<PAGE> 1
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999
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 72-2544994
(State or other jurisdiction of (I.R.S. Employer
incorporation or Identification No.)
organization)
545 E. JOHN CARPENTER FREEWAY, SUITE 1300, IRVING, TEXAS 75062
(Address of principal executive offices) (Zip Code)
(972) 444-4900
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all documents
and reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes [X] No [ ]
- --------------------------------------------------------------------------------
<PAGE> 2
FELCOR LODGING LIMITED PARTNERSHIP
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I. -- FINANCIAL INFORMATION
Item 1. Financial Statements................................................................... 3
FELCOR LODGING LIMITED PARTNERSHIP
Consolidated Balance Sheets - June 30, 1999 (Unaudited)
and December 31, 1998.......................................................... 3
Consolidated Statements of Operations -- For the Three and Six Months
Ended June 30, 1999 and 1998 (Unaudited)....................................... 4
Consolidated Statements of Cash Flows -- For the Six Months
Ended June 30, 1999 and 1998 (Unaudited)....................................... 5
Notes to Consolidated Financial Statements.......................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.. 13
General/Second Quarter Highlights................................................... 13
Results of Operations............................................................... 13
Liquidity and Capital Resources..................................................... 21
Item 3. Quantitative and Qualitative Disclosures About Market Risk............................. 24
PART II. -- OTHER INFORMATION
Item 5. Other Information...................................................................... 25
Item 6. Exhibits and Reports on Form 8-K....................................................... 25
SIGNATURE....................................................................................... 27
</TABLE>
2
<PAGE> 3
PART I. -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FELCOR LODGING LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Investment in hotels, net of accumulated depreciation of $251,924
at June 30, 1999 and $178,072 at December 31, 1998 ........................ $ 4,037,959 $ 3,955,582
Investment in unconsolidated entities ........................................ 138,554 148,065
Cash and cash equivalents .................................................... 50,569 34,692
Due from Lessees ............................................................. 32,324 18,968
Deferred expenses, net of accumulated amortization of $3,026
at June 30, 1999 and $2,096 at December 31, 1998 .......................... 13,163 10,041
Other assets ................................................................. 8,057 8,035
------------ ------------
Total assets ...................................................... $ 4,280,626 $ 4,175,383
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Debt, net of discount of $1,515 at June 30, 1999
and $1,628 at December 31, 1998 ........................................... $ 1,712,540 $ 1,594,734
Distributions payable ........................................................ 42,549 67,262
Accrued expenses and other liabilities ....................................... 78,753 57,312
Minority interest in other partnerships ...................................... 51,728 51,105
------------ ------------
Total liabilities ................................................. 1,885,570 1,770,413
------------ ------------
Commitments and contingencies (Notes 3 and 5)
Redeemable units at redemption value ......................................... 61,984 67,595
Preferred units:
Series A Cumulative Preferred Units, 6,050 units issued and outstanding ... 151,250 151,250
Series B Redeemable Preferred Units, 58 units issued and outstanding ...... 143,750 143,750
Partners' Capital ............................................................ 2,038,072 2,042,375
------------ ------------
Total liabilities and partners' capital ........................... $ 4,280,626 $ 4,175,383
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
3
<PAGE> 4
FELCOR LODGING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED, IN THOUSANDS EXCEPT FOR PER UNIT DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------ ------------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues:
Percentage lease revenue ....................... $ 131,891 $ 62,793 $ 256,882 $ 118,853
Equity in income from unconsolidated entities .. 2,591 2,689 3,837 3,982
Other revenue .................................. 705 1,920 1,385 2,095
--------- --------- --------- ---------
Total revenues ........................ 135,187 67,402 262,104 124,930
--------- --------- --------- ---------
Expenses:
General and administrative ..................... 2,509 1,375 4,753 2,574
Depreciation ................................... 37,737 17,429 74,162 33,316
Taxes, insurance, and other .................... 19,904 7,568 40,857 14,838
Interest expense ............................... 30,750 13,795 59,172 23,526
Minority interest in other partnerships ........ 833 291 1,639 482
--------- --------- --------- ---------
Total expenses ........................ 91,733 40,458 180,583 74,736
--------- --------- --------- ---------
Income before extraordinary charge ............... 43,454 26,944 81,521 50,194
