability
through room addition or rebranding as deemed appropriate.
Capital Reserve
During 2000, approximately $45.0 million was contributed to the
capital reserve for capital replacements and improvements and approximately
$45.6 million was spent on such replacements and improvements (which is in
addition to the $55.8 million spent under the renovation and redevelopment
program described above).
Repairs and Maintenance
During the year ended December 31, 2000, approximately $41.0 million
and $66.7 million were spent by the Lessees on routine repairs and maintenance
at the Hotels leased by DJONT and Bristol, respectively. This represents
approximately 4.4% of total 2000 hotel revenues.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal source of cash to meet its cash
requirements, including distributions and repayments of indebtedness, has
historically been its share of the cash flow from the Percentage Leases. For the
year ended December 31, 2000, cash flow provided by operating activities,
consisting primarily of Percentage Lease revenue, was $277.3 million and Funds
From Operations was $288.6 million.
DJONT recorded a net loss of $11.2 million for the year ended
December 31, 2000. DJONT's accumulated deficit totaled $24.5 million at December
31, 2000. The losses in the current year are partially attributed to increased
costs of frequent guest programs instituted during the year and increased
operating costs which resulted in lower than anticipated operating margins.
Subject to the receipt of consents from certain lenders, effective
January 1, 2001, the Company acquired and contributed to a taxable REIT
subsidiary, all of the equity interests in DJONT. In consideration for the
acquisition of DJONT, the Company issued an aggregate of 416,667 units of its
limited partner interest (valued at $10 million based upon the $23.125 closing
share price of FelCor common stock on December 29, 2000), 50% to an entity owned
by Thomas J. Corcoran, Jr. and Hervey A. Feldman and 50% to an entity owned by
the children of Charles N. Mathewson. The Company will treat the acquisition of
DJONT, for financial reporting purposes, as a termination of the DJONT leases
and, accordingly, will expense the value of the units issued as consideration
together with the $24.5 million accumulated shareholders' deficit of DJONT, in
the first quarter of 2001.
Effective January 1, 2001, the Company completed the acquisition of
12 of the Bristol leases which were held by Bass. In consideration for the
acquisition of such leases, the Company issued to Bass 413,585 shares of FelCor
common stock valued at approximately $10 million and a corresponding number of
units. Of the 12 hotels, (i) the Company has entered into an agreement with
Interstate Hotels Corporation ("IHC") to manage eight of the hotels, (ii) two
hotels are being managed by a subsidiary of Bass under short term management
contracts, (iii) one hotel is being managed by a subsidiary of Hilton and (iv)
one hotel was sold. In March 2001, the Company has entered into an agreement
with Bass to acquire the remaining 88 leases
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36
effective July 1, 2001. In consideration for the acquisition of such leases, the
Company will enter into long term management agreements with Bass with regard to
these hotels and FelCor will issue to Bass 100 shares of FelCor common stock. A
portion of the management fees with respect to the 88 hotels managed by Bass
under long term management agreements will be considered to be lease termination
costs for financial reporting purposes and the Company will record a lease
termination expense of approximately $125 million in the third quarter of 2001.
At that time, the Company will record a corresponding liability of approximately
$125 million that will be amortized over the term of the applicable management
agreements.
As a result of the effectiveness of the REIT Modernization Act,
which, among other things, allows the Company to own its lessees in taxable REIT
subsidiaries, and the acquisition of the Hotel leases in 2001, the Company will
be reporting the income and expenses of operating hotels rather than lease
income from the Percentage Leases. Any profits or losses from the TRS entities
holding the hotel leases, after applicable corporate taxes, will be reflected in
the Company's results of operations. Pro forma consolidated statements of
operations for the years ended December 31, 2000 and 1999, which reflect the
acquisition of the hotel leases, are contained in the Notes to the Consolidated
Financial Statements of FelCor Lodging Limited Partnership, appearing elsewhere
herein.
In 2000, the Company identified 25 non-strategic hotels and
indicated its intent to sell these hotels. The Company expects gross sale
proceeds from these sales to be approximately $150 million and net proceeds to
be approximately $137 million (after deducting estimated transaction costs). The
Company anticipates that the sale of these 25 hotels will result in a book loss
of approximately $63 million. Accordingly, FelCor's Board of Directors approved
the establishment of a $63 million reserve in the second quarter of 2000 for
hotels held for sale, to reflect the difference between book value and the
estimated market value of these hotels. In December 2000, the Company completed
the sale of one of these hotels held for sale and recorded a gain of
approximately $135,000.
In March 2001, the Company contributed eight of the hotels held for
sale to an entity in which the Company holds a 50% equity interest, and a
subsidiary of IHC holds the other 50% equity interest. Another subsidiary of IHC
manages each of these hotels.
In January 2000, FelCor's Board of Directors authorized an increase
in its share repurchase program to an aggregate of $300 million. The stock
repurchases have been and, at the discretion of FelCor's management, may be made
from time to time at prevailing prices in the open market or through privately
negotiated transactions. FelCor funds the repurchase of stock through redemption
of the Company's units, which redemptions are funded from existing credit
facilities and proceeds from the sale of assets. During 2000, FelCor repurchased
approximately 4.5 million shares of its outstanding common stock on the open
market for approximately $86.7 million and the Company has redeemed a like
number of units. Since inception of the program, FelCor has repurchased an
aggregate of 10.3 million shares of its common stock for a total of
approximately $185.1 million.
The Company may incur indebtedness to make property acquisitions, to
purchase shares of its capital stock or to meet distribution requirements
imposed on a REIT under the Internal Revenue Code, to the extent that working
capital and cash flow from the Company's investments are insufficient for such
purposes. At December 31, 2000, the Company had $26.1 million of cash and cash
equivalents and had utilized $362 million under its $600 million revolving line
of credit (the "Line of Credit").
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The following details the Company's debt outstanding at December 31,
2000 and 1999 (in thousands):
DECEMBER 31,
--------------------------
COLLATERAL INTEREST RATE MATURITY DATE 2000 1999
---------- ------------- ------------- ---------- ----------
FLOATING RATE DEBT:
Line of credit None LIBOR + 200bp August 2003 $ 112,000 $ 351,000
Senior term loan (a) LIBOR + 250bp March 2004 250,000
Mortgage debt 3 hotels LIBOR + 200bp February 2003 61,909 62,553
Other None LIBOR + 200bp Various 650 32,282
---------- ----------
Total floating rate debt 174,559 695,835
---------- ----------
FIXED RATE DEBT:
Line of credit - swapped None 7.66% August 2003 250,000 313,000
Publicly-traded term notes None 7.38% October 2004 174,505 174,377
Publicly-traded term notes None 7.63% October 2007 124,320 124,221
Publicly-traded term notes None 9.50% September 2008 394,731
Mortgage debt 15 hotels 7.24% November 2022 140,148 142,542
Senior term loan - swapped (a) 8.30% March 2004 125,000
Mortgage debt 7 hotels 7.54% April 2009 97,604 99,075
Mortgage debt 6 hotels 7.55% June 2009 73,389 74,483
Mortgage debt 7 hotels 8.73% May 2010 144,032
Mortgage debt 8 hotels 8.70% May 2010 184,829
Other 13 hotels 6.96% - 7.23% 2000 - 2005 80,124 85,421
---------- ----------
Total fixed rate debt 1,663,682 1,138,119
---------- ----------
Total debt $1,838,241 $1,833,954
========== ==========
- ----------
(a) The senior term loan was retired early from the proceeds of publicly traded
term notes issued in 2000.
The Line of Credit contains various affirmative and negative
covenants, including limitations on total indebtedness, total secured
indebtedness, and cash distributions, as well as the obligation to maintain a
certain minimum tangible net worth and certain minimum interest and debt service
coverage ratios. At December 31, 2000, the Company was not in default with
respect to such covenants.
The Company's other borrowings contain affirmative and negative
covenants that are generally equal to or less restrictive than the Line of
Credit. The mortgage debt is nonrecourse to the Company (with certain
exceptions) and contains provisions allowing for the substitution of collateral
upon satisfaction of certain conditions. Most of the mortgage debt is
prepayable, subject, however, to various prepayment penalties, yield
maintenance, or defeasance obligations.
The Company took several steps, during the year ended December 31,
2000, to increase its proportion of fixed rate debt, improve its debt maturity
profile, diversify its funding sources and expand its financial flexibility.
On April 26, 2000, the Company closed a 10-year, $145 million First
Mortgage Term Loan, which is collateralized by seven Sheraton hotels and carries
an 8.73% fixed interest rate. On May 2, 2000, the Company closed $186 million of
10-year, First Mortgage Term Loans which are collateralized by eight Embassy
Suites hotels and carry an 8.70% fixed interest rate. These loans are
non-recourse, mature in May 2010, and amortize over 25 years. The proceeds of
these loans were used to reduce borrowings under the Company's Line of Credit.
On August 1, 2000, the Company renewed its Line of Credit. The Line
of Credit was reduced from $850 million to $600 million and the maturity was
extended from July 2001 to August 2003. The effective interest rate on the
renewed Line of Credit ranges from 87.5 basis points to 250 basis points above
LIBOR depending on the Company's leverage and corporate rating. An extraordinary
charge of approximately $578,000 was recorded to write-off a portion of the
deferred financing costs associated with the Line of Credit.
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38
On September 15, 2000, the Company completed the private placement
of $400 million of senior unsecured notes that mature in September 2008 and bear
an interest rate of 9 1/2%. The notes were issued at a discount to yield 9 3/4%.
The proceeds were used to retire the $375 million floating rate senior term
loan, which matured in 2004, and to pay down the Line of Credit. An
extraordinary charge of approximately $3.3 million was recorded to write-off
unamortized deferred financing costs associated with the $375 million loan. The
Company subsequently completed an offer to exchange $400 million in aggregate
principal amount of the private placement senior notes for notes with identical
terms which were registered under the Securities Act of 1933.
On January 11, 2001, the Company completed the private placement of
an additional $100 million in 9 1/2% senior unsecured notes that mature in
September 2008. These notes were issued at a premium to yield an effective rate
of 9 1/8%. The proceeds were used initially to pay down the Company's Line of
Credit.
The Company had interest rate swap agreements with a total notional
amount of $250 million that were outstanding at December 31, 2000 and which were
designated as cash flow hedges. These interest rate swap agreements modify a
portion of the interest characteristics of the Company's outstanding debt under
its line of credit without an exchange of the underlying principal amount and
effectively convert variable rate debt to a fixed rate. The fixed rates to be
paid, and the variable rate to be received by the Company at December 31, 2000
are summarized in the following table:
SWAP RATE
RECEIVED
SWAP RATE (VARIABLE) AT SWAP
NOTIONAL AMOUNT PAID (FIXED) 12/31/00 MATURITY
- --------------- ------------ ------------- --------
$ 25 million 5.5575% 6.8213% July 2001(a)
25 million 5.5480% 6.8213% July 2001(a)
75 million 5.5550% 6.8213% July 2001(a)
100 million 5.7955% 6.8213% July 2003
25 million 5.8260% 6.8213% July 2003
- ------------
$250 million
============
(a) The variable rate payer has the option to terminate this swap in
July 2001; if not so terminated, it matures July 2003.
To provide for additional financing flexibility, FelCor has
approximately $946 million of common stock, preferred stock, debt securities,
and/or common stock warrants available for offerings under shelf registration
statements previously declared effective.
In the event of a significant economic downturn, the Company
believes that its Hotels will continue to benefit from the Company's extensive
capital expenditure programs. Most future renovation and redevelopment
expenditures are discretionary and are expected to be funded from the Company's
cash flow.
The Company's $252.6 million in cash flow used in financing
activities for the year ended December 31, 2000, relates primarily to the
repurchase of approximately 4.5 million shares of FelCor's common stock for
approximately $86.7 million and distributions aggregating $168.8 million.
INFLATION
Operators of hotels, in general, possess the ability to adjust room
rates daily to reflect the effects of inflation. Competitive pressures may,
however, limit the Company's ability to raise room rates. Recently, some utility
costs have increased at a faster rate than overall inflation. The Company may
not be able to increase room rates sufficiently to offset the increased utility
costs. However, in certain markets, the Company's Hotels have charged their
guests a utility surcharge to help offset such increases.
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39
SEASONALITY
The Hotels' operations historically have been seasonal in nature,
reflecting higher occupancy rates primarily during the first three quarters of
each year. This seasonality can be expected to cause fluctuations in the
Company's quarterly revenue, particularly during the fourth quarter. To the
extent cash flow from operations is insufficient during any quarter, due to
temporary or seasonal fluctuations in revenue, the Company expects to utilize
cash on hand or borrowings under the Line of Credit to make distributions to its
equity holders.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
Portions of this Annual Report on Form 10-K include forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Although the Company believes that the expectations reflected in such
forward-looking statements are based upon reasonable assumptions, it can give no
assurance that its expectations will be achieved. A number of important factors
which, among others, could adversely affect the ability of the Company to meet
its current expectations are disclosed in conjunction with the forward-looking
statements and under "Cautionary Factors That May Affect Future Results" in Item
1 of this Annual Report on Form 10-K ("Cautionary Statements"). Subsequent
written and oral forward-looking statements made by or attributable to the
Company or persons acting on its behalf are expressly qualified in their
entirety by the Cautionary Statements.
RECENTLY ISSUED STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS
Effective January 1, 2001, the Company will adopt SFAS No. 133
Accounting for Derivative Instruments and Hedging Activities, ("SFAS 133" or the
"Statement"). SFAS 133 will be adopted as a change in accounting principle and
cannot be applied retroactively to financial statements of prior periods.
SFAS 133 requires derivatives to be recorded on the balance sheet as
an asset or liability at fair value. The Statement also requires that the
Company record derivatives that are not hedges at fair value through earnings,
unless specific hedge accounting criteria are met. Special accounting for
qualifying hedges allows the Company to offset a derivative instrument's gains
and losses against related results on the hedged item in the income statement,
to the extent effective, and requires that the Company must formally document,
designate and assess the effectiveness of transactions that receive hedge
accounting. The Company's interest rate swap contracts outstanding as of January
1, 2001, have been designated as cash flow hedges.
Cash Flow Hedges
The Company has entered into six interest rate swap agreements, with
a total notional amount of $250 million. Three of these agreements, at the
option of the variable rate payer, may be terminated in July 2001 or otherwise
terminate in July 2003 along with the other three agreements. Under these
arrangements, the Company receives the one month LIBOR rate and pays a fixed
rate of 5.548% to 5.826%. Prior to adoption of FAS 133, the Company treated
these swaps as hedges and accounted for them as such. The Company has not
recorded any amounts on the Consolidated Balance Sheet as of December 31, 2000
in connection with these instruments and the net effect of the hedges was to
record interest expense at the fixed rate of 7.548% to 7.826% on $250 million of
variable rate debt. The Company has designated these swaps as cash flow hedges
of variable future cash flows associated with the interest on its Line of Credit
facility through July 2003. Upon adoption, the Company will record the fair
value of these swaps as an asset on its balance sheet valued at $248,000, with a
corresponding credit to other comprehensive income. The Company will record
subsequent changes in fair value of the swaps through other comprehensive
income, except for changes related to ineffectiveness, during the period these
instruments are designated as hedges.
The Company has no other derivative instruments, including embedded
derivatives under SFAS 133.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's primary market risk exposure is to changes in interest
rates on its floating rate debt. The Company manages the risk of increasing
interest rates on its floating rate debt through the use of interest rate swaps,
which effectively convert variable rate debt to a fixed rate, by locking the
interest rates paid. The Company had entered into interest rate swap contracts
relating to debt of $250 million at December 31, 2000.
The following table provides information about the Company's
financial instruments that are sensitive to changes in interest rates, including
interest rate swaps and debt obligations. For debt obligations at December 31,
2000, the table presents scheduled maturities and weighted average interest
rates by maturity dates. For interest rate swaps, the table presents notional
amounts and weighted average interest rates by contractual maturity dates.
Weighted average variable rates are based on implied forward rates in the yield
curve as of December 31, 2000. The fair value of the Company's fixed rate debt
indicates the estimated principal amount of debt having the same debt service
requirements which could have been borrowed at December 31, 2000 at then current
market interest rates. The fair value of the Company's variable to fixed
interest rate swaps indicates the estimated amount that would have been received
by the Company had they been sold at December 31, 2000.
EXPECTED MATURITY DATE
(IN THOUSANDS)
2001 2002 2003 2004 2005 THEREAFTER TOTAL FAIR VALUE
-------- ------- -------- -------- ------- ---------- ---------- ----------
LIABILITIES
Debt:
Fixed rate $ 23,092 $13,039 $ 34,906 $189,228 $43,127 $1,116,732 $1,420,124 $1,231,177
Average interest rate 9.43% 8.19% 8.09% 7.44% 8.67% 5.17%
Variable rate $ 711 $ 785 $422,413 $ 650 $ 424,559 $ 424,559
Average interest rate 9.21% 9.50% 9.24% 9.63%
Discount accretion $ (6,443)
----------
Total debt $1,838,241
==========
INTEREST RATE DERIVATIVES
Interest rate swaps:
Variable to fixed $125,000(a) $125,000 $ 250,000 $ 248
Average pay rate 5.61% 5.75%
Average receive rate 6.57% 5.89%
(a) The variable rate payer has the option to terminate this swap in
July 2001; if not so terminated, it matures July 2003.
Swap contracts, such as those described above, contain a credit
risk, in that the counterparties may be unable to fulfill the terms of the
agreement. The Company minimizes that risk by evaluating the creditworthiness of
its counterparties, who are limited to major banks and financial institutions,
and does not anticipate nonperformance by the counterparties.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Included herein beginning at page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
-38-
41
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The Company has no directors or officers. Management functions of
the Company are performed by FelCor as the sole general partner. Information
about the directors and executive officers of FelCor is contained in FelCor's
definitive Proxy Statement for its 2001 Annual Meeting of Stockholders, and
incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The Company has no directors or officers. Management functions of
the Company are performed by FelCor as the sole general partner. Information
about the directors and executive officers of FelCor is contained in FelCor's
definitive Proxy Statement for its 2001 Annual Meeting of Stockholders, and
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information called for by this Item is contained in FelCor's
definitive Proxy Statement for its 2001 Annual Meeting of Stockholders, and
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information called for by this Item is contained in FelCor's
definitive Proxy Statement for its 2001 Annual Meeting of Stockholders, and
incorporated herein by reference.
-39-
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
Included herein at pages F-1 through F-35.
2. Financial Statement Schedules
The following financial statement schedule is included herein at
page F-32.
Schedule III - Real Estate and Accumulated Depreciation for
FelCor Lodging Limited Partnership
All other schedules for which provision is made in Regulation S-X
are either not required to be included herein under the related instructions or
are inapplicable or the related information is included in the footnotes to the
applicable financial statement and, therefore, have been omitted.
3. Exhibits
The following exhibits are filed as part of this Annual Report on
Form 10-K:
EXHIBIT
NUMBER DESCRIPTION
------- -----------
3.1 - Amended and Restated Agreement of Limited Partnership of
the Company (filed as Exhibit 10.1 to FelCor's Annual
Report on Form 10-K/A Amendment No. 1 for the fiscal
year ended December 31, 1994 (the "1994 10-K/A") and
incorporated herein by reference).
3.2 - First Amendment to Amended and Restated Agreement of
Limited Partnership of the Company dated as of November
17, 1995 by and among FelCor, Promus Hotels, Inc. and
all of the persons or entities who are or shall in the
future become of the limited partners of the Company
(filed as Exhibit 10.1.1 to FelCor's Annual Report on
Form 10-K, as amended, for the fiscal year ended
December 31, 1995 (the "1995 10-K") and incorporated
herein by reference).
3.3 - Second Amendment to Amended and Restated Agreement of
Limited Partnership of the Company dated as of January
9, 1996 between FelCor and all of the persons or
entities who are or shall in the future become limited
partners of the Company (filed as Exhibit 10.1.2 to the
1995 10-K and incorporated herein by reference).
3.4 - Third Amendment to Amended and Restated Agreement of
Limited Partnership of the Company dated as of January
10, 1996 by and among FelCor, MarRay-LexGreen, Inc. and
all of the persons and entities who are or shall in the
future become limited partners of the Company (filed as
Exhibit 10.1.3 to the 1995 10-K and incorporated herein
by reference).
3.5 - Fourth Amendment to the Amended and Restated Agreement
of Limited Partnership of the Company dated as of
January 10, 1996 by and among FelCor,
Piscataway-Centennial Associates Limited Partnership and
all of the persons or entities who are or shall in the
future become limited partners of the Company (filed as
Exhibit 10.1.4 to the 1995 10-K and incorporated herein
by reference).
3.6 - Fifth Amendment to Amended and Restated Agreement of
Limited Partnership of the Company dated as of May 2,
1996, between FelCor and all of the persons or entities
who are or shall in the future become limited partners
of the Company, adopting Addendum No. 2 to Amended and
Restated Agreement of Limited Partnership of the Company
dated as of May 2, 1996 (filed as Exhibit 10.1.5 to
FelCor's Form 10-Q for the quarter ended June 30, 1996,
and incorporated herein by reference).
-40-
43
EXHIBIT
NUMBER DESCRIPTION
------- -----------
3.7 - Sixth Amendment to Amended and Restated Agreement of
Limited Partnership of the Company dated as of September
16, 1996, by and among FelCor, John B. Urbahns, II and
all of the persons or entities who are or shall in the
future become limited partners of the Company (filed as
Exhibit 10.1.6 to FelCor's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996, and
incorporated herein by reference).
3.8 - Seventh Amendment to Amended and Restated Agreement of
Limited Partnership of the Company dated as of May 16,
1997, by and among FelCor, PMB Associates, Ltd. and all
of the persons or entities who are or shall in the
future become limited partners of the Company (filed as
Exhibit 10.1.7 to FelCor's Annual Report on Form 10-K
for the fiscal year ended December 31, 1997, and
incorporated herein by reference).
3.9 - Eighth Amendment to Amended and Restated Agreement of
Limited Partnership of the Company dated as of February
6, 1998, by and among FelCor, Columbus/Front Ltd. and
all of the persons or entities who are or shall in the
future become limited partners of the Company (filed as
Exhibit 10.1.8 to FelCor's Annual Report on Form 10-K
for the fiscal year ended December 31, 1997, and
incorporated herein by reference).
3.10 - Ninth Amendment to Amended and Restated Agreement of
Limited Partnership of the Company dated as of May 1,
1998, between FelCor and all of the persons or entities
who are or shall in the future become limited partners
of the Company, adopting Addendum No. 3 to Amended and
Restated Agreement of Limited Partnership dated as of
May 1, 1998 (filed as Exhibit 10.1.9 to FelCor's Form
8-K dated May 29, 1998, and incorporated herein by
reference).
3.11 - Tenth Amendment to Amended and Restated Agreement of
Limited Partnership of the Company dated as of June 22,
1998, by and among FelCor, Schenley Hotel Associates,
and all of the persons or entities who are or shall in
the future become limited partners of the Company (filed
as Exhibit 10.1.10 to FelCor's Form 10-Q for the quarter
ended October 30, 1998, and incorporated herein by
reference).
3.12 - Eleventh Amendment to Amended and Restated Agreement of
Limited Partnership of the Company dated as of July 28,
1998, between FelCor and all of the persons or entities
who are or shall in the future become limited partners
of the Company, changing the name of the Company to
"FelCor Lodging Limited Partnership" (filed as Exhibit
10.1.11 to FelCor's Form 10-Q for the quarter ended
October 30, 1998, and incorporated herein by reference).
3.13 - Twelfth Amendment to Amended and Restated Agreement of
Limited Partnership of the Company dated as of December
29, 1998, between FelCor and all of the persons or
entities who are or shall in the future become limited
partners of the Company, amending certain provisions of
the Company Agreement (filed as Exhibit 10.1.12 to
FelCor's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998 (the "1998 10-K") and
incorporated herein by reference).
3.14 - Thirteenth Amendment to Amended and Restated Agreement
of Limited Partnership of the Company dated as of
December 31, 1998, by and between FelCor, FelCor Nevada
Holdings, L.L.C. and all of the persons or entities who
are or shall in the future become limited partners of
the Company (filed as Exhibit 10.1.13 to the 1998 10-K
and incorporated herein by reference).
3.15 - Fourteenth Amendment to Amended and Restated Agreement
of Limited Partnership of the Company dated as of March
1, 1999, by and among FelCor, Huie Properties, Ltd., and
all of the persons or entities who are or shall in the
future become limited partners of the Company (filed as
Exhibit 10.1.14 to the 1998 10-K and incorporated herein
by reference).
3.16 - Fifteenth Amendment to Amended and Restated Agreement of
Limited Partnership of the Company dated as of October
15, 1999, by and among FelCor, SRS Properties Limited
Partnership, and all of the persons and entities who are
or shall in the future become limited partners of the
Company (filed as Exhibit 10.1.15 to FelCor's Form 10-K
for the fiscal year ended December 31, 1999 ("the 1999
10-K") and incorporated herein by reference).
3.17 - Sixteenth Amendment to Amended and Restated Agreement of
Limited Partnership of the Company dated as of February
27, 2000, by and among FelCor, Bass America, Inc., and
all of the persons and entities who are or shall in the
future become limited partners of the Company (filed as
Exhibit 10.1.16 to the 1999 10-K and incorporated herein
by reference).
3.18 - Seventeenth Amendment to Amended and Restated Agreement
of Limited Partnership of the Company dated as of
November 1, 2000, by and among FelCor, Bass America,
Inc. and all of the persons or entities who are or shall
in the future become limited partners of the Company
(filed as Exhibit 10.1.17 to FelCor's Annual Report on
form 10-K for the fiscal year ended December 31, 2000
(the "2000 10-K"), and incorporated herein by
reference).
4.1 - Indenture dated as of April 22, 1996 by and between
FelCor and Sun Trust Bank, Atlanta, Georgia, as Trustee
(filed as Exhibit 4.2 to FelCor's Form 8-K dated May 1,
1996 and incorporated herein by reference).
4.2 - Indenture dated as of October 1, 1997 by and among the
Registrant, FelCor, the Subsidiary Guarantors named
therein and SunTrust Bank, Atlanta, Georgia, as Trustee
(filed as Exhibit 4.1 to the Registration Statement on
Form S-4 (file No. 333-39595) and the other
co-registrants named therein and incorporated herein by
reference).
-41-
44
EXHIBIT
NUMBER DESCRIPTION
------- -----------
4.2.1 - First Amendment to Indenture dated as of February 5,
1998 by and among Registrant, FelCor, the Subsidiary
Guarantors named therein and SunTrust Bank, Atlanta,
Georgia, as Trustee (filed as Exhibit 4.2 to the
Registration Statement on Form S-4 (File No. 333-39595)
and incorporated herein by reference).
4.2.2 - Second Amendment to Indenture and First Supplemental
Indenture dated as of December 30, 1998, by and among
Registrant, FelCor, the Subsidiary Guarantors named
therein and SunTrust Bank, Atlanta, Georgia, as Trustee
(filed as Exhibit 4.7.2 to the 1998 10-K and
incorporated herein by reference).
4.2.3 - Third Amendment to Indenture dated as of March 30, 1999
by and among the Company, FelCor, the Subsidiary
Guarantors named therein, who are signatories thereto
and SunTrust Bank, Atlanta (filed as Exhibit 4.7.3 to
FelCor's Form 10-Q for the quarter ended March 31, 1999
(the "March 1999 10-Q"), and incorporated herein by
reference).
10.1 - Form of Lease Agreement between the Registrant as Lessor
and DJONT Operations, L.L.C. or its subsidiaries
("DJONT") as Lessee (filed as Exhibit 10.2.1 to the 1995
10-K and incorporated herein by reference).
10.1.1 - Omnibus Lease Amendment Agreement dated as of June 30,
1998 among FelCor, the Company, and DJONT to clarify the
meaning of Article III of the lease as represented by
the actual course of dealing between lessors and lessees
under such leases (filed as Exhibit 10.19 to FelCor's
Form 10-Q for the quarter ended June 30, 1998, and
incorporated herein by reference).
10.2 - Form of Lease Agreement between the Company as Lessor
and a subsidiary of Bristol Hotels & Resorts ("BHR") as
Lessee (the "Bristol Lease Agreement") (filed as Exhibit
10.3 to the 1998 10-K and incorporated herein by
reference).
10.2.1 - Amended and Restated Master Hotel Agreement dated as of
July 27, 1998 among the Company, FelCor, BHR and the
lessors and lessees named therein (filed as Exhibit
10.17 to FelCor's Form 8-K dated August 10, 1998, and
incorporated herein by reference).
10.3 - Employment Agreement dated as of July 28, 1994 between
FelCor and Thomas J. Corcoran, Jr. (filed as Exhibit
10.8 to the 1994 10-K/A and incorporated herein by
reference).
10.4 - Restricted Stock and Stock Option Plan of FelCor (filed
as Exhibit 10.9 to the 1994 10-K/A and incorporated
herein by reference).
10.5 - Savings and Investment Plan of FelCor (filed as Exhibit
10.10 to the 1994 10-K/A and incorporated herein by
reference).
10.6 - 1995 Restricted Stock and Stock Option Plan of the
Company (filed as Exhibit 10.9.2 to the 1995 10-K and
incorporated herein by reference).
10.7 - Non-Qualified Deferred Compensation Plan, as amended and
restated July 1999 (filed as Exhibit 10.9 to FelCor's
Form 10-Q for the quarter ended September 30, 1999 (the
"September 1999 10-Q") and incorporated herein by
reference).
10.8 - 1998 Restricted Stock and Stock Option Plan (filed as
Exhibit 4.2 to FelCor's Registration Statement on Form
S-8 (File No. 333-66041) and incorporated herein by
reference).
-42-
45
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.9 - Second Amended and Restated 1995 Equity Incentive Plan
(filed as Exhibit 99.1 to FelCor's Post-Effective
Amendment on Form S-3 to Form S-4 Registration Statement
(File No. 333-50509) and incorporated herein by
reference).
10.10 - Amended and Restated Stock Option Plan for Non-Employee
Directors (filed as Exhibit 99.2 to FelCor's
Post-Effective Amendment on Form S-3 to Form S-4
Registration Statement (File No. 333-50509) and
incorporated herein by reference).
10.11 - Form of Severance Agreement for executive officers and
certain key employees of FelCor (filed as Exhibit 10.13
to the 1998 10-K and incorporated herein by reference).
10.12 - Agreement dated as of April 15, 1995 among FelCor, the
Company, FelCor, Inc., Thomas J. Corcoran, Jr. and
Hervey A. Feldman relating to purchase of securities
(filed as Exhibit 10.15 to the Registration Statement on
Form S-11 (File No. 33-91870) and incorporated herein by
reference).
10.13 - Voting and Cooperation Agreement dated as of March 23,
1998 among the Company, Bristol, Bass America Inc.,
Holiday Corporation and United/Harvey Holdings, L.P.
(filed as Exhibit 99.7 to FelCor's Registration
Statement on Form S-4 (File No. 333-50509) and
incorporated herein by reference).
10.14 - Spin-Off Agreement dated as of March 23, 1998 among
Bristol, Bristol Hotel Management Corporation and
Bristol Hotel and Resorts, Inc., as agreed to by FelCor
(filed as Exhibit 99.8 to FelCor's Registration
Statement on Form S-4 (File No. 333-50509) and
incorporated herein by reference).
10.15 - Stockholders' and Registration Rights Agreement dated as
of July 27, 1998 by and among FelCor, Bass America,
Inc., Holiday Corporation, Bass plc, United/Harvey
Investors I, L.P., United/Harvey Investors II, L.P.,
United/Harvey Investors III, L.P., United/Harvey
Investors IV, L.P., and United/Harvey Investors V, L.P.
(filed as Exhibit 10.18 to FelCor's Form 8-K dated
August 10, 1998, and incorporated herein by reference).
10.16 - Sixth Amended and Restated Credit Agreement dated as of
December 18, 2000, among the Registrant, the Partnership
and FelCor Canada Co., as Borrowers, the Lenders party
thereto, The Chase Manhattan Bank and The Chase
Manhattan Bank of Canada, as Administrative Agents,
Chase Securities, Inc., as Joint Lead Arranger, Joint
Book Manager and Syndication Agent, Bankers Trust
Company, as Joint Lead Arranger, Joint Book Manager and
Documentation Agent, Bank of America, N.A. and Wells
Fargo Bank, National Association, as Documentation
Agents (filed As Exhibit 10.17 to the 2000 10-K and
incorporated herein by reference).
10.17 - Loan Agreement dated as of October 10, 1997 among
Bristol Lodging Company, Bristol Lodging Holding
Company, Nomura Asset Capital Corporation as
administrative agent and collateral agent for Lenders
and Bankers Trust Company as co-agent for Lenders (filed
as Exhibit 10.10 to the Bristol Hotel Company Annual
report on Form 10-K for the year ended December 31, 1997
and incorporated herein by reference).
-43-
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EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.17.1 - First Amendment to Loan Agreement and Ancillary Loan
Documents made as of May 28, 1999, among FelCor Lodging
Company, L.L.C., FelCor Lodging Holding Company, L.L.C.
and LaSalle National Bank, as Trustee for Nomura Asset
Securities Corporation Commercial Pass-Through
Certificates Series 1998-D6, administrative agent and
collateral agent (filed as Exhibit 10.19.1 to the 1999
10-K and incorporated herein by reference).
10.18 - Deed of Trust, Security Agreement, Assignment of Leases
and Rents, Fixture Filing and Financing Statement, dated
March 1, 1999, by FelCor Hotel Company II, Ltd., as
Grantor, to Howard E. Schreiber, Trustee, in trust for
the benefit of Bankers Trust Company, as Beneficiary
(filed as Exhibit 10.21 to the March 1999 10-Q, and
incorporated herein by reference).
10.19.1 - Loan Agreement, dated April 1, 1999, among FelCor
Lodging Trust Incorporated and FelCor Lodging Limited
Partnership as Borrower, and The Lenders Party Thereto
and The Chase Manhattan Bank as Administrative Agent and
Collateral Agent (filed as Exhibit 10.22.1 to the March
1999 10-Q, and incorporated herein by reference).
10.19.2 - Guaranty, dated April 1, 1999, made by each of the named
Guarantors therein, who are signatories thereto (filed
as Exhibit 10.22.2 to the March 1999 10-Q, and
incorporated herein by reference).
10.19.3 - Pledge and Security Agreement, dated April 1, 1999, made
by each of the named Pledgors therein, who are
signatories thereto, in favor of The Chase Manhattan
Bank, as Collateral Agent (filed as Exhibit 10.22.3 to
the March 1999 10-Q, and incorporated herein by
reference).
10.19.4 - Second Amendment to Loan Agreement dated as of August
20, 1999, among FelCor and the Company, as Borrower, the
financial institutions party thereto, and The Chase
Manhattan Bank, as administrative agent (filed as
Exhibit 10.22.4 to the September 1999 10-Q and
incorporated herein by reference).
10.19.5 - Third Amendment to Loan Agreement dated as of December
1, 1999, among FelCor and the Registrant, as Borrower,
the financial institutions party thereto, and The Chase
Manhattan Bank, as Administrative Agent.
10.19.6 - Fourth Amendment to Loan Agreement dated as of August 7,
2000, among FelCor and the Company, as Borrower, the
financial institutions party thereto and The Chase
Manhattan Bank, as Administrative Agent (filed as
Exhibit 10.21.6 to the Company's Registration Statement
on Form S-4 (file no. 333-47506) and incorporated
herein by reference).
10.20 - Form of Mortgage, Security Agreement and Fixture Filing
by and between FelCor/CSS Holdings, L.P. as Mortgagor
and The Prudential Insurance Company of America as
Mortgagee (filed as Exhibit 10.23 to the March 1999
10-Q, and incorporated herein by reference).
10.20.1 - Promissory Note dated April 1, 1999, in the original
principal amount of $100,000,000 made by FelCor/CSS
Holdings, L.P., payable to the order of The Prudential
Insurance Company of America. (filed as Exhibit 10.23.1
to FelCor's Form 10-Q for the quarter ended June 30,
1999 (the "June 1999 10-Q") and incorporated herein by
reference).
10.20.2 - Form of Mortgage, Security Agreement and Fixture Filing
by and between FelCor/CSS Holdings, L. P., as Mortgagor,
and The Prudential Insurance Company of America, as
Mortgagee (incorporated by reference to Exhibit 10.23 to
FelCor's Form 10-Q for the quarter ended March 31,
1999).
10.20.3 - Mortgage Loan Agreement dated as of April 1, 1999, by
and between The Prudential Insurance Company of America,
as Lender, and FelCor/CSS Holdings, L.P., as Borrower
(filed as Exhibit 10.23.3 to the June 1999 10-Q and
incorporated herein by reference).
-44-
47
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.21.1 - Form of six separate Promissory Notes each dated May 12,
1999, made by FelCor/MM Holdings, L.P. payable to the
order of Massachusetts Mutual Life Insurance Company in
the respective original principal amounts of $12,500,000
(Embassy Suites-Dallas Market Center), $14,000,000
(Embassy Suites-Dallas Love Field), $12,450,000 (Embassy
Suites-Tempe), $11,550,000 (Embassy Suites-Anaheim),
$8,900,000 (Embassy Suites-Palm Desert), $15,600,000
(Embassy Suites-Deerfield Beach) (filed as Exhibit
10.24.1 to the June 1999 10-Q and incorporated herein by
reference).
10.21.2 - Form of Deed of Trust, Security Agreement and Fixture
Filing, each dated as of May 12, 1999, from FelCor/MM
Holdings, L.P., as Borrower, in favor of Fidelity
National Title Insurance Company, as Trustee, and
Massachusetts Mutual Life Insurance Company, as
Beneficiary, each covering a separate hotel and securing
one of the separate Promissory Notes described in
Exhibit 10.24.1, also executed by FelCor/CSS Holdings,
L.P. with respect to the Embassy Suites-Anaheim and
Embassy Suites-Deerfield Beach, and by FelCor Lodging
Limited Partnership with respect to the Embassy
Suites-Palm Desert (filed as Exhibit 10.24.2 to the June
1999 10-Q and incorporated herein by reference).
* 21 - List of Subsidiaries of the Registrant.
- ----------
* Filed herewith.
-45-
48
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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.
FELCOR LODGING LIMITED PARTNERSHIP
a Delaware Limited Partnership
By: FelCor Lodging Trust Incorporated
Its General Partner
By: /s/ Lawrence D. Robinson
-----------------------------------
Lawrence D. Robinson
Executive Vice President
Date: March 29, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
DATE SIGNATURE
---- ---------
March 29, 2001 /s/ Donald J. McNamara
--------------------------------------------------------------
Donald J. McNamara
Chairman of the Board and Director
March 29, 2001 /s/ Thomas J. Corcoran, Jr.
--------------------------------------------------------------
Thomas J. Corcoran, Jr.
President and Director (Chief Executive Officer)
March 29, 2001 /s/ Lester C. Johnson
--------------------------------------------------------------
Lester C. Johnson
Senior Vice President and Controller
(Principal Financial Officer and Principal Accounting Officer)
March , 2001
--------------------------------------------------------------
Melinda J. Bush, Director
March 27, 2001 /s/ Richard S. Ellwood
--------------------------------------------------------------
Richard S. Ellwood, Director
March 27, 2001 /s/ Richard O. Jacobson
--------------------------------------------------------------
Richard O. Jacobson, Director
March 27, 2001 /s/ Charles A. Ledsinger, Jr.
--------------------------------------------------------------
Charles A. Ledsinger, Jr., Director
March 27, 2001 /s/ Robert H. Lutz, Jr.
--------------------------------------------------------------
Robert H. Lutz, Jr., Director
March 26, 2001 /s/ Charles N. Mathewson
--------------------------------------------------------------
Charles N. Mathewson, Director
March , 2001
--------------------------------------------------------------
Thomas A. McChristy, Director
March , 2001
--------------------------------------------------------------
Richard C. North, Director
March 29, 2001 /s/Michael D. Rose
--------------------------------------------------------------
Michael D. Rose, Director
-48-
49
FELCOR LODGING LIMITED PARTNERSHIP
INDEX TO FINANCIAL STATEMENTS
PART I - FINANCIAL INFORMATION
FELCOR LODGING LIMITED PARTNERSHIP
Report of Independent Accountants.....................................................................F-2
Consolidated Balance Sheets - December 31, 2000 and 1999..............................................F-3
Consolidated Statements of Operations for the years ended December 31, 2000, 1999 and 1998............F-4
Consolidated Statements of Partners' Capital for the years ended December 31, 2000, 1999 and 1998.... F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2000, 1999 and 1998............F-6
Notes to Consolidated Financial Statements............................................................F-7
Report of Independent Accountants on Financial Statement Schedule....................................F-31
Schedule III - Real Estate and Accumulated Depreciation as of December 31, 2000......................F-32
F-1
50
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
of FelCor Lodging Trust Incorporated:
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, partners' capital and cash flows present
fairly, in all material respects, the financial position of FelCor Lodging
Limited Partnership at December 31, 2000 and 1999, and the consolidated results
of its operations and its cash flows for each of the three years in the period
ended December 31, 2000, in conformity with accounting principles generally
accepted in the United States of America. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States of America, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Dallas, Texas
February 5, 2001,
except for footnotes 1 and 20,
as to which the date is March 28, 2001
F-2
51
FELCOR LODGING LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
(IN THOUSANDS)
ASSETS
2000 1999
---------- ----------
Investment in hotels, net of accumulated depreciation of
$473,101 in 2000 and $330,555 in 1999 .................................. $3,750,275 $4,035,344
Investment in unconsolidated entities ................................... 128,593 136,718
Assets held for sale .................................................... 129,294
Cash and cash equivalents ............................................... 26,060 36,123
Due from Lessees ........................................................ 28,058 18,394
Note receivable from unconsolidated entity .............................. 7,695 7,760
Deferred expenses, net of accumulated amortization of
$7,146 in 2000 and $4,491 in 1999 ...................................... 23,944 15,473
Other assets ............................................................ 9,684 5,939
---------- ----------
Total assets ........................................................... $4,103,603 $4,255,751
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Debt, net of discount of $6,443 in 2000 and $1,401 in 1999 .............. $1,838,241 $1,833,954
Distributions payable ................................................... 33,957 39,657
Accrued expenses and other liabilities .................................. 94,232 65,480
Minority interest in other partnerships ................................. 50,774 51,671
---------- ----------
Total liabilities ....................................................... 2,017,204 1,990,762
---------- ----------
Commitments and contingencies
Redeemable units at redemption value .................................... 205,800 52,338
Preferred units:
Series A Cumulative Preferred Units, 5,981 and 6,050 units issued and
outstanding at December 31, 2000 and 1999, respectively .............. 149,515 151,250
Series B Redeemable Preferred Units, 58 units issued and outstanding ... 143,750 143,750
Partners' Capital ....................................................... 1,587,334 1,917,651
---------- ----------
Total liabilities and partners' capital ................................ $4,103,603 $4,255,751
========== ==========
The accompanying notes are an integral part of these consolidated
financial statements.
F-3
52
FELCOR LODGING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
2000 1999 1998
--------- --------- ---------
Revenues:
Percentage lease revenue ........................................ $ 536,907 $ 490,893 $ 328,035
Equity in income from unconsolidated entities ................... 14,820 8,484 7,017
Other revenue ................................................... 4,965 4,624 4,565
--------- --------- ---------
Total revenues ................................................. 556,692 504,001 339,617
--------- --------- ---------
Expenses:
General and administrative ...................................... 12,256 9,122 5,254
Depreciation .................................................... 160,745 152,948 90,835
Taxes, insurance and other ...................................... 70,648 59,572 37,158
Land leases ..................................................... 21,985 17,558 8,130
Interest expense ................................................ 158,620 125,435 73,182
Reserve for hotels held for sale ................................ 63,000
Minority interest in other partnerships ......................... 3,570 2,713 1,121
--------- --------- ---------
Total expenses ................................................. 490,824 367,348 215,680
--------- --------- ---------
Income before nonrecurring items ................................ 65,868 136,653 123,937
Gain on sale of assets .......................................... 4,388 236 477
Extraordinary charge from write off of deferred financing fees .. 3,865 1,113 3,075
--------- --------- ---------
Net income ...................................................... 66,391 135,776 121,339
Preferred distributions ......................................... 24,682 24,735 21,423
--------- --------- ---------
Net income applicable to unitholders ............................ $ 41,709 $ 111,041 $ 99,916
========= ========= =========
Per unit data:
Basic:
Income applicable to unitholders
before extraordinary charge ................................ $ 0.73 $ 1.59 $ 1.95
Extraordinary charge ......................................... (0.06) (0.01) (0.06)
--------- --------- ---------
Net income applicable to unitholders ......................... $ 0.67 $ 1.58 $ 1.89
========= ========= =========
Weighted average units outstanding ........................... 62,301 70,372 52,978
Diluted:
Income applicable to unitholders
before extraordinary charge ................................ $ 0.73 $ 1.59 $ 1.93
Extraordinary charge ......................................... (0.06) (0.02) (0.06)
--------- --------- ---------
Net income applicable to unitholders ......................... $ 0.67 $ 1.57 $ 1.87
========= ========= =========
Weighted average units outstanding ........................... 62,556 70,561 53,323
The accompanying notes are an integral part of these consolidated
financial statements.
F-4
53
FELCOR LODGING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
(IN THOUSANDS)
Balance, December 31, 1997 .............. $ 897,766
Contributions ........................... 1,147,739
Distributions ........................... (166,580)
Allocations from redeemable units ....... 42,111
Net income .............................. 121,339
-----------
Balance, December 31, 1998 .............. 2,042,375
Contributions ........................... 583
Redemption of units ..................... (98,387)
Distributions ........................... (179,185)
Allocations from redeemable units ....... 16,489
Net income .............................. 135,776
-----------
Balance, December 31, 1999 .............. 1,917,651
Exchange of Bass shares for units ....... (3,410)
Contributions ........................... 190,416
Redemption of units ..................... (88,542)
Distributions ........................... (158,104)
Allocations to redeemable units ......... (51,598)
Net income .............................. 66,391
-----------
Balance, December 31, 2000 .............. $ 1,587,334
===========
The accompanying notes are an integral part of these consolidated
financial statements.
F-5
54
FELCOR LODGING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
(IN THOUSANDS)
2000 1999 1998
----------- ----------- -----------
Cash flows from operating activities:
Net income .......................................................... $ 66,391 $ 135,776 $ 121,339
Adjustments to reconcile net income to net cash provided
by operating activities:
Gain on sale of assets ............................................ (4,388) (236) (477)
Depreciation ...................................................... 160,745 152,948 90,835
Reserve for hotels held for sale .................................. 63,000
Amortization of deferred financing fees ........................... 3,936 1,816 1,985
Amortization of unearned officers' and directors' compensation .... 1,478 652 830
Equity in income from unconsolidated entities ..................... (14,820) (8,484) (7,017)
Extraordinary charge for write off of deferred financing fees ..... 3,865 1,113 3,075
Minority interest in other partnerships ........................... 3,570 2,713 1,121
Changes in assets and liabilities, net of effects of acquisitions:
Due from Lessees .................................................. (9,664) 574 (3,035)
Deferred financing fees ........................................... (16,964) (9,313) (4,348)
Other assets ...................................................... (5,339) (282) (602)
Accrued expenses and other liabilities ............................ 25,494 5,088 (11,123)
----------- ----------- -----------
Net cash flow provided by operating activities ............... 277,304 282,365 192,583
----------- ----------- -----------
Cash flows used in investing activities:
Acquisition of hotels ............................................. (10,802) (326,276)
Acquisition of unconsolidated entities ............................ (7,452) (4,230)
Improvements and additions to hotels .............................. (95,235) (222,320) (119,107)
Note receivable from unconsolidated entity ........................ (7,766)
Bristol interim credit facility ................................... (120,000)
Sale of assets .................................................... 35,111 15,476 7,815
Cash distributions from unconsolidated entities ................... 25,358 19,581 19,066
----------- ----------- -----------
Net cash flow used in investing activities ................... (34,766) (205,517) (550,498)
----------- ----------- -----------
Cash flows provided by (used in) financing activities:
Proceeds from borrowings .......................................... 997,424 1,034,667 1,013,003
Repayment of borrowings ........................................... (992,635) (804,915) (658,524)
Proceeds from sale of preferred units ............................. 139,063
Redemption of units ............................................... (88,542) (98,387)
Contributions ..................................................... 8 3,884
Distributions paid to minority interest unitholders ............... (5,229)
Distributions paid to unitholders ................................. (138,928) (180,803) (105,425)
Dividends paid to preferred unitholders ........................... (24,691) (25,987) (16,937)
----------- ----------- -----------
Net cash flow provided by (used in) financing activities ..... (252,601) (75,417) 375,064
----------- ----------- -----------
Net change in cash and cash equivalents .............................. (10,063) 1,431 17,149
Cash and cash equivalents at beginning of years ...................... 36,123 34,692 17,543
----------- ----------- -----------
Cash and cash equivalents at end of years ............................ $ 26,060 $ 36,123 $ 34,692
=========== =========== ===========
Supplemental cash flow information - interest paid ................... $ 143,594 $ 125,085 $ 72,215
----------- ----------- -----------
The accompanying notes are an integral part of these consolidated
financial statements.
F-6
55
FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION
FelCor Lodging Limited Partnership and its subsidiaries (the
"Company") at December 31, 2000, owned interests in 186 hotels with nearly
50,000 rooms and suites (collectively the "Hotels"). The sole general partner of
the Company is FelCor Lodging Trust Incorporated ("FelCor") which is the
nation's second largest hotel real estate investment trust ("REIT"). At December
31, 2000, FelCor owned greater than 86% equity interest in the Company. At
December 31, 2000, the Company owned 100% of the interest in 161 of the Hotels,
a 90% or greater interest in entities owning seven hotels, a 60% interest in an
entity owning two hotels and 50% interests in separate entities that own 16
hotels.
The following table provides a schedule of the Hotels, by brand,
operated by each of the Company's lessees at December 31, 2000:
NOT OPERATED
BRAND DJONT BRISTOL UNDER A LEASE TOTAL
----- ----- ------- ------------- -----
Hilton(R) Brands:
Embassy Suites(R) 59 59
Doubletree(R) and Doubletree Guest Suites(R) 14 14
Hampton Inn(R) 9 9
Hilton Suites(R) 1 1
Homewood Suites(R) 1 1
Bass Brands:
Holiday Inn(R) 43 1 44
Crowne Plaza(R) and Crowne Plaza Suites(R) 18 18
Holiday Inn Select(R) 10 10
Holiday Inn Express(R) 5 5
Starwood Brands:
Sheraton(R) and Sheraton Suites(R) 10 10
Westin(R) 1 1
Other Brands 13 1 14
--- --- -- ----
Total Hotels 85 99 2 186
=== === == ====
The Hotels are located in the United States (35 states) and Canada,
with a concentration in Texas (41 hotels), California (19 hotels), Florida (18
hotels) and Georgia (15 hotels). The following table provides information
regarding the net acquisition and disposition of hotels through December 31,
2000:
NET HOTELS
ACQUIRED/(DISPOSED OF)
----------------------
1994 7
1995 13
1996 23
1997 30
1998 120
1999 (5)
2000 (2)
-----
186
=====
On January 1, 2001, the provisions of the REIT Modernization Act
became effective. These provisions reduce the percentage of taxable income
required to be distributed by a REIT from 95% to 90% for taxable years after
2000 and subject to certain limitations, permit a REIT to own taxable
subsidiaries that engage in businesses previously prohibited to a REIT,
including, among other things, leasing hotels from a hotel REIT, provided that
the hotels continue to be managed by unrelated third parties.
F-7
56
FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1. ORGANIZATION -- (CONTINUED)
At December 31, 2000, the Company leased 85 hotels to DJONT
Operations, L.L.C., a Delaware limited liability company, or a consolidated
subsidiary thereof (collectively "DJONT") and leased 99 hotels to Bristol Hotels
& Resorts and its consolidated subsidiaries ("Bristol" and, together with DJONT,
the"Lessees"). Bristol became a subsidiary of Bass plc ("Bass") by virtue of a
merger between Bristol and a subsidiary of Bass on March 31, 2000. Two of the
Hotels were operated without a lease.
At December 31, 2000, DJONT was a private company controlled by
Thomas J. Corcoran, Jr., the President, Chief Executive Officer and a Director
of FelCor. Subject to the receipt of certain lender consents, effective January
1, 2001, the Company acquired and contributed to a newly formed taxable REIT
subsidiary, all of the equity interests in DJONT. In consideration for the
acquisition of DJONT, the Company issued an aggregate of 416,667 units valued at
approximately $10 million, which, together with DJONT's accumulated
shareholders' deficit of $24.5 million, will be expensed in the first quarter of
2001 as a lease termination cost.
Effective January 1, 2001, the Company completed the acquisition of
the 12 of the Bristol leases which were held by Bass. In consideration for the
acquisition of such leases, FelCor issued to Bass 413,585 shares of FelCor
common stock valued at approximately $10 million and the Company issued the
corresponding number of units. Of the 12 hotels, (i) the Company has entered
into an agreement with Interstate Hotels Corporation ("IHC") to manage eight of
the hotels, (ii) two hotels are being managed by a subsidiary of Bass under
short term management contracts, (iii) one hotel is being managed by a
subsidiary of Hilton Hotels Corporation ("Hilton") and (iv) one hotel was sold.
In March 2001, the Company entered into an agreement with Bass to acquire the
remaining 88 leases effective July 1, 2001. In consideration for the acquisition
of such leases, the Company will enter into long term management agreements with
Bass with regard to these hotels and FelCor will issue to Bass 100 shares of
FelCor common stock. A portion of the management fees with respect to the 88
hotels managed by Bass under long term management agreements will be considered
to be lease termination costs and the Company will record a lease termination
expense of approximately $125 million in the third quarter of 2001. At that
time, the Company will record a corresponding liability of approximately $125
million that will be amortized over the term of the applicable management
agreements.
At January 1, 2001, (i) subsidiaries of Bass managed 91 of the
Hotels, (ii) subsidiaries of Hilton managed 72 of the Hotels, (iii) subsidiaries
of Starwood Hotels & Resorts Worldwide, Inc. ("Starwood") managed 11 of the
Hotels, (iv) subsidiaries of IHC managed eight of the Hotels and (v) three
independent management companies managed the four remaining Hotels.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation -- The consolidated financial statements
include the accounts of the Company and its consolidated subsidiaries. All
significant intercompany balances and transactions have been eliminated.
Use of Estimates -- The preparation of the financial statements in
conformity with generally accepted accounting principles 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.
Investment in Hotels -- Hotels are stated at cost and are
depreciated using the straight-line method over estimated useful lives ranging
from 31 to 40 years for buildings and improvements and three to seven years for
furniture, fixtures, and equipment.
F-8
57
FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
The Company periodically reviews the carrying value of each Hotel to
determine if circumstances exist indicating an impairment in the carrying value
of the investment in the hotel or that depreciation periods should be modified.
If facts or circumstances support the possibility of impairment, the Company
will prepare a projection of the undiscounted future cash flows, without
interest charges, of the specific hotel and determine if the investment in such
hotel is recoverable based on the undiscounted future cash flows. If impairment
is indicated, an adjustment will be made to the carrying value of the hotel
based on discounted future cash flows. The Company does not believe that there
are any factors or circumstances indicating impairment of any of its investment
in the Hotels except as reflected in reserve established for the assets held for
sale.
Maintenance and repairs are the responsibility of the Lessees; major
renewals and betterments by the Company are capitalized. Upon the sale or
disposition of a fixed asset, the asset and related accumulated depreciation are
removed from the accounts and the related gain or loss is included in
operations.
Investment in Unconsolidated Entities --The Company owns a 50%
interest in various partnerships or limited liability companies in which the
partners jointly make all material decisions concerning the business affairs and
operations. The Company also owns a 97% nonvoting interest in an entity.
Accordingly, the Company does not control these entities and carries its
investment in unconsolidated entities at cost, plus its equity in net earnings,
less distributions received since the date of acquisition. Equity in net
earnings is adjusted for the straight-line amortization, over a 40-year period,
of the difference between the Company's cost and its proportionate share of the
underlying net assets at the date of acquisition.
Cash and Cash Equivalents -- All highly liquid investments with a
maturity of three months or less when purchased are considered to be cash
equivalents.
Deferred Expenses -- Deferred expenses, consisting primarily of loan
costs, are recorded at cost. Amortization is computed using the interest method
over the maturity of the related debt.
Revenue Recognition -- Percentage lease revenue is reported as
income when earned.
Capitalized Interest -- The Company capitalizes interest and certain
other costs relating to hotels undergoing major renovations and redevelopments.
Such costs capitalized in 2000, 1999 and 1998 were approximately $2.0 million,
$7.4 million and $5.9 million, respectively.
Net Income Per Unit -- Basic earnings per unit have been computed by
dividing net income available to unitholders by the weighted average number of
units outstanding. Diluted earnings per unit have been computed by dividing net
income available to unitholders by the weighted average number of units and
equivalents outstanding. Unit equivalents represent units issuable upon exercise
of stock options and unvested officers' restricted FelCor stock grants.
At December 31, 2000, 1999, and 1998, the Company's Series A
Cumulative preferred units, if converted to units, would be antidilutive;
accordingly the Series A Cumulative preferred units are not assumed to be
converted in the computation of diluted earnings per unit.
Distributions -- The Company pays regular quarterly distributions on
its units. Additionally, the Company pays regular quarterly distributions on
preferred units in accordance with its preferred units distributions
requirements.
F-9
58
FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
For 2000, the Company paid distributions of $2.20 per unit, $1.95
per unit of $1.95 Series A Cumulative Preferred Units ("Series A preferred
units"), and $2.25 per depositary share evidencing its 9% Series B Redeemable
Preferred Units ("Series B preferred units").
Income Taxes -- No provision for federal income taxes has been
reflected in the financial statements because all taxable income or loss, or tax
credits are passed through to the partners.
3. INVESTMENT IN HOTELS
Investment in hotels at December 31, 2000 and 1999, consists of the
following (in thousands):
2000 1999
----------- -----------
Land ............................... $ 321,994 $ 346,862
Building and improvements .......... 3,477,006 3,616,269
Furniture, fixtures and equipment .. 409,011 383,931
Construction in progress ........... 15,365 18,837
----------- -----------
4,223,376 4,365,899
Accumulated depreciation ........... (473,101) (330,555)
----------- -----------
$ 3,750,275 $ 4,035,344
=========== ===========
4. INVESTMENT IN UNCONSOLIDATED ENTITIES
At December 31, 2000, the Company owned 50% interests in separate
entities owning 16 hotels, a parcel of undeveloped land, and a condominium
management company. The Company also owned a 97% nonvoting interest in an entity
that owns an annex to a hotel owned by the Company and holds a 50% interest in
an entity that has developed condominiums for sale. The Company accounts for its
investments in these unconsolidated entities under the equity method.
Summarized unaudited combined financial information for 100% of
these unconsolidated entities is as follows (in thousands):
DECEMBER 31,
-------------------------
2000 1999
----------- -----------
Balance sheet information:
Investment in hotels ........ $ 294,941 $ 337,444
Non-recourse mortgage debt .. $ 225,302 $ 254,668
Equity ...................... $ 82,986 $ 101,120
YEARS ENDED DECEMBER 31,
--------------------------------
2000 1999 1998
-------- -------- --------
Statements of operations information:
Total revenues ................................. $ 80,761 $ 69,146 $ 57,006
Net income ..................................... $ 30,729 $ 21,726 $ 17,438
Net income attributable to the Company ......... $ 16,962 $ 10,626 $ 8,719
Amortization of cost in excess of book value ... (2,142) (2,142) (1,702)
-------- -------- --------
Equity in income from unconsolidated entities .. $ 14,820 $ 8,484 $ 7,017
======== ======== ========
F-10
59
FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. ASSETS HELD FOR SALE
In the second quarter of 2000, the Company identified 25 hotels that
it considered non-strategic and announced its intention to sell such hotels by
June 30, 2001. In connection with the decision to sell these hotels, the Company
recorded a reserve of $63 million representing the difference between the net
book value of these hotels and the estimated net proceeds. No depreciation
expense has been recorded on these hotels since June 30, 2000. Percentage rent
income related to the assets held for sale, less costs associated with those
assets, were included in the Company's results of operations for the year ended
December 31, 2000, and represented net income of approximately $16 million.
During 2000, one of these hotels was sold and the Company recognized a gain of
approximately $135,000. At December 31, 2000, assets held for sale, which
represent the 24 remaining hotels, are reported net of the $63 million reserve.
6. DEBT
Debt at December 31, 2000 and 1999, consists of the following (in
thousands):
DECEMBER 31,
-----------------------------
COLLATERAL INTEREST RATE MATURITY DATE 2000 1999
---------- ------------- ------------- ---------- ----------
FLOATING RATE DEBT:
Line of credit None LIBOR + 200bp August 2003 $ 112,000 $ 351,000
Senior term loan (a) LIBOR + 250bp March 2004 250,000
Mortgage debt 3 hotels LIBOR + 200bp February 2003 61,909 62,553
Other None LIBOR + 200bp Various 650 32,282
---------- ----------
Total floating rate debt 174,559 695,835
---------- ----------
FIXED RATE DEBT:
Line of credit - swapped None 7.66% August 2003 250,000 313,000
Publicly-traded term notes None 7.38% October 2004 174,505 174,377
Publicly-traded term notes None 7.63% October 2007 124,320 124,221
Publicly-traded term notes None 9.50% October 2008 394,731
Mortgage debt 15 hotels 7.24% November 2007 140,148 142,542
Senior term loan - swapped (a) 8.30% March 2004 125,000
Mortgage debt 7 hotels 7.54% April 2009 97,604 99,075
Mortgage debt 6 hotels 7.55% June 2009 73,389 74,483
Mortgage debt 7 hotels 8.73% May 2010 144,032
Mortgage debt 8 hotels 8.70% May 2010 184,829
Other 13 hotels 6.96% - 7.23% 2000-2005 80,124 85,421
---------- ----------
Total fixed rate debt 1,663,682 1,138,119
---------- ----------
Total debt $1,838,241 $1,833,954
========== ==========
(a) Collateralized by stock and partnership interests in certain
subsidiaries of FelCor. The senior term loan was retired early
from the proceeds of publicly traded term notes issued in 2000.
One month LIBOR at December 31, 2000 was 6.565%.
The Company's $600 million line of credit (the "Line of Credit")
contains various affirmative and negative covenants including limitations on
total indebtedness, total secured indebtedness, and cash distributions, as well
as the obligation to maintain certain minimum tangible net worth and certain
minimum interest and debt service coverage ratios. At December 31, 2000, the
Company was in compliance with all such covenants.
The Company's other borrowings contain affirmative and negative
covenants that are generally equal to or less restrictive than the Line of
Credit. Most of the mortgage debt is non-recourse to the Company (with certain
exceptions) and contains provisions allowing for the substitution of collateral
upon satisfaction of
F-11
60
FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. DEBT -- (CONTINUED)
certain conditions. Most of the mortgage debt is prepayable, subject, however,
to various prepayment penalties, yield maintenance, or defeasance obligations.
On April 26, 2000, the Company completed a 10-year, $145 million
First Mortgage Term Loan, which is collateralized by seven Sheraton hotels and
carries an 8.73% fixed interest rate. On May 2, 2000, the Company closed $186
million of 10-year, First Mortgage Term Loans which are collateralized by eight
Embassy Suites hotels and carry an 8.70% fixed interest rate. These loans are
non-recourse, mature in May 2010, and amortize over 25 years. The proceeds of
these loans were used to reduce borrowings under the Company's Line of Credit.
On August 1, 2000, the Company renewed its Line of Credit. The Line
of Credit was reduced from $850 million to $600 million and the maturity was
extended from July 2001 to August 2003. The effective interest rate on the
renewed Line of Credit ranges from 87.5 basis points to 250 basis points above
LIBOR depending on the Company's leverage and corporate rating. An extraordinary
charge of approximately $578,000 was recorded to write-off a portion of the
deferred financing costs associated with the Line of Credit.
On September 15, 2000, the Company completed the private placement
of $400 million of senior unsecured notes which mature in September, 2008 and
bear an interest rate of 9 1/2%. The notes were issued at a discount to yield 9
3/4%. The proceeds were used to retire the $375 million floating rate senior
term loan, which matured in 2004, and to pay down the Line of Credit. An
extraordinary charge of approximately $3.3 million was recorded to write-off
unamortized deferred financing costs associated with the $375 million loan.
During the fourth quarter of 2000, the Company exchanged the $400 million in
aggregate principal amount of the private placement senior notes for notes with
identical terms which were registered under the Securities Act of 1933.
Future scheduled principal payments on debt obligations at December
31, 2000 are as follows (in thousands):
YEAR
----
2001.................................. $ 23,802
2002.................................. 13,825
2003.................................. 457,319
2004.................................. 189,228
2005.................................. 43,129
2006 and thereafter................... 1,117,381
-----------
1,844,684
Discount accretion over term.......... (6,443)
-----------
$ 1,838,241
===========
To manage the relative mix of its debt between fixed and variable
rate instruments, the Company has entered into interest rate swap agreements
with four financial institutions. These interest rate swap agreements modify a
portion of the interest characteristics of the Company's outstanding debt under
its Line of Credit without an exchange of the underlying principal amount and
effectively convert variable rate debt to a fixed rate. The fixed rates to be
paid and the variable rate to be received by the Company at December 31, 2000,
are summarized in the following table:
F-12
61
FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. DEBT -- (CONTINUED)
SWAP RATE
RECEIVED
SWAP RATE (VARIABLE) AT SWAP
NOTIONAL AMOUNT PAID (FIXED) 12/31/00 MATURITY
- ---------------- ------------ -------------- ------------
$ 25 million 5.5575% 6.8213% July 2001(a)
25 million 5.5480% 6.8213% July 2001(a)
75 million 5.5550% 6.8213% July 2001(a)
100 million 5.7955% 6.8213% July 2003
25 million 5.8260% 6.8213% July 2003
- -------------
$ 250 million
=============
(a) The variable rate payer has the option to terminate this swap in
July 2001; if not so terminated, it matures July 2003.
The differences to be paid or received by the Company under the
terms of the interest rate swap agreements are accrued as interest rates change
and recognized as an adjustment to interest expense by the Company, pursuant to
the terms of its interest rate agreement, and will have a corresponding effect
on its future cash flows. During 2000, the Company received a net $1.8 million
under the interest rate swaps and paid a net $1.7 million and $383,000 during
1999 and 1998, respectively. Agreements such as these contain a credit risk in
that the counterparties may be unable to meet the terms of the agreement. The
Company minimizes that risk by evaluating the creditworthiness of its
counterparties, who are limited to major banks and financial institutions, and
does not anticipate nonperformance by the counterparties.
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107 requires
disclosures about the fair value for all financial instruments, whether or not
recognized, for financial statement purposes. Disclosures about fair value of
financial instruments are based on pertinent information available to management
as of December 31, 2000. Considerable judgement is necessary to interpret market
data and develop estimated fair value. Accordingly, the estimates presented
herein are not necessarily indicative of the amounts that could be realized on
disposition of the financial instruments. The use of different market
assumptions and/or estimation methodologies may have a material effect on the
estimated fair value amounts.
Management estimates the fair value of (i) accounts receivable,
accounts payable and accrued expenses approximate carrying value due to the
relatively short maturity of these instruments; (ii) the note receivable
approximates carrying value based upon effective borrowing rates for issuance of
debt with similar terms and remaining maturities; (iii) the borrowings under the
Line of Credit and various other mortgage notes approximate carrying value
because these borrowings accrue interest at floating interest rates based on
market. The estimated fair value of the Company's fixed rate debt of $1.4
billion is $1.2 billion at December 31, 2000, based on current market interest
rates estimated by the Company for similar debt with similar maturities.
The Company manages its debt portfolio by using interest rate swaps
to achieve an overall desired position of fixed and floating rates. The fair
value of interest rate hedge contracts is estimated based on quotes from the
market makers of these instruments and represents the estimated amounts the
Company would expect to receive or pay to terminate the contracts. Credit and
market risk exposures are limited to the net interest differentials. The
estimated unrealized net gain on these instruments was approximately $248,000 at
December 31, 2000, which represents the amount the Company would receive to
terminate the agreements based on current market rates.
F-13
62
FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. REDEEMABLE OPERATING PARTNERSHIP UNITS AND PREFERRED UNITS
FelCor is the sole general partner of the Company and is obligated
to contribute the net proceeds from any issuance of its equity securities to the
Company in exchange for units corresponding in number and terms to the equity
securities issued by it. Units may also be issued by the Company to third
parties in exchange for cash or property, and units so issued to third parties
are redeemable at the option of the holders thereof for a like number of shares
of FelCor common stock or, at the option of FelCor, for the cash equivalent
thereof. Due to these redemption rights, these limited partnership units have
been excluded from partners' capital and are included in redeemable units and
measured at redemption value as of the end of the periods presented. At December
31, 2000 and 1999 there were 8,597,379 and 2,990,762 redeemable units
outstanding. The value of the redeemable units are based on the closing market
price of FelCor's common stock at the balance sheet date, which at December 31,
2000 and 1999 was $23.9375 and $17.50, respectively.
In connection with the efforts of Bass to acquire Bristol, a Bass
subsidiary contributed approximately 4.7 million and 1 million outstanding
FelCor common shares held by it to the Company in exchange for a like number of
units on February 28 and November 1, 2000, respectively. This exchange reduced
FelCor's percentage ownership in the Company from approximately 95% to
approximately 86%.
As of December 31, 2000, FelCor had approximately $946 million of
common stock, preferred stock, debt securities, and/or common stock warrants
available for offerings under shelf registration statements previously declared
effective.
Preferred Units
FelCor's Board of Directors is authorized to provide for the
issuance of up to 20,000,000 shares of preferred stock in one or more series, to
establish the number of shares in each series, to fix the designation, powers
preferences and rights of each such series, and the qualifications, limitations
or restrictions thereof.
In 1996, FelCor issued 6.1 million shares of its Series A preferred
stock at $25 per share. The Series A preferred stock bears an annual dividend
equal to the greater of $1.95 per share or the cash distributions declared or
paid for the corresponding period on the number of shares of common stock into
which the Series A preferred stock is then convertible. Each share of the Series
A preferred stock is convertible at the shareholder's option to 0.7752 shares of
common stock, subject to certain adjustments, and may not be redeemed by the
Company before April 30, 2001. The proceeds from the Series A preferred stock
were contributed to the Company in exchange for Series A preferred units. The
preference on these units are the same as FelCor's Series A preferred stock.
During 2000, holders of 69,400 shares of Series A preferred stock converted
their shares to 53,798 common shares which were issued from treasury shares and
an equivalent number of units were issued.
On May 1, 1998, FelCor issued 5.75 million depositary shares,
representing 57,500 shares of its Series B preferred stock, at $25 per
depositary share. The Series B preferred stock and the corresponding depositary
shares may be called by FelCor at par on or after May 7, 2003, have no stated
maturity, sinking fund or mandatory redemption, and are not convertible into any
other securities of FelCor. The Series B preferred stock has a liquidation
preference of $2,500 per share (equivalent to $25 per depositary share) and is
entitled to annual dividends at the rate of 9% of the liquidation preference
(equivalent to $2.25 annually per depositary share). The proceeds from the
Series B preferred stock were contributed to the Company in exchange for Series
B preferred units. The preference on these units are the same as FelCor's Series
preferred stock.
At December 31, 2000, all distributions then payable on the Series A
and Series B preferred units had been paid.
F-14
63
FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. REDEEMABLE OPERATING PARTNERSHIP UNITS AND PREFERRED UNITS -- (CONTINUED)
Treasury Stock Repurchase Program
On September 3, 1999, FelCor announced that its Board of Directors
(the "Board") had authorized FelCor to repurchase up to $100 million of its
outstanding common shares. On January 4, 2000, the Board approved a $200 million
increase in its stock repurchase program. At December 31, 2000, FelCor had
completed the repurchase of approximately 10.3 million shares of FelCor common
stock at a cost of approximately $185.1 million (of the $300 million
authorized). This has been recorded as a reduction to Partners' Capital as a
result of the redemption of units held by FelCor to fund the repurchase.
9. TAXES, INSURANCE AND OTHER
Taxes, insurance and other is comprised of the following for the
years ended December 31, 2000, 1999, and 1998 (in thousands):
2000 1999 1998
------- ------- -------
Real estate and personal property taxes ........ $63,207 $52,118 $32,892
Property insurance ............................. 4,065 3,481 2,341
State franchise taxes and Canadian income tax .. 3,376 3,973 1,609
Other .......................................... 316
------- ------- -------
Total taxes, insurance, and other .. $70,648 $59,572 $37,158
======= ======= =======
10. LAND LEASES
The Company leases land occupied by certain hotels from third
parties under various operating leases. Certain leases contain contingent rent
features based on gross revenue at the respective hotels. Future minimum lease
payments under the Company's land lease obligations at December 31, 2000, are as
follows (in thousands):
YEAR
----
2001 $ 4,863
2002 4,756
2003 4,706
2004 4,773
2005 4,573
2006 and thereafter 135,978
--------
$159,649
========
11. GAIN ON SALE OF ASSETS
On December 11, 2000, the Company completed the sale of its Four
Points by Sheraton(R) hotel - Leominster, Massachusetts (one of the 25 hotels
designated as held for sale), for a gross price of $10.5 million which resulted
in a gain of approximately $135,000.
On September 27, 2000, the Company completed the sale of its Embassy
Suites hotel, Los Angeles International Airport - North, California for a gross
price of approximately $23.3 million. The Company recorded a gain of
approximately $2.5 million.
F-15
64
FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
11. GAIN ON SALE OF ASSETS -- (CONTINUED)
During the third quarter of 2000, the Company sold two acres of
vacant excess land adjacent to its Embassy Suites hotel - Fort Lauderdale,
Florida and a billboard in Dallas, Texas, for an aggregate of $1.3 million and
recorded a gain of approximately $0.9 million.
On June 30, 2000, the Company sold 31 acres of vacant excess land
adjacent to its Whispering Woods Hotel in Olive Branch, Mississippi, for
approximately $1 million and recorded a gain of $0.9 million.
12. COMMITMENTS AND RELATED PARTY TRANSACTIONS
Through December 31, 2000, the Company's general partner, FelCor,
shared its executive offices and certain employees with FelCor, Inc., and DJONT,
and each company paid its share of the costs thereof, including an allocated
portion of the rent, compensation of certain personnel (other than Mr. Corcoran,
whose compensation is borne solely by FelCor), office supplies, telephones, and
depreciation of office furniture, fixtures, and equipment. The Company
reimburses FelCor for its share of such allocated costs. Any such allocation of
shared expenses to FelCor is required to be approved by a majority of FelCor's
Independent Directors. During 2000, 1999, and 1998, the Company and FelCor paid
approximately $6.7 million (approximately 89.4%), $5.7 million (approximately
89.5%), and $2.8 million (approximately 63%), respectively, of the allocable
expenses under this arrangement.
Included in the mortgage debt of the unconsolidated entities is a
mortgage loan payable to the Company in the amount of $7.7 million and $7.8
million for 2000 and 1999, respectively. The note bears a fixed interest rate of
8% per annum with a 30 year amortization, matures on December 31, 2004, and is
collateralized by a Mortgage and Assignment of Leases and Rents with respect to
a hotel annex owned by an entity in which the Company has a 97% nonvoting
interest.
13. SUPPLEMENTAL CASH FLOW DISCLOSURE
The Company purchased certain assets and assumed certain liabilities
in connection with the acquisition of hotels in 1998. During 1999 the Company
purchased the land related to three hotels, which previously had been leased.
These purchases were recorded under the purchase method of accounting. The fair
values of the acquired assets and liabilities recorded at the date of
acquisition are as follows (in thousands):
1999 1998
----------- -----------
Assets acquired ................................ $ 19,776 $ 2,427,027
Liabilities assumed ............................ (7,800) (940,906)
Units issued ................................... (1,174) (1,152,856)
Minority interest contribution ................. (6,989)
----------- -----------
Net cash paid ...................... $ 10,802 $ 326,276
=========== ===========
Approximately $34.0 million, $39.7 million, and $67.3 million of
aggregate preferred unit distributions and unit distributions had been declared
as of December 31, 2000, 1999, and 1998, respectively. These amounts were paid
in the following January of each year.
In 1998, the Company entered into a joint venture, in which the
Company contributed a hotel with a net book value of $53.9 million for a 60%
equity interest in the venture. The Company has consolidated this venture in the
financial statements and recorded increases of $34.4 million in investment in
hotels and minority interest in other partnerships.
F-16
65
FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
14. STOCK BASED COMPENSATION PLANS
FelCor sponsors three restricted stock and stock option plans (the
"FelCor Plans"). In addition, upon completion of the merger with Bristol Hotel
Company (the "Merger"), FelCor assumed two stock option plans previously
sponsored by Bristol Hotel Company (the "Bristol Plans"). FelCor was initially
obligated to issue up to 1,271,103 shares of its common stock pursuant to the
Bristol Plans. No additional options may be awarded under the Bristol Plans. The
FelCor Plans and the Bristol Plans are referred to collectively as the "Plans".
Upon issuance of any stock, FelCor is obligated to contribute the proceeds to
the Company in exchange for a like number of units.
Stock Options
FelCor is authorized to issue 2,950,000 shares of common stock under
the FelCor Plans pursuant to awards granted in the form of incentive stock
options, non-qualified stock options, and restricted stock. All options have
10-year contractual terms and vest over five equal annual installments (20% per
year), beginning in the year following the date of grant.
The options outstanding under the Bristol Plans generally vest
either in four equal annual installments (25% per year) beginning in the second
year following the original date of award, in five equal annual installments
(20% per year) beginning in the year following the original date of award, or on
a single date that is three to five years following the original date of the
award.
A summary of the status of FelCor's non-qualified stock options
under the Plans as of December 31, 2000, 1999, and 1998, and the changes during
the years are presented below:
2000 1999 1998
------------------------ --------------------------- --------------------------
WEIGHTED WEIGHTED WEIGHTED
# SHARES OF AVERAGE # SHARES OF AVERAGE # SHARES OF AVERAGE
UNDERLYING EXERCISE UNDERLYING EXERCISE UNDERLYING EXERCISE
OPTIONS PRICES OPTIONS PRICES OPTIONS PRICES
----------- -------- ------------ -------- ------------ --------
Outstanding at beginning of the year.... 2,496,773 $22.32 2,540,466 $22.53 1,670,500 $29.96
Granted (a)(b).......................... 69,000 $19.50 9,750 $22.13 2,445,813 $20.54
Exercised............................... (760) $10.33 (332,915) $11.67
Retired (c)............................. (349,443) $12.28
Forfeited (b)(c)........................ (315,550) $26.75 (52,683) $32.41 (1,242,932) $31.51
---------- ---------- ----------
Outstanding at end of year.............. 1,900,780 $23.33 2,496,773 $22.32 2,540,466 $22.53
========== ========== ==========
Exercisable at end of year.............. 804,066 $24.64 906,675 $24.58 796,499 $24.64
(a) 1998 grants include options covering 1,271,103 shares of common
stock issuable as a result of the assumption of the Bristol Plans.
(b) To enable FelCor to preserve its stock options as a meaningful
element of compensation in 1998, existing option holders under the
FelCor Plans employed by FelCor on a full-time basis were offered
the opportunity to exchange their existing options (having exercise
prices ranging from $26.44 to $38.56 per share) for a lesser number
of new options having an equal value under the Black-Scholes option
pricing model. Twenty-two employees accepted this offer in 1998,
surrendering for cancellation existing options covering an aggregate
of 1,151,500 shares of common stock at a weighted average exercise
price of $32.807 per share for new options covering an aggregate of
840,393 shares of common stock at an exercise price of $22.125 per
share. The new options have the same expiration dates and vesting
schedules as the options surrendered for cancellation; however, none
of the new options were exercisable prior to January 1, 2000.
(c) In the second quarter of 2000 FelCor purchased options covering
an aggregate of 349,443 shares of FelCor's common stock for
approximately $1.9 million. These options were held by employees of
Bristol and were issued in substitution for stock options previously
granted by Bristol Hotel Company that were outstanding at the time
of its
F-17
66
FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
14. STOCK BASED COMPENSATION PLANS -- (CONTINUED)
merger with FelCor in 1998. These options so purchased and retired
had exercise prices ranging from $10.33 to $16.95 per share and the
majority of these options were scheduled to vest in the third
quarter of 2000. The purchase price was recorded as a reduction in
partners' capital.
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
---------------------------------------------- -------------------------------
NUMBER WGTD. AVG. NUMBER
RANGE OF OUTSTANDING REMAINING WGTD AVG. EXERCISABLE WGTD. AVG.
EXERCISE PRICES AT 12/31/00 LIFE EXERCISE PRICE AT 12/31/00 EXERCISE PRICE
- --------------- ----------- ---------- -------------- ----------- --------------
$10.33 to $29.92 1,735,841 6.46 $22.21 663,155 $22.36
$30.28 to $36.63 164,939 6.48 $35.09 140,911 $35.38
- ---------------- ---------- ------ ------ --------- ------
$10.33 to $36.63 1,900,780 6.46 $23.33 804,066 $24.64
The fair value of each stock option granted is estimated on the date
of grant using the Black-Scholes option pricing model with the following
weighted average assumptions: dividend yield of 11.28%; risk free interest rates
are different for each grant and range from 4.65% to 6.58%; the expected lives
of options are 6 years; and volatility of 18.22% for 2000 grants, 18.44% for
1999 grants, and 32.90% for grants issued in 1998. The weighted average fair
value of options granted during 2000, 1999, and 1998 was $0.90, $1.07, and $3.35
per share, respectively.
Restricted Stock
A summary of the status of FelCor's restricted stock grants as of
December 31, 2000, 1999, and 1998 and the changes during the years are presented
below:
2000 1999 1998
------------------------- ------------------------- --------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
FAIR MARKET FAIR MARKET FAIR MARKET
VALUE VALUE VALUE
# SHARES AT GRANT # SHARES AT GRANT # SHARES AT GRANT
-------- ----------- -------- ----------- -------- ------------
Outstanding at beginning of the year... 125,375 $28.35 125,375 $28.97 115,500 $29.03
Granted:
With 5-year pro rata vesting......... 210,100 $23.50 5,000 $21.25
Vest 100% at grant date.............. 4,875 $35.63
Forfeited..............................
------- ------- -------
Outstanding at end of year............. 335,475 $25.55 125,375 $28.97 125,375 $28.97
======= ======= =======
Vested at end of year.................. 107,975 $28.77 83,575 $28.35 65,175 $28.26
F-18
67
FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
15. SEGMENT INFORMATION
The Company has determined that its reportable segments are those
that are consistent with the Company's method of internal reporting, which
segments its business by Lessee. The Company's Lessees at December 31, 2000,
were DJONT and Bristol. Prior to July 28, 1998 (the date of the Merger), the
Company had only one lessee, DJONT.
The following tables present information about the reportable
segments for the years ended December 31, 2000, 1999 and 1998 (in thousands):
CORPORATE
NOT
SEGMENT ALLOCABLE CONSOLIDATED
YEAR ENDED DECEMBER 31, 2000 DJONT BRISTOL TOTAL TO SEGMENTS TOTAL
----------- ----------- ----------- ----------- -----------
Statement of Operations Information:
Percentage lease revenue .................... $ 277,283 $ 259,624 $ 536,907 $ 536,907
Equity in income from unconsolidated
entities ................................. $ 13,898 $ 922 $ 14,820 $ 14,820
Expenses:
Depreciation ............................. $ 83,974 $ 76,479 $ 160,453 $ 292 $ 160,745
Reserve for assets held for sale ......... $ 9,510 $ 53,490 $ 63,000 $ 63,000
Interest expense ......................... $ 158,620 $ 158,620
Income (loss) before nonrecurring items ..... $ 156,512 $ 75,559 $ 232,071 $ (166,203) $ 65,868
Gain on sale of assets ...................... $ 3,105 $ 1,283 $ 4,388 $ 4,388
Income (loss) before extraordinary charge ... $ 159,617 $ 76,842 $ 236,459 $ (166,203) $ 70,256
Funds From Operations:
Income (loss) before extraordinary charge ... $ 159,617 $ 76,842 $ 236,459 $ (166,203) $ 70,256
Series B preferred distributions ............ (12,937) (12,937)
Reserve for hotels held for sale ............ 9,510 53,490 63,000 63,000
Gain on sale of hotels ...................... (2,461) (134) (2,595) (2,595)
Depreciation ................................ 83,974 76,479 160,453 292 160,745
Depreciation from unconsolidated entities ... 9,426 741 10,167 10,167
----------- ----------- ----------- ----------- -----------
Funds from operations ....................... $ 260,066 $ 207,418 $ 467,484 $ (178,848) $ 288,636
=========== =========== =========== =========== ===========
Weighted average units outstanding (a) ...... 67,239
Other Information:
Investment in unconsolidated entities .... $ 112,654 $ 15,939 $ 128,593 $ 128,593
Total assets ............................. $ 1,860,847 $ 2,179,321 $ 4,040,168 $ 63,435 $ 4,103,603
Capital expenditures ..................... $ 34,865 $ 60,370 $ 95,235 $ 95,235
F-19
68
FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
15. SEGMENT INFORMATION -- (CONTINUED)
CORPORATE
NOT
SEGMENT ALLOCABLE CONSOLIDATED
YEAR ENDED DECEMBER 31, 1999 DJONT BRISTOL TOTAL TO SEGMENTS TOTAL
----------- ----------- ----------- ----------- ------------
Statement of Operations Information:
Percentage lease revenue ................... $ 256,128 $ 234,765 $ 490,893 $ 490,893
Equity in income from unconsolidated
entities ................................ $ 7,725 $ 759 $ 8,484 $ 8,484
Expenses:
Depreciation ............................ $ 80,969 $ 71,748 $ 152,717 $ 231 $ 152,948
Interest expense ........................ $ 125,435 $ 125,435
Income (loss) before nonrecurring items .... $ 147,868 $ 118,949 $ 266,817 $ (134,860) $ 131,957
Gain on sale of hotels ..................... $ 236 $ 236
Income (loss) before extraordinary charge .. $ 147,868 $ 118,949 $ 266,817 $ (129,928) $ 136,889
Funds From Operations:
Income (loss) before extraordinary charge .. $ 147,868 $ 118,949 $ 266,817 $ (129,928) $ 136,889
Series B preferred distributions ........... (12,937) (12,937)
Depreciation ............................... 80,969 71,748 152,717 231 152,948
Depreciation from unconsolidated entities .. 9,248 747 9,995 9,995
----------- ----------- ----------- ----------- -----------
Funds from operations ...................... $ 238,085 $ 191,444 $ 429,529 $ (142,634) $ 286,895
=========== =========== =========== =========== ===========
Weighted average units outstanding (a) ..... 75,251
Other Information:
Investment in unconsolidated entities ... $ 120,556 $ 16,162 $ 136,718 $ 136,718
Total assets ............................ $ 1,940,247 $ 2,243,916 $ 4,184,163 $ 68,555 $ 4,252,718
Capital expenditures .................... $ 51,587 $ 170,733 $ 222,320 $ 222,320
F-20
69
FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
15. SEGMENT INFORMATION -- (CONTINUED)
CORPORATE
NOT
SEGMENT ALLOCABLE CONSOLIDATED
YEAR ENDED DECEMBER 31, 1998 DJONT BRISTOL TOTAL TO SEGMENTS TOTAL
----------- ----------- ----------- ----------- -----------
Statement of Operations Information:
Percentage lease revenue ................... $ 237,555 $ 90,480 $ 328,035 $ 328,035
Equity in income from unconsolidated
entities ................................ $ 6,744 $ 273 $ 7,017 $ 7,017
Expenses:
Depreciation ............................ $ 71,055 $ 19,619 $ 90,674 $ 161 $ 90,835
Interest expense ........................ $ 73,182 $ 73,182
Income before nonrecurring item ............ $ 143,736 $ 54,233 $ 197,969 $ (80,532) $ 117,437
Gain on sale of hotels ..................... $ 477 $ 477
Income (loss) before extraordinary charge .. $ 143,736 $ 54,233 $ 197,969 $ (73,555) $ 124,414
Funds From Operations:
Income (loss) before extraordinary charge .. $ 143,736 $ 54,233 $ 197,969 $ (73,555) $ 124,414
Series B preferred distributions ........... (8,373) (8,373)
Depreciation ............................... 71,055 19,619 90,674 161 90,835
Depreciation from unconsolidated entities .. 10,254 233 10,487 10,487
----------- ----------- ----------- ----------- -----------
Funds from operations ...................... $ 225,045 $ 74,085 $ 299,130 $ (81,767) $ 217,363
=========== =========== =========== =========== ===========
Weighted average units outstanding (a) ..... 58,013
Other Information:
Investment in unconsolidated entities ... $ 123,507 $ 16,792 $ 140,299 $ 140,299
Total assets ............................ $ 2,022,975 $ 2,093,328 $ 4,116,303 $ 59,080 $ 4,175,383
Capital expenditures .................... $ 65,264 $ 65,839 $ 131,103 $ 131,103
(a) Weighted average units outstanding are computed including
dilutive FelCor options and unvested stock grants, and assuming
conversion of Series A preferred units to units.
The following table sets forth Percentage Lease revenue and
investment in hotel assets represented by the following geographical areas as of
and for the years ended December 31, 2000, 1999 and 1998 (in thousands):
PERCENTAGE LEASE REVENUE INVESTMENT IN HOTEL ASSETS
------------------------------------ ------------------------------------
2000 1999 1998 2000 1999 1998
---------- ---------- ---------- ---------- ---------- ----------
California ......... $ 118,857 $ 97,283 $ 63,733 $ 681,714 $ 698,942 $ 642,965
Texas .............. 97,157 94,782 52,220 862,199 891,626 854,558
Florida ............ 66,014 61,516 45,719 530,933 542,298 519,280
Georgia ............ 40,183 39,247 23,691 316,267 355,519 349,429
Other States ....... 200,836 186,248 138,437 1,752,303 1,802,220 1,705,220
Canada ............. 13,860 11,817 5,123 79,960 75,294 62,202
---------- ---------- ---------- ---------- ---------- ----------
Total .. $ 536,907 $ 490,893 $ 328,923 $4,223,376 $4,365,899 $4,133,654
========== ========== ========== ========== ========== ==========
F-21
70
FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
16. PRO FORMA INFORMATION (UNAUDITED)
The following unaudited Pro Forma Statements of Operations for the
years ended December 31, 2000 and 1999 are presented as if the acquisition of
DJONT and acquisition of the Bristol leases occurred on January 1, 1999.
The following unaudited Pro Forma Consolidated Statements of
Operations for the periods presented are not necessarily indicative of what
actual results operations of the Company would have been assuming such
transactions had been completed at the beginning of the respective periods
presented, nor does it purport to represent the results of operations for future
periods.
2000 1999
----------- -----------
(IN THOUSANDS,
EXCEPT PER UNIT DATA)
Revenues:
Hotel operating revenue:
Room and suite revenue ....................... $ 1,309,301 $ 1,208,954
Food and beverage revenue .................... 261,551 228,271
Other operating departments .................. 93,616 98,642
Other revenue ................................... 4,965 4,624
----------- -----------
Total revenues ............................... 1,669,433 1,540,491
----------- -----------
Expenses:
Hotel operating expenses ........................ 539,665 519,333
Undistributed operating expenses:
Property operating costs ..................... 676,507 592,507
General and administrative ................... 13,329 10,112
Reserve for assets held for sale ............. 63,000
Depreciation ................................. 161,836 153,498
Total operating expenses ............... 1,454,337 1,275,450
----------- -----------
Operating income ....................................... 215,096 265,041
Interest expense ................................ (166,191) (133,305)
Equity in income from unconsolidated entities ... 11,551 8,534
----------- -----------
Income before nonrecurring items ....................... 60,456 140,270
Gain on sale of assets .......................... 4,388 236
Extraordinary charge ............................ (3,865) (1,113)
----------- -----------
Net income ............................................. 60,979 139,393
Preferred distributions ................................ (24,682) (24,735)
----------- -----------
Net income applicable to unitholders ................... $ 36,297 $ 114,658
=========== ===========
Diluted earnings per unit:
Net income (loss) applicable to unitholders .. $ 0.57 $ 1.61
=========== ===========
Weighted average units outstanding ........... 63,387 71,391
F-22
71
FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
17. RECENTLY ISSUED STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS
Effective January 1, 2001, the Company will adopt SFAS No. 133
Accounting for Derivative Instruments and Hedging Activities, ("SFAS 133" or the
"Statement"). SFAS 133 will be adopted as a change in accounting principle and
cannot be applied retroactively to financial statements of prior periods.
SFAS 133 requires that the Company record derivatives on the balance
sheet as an asset or liability at fair value. The Statement also requires that
the Company record derivatives that are not hedges at fair value through
earnings, unless specific hedge accounting criteria are met. Special accounting
for qualifying hedges allows the Company to offset a derivative instrument's
gains and losses against related results on the hedged item in the income
statement, to the extent effective, and requires that the Company formally
document, designate and assess the effectiveness of transactions that receive
hedge accounting.
The Company's interest rate swap contracts outstanding as of January
1, 2001, have been designated as cash flow hedges.
Cash flow hedges
The Company has entered into six interest rate swap agreements, with
a total notional amount of $250 million. Three of these agreements, at the
option of the variable rate payer, may be terminated in July 2001 or otherwise
terminate in July 2003 along with the other three agreements. Under these
arrangements, the Company receives the one month LIBOR rate and pays a fixed
rate of 5.548% to 5.826%. Prior to adoption of FAS 133, the Company treated
these swaps as hedges and accounted for them as such. The Company has not
recorded any amounts on the Consolidated Balance Sheet as of December 31, 2000
in connection with these instruments and the net effect of the hedges was to
record interest expense at the fixed rate of 7.548% to 7.826% on $250 million of
variable rated debt. The Company has designated these swaps as cash flow hedges
of variable future cash flows associated with the interest on its Line of Credit
facility through July 2003. Upon adoption, the Company will record the fair
value of these swaps as an asset on its balance sheet valued at $248,000, with a
corresponding credit to other comprehensive income. The Company will record
subsequent changes in fair value of the swaps through other comprehensive
income, except for changes related to ineffectiveness, during the period these
instruments are designated as hedges.
The Company has no other derivative instruments, including embedded
derivatives under SFAS 133.
F-23
72
FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
18. QUARTERLY OPERATING RESULTS (UNAUDITED)
The Company's unaudited consolidated quarterly operating data for
the years ended December 31, 2000 and 1999, follows (in thousands, except per
unit data). In the opinion of management, all adjustments (consisting of normal
recurring accruals) necessary for a fair presentation of quarterly results have
been reflected in the data. It is also management's opinion, however, that
quarterly operating data for hotel enterprises are not indicative of results to
be achieved in succeeding quarters or years. In order to obtain a more accurate
indication of performance, there should be a review of operating results,
changes in partners' equity and cash flows for a period of several years.
FIRST SECOND THIRD FOURTH
2000 QUARTER QUARTER QUARTER QUARTER
---- --------- --------- --------- ---------
Total revenues ................................................. $ 126,805 $ 137,865 $ 140,476 $ 151,546
Reserve for hotels held for sale ............................... $ 63,000
Income (loss) before nonrecurring items ........................ $ 19,931 $ (33,178) $ 33,473 $ 45,642
Extraordinary charge from write off of deferred financing fee .. $ 3,865
Net income (loss) applicable to unitholders .................... $ 13,747 $ (38,477) $ 26,831 $ 39,608
Diluted per unit data:
Net income (loss) applicable to unitholders ................. $ 0.21 $ (0.62) $ 0.43 $ 0.64
Weighted average units outstanding .......................... 64,029 62,543 62,176 61,462
FIRST SECOND THIRD FOURTH
1999 QUARTER QUARTER QUARTER QUARTER
---- --------- --------- --------- ---------
Total revenues ................................................. $ 126,917 $ 135,187 $ 124,082 $ 117,815
Income before nonrecurring items ............................... $ 38,067 $ 43,454 $ 31,115 $ 24,017
Extraordinary charge from write off of deferred financing fee .. $ 1,113
Net income applicable to unitholders ........................... $ 31,833 $ 36,157 $ 24,931 $ 18,070
Diluted per unit data:
Net income applicable to unitholders ........................ $ 0.45 $ 0.51 $ 0.35 $ 0.26
Weighted average units outstanding .......................... 70,964 71,338 71,001 68,533
19. 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.; 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
unsecured debt. The following tables present consolidating information for the
Subsidiary Guarantors.
F-24
73
FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
19. CONSOLIDATING FINANCIAL INFORMATION -- (CONTINUED)
CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2000
(IN THOUSANDS)
ASSETS
SUBSIDIARY NON-GUARANTOR TOTAL
FELCOR L.P. GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
----------- ----------- ------------ ------------ ------------
Net investment in hotel properties ........................ $ 519,523 $ 1,651,019 $ 1,579,733 $ 3,750,275
Equity investment in consolidated entities ................ 4,208,426 $(4,208,426)
Investment in unconsolidated entities ..................... 112,654 15,939 128,593
Assets held for sale ...................................... 4,905 120,509 3,880 129,294
Cash and cash equivalents ................................. 5,113 3,032 17,915 26,060
Due from Lessee ........................................... 14,546 7,200 6,312 28,058
Due (to)/from subsidiary .................................. (339,680) 415,301 (75,621)
Note receivable from unconsolidated entity ................ 7,695 7,695
Deferred assets ........................................... 17,443 1,177 5,324 23,944
Other assets .............................................. 4,464 2,042 3,178 9,684
----------- ----------- ----------- ----------- -----------
Total assets ..................................... $ 4,555,089 $ 2,216,219 $ 1,540,721 $(4,208,426) $ 4,103,603
=========== =========== =========== =========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Debt ...................................................... $ 1,079,222 $ 117,571 $ 641,448 $ 1,838,241
Distributions payable ..................................... 33,957 33,957
Accrued expenses and other liabilities .................... 50,797 22,274 21,161 94,232
Minority interest - other partnerships .................... 97 50,677 50,774
----------- ----------- ----------- ----------- -----------
Total liabilities ................................ 1,164,073 139,845 713,286 2,017,204
----------- ----------- ----------- ----------- -----------
Redeemable units, at redemption value ..................... 205,800 205,800
Preferred units ........................................... 293,265 293,265
Partners' capital ......................................... 2,891,951 2,076,374 827,435 $(4,208,426) 1,587,334
----------- ----------- ----------- ----------- -----------
Total liabilities and partners' capital .......... $ 4,555,089 $ 2,216,219 $ 1,540,721 $(4,208,426) $ 4,103,603
=========== =========== =========== =========== ===========
F-25
74
FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
19. CONSOLIDATING FINANCIAL INFORMATION -- (CONTINUED)
CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1999
(IN THOUSANDS)
ASSETS
SUBSIDIARY NON-GUARANTOR TOTAL
FELCOR L.P. GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
----------- ----------- ----------- ----------- ------------
Net investment in hotel properties ........................ $ 974,642 $ 1,884,901 $ 1,175,801 $ 4,035,344
Equity investment in consolidated entities ................ 2,799,824 $(2,799,824)
Investment in unconsolidated entities ..................... 120,556 16,162 136,718
Cash and cash equivalents ................................. 3,093 12,418 20,612 36,123
Due from Lessee ........................................... 12,615 5,035 744 18,394
Due (to)/from subsidiary .................................. (191,148) 219,280 (28,132)
Note receivable from unconsolidated entity ................ 7,760 7,760
Deferred assets ........................................... 9,842 1,336 4,295 15,473
Other assets .............................................. 3,796 1,834 309 5,939
----------- ----------- ----------- ----------- -----------
Total assets ..................................... $ 3,740,980 $ 2,140,966 $ 1,173,629 $(2,799,824) $ 4,255,751
=========== =========== =========== =========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Debt ...................................................... $ 1,371,220 $ 142,530 $ 320,204 $ 1,833,954
Distributions payable ..................................... 39,657 39,657
Accrued expenses and other liabilities .................... 65,480 65,480
Minority interest - other partnerships .................... (366) 52,037 51,671
----------- ----------- ----------- -----------
Total liabilities ................................ 1,475,991 142,530 372,241 1,990,762
----------- ----------- ----------- -----------
Redeemable units, at redemption value ..................... 52,338 52,338
Preferred units ........................................... 295,000 295,000
Partners' capital ......................................... 1,917,651 1,998,436 801,388 $(2,799,824) 1,917,651
----------- ----------- ----------- ----------- -----------
Total liabilities and partners' capital .......... $ 3,740,980 $ 2,140,966 $ 1,173,629 $(2,799,824) $ 4,255,751
=========== =========== =========== =========== ===========
F-26
75
FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
19. CONSOLIDATING FINANCIAL INFORMATION -- (CONTINUED)
CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2000
(IN THOUSANDS)
SUBSIDIARY NON-GUARANTOR TOTAL
FELCOR L.P. GUARANTORS SUBSIDIARIES CONSOLIDATED
-------------- -------------- -------------- --------------
Revenues:
Percent rent ...................................... $ 106,797 $ 259,374 $ 170,736 $ 536,907
Equity in income from unconsolidated entities ..... 13,898 922 14,820
Other revenue ..................................... 4,770 174 21 4,965
-------------- -------------- -------------- --------------
Total revenue ......................... 125,465 260,470 170,757 556,692
-------------- -------------- -------------- --------------
Expenses:
General and administrative ........................ 4,218 5,019 3,019 12,256
Depreciation ...................................... 35,636 72,882 52,227 160,745
Taxes, insurance and other ........................ 18,314 52,004 22,315 92,633
Interest expense .................................. 96,663 16,164 45,793 158,620
Reserve for assets held for sale .................. 6,938 52,483 3,579 63,000
Minority interest other partnerships .............. (114) 3,684 3,570
-------------- -------------- -------------- --------------
Total expenses ........................ 161,655 198,552 130,617 490,824
Net income (loss) before nonrecurring items ....... (36,190) 61,918 40,140 65,868
Gain on sale of hotels, net ....................... 2,461 1,789 138 4,388
Extraordinary charge for write off of deferred
financing fees ................................... 3,865 3,865
-------------- -------------- -------------- --------------
Net income (loss) ................................. (37,594) 63,707 40,278 66,391
Preferred distributions ........................... 24,682 24,682
-------------- -------------- -------------- --------------
Net income (loss) applicable to unitholders ....... $ (62,276) $ 63,707 $ 40,278 $ 41,709
============== ============== ============== ==============
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2000
(IN THOUSANDS)
SUBSIDIARY NON-GUARANTOR TOTAL
FELCOR L.P. GUARANTORS SUBSIDIARIES CONSOLIDATED
-------------- -------------- -------------- --------------
Cash flows from (used in) operating activities .... $ (953) $ 184,195 $ 94,062 $ 277,304
Cash flows from (used in) investing activities .... 33,721 (44,540) (23,947) (34,766)
Cash flows from (used in) financing activities .... (30,748) (149,041) (72,812) (252,601)
-------------- -------------- -------------- --------------
Change in cash and cash equivalents ............... 2,020 (9,386) (2,697) (10,063)
Cash and cash equivalents at beginning of period .. 3,093 12,418 20,612 36,123
-------------- -------------- -------------- --------------
Cash and equivalents at end of year ............... $ 5,113 $ 3,032 $ 17,915 $ 26,060
============== ============== ============== ==============
F-27
76
FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
19. CONSOLIDATING FINANCIAL INFORMATION -- (CONTINUED)
CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS)
SUBSIDIARY NON-GUARANTOR TOTAL
FELCOR L.P. GUARANTORS SUBSIDIARIES CONSOLIDATED
-------------- -------------- -------------- --------------
Revenues:
Percent rent ...................................... $ 131,706 $ 228,154 $ 131,033 $ 490,893
Equity in income from unconsolidated entities ..... 7,725 759 8,484
Other revenue ..................................... 4,624 4,624
-------------- -------------- -------------- --------------
Total revenue ......................... 144,055 228,913 131,033 504,001
-------------- -------------- -------------- --------------
Expenses:
General and administrative ........................ 2,447 4,240 2,435 9,122
Depreciation ...................................... 43,090 69,665 40,193 152,948
Taxes, insurance and other ........................ 17,643 39,460 20,027 77,130
Interest expense .................................. 95,254 9,327 20,854 125,435
Minority interest other partnerships .............. 1,099 1,614 2,713
-------------- -------------- -------------- --------------
Total expenses ........................ 159,533 122,692 85,123 367,348
Net income (loss) before nonrecurring items ....... (15,478) 106,221 45,910 136,653
Gain on sale of hotels, net ....................... 236 236
Extraordinary charge for write off of deferred
financing fees .................................. 1,113 1,113
-------------- -------------- -------------- --------------
Net income (loss) ................................. (16,355) 106,221 45,910 135,776
Preferred distributions ........................... 24,735 24,735
-------------- -------------- -------------- --------------
Net income (loss) applicable to unitholders ....... $ (41,090) $ 106,221 $ 45,910 $ 111,041
============== ============== ============== ==============
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS)
SUBSIDIARY NON-GUARANTOR TOTAL
FELCOR L.P. GUARANTORS SUBSIDIARIES CONSOLIDATED
-------------- -------------- -------------- --------------
Cash flows from operating activities .............. $ 17,555 $ 183,998 $ 80,812 $ 282,365
Cash flows from (used in)investing activities ..... 55,786 (99,074) (162,229) (205,517)
Cash flows from (used in) financing activities .... (90,248) (77,178) 92,009 (75,417)
-------------- -------------- -------------- --------------
Change in cash and cash equivalents ............... (16,907) 7,746 10,592 1,431
Cash and cash equivalents at beginning of period .. 20,000 4,672 10,020 34,692
-------------- -------------- -------------- --------------
Cash and equivalents at end of year ............... $ 3,093 $ 12,418 $ 20,612 $ 36,123
============== ============== ============== ==============
F-28
77
FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
19. CONSOLIDATING FINANCIAL INFORMATION -- (CONTINUED)
CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS)
SUBSIDIARY NON-GUARANTOR TOTAL
FELCOR L.P. GUARANTORS SUBSIDIARIES CONSOLIDATED
-------------- -------------- -------------- --------------
Revenues:
Percent rent ...................................... $ 125,103 $ 143,977 $ 58,955 $ 328,035
Equity in income from unconsolidated entities ..... 6,960 57 7,017
Other revenue ..................................... 4,504 61 4,565
-------------- -------------- -------------- --------------
Total revenue ......................... 136,567 144,038 59,012 339,617
-------------- -------------- -------------- --------------
Expenses:
General and administrative ........................ 2,117 2,226 911 5,254
Depreciation ...................................... 36,490 41,021 13,324 90,835
Taxes, insurance and other ........................ 14,388 23,548 7,352 45,288
Interest expense .................................. 62,785 3,076 7,321 73,182
Minority interest other partnerships .............. 1,121 1,121
-------------- -------------- -------------- --------------
Total expenses ........................ 115,780 69,871 30,029 215,680
Net income (loss) before nonrecurring items ....... 20,787 74,167 28,983 123,937
Gain on sale of hotels, net ....................... 477 477
Extraordinary charge for write off of deferred
financing fees .................................. 3,075 3,075
-------------- -------------- -------------- --------------
Net income (loss) ................................. 18,189 74,167 28,983 121,339
Preferred distributions ........................... 21,423 21,423
-------------- -------------- -------------- --------------
Net income (loss) applicable to unitholders ....... $ ( 3,234) $ 74,167 $ 28,983 $ 99,916
============== ============== ============== ==============
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS)
SUBSIDIARY NON-GUARANTOR TOTAL
FELCOR L.P. GUARANTORS SUBSIDIARIES CONSOLIDATED
-------------- -------------- -------------- --------------
Cash flows from operating activities .............. $ 34,025 $ 115,187 $ 43,371 $ 192,583
Cash flows from (used in)investing activities ..... (444,363) (25,753) (80,382) (550,498)
Cash flows from (used in) financing activities .... 412,795 (84,762) 47,031 375,064
-------------- -------------- -------------- --------------
Change in cash and cash equivalents ............... 2,457 4,672 10,020 17,149
Cash and cash equivalents at beginning of period .. 17,543 17,543
-------------- -------------- -------------- --------------
Cash and equivalents at end of year ............... $ 20,000 $ 4,672 $ 10,020 $ 34,692
============== ============== ============== ==============
F-29
78
FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
20. SUBSEQUENT EVENTS
Effective January 1, 2001, subject to the receipt of certain lender
consents, the Company acquired and contributed to a newly formed taxable REIT
subsidiary, all of the equity interests in DJONT. In consideration for the
acquisition of DJONT, the Company issued an aggregate of 416,667 units valued at
approximately $10 million, which, together with DJONT's accumulated
shareholders' deficit of $24.5 million, will be expensed in the first quarter of
2001 as a lease termination cost.
Effective January 1, 2001, the Company completed the acquisition of
12 of the Bristol leases. In consideration for the acquisition of such leases,
FelCor issued to Bass 413,585 shares of FelCor common stock valued at
approximately $10 million and the Company issued a like number of units. In
March 2001, the Company entered into an agreement with Bass to acquire the
remaining 88 leases effective July 1, 2001. In consideration for the acquisition
of such leases, the Company will enter into long term management agreements with
Bass with regard to these hotels and FelCor will issue to Bass 100 shares of
FelCor common stock. A portion of the management fees with respect to the 88
hotels managed by Bass under long term management agreements will be considered
to be lease termination costs and the Company will record a lease termination
expense of approximately $125 million in the third quarter of 2001. At that
time, the Company will record a corresponding liability of approximately $125
million, that will be amortized over the term of the applicable management
agreements.
On January 11, 2001, the Company completed the private placement of
an additional $100 million in 9 1/2% senior unsecured notes that mature in
September, 2008. These notes were issued at a premium to yield an effective rate
of 91/8%. The proceeds were used initially to pay down the Company's Line of
Credit.
In March 2001, the Company contributed eight of the hotels held for
sale to an entity in which the Company holds a 50% equity interest and a
subsidiary of IHC holds the other 50% equity interest. The Company contributed
assets with a book value of approximately $77 million. Another subsidiary of IHC
manages each of these hotels.
F-30
79
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors
of FelCor Lodging Trust Incorporated:
Our audits of the consolidated financial statements referred to in our report
dated February 5, 2001, except for footnotes 1 and 20 as to which the date is
March 28, 2001, appearing on page F-2 of the Annual Report on Form 10-K of
FelCor Lodging Limited Partnership (which report and consolidated financial
statements are included in this Annual Report on Form 10-K) also included an
audit of the financial statement schedule listed in Item 14(a)(2) of this Form
10-K. In our opinion, this financial statement schedule presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements.
PricewaterhouseCoopers LLP
Dallas, Texas
February 5, 2001
F-31
80
FELCOR LODGING LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 2000
(IN THOUSANDS)
COST CAPITALIZED SUBSEQUENT
INITIAL COST TO ACQUISITION
-------------------------------- ------------------------------
BUILDINGS FURNITURE BUILDINGS FURNITURE
AND AND AND AND
DESCRIPTION OF PROPERTY ENCUMBRANCES LAND IMPROVEMENTS FIXTURES LAND IMPROVEMENTS FIXTURES
- ----------------------- ------------ ------- ------------ --------- ----- ------------ ---------
Birmingham, AL (1) $ 12,298 $ 2,843 $29,286 $ 160 $ 653 $ 4,132
Montgomery E. (I-85), AL (2) 836 7,272 251 2,669 1,038
Texarkana (I-30), AR (2) 5,245 162 1,438 521
Flagstaff, AZ (1) 900 6,825 268 1,605 1,329
Phoenix (Airport - 44th St.), AZ (1) 2,969 25,828 891 1,357 2,598
Phoenix (Camelback), AZ (1) 38,998 612 4,695 935 5,782
Phoenix (Crescent), AZ (3) 26,820 3,608 29,583 2,886 166 1,159
Tempe (ASU), AZ (1) 12,183 3,951 34,371 1,185 915 2,768
Anaheim (Disney(R)Area), CA (1) 11,302 2,548 14,832 607 546 3,836
Burlingame (San Francisco A/P So.), CA (1) 39,929 818 200 4,426
Dana Point, CA (5) 1,787 15,545 536 644 2,907
El Segundo (LAX Airport South), CA (1) 2,660 17,997 798 557 6,392
Irvine (Orange County Airport), CA (6) 4,981 43,338 1,494 1,745 744
Milpitas, CA (1) 21,180 4,021 23,677 562 1,041 4,713
Milpitas (San Jose N.), CA (6) 4,153 36,130 1,246 5,810 1,964
Napa, CA (1) 11,127 3,287 14,205 494 997 3,594
Oxnard (Mandalay Beach), CA (1) 2,930 22,124 879 1,174 5,871
Palm Desert, CA (1) 8,709 2,368 20,598 710 1,607 2,855
Pleasanton, CA (6) 3,169 27,569 951 159 295
San Diego (On the Bay), CA (2) 68,633 2,123 282 1,052
San Francisco (Financial District), CA (2) 21,679 670 1,426 2,014
San Francisco (Fisherman's Wharf), CA (2) 62,203 1,924 749 756
San Francisco (Union Square), CA (6) 8,514 74,075 2,554 3,513 1,390
Santa Barbara, CA (2) 5,535 1,692 14,723 508 103 292
So. San Francisco (SF Airport No.), CA (1) 26,118 3,418 31,737 527 827 5,017
Aurora (Denver Southeast), CO (7) 2,432 21,158 730 439 2,112
Avon (Beaver Creek Resort), CO (8) 1,134 9,864 340 (16) 79 1,125
Hartford Downtown, CT (6) 2,327 20,243 698 5,981 3,221
Stamford, CT (9) 37,356 1,155 1,548 999
Wilmington, DE (7) 1,379 12,487 431 9,486 3,582
Boca Raton, FL (1) 1,868 16,253 560 90 4,006
Cocoa Beach (Oceanfront Resort), FL (2) 2,304 20,046 691 9,350 3,808
Deerfield Beach, FL (1) 15,265 4,522 29,443 917 69 989 5,016
Ft. Lauderdale, FL (1) 16,300 5,329 47,850 903 (163) 1,457 5,771
Ft. Lauderdale (Cypress Creek), FL (11) 12,913 3,009 26,177 903 972 2,681
Jacksonville, FL (1) 1,130 9,608 456 4,877 2,330
Kissimmee (Nikki Bird Resort), FL (2) 31,652 979 6,261 2,238
Lake Buena Vista (Disney World(R)), FL (5) 2,896 25,196 869 245 2,944
Miami (Airport), FL (6) 26,146 809 993 1,429
Miami (Airport), FL (1) 13,177 4,135 24,950 1,171 315 6,289
Orlando (Airport), FL (9) 2,564 22,310 769 1,675 428
Orlando (Int'l Drive Resort), FL (2) 5,142 44,735 1,543 4,593 1,948
Orlando (North), FL (1) 1,673 14,218 684 5,072 2,711
Orlando (South), FL (1) 25,437 1,632 13,870 799 375 2,349
Tampa (Near Busch Gardens), FL (2) 9,534 295 11,176 2,200
Tampa Rocky Point, FL (5) 2,142 18,639 643 1,121 2,473
Atlanta (Airport), GA (6) 40,943 1,266 132 623
Atlanta (Airport), GA (1) 22,342 770 2,568 1,149 1,568
Atlanta (Airport Gateway), GA (3) 5,113 22,857 2,105 201 3,988
Atlanta (Airport North), GA (2) 17,255 34,531 1,068 265 739
Atlanta Buckhead, GA (1) 38,031 7,303 38,996 2,437 670 2,557
GROSS AMOUNTS AT WHICH ACCUMULATED NET BOOK
CARRIED AT CLOSE OF PERIOD DEPRECIATION VALUE
----------------------------------- BUILDINGS AND BUILDINGS AND
BUILDINGS FURNITURE IMPROVEMENTS; IMPROVEMENTS
AND AND FURNITURE & FURNITURE &
DESCRIPTION OF PROPERTY LAND IMPROVEMENTS FIXTURES TOTAL FIXTURES FIXTURES
- ----------------------- ------- ------------ --------- -------- ------------- -------------
Birmingham, AL (1) $ 2,843 $29,939 $ 4,292 $ 37,074 $ 6,685 $30,389
Montgomery E. (I-85), AL (2) 836 9,941 1,289 12,066 1,056 11,010
Texarkana (I-30), AR (2) 6,683 683 7,366 620 6,746
Flagstaff, AZ (1) 900 8,430 1,597 10,927 2,558 8,369
Phoenix (Airport - 44th St.), AZ (1) 2,969 27,185 3,489 33,643 2,447 31,196
Phoenix (Camelback), AZ (1) 4,695 39,933 6,394 51,022 9,725 41,297
Phoenix (Crescent), AZ (3) 3,608 29,749 4,045 37,402 4,996 32,406
Tempe (ASU), AZ (1) 3,951 35,286 3,953 43,190 3,513 39,677
Anaheim (Disney(R)Area), CA (1) 2,548 15,378 4,443 22,369 5,600 16,769
Burlingame (San Francisco A/P So.), CA (1) 40,129 5,244 45,373 8,919 36,454
Dana Point, CA (5) 1,787 16,189 3,443 21,419 3,488 17,931
El Segundo (LAX Airport South), CA (1) 2,660 18,554 7,190 28,404 7,872 20,532
Irvine (Orange County Airport), CA (6) 4,981 45,083 2,238 52,302 3,547 48,755
Milpitas, CA (1) 4,021 24,718 5,275 34,014 6,984 27,030
Milpitas (San Jose N.), CA (6) 4,153 41,940 3,210 49,303 3,324 45,979
Napa, CA (1) 3,287 15,202 4,088 22,577 4,553 18,024
Oxnard (Mandalay Beach), CA (1) 2,930 23,298 6,750 32,978 7,303 25,675
Palm Desert, CA (1) 2,368 22,205 3,565 28,138 2,697 25,441
Pleasanton, CA (6) 3,169 27,728 1,246 32,143 2,143 30,000
San Diego (On the Bay), CA (2) 68,915 3,175 72,090 5,167 66,923
San Francisco (Financial District), CA (2) 23,105 2,684 25,789 2,106 23,683
San Francisco (Fisherman's Wharf), CA (2) 62,952 2,680 65,632 4,722 60,910
San Francisco (Union Square), CA (6) 8,514 77,588 3,944 90,046 6,077 83,969
Santa Barbara, CA (2) 1,692 14,826 800 17,318 1,187 16,131
So. San Francisco (SF Airport No.), CA (1) 3,418 32,564 5,544 41,526 8,121 33,405
Aurora (Denver Southeast), CO (7) 2,432 21,597 2,842 26,871 2,653 24,218
Avon (Beaver Creek Resort), CO (8) 1,118 9,943 1,465 12,526 2,449 10,077
Hartford Downtown, CT (6) 2,327 26,224 3,919 32,470 2,905 29,565
Stamford, CT (9) 38,904 2,154 41,058 3,049 38,009
Wilmington, DE (7) 1,379 21,973 4,013 27,365 1,828 25,537
Boca Raton, FL (1) 1,868 16,343 4,566 22,777 5,217 17,560
Cocoa Beach (Oceanfront Resort), FL (2) 2,304 29,396 4,499 36,199 2,998 33,201
Deerfield Beach, FL (1) 4,591 30,432 5,933 40,956 8,003 32,953
Ft. Lauderdale, FL (1) 5,166 49,307 6,674 61,147 11,072 50,075
Ft. Lauderdale (Cypress Creek), FL (11) 3,009 27,149 3,584 33,742 2,609 31,133
Jacksonville, FL (1) 1,130 14,485 2,786 18,401 3,777 14,624
Kissimmee (Nikki Bird Resort), FL (2) 37,913 3,217 41,130 3,373 37,757
Lake Buena Vista (Disney World(R)), FL (5) 2,896 25,441 3,813 32,150 3,765 28,385
Miami (Airport), FL (6) 27,139 2,238 29,377 2,489 26,888
Miami (Airport), FL (1) 4,135 25,265 7,460 36,860 8,560 28,300
Orlando (Airport), FL (9) 2,564 23,985 1,197 27,746 1,760 25,986
Orlando (Int'l Drive Resort), FL (2) 5,142 49,328 3,491 57,961 3,660 54,301
Orlando (North), FL (1) 1,673 19,290 3,395 24,358 5,063 19,295
Orlando (South), FL (1) 1,632 14,245 3,148 19,025 4,685 14,340
Tampa (Near Busch Gardens), FL (2) 20,710 2,495 23,205 2,119 21,086
Tampa Rocky Point, FL (5) 2,142 19,760 3,116 25,018 2,842 22,176
Atlanta (Airport), GA (6) 41,075 1,889 42,964 3,151 39,813
Atlanta (Airport), GA (1) 2,568 23,491 2,338 28,397 2,018 26,379
Atlanta (Airport Gateway), GA (3) 5,113 23,058 6,093 34,264 5,007 29,257
Atlanta (Airport North), GA (2) 34,796 1,807 36,603 2,612 33,991
Atlanta Buckhead, GA (1) 7,303 39,666 4,994 51,963 6,989 44,974
LIFE UPON
WHICH
DEPRECIATION
DATE OF DATE IN STATEMENT
DESCRIPTION OF PROPERTY CONSTRUCTION ACQUIRED IS COMPUTED
- ----------------------- ------------ -------- ------------
Birmingham, AL (1) 1987 01-03-96 5 - 40 Yrs
Montgomery E. (I-85), AL (2) 1964 07-28-98 5 - 40 Yrs
Texarkana (I-30), AR (2) 1970 07-28-98 5 - 40 Yrs
Flagstaff, AZ (1) 1988 02-16-95 5 - 40 Yrs
Phoenix (Airport - 44th St.), AZ (1) 1981 05-04-98 5 - 40 Yrs
Phoenix (Camelback), AZ (1) 1985 01-03-96 5 - 40 Yrs
Phoenix (Crescent), AZ (3) 1986 06-30-97 5 - 40 Yrs
Tempe (ASU), AZ (1) 1986 05-04-98 5 - 40 Yrs
Anaheim (Disney(R)Area), CA (1) 1987 01-03-96 5 - 40 Yrs
Burlingame (San Francisco A/P So.), CA (1) 1986 11-06-95 5 - 40 Yrs
Dana Point, CA (5) 1992 02-21-97 5 - 40 Yrs
El Segundo (LAX Airport South), CA (1) 1985 03-27-96 5 - 40 Yrs
Irvine (Orange County Airport), CA (6) 1986 07-28-98 5 - 40 Yrs
Milpitas, CA (1) 1987 01-03-96 5 - 40 Yrs
Milpitas (San Jose N.), CA (6) 1987 07-28-98 5 - 40 Yrs
Napa, CA (1) 1985 05-08-96 5 - 40 Yrs
Oxnard (Mandalay Beach), CA (1) 1986 05-08-96 5 - 40 Yrs
Palm Desert, CA (1) 1984 05-04-98 5 - 40 Yrs
Pleasanton, CA (6) 1986 07-28-98 5 - 40 Yrs
San Diego (On the Bay), CA (2) 1965 07-28-98 5 - 40 Yrs
San Francisco (Financial District), CA (2) 1970 07-28-98 5 - 40 Yrs
San Francisco (Fisherman's Wharf), CA (2) 1970 07-28-98 5 - 40 Yrs
San Francisco (Union Square), CA (6) 1970 07-28-98 5 - 40 Yrs
Santa Barbara, CA (2) 1969 07-28-98 5 - 40 Yrs
So. San Francisco (SF Airport No.), CA (1) 1988 01-03-96 5 - 40 Yrs
Aurora (Denver Southeast), CO (7) 1989 03-15-98 5 - 40 Yrs
Avon (Beaver Creek Resort), CO (8) 1989 02-20-96 5 - 40 Yrs
Hartford Downtown, CT (6) 1973 07-28-98 5 - 40 Yrs
Stamford, CT (9) 1984 07-28-98 5 - 40 Yrs
Wilmington, DE (7) 1972 03-20-98 5 - 40 Yrs
Boca Raton, FL (1) 1989 02-28-96 5 - 40 Yrs
Cocoa Beach (Oceanfront Resort), FL (2) 1960 07-28-98 5 - 40 Yrs
Deerfield Beach, FL (1) 1987 01-03-96 5 - 40 Yrs
Ft. Lauderdale, FL (1) 1986 01-03-96 5 - 40 Yrs
Ft. Lauderdale (Cypress Creek), FL (11) 1986 05-04-98 5 - 40 Yrs
Jacksonville, FL (1) 1986 07-28-94 5 - 40 Yrs
Kissimmee (Nikki Bird Resort), FL (2) 1974 07-28-98 5 - 40 Yrs
Lake Buena Vista (Disney World(R)), FL (5) 1987 07-28-97 5 - 40 Yrs
Miami (Airport), FL (6) 1987 01-03-96 5 - 40 Yrs
Miami (Airport), FL (1) 1983 07-28-98 5 - 40 Yrs
Orlando (Airport), FL (9) 1984 07-28-98 5 - 40 Yrs
Orlando (Int'l Drive Resort), FL (2) 1972 07-28-98 5 - 40 Yrs
Orlando (North), FL (1) 1985 07-28-94 5 - 40 Yrs
Orlando (South), FL (1) 1985 07-28-94 5 - 40 Yrs
Tampa (Near Busch Gardens), FL (2) 1966 07-28-98 5 - 40 Yrs
Tampa Rocky Point, FL (5) 1986 07-28-97 5 - 40 Yrs
Atlanta (Airport), GA (6) 1975 07-28-98 5 - 40 Yrs
Atlanta (Airport), GA (1) 1989 05-04-98 5 - 40 Yrs
Atlanta (Airport Gateway), GA (3) 1986 06-30-97 5 - 40 Yrs
Atlanta (Airport North), GA (2) 1967 07-28-98 5 - 40 Yrs
Atlanta Buckhead, GA (1) 1988 10-17-96 5 - 40 Yrs
F-32
81
FELCOR LODGING LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION-- (CONTINUED)
COST CAPITALIZED SUBSEQUENT
INITIAL COST TO ACQUISITION
------------------------------ -----------------------------
BUILDINGS FURNITURE BUILDINGS FURNITURE
AND AND AND AND
DESCRIPTION OF PROPERTY ENCUMBRANCES LAND IMPROVEMENTS FIXTURES LAND IMPROVEMENTS FIXTURES
- ----------------------- ------------ ---- ------------ -------- ---- ------------ --------
Atlanta (Galleria), GA (11) 17,880 5,052 28,507 2,526 477 626
Atlanta (Jonesboro South), GA (2) 2,869 864 7,515 259 137 507
Atlanta Perimeter, GA (9) 10,708 20,556 636 188 502
Atlanta Powers Ferry, GA (6) 10,444 3,410 29,672 1,023 555 550
Brunswick, GA (1) 705 6,067 247 28 1,067
Columbus (Airport North), GA (2) 7,026 217 1,965 856
Chicago (Allerton), IL (6) 3,343 29,086 1,003 54,918 7,758
Chicago (O'Hare), IL (3) 24,833 8,178 37,043 2,887 337 1,334
Deerfield, IL (1) 16,480 2,305 20,054 692 531 1,570
Lexington, KY (14) 1,955 13,604 587 155 1,992
Lexington, KY (11) 6,953 21,644 746 2,488 396 669
Baton Rouge, LA (1) 7,906 2,350 19,092 525 1 618 4,090
New Orleans (French Quarter), LA (2) 24,147 5,263 45,793 1,579 272 621
New Orleans, LA (1) 32,463 2,570 22,300 895 4,806 3,261
Boston (Government Center), MA (9) 45,452 1,406 4,495 1,105
Boston (Marlborough), MA (1) 20,383 948 8,143 325 761 12,994 5,154
Baltimore (BWI), MD (1) 2,568 22,433 770 (2) 1,272 2,279
Troy, MI (1) 2,968 25,905 909 1,212 2,013
Bloomington, MN (1) 2,038 17,731 611 529 3,285
Minneapolis (Airport), MN (1) 15,617 5,417 36,508 602 249 3,307
Minneapolis (Downtown), MN (1) 818 16,820 505 227 3,519
St. Paul, MN (1) 1,156 17,315 849 90 3,455
Kansas City (Northeast), MO (2) 973 8,461 292 12 2,602
St. Louis (Downtown), MO (1) 3,179 27,659 954 1,274 2,332
St. Louis (Westport), MO (2) 2,767 24,072 830 192 448
Jackson (Downtown), MS (6) 5,036 2,226 19,370 668 116 329
Jackson (North), MS (15) 5,438 1,643 14,296 493 221 394
Olive Branch (Whispering Woods
Conference Center), MS (8) 1,247 12,155 419 (158) 1,564 1,496
Raleigh/Durham, NC (5) 2,124 18,476 637 99 1,890
Omaha (Central), NE (5) 1,877 16,328 563 215 1,796
Omaha (Central), NE (12) 518 4,504 155 816 484
Omaha (I-80), NE (2) 6,154 1,795 15,614 538 2,289 1,853
Omaha (Old Mill Northwest), NE (6) 979 8,519 294 4,669 2,459
Omaha (Southwest), NE (12) 464 4,036 139 613 263
Omaha, (Southwest) NE (13) 923 8,029 277 864 392
Omaha (Southwest), NE (15) 373 3,245 112 12 118
Piscataway, NJ (1) 20,609 1,755 17,563 527 843 2,924
Secaucus (Meadowlands), NJ (6) 2,356 20,497 707 4,254 5,981
Albuquerque (Mountain View), NM (2) 1,322 11,505 397 120 547
Syracuse, NY (1) 1,483 13,756 1,330 274 417
Cleveland, OH (1) 1,755 15,329 527 1,852 2,436
Columbus, OH (5) 1,918 16,691 576 760 1,077
Dayton, OH (5) 6,707 1,140 11,223 342 149 1,109 391
Tulsa, OK (1) 525 7,344 3,117 636 2,591
Philadelphia (Center City), PA (6) 5,793 50,395 1,738 2,470 1,349
Philadelphia (Independence Mall), PA (2) 14,000 3,184 27,704 955 5,861 2,154
Philadelphia (Society Hill), PA (3) 33,773 4,542 45,121 1,536 1,056 2,872
Pittsburgh, PA (9) 15,500 25,170 773 1,692 1,913
Charleston (Mills House), SC (2) 3,270 28,446 981 347 2,376
Greenville (Roper), SC (6) 1,551 13,492 465 670 782
Myrtle Beach (Kingston Plantation), SC (1) 2,940 24,988 1,470 1,557 4,913
GROSS AMOUNTS AT WHICH ACCUMULATED NET BOOK
CARRIED AT CLOSE OF PERIOD DEPRECIATION VALUE
--------------------------------- BUILDINGS AND BUILDINGS AND
BUILDINGS FURNITURE IMPROVEMENTS; IMPROVEMENTS;
AND AND FURNITURE & FURNITURE &
DESCRIPTION OF PROPERTY LAND IMPROVEMENTS FIXTURES TOTAL FIXTURES FIXTURES
- ----------------------- ---- ------------ --------- ----- ------------- -------------
Atlanta (Galleria), GA (11) 5,052 28,984 3,152 37,188 4,433 32,755
Atlanta (Jonesboro South), GA (2) 864 7,652 766 9,282 648 8,634
Atlanta Perimeter, GA (9) 20,744 1,138 21,882 1,641 20,241
Atlanta Powers Ferry, GA (6) 3,410 30,227 1,573 35,210 2,365 32,845
Brunswick, GA (1) 705 6,095 1,314 8,114 1,692 6,422
Columbus (Airport North), GA (2) 8,991 1,073 10,064 931 9,133
Chicago (Allerton), IL (6) 3,343 84,004 8,761 96,108 5,351 90,757
Chicago (O'Hare), IL (3) 8,178 37,380 4,221 49,779 5,676 44,103
Deerfield, IL (1) 2,305 20,585 2,262 25,152 3,634 21,518
Lexington, KY (14) 1,955 13,759 2,579 18,293 3,390 14,903
Lexington, KY (11) 2,488 22,040 1,415 25,943 1,890 24,053
Baton Rouge, LA (1) 2,351 19,710 4,615 26,676 5,911 20,765
New Orleans (French Quarter), LA (2) 5,263 46,065 2,200 53,528 3,575 49,953
New Orleans, LA (1) 2,570 27,106 4,156 33,832 6,896 26,936
Boston (Government Center), MA (9) 49,947 2,511 52,458 3,459 48,999
Boston (Marlborough), MA (1) 1,709 21,137 5,479 28,325 5,821 22,504
Baltimore (BWI), MD (1) 2,566 23,705 3,049 29,320 3,330 25,990
Troy, MI (1) 2,968 27,117 2,922 33,007 3,553 29,454
Bloomington, MN (1) 2,038 18,260 3,896 24,194 3,151 21,043
Minneapolis (Airport), MN (1) 5,417 36,757 3,909 46,083 8,013 38,070
Minneapolis (Downtown), MN (1) 818 17,047 4,024 21,889 5,539 16,350
St. Paul, MN (1) 1,156 17,405 4,304 22,865 5,938 16,927
Kansas City (Northeast), MO (2) 973 8,473 2,894 12,340 1,705 10,635
St. Louis (Downtown), MO (1) 3,179 28,933 3,286 35,398 2,722 32,676
St. Louis (Westport), MO (2) 2,767 24,264 1,278 28,309 1,943 26,366
Jackson (Downtown), MS (6) 2,226 19,486 997 22,709 1,651 21,058
Jackson (North), MS (15) 1,643 14,517 887 17,047 1,267 15,780
Olive Branch (Whispering Woods
Conference Center), MS (8) 1,089 13,719 1,915 16,723 1,473 15,250
Raleigh/Durham, NC (5) 2,124 18,575 2,527 23,226 2,752 20,474
Omaha (Central), NE (5) 1,877 16,543 2,359 20,779 2,930 17,849
Omaha (Central), NE (12) 518 5,320 639 6,477 475 6,002
Omaha (I-80), NE (2) 1,795 17,903 2,391 22,089 1,338 20,751
Omaha (Old Mill Northwest), NE (6) 979 13,188 2,753 16,920 1,426 15,494
Omaha (Southwest), NE (12) 464 4,649 402 5,515 394 5,121
Omaha, (Southwest) NE (13) 923 8,893 669 10,485 720 9,765
Omaha (Southwest), NE (15) 373 3,257 230 3,860 351 3,509
Piscataway, NJ (1) 1,755 18,406 3,451 23,612 4,493 19,119
Secaucus (Meadowlands), NJ (6) 2,356 24,751 6,688 33,795 2,890 30,905
Albuquerque (Mountain View), NM (2) 1,322 11,625 944 13,891 1,070 12,821
Syracuse, NY (1) 1,483 14,030 1,747 17,260 2,253 15,007
Cleveland, OH (1) 1,755 17,181 2,963 21,899 3,910 17,989
Columbus, OH (5) 1,918 17,451 1,653 21,022 1,987 19,035
Dayton, OH (5) 1,289 12,332 733 14,354 1,196 13,158
Tulsa, OK (1) 525 7,980 5,708 14,213 6,727 7,486
Philadelphia (Center City), PA (6) 5,793 52,865 3,087 61,745 4,264 57,481
Philadelphia (Independence Mall), PA (2) 3,184 33,565 3,109 39,858 3,021 36,837
Philadelphia (Society Hill), PA (3) 4,542 46,177 4,408 55,127 5,320 49,807
Pittsburgh, PA (9) 26,862 2,686 29,548 2,277 27,271
Charleston (Mills House), SC (2) 3,270 28,793 3,357 35,420 2,609 32,811
Greenville (Roper), SC (6) 1,551 14,162 1,247 16,960 1,315 15,645
Myrtle Beach (Kingston Plantation), SC (1) 2,940 26,545 6,383 35,868 6,201 29,667
LIFE UPON
WHICH
DEPRECIATION
DATE OF DATE IN STATEMENT
DESCRIPTION OF PROPERTY CONSTRUCTION ACQUIRED IS COMPUTED
- ----------------------- ------------ -------- -----------
Atlanta (Galleria), GA (11) 1990 06-30-97 5 - 40 Yrs
Atlanta (Jonesboro South), GA (2) 1973 07-28-98 5 - 40 Yrs
Atlanta Perimeter, GA (9) 1985 07-28-98 5 - 40 Yrs
Atlanta Powers Ferry, GA (6) 1981 07-28-98 5 - 40 Yrs
Brunswick, GA (1) 1988 07-19-95 5 - 40 Yrs
Columbus (Airport North), GA (2) 1969 07-28-98 5 - 40 Yrs
Chicago (Allerton), IL (6) 1923 07-28-98 5 - 40 Yrs
Chicago (O'Hare), IL (3) 1994 06-30-97 5 - 40 Yrs
Deerfield, IL (1) 1987 06-20-96 5 - 40 Yrs
Lexington, KY (14) 1987 01-10-96 5 - 40 Yrs
Lexington, KY (11) 1989 05-04-98 5 - 40 Yrs
Baton Rouge, LA (1) 1985 01-03-96 5 - 40 Yrs
New Orleans (French Quarter), LA (2) 1969 07-28-98 5 - 40 Yrs
New Orleans, LA (1) 1984 12-01-94 5 - 40 Yrs
Boston (Government Center), MA (9) 1968 07-28-98 5 - 40 Yrs
Boston (Marlborough), MA (1) 1988 06-30-95 5 - 40 Yrs
Baltimore (BWI), MD (1) 1987 03-20-97 5 - 40 Yrs
Troy, MI (1) 1987 03-20-97 5 - 40 Yrs
Bloomington, MN (1) 1980 02-01-97 5 - 40 Yrs
Minneapolis (Airport), MN (1) 1986 11-06-95 5 - 40 Yrs
Minneapolis (Downtown), MN (1) 1984 11-15-95 5 - 40 Yrs
St. Paul, MN (1) 1983 11-15-95 5 - 40 Yrs
Kansas City (Northeast), MO (2) 1975 07-28-98 5 - 40 Yrs
St. Louis (Downtown), MO (1) 1985 05-04-98 5 - 40 Yrs
St. Louis (Westport), MO (2) 1979 07-28-98 5 - 40 Yrs
Jackson (Downtown), MS (6) 1975 07-28-98 5 - 40 Yrs
Jackson (North), MS (15) 1957 07-28-98 5 - 40 Yrs
Olive Branch (Whispering Woods
Conference Center), MS (8) 1972 07-28-98 5 - 40 Yrs
Raleigh/Durham, NC (5) 1987 07-28-97 5 - 40 Yrs
Omaha (Central), NE (5) 1973 02-01-97 5 - 40 Yrs
Omaha (Central), NE (12) 1965 07-28-98 5 - 40 Yrs
Omaha (I-80), NE (2) 1991 07-28-98 5 - 40 Yrs
Omaha (Old Mill Northwest), NE (6) 1974 07-28-98 5 - 40 Yrs
Omaha (Southwest), NE (12) 1986 07-28-98 5 - 40 Yrs
Omaha, (Southwest) NE (13) 1989 07-28-98 5 - 40 Yrs
Omaha (Southwest), NE (15) 1996 07-28-98 5 - 40 Yrs
Piscataway, NJ (1) 1988 01-10-96 5 - 40 Yrs
Secaucus (Meadowlands), NJ (6) N/A 07-28-98 5 - 40 Yrs
Albuquerque (Mountain View), NM (2) 1968 07-28-98 5 - 40 Yrs
Syracuse, NY (1) 1989 06-30-97 5 - 40 Yrs
Cleveland, OH (1) 1990 11-17-95 5 - 40 Yrs
Columbus, OH (5) 1985 02-04-98 5 - 40 Yrs
Dayton, OH (5) 1987 12-30-97 5 - 40 Yrs
Tulsa, OK (1) 1985 07-28-94 5 - 40 Yrs
Philadelphia (Center City), PA (6) 1970 07-28-98 5 - 40 Yrs
Philadelphia (Independence Mall), PA (2) 1972 07-28-98 5 - 40 Yrs
Philadelphia (Society Hill), PA (3) 1986 10-01-97 5 - 40 Yrs
Pittsburgh, PA (9) 1988 07-28-98 5 - 40 Yrs
Charleston (Mills House), SC (2) 1982 07-28-98 5 - 40 Yrs
Greenville (Roper), SC (6) 1984 07-28-98 5 - 40 Yrs
Myrtle Beach (Kingston Plantation), SC (1) 1987 12-05-96 5 - 40 Yrs
F-33
82
FELCOR LODGING LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION-- (CONTINUED)
COST CAPITALIZED SUBSEQUENT
INITIAL COST TO ACQUISITION
------------------------------ ----------------------------
BUILDINGS FURNITURE BUILDINGS FURNITURE
AND AND AND AND
DESCRIPTION OF PROPERTY ENCUMBRANCES LAND IMPROVEMENTS FIXTURES LAND IMPROVEMENTS FIXTURES
- ----------------------- ------------ ---- ------------ -------- ---- ------------ ---------
Knoxville (Central), TN (2) 11,586 358 1,512 1,009
Nashville, TN (1) 1,118 9,506 961 265 2,201
Nashville (Opryland/Airport), TN (9) 27,889 863 1,849 1,671
Addison (North Dallas), TX (6) 18,180 4,938 42,965 1,482 293 889
Amarillo (I-40), TX (2) 5,754 178 2,591 861
Austin (Downtown), TX (5) 2,508 21,908 752 829 576
Austin (Town Lake), TX (2) 21,551 667 750 1,605
Beaumont (Midtown I-10), TX (2) 685 5,964 206 1,872 703
Corpus Christi, TX (1) 5,307 1,113 9,618 390 51 396 1,656
Dallas, TX (19) 3,536 13,564 420 2,409 264 617
Dallas (Alpha Road), TX (17) 9,795 53 1,623 (1,678) 1,713
Dallas (Campbell Center), TX (7) 3,208 27,907 962 988 1,981
Dallas, (DFW Airport South), TX (1) 35,156 1,212 4,041 448 3,906
Dallas (Downtown West End), TX (12) 1,953 16,989 586 155 96
Dallas (Love Field), TX (1) 13,699 1,934 16,674 757 371 1,775
Dallas (Market Center), TX (6) 12,830 4,079 35,486 1,224 559 817
Dallas (Market Center), TX (1) 12,231 2,560 23,751 2,182 413 536
Dallas (Park Central), TX (6) 15,723 30,513 944 5,623 201 654
Dallas (Park Central), TX (1) 1,497 12,722 647 703 2,399
Dallas (Park Central), TX (3) 1,720 28,550 4,130 125 989
Dallas (Park Central), TX (20) 4,513 43,125 2,507 4,437 2,477
Houston (I-10 West), TX (9) 3,055 26,575 916 191 316
Houston (Int'l Airport), TX (2) 13,088 3,890 33,842 1,167 173 438
Houston (Medical Center), TX (6) 6,214 2,493 21,687 748 581 505
Houston (Medical Center), TX (15) 8,248 2,284 19,869 685 2,029 1,744
Houston (Near Greenway), TX (9) 6,944 3,418 29,736 1,025 327 1,104
Irving (DFW Airport North), TX (19) 28,006 56,714 1,754 10,039 654 1,663
Irving (DFW Airport North), TX (21) 10,766 1,546 13,453 464 145 2,158
Midland (Country Villa), TX (2) 404 3,517 121 68 291
Odessa (Centre), TX (15) 487 4,238 146 58 363
Odessa (Parkway Blvd), TX (13) 370 3,218 111 38 202
Plano, TX (19) 4,813 1,813 15,775 544 467 1,124
Plano, TX (2) 885 7,696 265 113 284
San Antonio (Downtown), TX (2) 22,246 688 524 562
San Antonio (Int'l Airport), TX (9) 3,371 29,326 1,011 1,825 778
Waco (I-35), TX (2) 574 4,994 172 93 306
Salt Lake City (Airport), UT (2) 5,346 165 2,725 1,046
Burlington, VT (3) 20,860 3,136 27,283 941 446 1,731
Cambridge, Canada (2) 481 4,188 144 1,082 841
Kitchener (Waterloo), Canada (2) 9,441 292 1,543 715
Peterbourough (Waterfront), Canada (2) 735 6,391 220 632 593
Sarnia, Canada (2) 271 2,359 81 1,093 810
Toronto (Airport), Canada (9) 21,168 655 3,137 1,679
Toronto (Yorkdale), Canada (2) 1,578 13,725 473 4,372 1,261
-------- -------- ---------- -------- ------- -------- --------
Total $751,995 $287,816 $3,213,820 $123,687 $34,178 $263,186 $285,324
======== ======== ========== ======== ======= ======== ========
GROSS AMOUNTS AT WHICH ACCUMULATED NET BOOK
CARRIED AT CLOSE OF PERIOD DEPRECIATION VALUE
-------------------------------- BUILDINGS AND BUILDINGS AND
BUILDINGS FURNITURE IMPROVEMENTS; IMPROVEMENTS;
AND AND FURNITURE & FURNITURE &
DESCRIPTION OF PROPERTY LAND IMPROVEMENTS FIXTURES TOTAL FIXTURES FIXTURES
- ----------------------- ---- ------------ -------- ----- ------------- -------------
Knoxville (Central), TN (2) 13,098 1,367 14,465 1,306 13,159
Nashville, TN (1) 1,118 9,771 3,162 14,051 4,493 9,558
Nashville (Opryland/Airport), TN (9) 29,738 2,534 32,272 2,420 29,852
Addison (North Dallas), TX (6) 4,938 43,258 2,371 50,567 3,702 46,865
Amarillo (I-40), TX (2) 8,345 1,039 9,384 793 8,591
Austin (Downtown), TX (5) 2,508 22,737 1,328 26,573 2,857 23,716
Austin (Town Lake), TX (2) 22,301 2,272 24,573 2,116 22,457
Beaumont (Midtown I-10), TX (2) 685 7,836 909 9,430 731 8,699
Corpus Christi, TX (1) 1,164 10,014 2,046 13,224 3,062 10,162
Dallas, TX (19) 2,409 13,828 1,037 17,274 1,211 16,063
Dallas (Alpha Road), TX (17) 1,623 8,117 1,766 11,506 2,787 8,719
Dallas (Campbell Center), TX (7) 3,208 28,895 2,943 35,046 2,462 32,584
Dallas, (DFW Airport South), TX (1) 4,041 35,604 5,118 44,763 3,426 41,337
Dallas (Downtown West End), TX (12) 1,953 17,144 682 19,779 1,287 18,492
Dallas (Love Field), TX (1) 1,934 17,045 2,532 21,511 4,325 17,186
Dallas (Market Center), TX (6) 4,079 36,045 2,041 42,165 2,876 39,289
Dallas (Market Center), TX (1) 2,560 24,164 2,718 29,442 3,772 25,670
Dallas (Park Central), TX (6) 5,623 30,714 1,598 37,935 2,462 35,473
Dallas (Park Central), TX (1) 1,497 13,425 3,046 17,968 4,475 13,493
Dallas (Park Central), TX (3) 1,720 28,675 5,119 35,514 3,169 32,345
Dallas (Park Central), TX (20) 4,513 47,562 4,984 57,059 6,446 50,613
Houston (I-10 West), TX (9) 3,055 26,766 1,232 31,053 2,116 28,937
Houston (Int'l Airport), TX (2) 3,890 34,015 1,605 39,510 2,675 36,835
Houston (Medical Center), TX (6) 2,493 22,268 1,253 26,014 1,847 24,167
Houston (Medical Center), TX (15) 2,284 21,898 2,429 26,611 2,206 24,405
Houston (Near Greenway), TX (9) 3,418 30,063 2,129 35,610 2,502 33,108
Irving (DFW Airport North), TX (19) 10,039 57,368 3,417 70,824 4,883 65,941
Irving (DFW Airport North), TX (21) 1,546 13,598 2,622 17,766 1,200 16,566
Midland (Country Villa), TX (2) 404 3,585 412 4,401 391 4,010
Odessa (Centre), TX (15) 487 4,296 509 5,292 393 4,899
Odessa (Parkway Blvd), TX (13) 370 3,256 313 3,939 305 3,634
Plano, TX (19) 1,813 16,242 1,668 19,723 1,530 18,193
Plano, TX (2) 885 7,809 549 9,243 704 8,539
San Antonio (Downtown), TX (2) 22,770 1,250 24,020 1,876 22,144
San Antonio (Int'l Airport), TX (9) 3,371 31,151 1,789 36,311 2,532 33,779
Waco (I-35), TX (2) 574 5,087 478 6,139 494 5,645
Salt Lake City (Airport), UT (2) 8,071 1,211 9,282 759 8,523
Burlington, VT (3) 3,136 27,729 2,672 33,537 2,986 30,551
Cambridge, Canada (2) 481 5,270 985 6,736 563 6,173
Kitchener (Waterloo), Canada (2) 10,984 1,007 11,991 882 11,109
Peterbourough (Waterfront), Canada (2) 735 7,023 813 8,571 678 7,893
Sarnia, Canada (2) 271 3,452 891 4,614 197 4,417
Toronto (Airport), Canada (9) 24,305 2,334 26,639 2,215 24,424
Toronto (Yorkdale), Canada (2) 1,578 18,097 1,734 21,409 1,409 20,000
-------- ---------- -------- ---------- -------- ----------
Total $321,994 $3,477,006 $409,011 $4,208,011 $473,101 $3,734,910
======== ========== ======== ========== ======== ==========
LIFE UPON
WHICH
DEPRECIATION
DATE OF DATE IN STATEMENT
DESCRIPTION OF PROPERTY CONSTRUCTION ACQUIRED IS COMPUTED
- ----------------------- ------------ -------- -----------
Knoxville (Central), TN (2) 1966 07-28-98 5 - 40 Yrs
Nashville, TN (1) 1985 07-28-94 5 - 40 Yrs
Nashville (Opryland/Airport), TN (9) 1981 07-28-98 5 - 40 Yrs
Addison (North Dallas), TX (6) 1985 07-28-98 5 - 40 Yrs
Amarillo (I-40), TX (2) 1970 07-28-98 5 - 40 Yrs
Austin (Downtown), TX (5) 1987 03-20-97 5 - 40 Yrs
Austin (Town Lake), TX (2) 1967 07-28-98 5 - 40 Yrs
Beaumont (Midtown I-10), TX (2) 1967 07-28-98 5 - 40 Yrs
Corpus Christi, TX (1) 1984 07-19-95 5 - 40 Yrs
Dallas, TX (19) 1988 07-28-98 5 - 40 Yrs
Dallas (Alpha Road), TX (17) 1997 07-28-98 5 - 40 Yrs
Dallas (Campbell Center), TX (7) 1982 05-29-98 5 - 40 Yrs
Dallas, (DFW Airport South), TX (1) 1985 07-28-98 5 - 40 Yrs
Dallas (Downtown West End), TX (12) 1969 07-28-98 5 - 40 Yrs
Dallas (Love Field), TX (1) 1986 03-29-95 5 - 40 Yrs
Dallas (Market Center), TX (6) 1983 07-28-98 5 - 40 Yrs
Dallas (Market Center), TX (1) 1980 06-30-97 5 - 40 Yrs
Dallas (Park Central), TX (6) 1981 07-28-98 5 - 40 Yrs
Dallas (Park Central), TX (1) 1985 07-28-94 5 - 40 Yrs
Dallas (Park Central), TX (3) 1972 11-01-98 5 - 40 Yrs
Dallas (Park Central), TX (20) 1983 06-30-97 5 - 40 Yrs
Houston (I-10 West), TX (9) 1969 07-28-98 5 - 40 Yrs
Houston (Int'l Airport), TX (2) 1971 07-28-98 5 - 40 Yrs
Houston (Medical Center), TX (6) 1973 07-28-98 5 - 40 Yrs
Houston (Medical Center), TX (15) 1984 07-28-98 5 - 40 Yrs
Houston (Near Greenway), TX (9) 1984 07-28-98 5 - 40 Yrs
Irving (DFW Airport North), TX (19) 1987 07-28-98 5 - 40 Yrs
Irving (DFW Airport North), TX (21) 1989 07-28-98 5 - 40 Yrs
Midland (Country Villa), TX (2) 1979 07-28-98 5 - 40 Yrs
Odessa (Centre), TX (15) 1982 07-28-98 5 - 40 Yrs
Odessa (Parkway Blvd), TX (13) 1977 07-28-98 5 - 40 Yrs
Plano, TX (19) 1983 07-28-98 5 - 40 Yrs
Plano, TX (2) 1983 07-28-98 5 - 40 Yrs
San Antonio (Downtown), TX (2) 1968 07-28-98 5 - 40 Yrs
San Antonio (Int'l Airport), TX (9) 1981 07-28-98 5 - 40 Yrs
Waco (I-35), TX (2) 1970 07-28-98 5 - 40 Yrs
Salt Lake City (Airport), UT (2) 1963 07-28-98 5 - 40 Yrs
Burlington, VT (3) 1967 12-04-97 5 - 40 Yrs
Cambridge, Canada (2) 1969 07-28-98 5 - 40 Yrs
Kitchener (Waterloo), Canada (2) 1965 07-28-98 5 - 40 Yrs
Peterbourough (Waterfront), Canada (2) 1965 07-28-98 5 - 40 Yrs
Sarnia, Canada (2) 1970 07-28-98 5 - 40 Yrs
Toronto (Airport), Canada (9) 1970 07-28-98 5 - 40 Yrs
Toronto (Yorkdale), Canada (2) 1970 07-28-98 5 - 40 Yrs
Total
F-34
83
FELCOR LODGING LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION-- (CONTINUED)
Balance at December 31, 1997 $1,562,724 Depreciation expense during the period $ 50,682
---------
Additions during the period 2,537,222 Balance at December 31, 1997 87,400
----------
Balance at December 31, 1998 $4,099,946 Depreciation expense during the period 90,672
---------
Additions during the period 247,116 Balance at December 31, 1998 $ 178,072
----------
Balance at December 31, 1999 $4,347,062 Depreciation expense during the period 152,483
---------
Sold Hotels in 2000 (31,921) Balance at December 31, 1999 $ 330,555
Hotels Held for Sale (206,000) Sold Hotels in 2000 (4,200)
Additions during the period 98,870 Hotels Held for Sale (13,706)
----------
Balance at December 31, 2000 $4,208,011 Depreciation expense during the period 160,452
---------- ---------
Balance at December 31, 2000 $ 473,101
COST CAPITALIZED SUBSEQUENT
INITIAL COST TO ACQUISITION
--------------------------------- ------------------------------
BUILDINGS FURNITURE BUILDINGS FURNITURE
AND AND AND AND
DESCRIPTION OF PROPERTY ENCUMBRANCES LAND IMPROVEMENTS FIXTURES LAND IMPROVEMENTS FIXTURES
- ----------------------- ------------ ------- ------------ --------- ---- ------------ ---------
Scottsdale (Downtown), AZ (4) 12,430 384 24 151
Boca Raton, FL (5) 5,433 2,796 468 243 1,316
Tampa (Busch Gardens), FL (5) 672 12,387 226 134 991
Atlanta (Downtown), GA (10) 2,025 17,618 608 25 202
Atlanta, (Downtown), GA (4) 1,266 11,017 380 213 494
Marietta, GA (12) 952 8,285 286 467 587
Davenport, IA (12) 434 3,776 130 405 372
Davenport, IA (2) 547 4,763 164 1,333 1,003
Moline, IL (12) 505 4,398 152 535 470
Moline (Airport), IL (2) 822 7,149 247 1,240 1,039
Moline (Airport), IL (13) 232 2,021 70 383 429
Colby, KS (13) 339 2,950 102 228 48
Great Bend, KS (2) 549 4,780 165 215 372
Hays, KS (12) 243 2,112 73 306 267
Hays, KS (2) 597 5,190 179 43 183
Salina, KS (2) 4,891 502 4,370 151 66 341
Salina (I-70), KS (13) 341 2,964 102 (14) 95
Jackson (Briarwood), MS (12) 626 747 6,501 224 144 191
Nashville (Airport), TN (5) 1,073 9,331 322 624 1,114
Dallas (Regal Row), TX (4) 778 6,770 233 19 76
Houston (Galleria), TX (10) 1,855 16,143 557 177 322
Houston (Galleria), TX (4) 465 4,047 140 19 135
Houston (I-10 East), TX (4) 586 5,099 176 66 300
Houston (I-10 East), TX (12) 478 4,155 143 196 236
------ ------- -------- ------ ------ -------
Total $5,517 $21,441 $161,052 $5,682 $7,091 $10,734
Reserve for assets held for sale
GROSS AMOUNTS AT WHICH ACCUMULATED NET BOOK
CARRIED AT CLOSE OF PERIOD DEPRECIATION VALUE
---------------------------------- BUILDINGS AND BUILDINGS AND
BUILDINGS FURNITURE IMPROVEMENTS; IMPROVEMENTS;
AND AND FURNITURE & FURNITURE &
DESCRIPTION OF PROPERTY LAND IMPROVEMENTS FIXTURES TOTAL FIXTURES FIXTURES
- ----------------------- ------- ------------ --------- -------- ------------- -------------
Scottsdale (Downtown), AZ (4) 12,454 535 12,989 731 12,258
Boca Raton, FL (5) 5,433 3,039 1,784 10,256 1,538 8,718
Tampa (Busch Gardens), FL (5) 672 12,521 1,217 14,410 2,118 12,292
Atlanta (Downtown), GA (10) 2,025 17,643 810 20,478 1,056 19,422
Atlanta, (Downtown), GA (4) 1,266 11,230 874 13,370 721 12,649
Marietta, GA (12) 952 8,752 873 10,577 631 9,946
Davenport, IA (12) 434 4,181 502 5,117 238 4,879
Davenport, IA (2) 547 6,096 1,167 7,810 328 7,482
Moline, IL (12) 505 4,933 622 6,060 282 5,778
Moline (Airport), IL (2) 822 8,389 1,286 10,497 455 10,042
Moline (Airport), IL (13) 232 2,404 499 3,135 148 2,987
Colby, KS (13) 339 3,178 150 3,667 195 3,472
Great Bend, KS (2) 549 4,995 537 6,081 344 5,737
Hays, KS (12) 243 2,418 340 3,001 131 2,870
Hays, KS (2) 597 5,233 362 6,192 338 5,854
Salina, KS (2) 502 4,436 492 5,430 307 5,123
Salina (I-70), KS (13) 341 2,950 197 3,488 186 3,302
Jackson (Briarwood), MS (12) 747 6,645 415 7,807 392 7,415
Nashville (Airport), TN (5) 1,073 9,955 1,436 12,464 1,240 11,224
Dallas (Regal Row), TX (4) 778 6,789 309 7,876 406 7,470
Houston (Galleria), TX (10) 1,855 16,320 879 19,054 1,010 18,044
Houston (Galleria), TX (4) 465 4,066 275 4,806 258 4,548
Houston (I-10 East), TX (4) 586 5,165 476 6,227 352 5,875
Houston (I-10 East), TX (12) 478 4,351 379 5,208 301 4,907
------- -------- ------- -------- ------- --------
Total $21,441 $168,143 $16,416 $206,000 $13,706 $192,294
Reserve for assets held for sale (63,000)
--------
$129,294
========
LIFE UPON
WHICH
DEPRECIATION
DATE OF DATE IN STATEMENT
DESCRIPTION OF PROPERTY CONSTRUCTION ACQUIRED IS COMPUTED
- ----------------------- ------------ -------- ------------
Scottsdale (Downtown), AZ (4) 1970 07-28-98 5 - 40 Yrs
Boca Raton, FL (5) 1989 11-15-95 5 - 40 Yrs
Tampa (Busch Gardens), FL (5) 1985 11-15-95 5 - 40 Yrs
Atlanta (Downtown), GA (10) 1963 07-28-98 5 - 40 Yrs
Atlanta, (Downtown), GA (4) 1963 07-28-98 5 - 40 Yrs
Marietta, GA (12) 1986 07-28-98 5 - 40 Yrs
Davenport, IA (12) 1985 07-28-98 5 - 40 Yrs
Davenport, IA (2) 1966 07-28-98 5 - 40 Yrs
Moline, IL (12) 1985 07-28-98 5 - 40 Yrs
Moline (Airport), IL (2) 1961 07-28-98 5 - 40 Yrs
Moline (Airport), IL (13) 1996 07-28-98 5 - 40 Yrs
Colby, KS (13) 1998 07-28-98 5 - 40 Yrs
Great Bend, KS (2) 1964 07-28-98 5 - 40 Yrs
Hays, KS (12) 1985 07-28-98 5 - 40 Yrs
Hays, KS (2) 1966 07-28-98 5 - 40 Yrs
Salina, KS (2) 1986 07-28-98 5 - 40 Yrs
Salina (I-70), KS (13) 1997 07-28-98 5 - 40 Yrs
Jackson (Briarwood), MS (12) 1985 07-28-98 5 - 40 Yrs
Nashville (Airport), TN (5) 1988 06-05-97 5 - 40 Yrs
Dallas (Regal Row), TX (4) 1969 07-28-98 5 - 40 Yrs
Houston (Galleria), TX (10) 1968 07-28-98 5 - 40 Yrs
Houston (Galleria), TX (4) 1968 07-28-98 5 - 40 Yrs
Houston (I-10 East), TX (4) 1984 07-28-98 5 - 40 Yrs
Houston (I-10 East), TX (12) 1969 07-28-98 5 - 40 Yrs
1. Embassy Suites
2. Holiday Inn
3. Sheraton
4. Fairfield Inn
5. Doubletree Guest Suites
6. Crowne Plaza
7. Doubletree
8. Independents
9. Holiday Inn Select
10. Courtyard by Marriott
11. Sheraton Suites
12. Hampton Inn
13. Holiday Inn Express
14. Hilton Suites
15. Holiday Inn Hotel & Suites
16. Homewood Suites
17. Bristol House(R)
18. Crowne Plaza Suites
19. Harvey Hotel
20. Westin
21. Harvey Suites
F-35
84
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
3.1 - Amended and Restated Agreement of Limited Partnership of
the Company (filed as Exhibit 10.1 to FelCor's Annual
Report on Form 10-K/A Amendment No. 1 for the fiscal
year ended December 31, 1994 (the "1994 10-K/A") and
incorporated herein by reference).
3.2 - First Amendment to Amended and Restated Agreement of
Limited Partnership of the Company dated as of November
17, 1995 by and among FelCor, Promus Hotels, Inc. and
all of the persons or entities who are or shall in the
future become of the limited partners of the Company
(filed as Exhibit 10.1.1 to FelCor's Annual Report on
Form 10-K, as amended, for the fiscal year ended
December 31, 1995 (the "1995 10-K") and incorporated
herein by reference).
3.3 - Second Amendment to Amended and Restated Agreement of
Limited Partnership of the Company dated as of January
9, 1996 between FelCor and all of the persons or
entities who are or shall in the future become limited
partners of the Company (filed as Exhibit 10.1.2 to the
1995 10-K and incorporated herein by reference).
3.4 - Third Amendment to Amended and Restated Agreement of
Limited Partnership of the Company dated as of January
10, 1996 by and among FelCor, MarRay-LexGreen, Inc. and
all of the persons and entities who are or shall in the
future become limited partners of the Company (filed as
Exhibit 10.1.3 to the 1995 10-K and incorporated herein
by reference).
3.5 - Fourth Amendment to the Amended and Restated Agreement
of Limited Partnership of the Company dated as of
January 10, 1996 by and among FelCor,
Piscataway-Centennial Associates Limited Partnership and
all of the persons or entities who are or shall in the
future become limited partners of the Company (filed as
Exhibit 10.1.4 to the 1995 10-K and incorporated herein
by reference).
3.6 - Fifth Amendment to Amended and Restated Agreement of
Limited Partnership of the Company dated as of May 2,
1996, between FelCor and all of the persons or entities
who are or shall in the future become limited partners
of the Company, adopting Addendum No. 2 to Amended and
Restated Agreement of Limited Partnership of the Company
dated as of May 2, 1996 (filed as Exhibit 10.1.5 to
FelCor's Form 10-Q for the quarter ended June 30, 1996,
and incorporated herein by reference).
3.7 - Sixth Amendment to Amended and Restated Agreement of
Limited Partnership of the Company dated as of September
16, 1996, by and among FelCor, John B. Urbahns, II and
all of the persons or entities who are or shall in the
future become limited partners of the Company (filed as
Exhibit 10.1.6 to FelCor's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996, and
incorporated herein by reference).
3.8 - Seventh Amendment to Amended and Restated Agreement of
Limited Partnership of the Company dated as of May 16,
1997, by and among FelCor, PMB Associates, Ltd. and all
of the persons or entities who are or shall in the
future become limited partners of the Company (filed as
Exhibit 10.1.7 to FelCor's Annual Report on Form 10-K
for the fiscal year ended December 31, 1997, and
incorporated herein by reference).
3.9 - Eighth Amendment to Amended and Restated Agreement of
Limited Partnership of the Company dated as of February
6, 1998, by and among FelCor, Columbus/Front Ltd. and
all of the persons or entities who are or shall in the
future become limited partners of the Company (filed as
Exhibit 10.1.8 to FelCor's Annual Report on Form 10-K
for the fiscal year ended December 31, 1997, and
incorporated herein by reference).
E-49
85
EXHIBIT
NUMBER DESCRIPTION
------- -----------
3.10 - Ninth Amendment to Amended and Restated Agreement of
Limited Partnership of the Company dated as of May 1,
1998, between FelCor and all of the persons or entities
who are or shall in the future become limited partners
of the Company, adopting Addendum No. 3 to Amended and
Restated Agreement of Limited Partnership dated as of
May 1, 1998 (filed as Exhibit 10.1.9 to FelCor's Form
8-K dated May 29, 1998, and incorporated herein by
reference).
3.11 - Tenth Amendment to Amended and Restated Agreement of
Limited Partnership of the Company dated as of June 22,
1998, by and among FelCor, Schenley Hotel Associates,
and all of the persons or entities who are or shall in
the future become limited partners of the Company (filed
as Exhibit 10.1.10 to FelCor's Form 10-Q for the quarter
ended October 30, 1998, and incorporated herein by
reference).
3.12 - Eleventh Amendment to Amended and Restated Agreement of
Limited Partnership of the Company dated as of July 28,
1998, between FelCor and all of the persons or entities
who are or shall in the future become limited partners
of the Company, changing the name of the Company to
"FelCor Lodging Limited Partnership" (filed as Exhibit
10.1.11 to FelCor's Form 10-Q for the quarter ended
October 30, 1998, and incorporated herein by reference).
3.13 - Twelfth Amendment to Amended and Restated Agreement of
Limited Partnership of the Company dated as of December
29, 1998, between FelCor and all of the persons or
entities who are or shall in the future become limited
partners of the Company, amending certain provisions of
the Company Agreement (filed as Exhibit 10.1.12 to
FelCor's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998 (the "1998 10-K") and
incorporated herein by reference).
3.14 - Thirteenth Amendment to Amended and Restated Agreement
of Limited Partnership of the Company dated as of
December 31, 1998, by and between FelCor, FelCor Nevada
Holdings, L.L.C. and all of the persons or entities who
are or shall in the future become limited partners of
the Company (filed as Exhibit 10.1.13 to the 1998 10-K
and incorporated herein by reference).
3.15 - Fourteenth Amendment to Amended and Restated Agreement
of Limited Partnership of the Company dated as of March
1, 1999, by and among FelCor, Huie Properties, Ltd., and
all of the persons or entities who are or shall in the
future become limited partners of the Company (filed as
Exhibit 10.1.14 to the 1998 10-K and incorporated herein
by reference).
3.16 - Fifteenth Amendment to Amended and Restated Agreement of
Limited Partnership of the Company dated as of October
15, 1999, by and among FelCor, SRS Properties Limited
Partnership, and all of the persons and entities who are
or shall in the future become limited partners of the
Company (filed as Exhibit 10.1.15 to FelCor's Form 10-K
for the fiscal year ended December 31, 1999 ("the 1999
10-K") and incorporated herein by reference).
3.17 - Sixteenth Amendment to Amended and Restated Agreement of
Limited Partnership of the Company dated as of February
27, 2000, by and among FelCor, Bass America, Inc., and
all of the persons and entities who are or shall in the
future become limited partners of the Company (filed as
Exhibit 10.1.16 to the 1999 10-K and incorporated herein
by reference).
3.18 - Seventeenth Amendment to Amended and Restated Agreement
of Limited Partnership of the Company dated as of
November 1, 2000, by and among FelCor, Bass America,
Inc. and all of the persons or entities who are or shall
in the future become limited partners of the Company
(filed as Exhibit 10.1.17 to FelCor's Annual Report on
form 10-K for the fiscal year ended December 31, 2000
(the "2000 10-K"), and incorporated herein by
reference).
4.1 - Indenture dated as of April 22, 1996 by and between
FelCor and Sun Trust Bank, Atlanta, Georgia, as Trustee
(filed as Exhibit 4.2 to FelCor's Form 8-K dated May 1,
1996 and incorporated herein by reference).
4.2 - Indenture dated as of October 1, 1997 by and among the
Registrant, FelCor, the Subsidiary Guarantors named
therein and SunTrust Bank, Atlanta, Georgia, as Trustee
(filed as Exhibit 4.1 to the Registration Statement on
Form S-4 (file No. 333-39595) and the other
co-registrants named therein and incorporated herein by
reference).
E-50
86
EXHIBIT
NUMBER DESCRIPTION
------- -----------
4.2.1 - First Amendment to Indenture dated as of February 5,
1998 by and among Registrant, FelCor, the Subsidiary
Guarantors named therein and SunTrust Bank, Atlanta,
Georgia, as Trustee (filed as Exhibit 4.2 to the
Registration Statement on Form S-4 (File No. 333-39595)
and incorporated herein by reference).
4.2.2 - Second Amendment to Indenture and First Supplemental
Indenture dated as of December 30, 1998, by and among
Registrant, FelCor, the Subsidiary Guarantors named
therein and SunTrust Bank, Atlanta, Georgia, as Trustee
(filed as Exhibit 4.7.2 to the 1998 10-K and
incorporated herein by reference).
4.2.3 - Third Amendment to Indenture dated as of March 30, 1999
by and among the Company, FelCor, the Subsidiary
Guarantors named therein, who are signatories thereto
and SunTrust Bank, Atlanta (filed as Exhibit 4.7.3 to
FelCor's Form 10-Q for the quarter ended March 31, 1999
(the "March 1999 10-Q"), and incorporated herein by
reference).
10.1 - Form of Lease Agreement between the Registrant as Lessor
and DJONT Operations, L.L.C. or its subsidiaries
("DJONT") as Lessee (filed as Exhibit 10.2.1 to the 1995
10-K and incorporated herein by reference).
10.1.1 - Omnibus Lease Amendment Agreement dated as of June 30,
1998 among FelCor, the Company, and DJONT to clarify the
meaning of Article III of the lease as represented by
the actual course of dealing between lessors and lessees
under such leases (filed as Exhibit 10.19 to FelCor's
Form 10-Q for the quarter ended June 30, 1998, and
incorporated herein by reference).
10.2 - Form of Lease Agreement between the Company as Lessor
and a subsidiary of Bristol Hotels & Resorts ("BHR") as
Lessee (the "Bristol Lease Agreement") (filed as Exhibit
10.3 to the 1998 10-K and incorporated herein by
reference).
10.2.1 - Amended and Restated Master Hotel Agreement dated as of
July 27, 1998 among the Company, FelCor, BHR and the
lessors and lessees named therein (filed as Exhibit
10.17 to FelCor's Form 8-K dated August 10, 1998, and
incorporated herein by reference).
10.3 - Employment Agreement dated as of July 28, 1994 between
FelCor and Thomas J. Corcoran, Jr. (filed as Exhibit
10.8 to the 1994 10-K/A and incorporated herein by
reference).
10.4 - Restricted Stock and Stock Option Plan of FelCor (filed
as Exhibit 10.9 to the 1994 10-K/A and incorporated
herein by reference).
10.5 - Savings and Investment Plan of FelCor (filed as Exhibit
10.10 to the 1994 10-K/A and incorporated herein by
reference).
10.6 - 1995 Restricted Stock and Stock Option Plan of the
Company (filed as Exhibit 10.9.2 to the 1995 10-K and
incorporated herein by reference).
10.7 - Non-Qualified Deferred Compensation Plan, as amended and
restated July 1999 (filed as Exhibit 10.9 to FelCor's
Form 10-Q for the quarter ended September 30, 1999 (the
"September 1999 10-Q") and incorporated herein by
reference).
10.8 - 1998 Restricted Stock and Stock Option Plan (filed as
Exhibit 4.2 to FelCor's Registration Statement on Form
S-8 (File No. 333-66041) and incorporated herein by
reference).
E-51
87
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.9 - Second Amended and Restated 1995 Equity Incentive Plan
(filed as Exhibit 99.1 to FelCor's Post-Effective
Amendment on Form S-3 to Form S-4 Registration Statement
(File No. 333-50509) and incorporated herein by
reference).
10.10 - Amended and Restated Stock Option Plan for Non-Employee
Directors (filed as Exhibit 99.2 to FelCor's
Post-Effective Amendment on Form S-3 to Form S-4
Registration Statement (File No. 333-50509) and
incorporated herein by reference).
10.11 - Form of Severance Agreement for executive officers and
certain key employees of FelCor (filed as Exhibit 10.13
to the 1998 10-K and incorporated herein by reference).
10.12 - Agreement dated as of April 15, 1995 among FelCor, the
Company, FelCor, Inc., Thomas J. Corcoran, Jr. and
Hervey A. Feldman relating to purchase of securities
(filed as Exhibit 10.15 to the Registration Statement on
Form S-11 (File No. 33-91870) and incorporated herein by
reference).
10.13 - Voting and Cooperation Agreement dated as of March 23,
1998 among the Company, Bristol, Bass America Inc.,
Holiday Corporation and United/Harvey Holdings, L.P.
(filed as Exhibit 99.7 to FelCor's Registration
Statement on Form S-4 (File No. 333-50509) and
incorporated herein by reference).
10.14 - Spin-Off Agreement dated as of March 23, 1998 among
Bristol, Bristol Hotel Management Corporation and
Bristol Hotel and Resorts, Inc., as agreed to by FelCor
(filed as Exhibit 99.8 to FelCor's Registration
Statement on Form S-4 (File No. 333-50509) and
incorporated herein by reference).
10.15 - Stockholders' and Registration Rights Agreement dated as
of July 27, 1998 by and among FelCor, Bass America,
Inc., Holiday Corporation, Bass plc, United/Harvey
Investors I, L.P., United/Harvey Investors II, L.P.,
United/Harvey Investors III, L.P., United/Harvey
Investors IV, L.P., and United/Harvey Investors V, L.P.
(filed as Exhibit 10.18 to FelCor's Form 8-K dated
August 10, 1998, and incorporated herein by reference).
10.16 - Sixth Amended and Restated Credit Agreement dated as of
December 18, 2000, among the Registrant, the Partnership
and FelCor Canada Co., as Borrowers, the Lenders party
thereto, The Chase Manhattan Bank and The Chase
Manhattan Bank of Canada, as Administrative Agents,
Chase Securities, Inc., as Joint Lead Arranger, Joint
Book Manager and Syndication Agent, Bankers Trust
Company, as Joint Lead Arranger, Joint Book Manager and
Documentation Agent, Bank of America, N.A. and Wells
Fargo Bank, National Association, as Documentation
Agents (filed As Exhibit 10.17 to the 2000 10-K and
incorporated herein by reference).
10.17 - Loan Agreement dated as of October 10, 1997 among
Bristol Lodging Company, Bristol Lodging Holding
Company, Nomura Asset Capital Corporation as
administrative agent and collateral agent for Lenders
and Bankers Trust Company as co-agent for Lenders (filed
as Exhibit 10.10 to the Bristol Hotel Company Annual
report on Form 10-K for the year ended December 31, 1997
and incorporated herein by reference).
E-52
88
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.17.1 - First Amendment to Loan Agreement and Ancillary Loan
Documents made as of May 28, 1999, among FelCor Lodging
Company, L.L.C., FelCor Lodging Holding Company, L.L.C.
and LaSalle National Bank, as Trustee for Nomura Asset
Securities Corporation Commercial Pass-Through
Certificates Series 1998-D6, administrative agent and
collateral agent (filed as Exhibit 10.19.1 to the 1999
10-K and incorporated herein by reference).
10.18 - Deed of Trust, Security Agreement, Assignment of Leases
and Rents, Fixture Filing and Financing Statement, dated
March 1, 1999, by FelCor Hotel Company II, Ltd., as
Grantor, to Howard E. Schreiber, Trustee, in trust for
the benefit of Bankers Trust Company, as Beneficiary
(filed as Exhibit 10.21 to the March 1999 10-Q, and
incorporated herein by reference).
10.19.1 - Loan Agreement, dated April 1, 1999, among FelCor
Lodging Trust Incorporated and FelCor Lodging Limited
Partnership as Borrower, and The Lenders Party Thereto
and The Chase Manhattan Bank as Administrative Agent and
Collateral Agent (filed as Exhibit 10.22.1 to the March
1999 10-Q, and incorporated herein by reference).
10.19.2 - Guaranty, dated April 1, 1999, made by each of the named
Guarantors therein, who are signatories thereto (filed
as Exhibit 10.22.2 to the March 1999 10-Q, and
incorporated herein by reference).
10.19.3 - Pledge and Security Agreement, dated April 1, 1999, made
by each of the named Pledgors therein, who are
signatories thereto, in favor of The Chase Manhattan
Bank, as Collateral Agent (filed as Exhibit 10.22.3 to
the March 1999 10-Q, and incorporated herein by
reference).
10.19.4 - Second Amendment to Loan Agreement dated as of August
20, 1999, among FelCor and the Company, as Borrower, the
financial institutions party thereto, and The Chase
Manhattan Bank, as administrative agent (filed as
Exhibit 10.22.4 to the September 1999 10-Q and
incorporated herein by reference).
10.19.5 - Third Amendment to Loan Agreement dated as of December
1, 1999, among FelCor and the Registrant, as Borrower,
the financial institutions party thereto, and The Chase
Manhattan Bank, as Administrative Agent.
10.19.6 - Fourth Amendment to Loan Agreement dated as of August 7,
2000, among FelCor and the Company, as Borrower, the
financial institutions party thereto and The Chase
Manhattan Bank, as Administrative Agent (filed as
Exhibit 10.21.6 to the Company's Registration Statement
on Form S-4 (file no. 333-47506) and incorporated
herein by reference).
10.20 - Form of Mortgage, Security Agreement and Fixture Filing
by and between FelCor/CSS Holdings, L.P. as Mortgagor
and The Prudential Insurance Company of America as
Mortgagee (filed as Exhibit 10.23 to the March 1999
10-Q, and incorporated herein by reference).
10.20.1 - Promissory Note dated April 1, 1999, in the original
principal amount of $100,000,000 made by FelCor/CSS
Holdings, L.P., payable to the order of The Prudential
Insurance Company of America. (filed as Exhibit 10.23.1
to FelCor's Form 10-Q for the quarter ended June 30,
1999 (the "June 1999 10-Q") and incorporated herein by
reference).
10.20.2 - Form of Mortgage, Security Agreement and Fixture Filing
by and between FelCor/CSS Holdings, L. P., as Mortgagor,
and The Prudential Insurance Company of America, as
Mortgagee (incorporated by reference to Exhibit 10.23 to
FelCor's Form 10-Q for the quarter ended March 31,
1999).
10.20.3 - Mortgage Loan Agreement dated as of April 1, 1999, by
and between The Prudential Insurance Company of America,
as Lender, and FelCor/CSS Holdings, L.P., as Borrower
(filed as Exhibit 10.23.3 to the June 1999 10-Q and
incorporated herein by reference).
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89
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.21.1 - Form of six separate Promissory Notes each dated May 12,
1999, made by FelCor/MM Holdings, L.P. payable to the
order of Massachusetts Mutual Life Insurance Company in
the respective original principal amounts of $12,500,000
(Embassy Suites-Dallas Market Center), $14,000,000
(Embassy Suites-Dallas Love Field), $12,450,000 (Embassy
Suites-Tempe), $11,550,000 (Embassy Suites-Anaheim),
$8,900,000 (Embassy Suites-Palm Desert), $15,600,000
(Embassy Suites-Deerfield Beach) (filed as Exhibit
10.24.1 to the June 1999 10-Q and incorporated herein by
reference).
10.21.2 - Form of Deed of Trust, Security Agreement and Fixture
Filing, each dated as of May 12, 1999, from FelCor/MM
Holdings, L.P., as Borrower, in favor of Fidelity
National Title Insurance Company, as Trustee, and
Massachusetts Mutual Life Insurance Company, as
Beneficiary, each covering a separate hotel and securing
one of the separate Promissory Notes described in
Exhibit 10.24.1, also executed by FelCor/CSS Holdings,
L.P. with respect to the Embassy Suites-Anaheim and
Embassy Suites-Deerfield Beach, and by FelCor Lodging
Limited Partnership with respect to the Embassy
Suites-Palm Desert (filed as Exhibit 10.24.2 to the June
1999 10-Q and incorporated herein by reference).
* 21 - List of Subsidiaries of the Registrant.
- ----------
* Filed herewith.
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