Extraordinary charge from write off of deferred
financing fees ................................ 1,113 1,113 556
--------- --------- --------- ---------
Net income ....................................... 42,341 26,944 80,408 49,638
Preferred distributions .......................... 6,184 4,854 12,368 7,803
--------- --------- --------- ---------
Income applicable to unitholders ................. $ 36,157 $ 22,090 $ 68,040 $ 41,835
========= ========= ========= =========
Per unit data:
Basic:
Income applicable to unitholders before
extraordinary charge ...................... $ 0.53 $ 0.56 $ 0.98 $ 1.07
Extraordinary charge ........................... (0.02) (0.02) (0.01)
--------- --------- --------- ---------
Net income applicable to unitholders ........... $ 0.51 $ 0.56 $ 0.96 $ 1.06
========= ========= ========= =========
Weighted average units outstanding ............. 71,000 39,567 70,998 39,546
========= ========= ========= =========
Diluted:
Income applicable to unitholders before
extraordinary charge ...................... $ 0.53 $ 0.55 $ 0.97 $ 1.06
Extraordinary charge ........................... (0.02) (0.02) (0.01)
--------- --------- --------- ---------
Net income applicable to unitholders ........... $ 0.51 $ 0.55 $ 0.95 $ 1.05
========= ========= ========= =========
Weighted average units outstanding ............. 71,338 39,882 71,334 39,883
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
4
<PAGE> 5
FELCOR LODGING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------
1999 1998
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income ................................................................... $ 80,408 $ 49,638
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation ....................................................... 74,162 33,316
Amortization of deferred financing fees ............................ 1,303 1,256
Accretion of debt .................................................. (494)
Amortization of unearned officers' and directors' compensation ..... 350 396
Equity in income from unconsolidated entities ...................... (3,837) (3,982)
Extraordinary charge for write off of deferred financing fees ...... 1,113 556
Minority interest in other partnerships ............................ 1,639 482
Changes in assets and liabilities:
Due from Lessees ................................................... (13,356) (13,793)
Deferred financing fees ............................................ (5,538) (3,558)
Other assets ....................................................... (1,140) (8,436)
Accrued expenses and other liabilities ............................. 15,343 11,599
--------- ---------
Net cash flow provided by operating activities ........... 149,953 67,474
--------- ---------
Cash flows used in investing activities:
Acquisition of hotel assets .................................................. (10,802) (353,615)
Acquisition of unconsolidated entities ....................................... (418)
Sale of hotels ............................................................... 15,091
Bristol Interim Credit Facility .............................................. (120,000)
Improvements and additions to hotels ......................................... (148,519) (22,244)
Cash distributions from unconsolidated entities .............................. 13,297 15,809
--------- ---------
Net cash flow used in investing activities ............... (130,933) (480,468)
--------- ---------
Cash flows from financing activities:
Proceeds from borrowings ..................................................... 744,000 461,000
Repayment of borrowings ...................................................... (630,899) (144,145)
Proceeds from sale of preferred units ........................................ 143,750
Costs associated with public offerings ....................................... (4,686)
Distributions paid to preferred unitholders .................................. (13,619) (7,803)
Distributions paid to unitholders ............................................ (102,625) (41,605)
--------- ---------
Net cash flow provided by (used in) financing activities . (3,143) 406,511
--------- ---------
Net change in cash and cash equivalents ................................................ 15,877 (6,483)
Cash and cash equivalents at beginning of periods ...................................... 34,692 17,543
--------- ---------
Cash and cash equivalents at end of periods ............................................ $ 50,569 $ 11,060
========= =========
Supplemental cash flow information --
Interest paid ................................................................ $ 55,549 $ 22,226
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
5
<PAGE> 6
FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND SECOND QUARTER HIGHLIGHTS
FelCor Lodging Limited Partnership and its subsidiaries (the
"Company"), at June 30, 1999, owned interests in 187 hotels with nearly 50,000
rooms and suites (collectively the "Hotels"). The sole general partner of the
Company is FelCor Lodging Trust Incorporated ("FelCor"), one of the nation's
largest hotel real estate investment trusts ("REIT"). At June 30, 1999, FelCor
owned a greater than 95% equity interest in the Company. The Company owns 100%
interests in 163 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 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 presents the Hotels, by brand, operated
by each of the Company's Lessees at June 30, 1999:
<TABLE>
<CAPTION>
BRAND DJONT BRISTOL TOTAL
----- ----- ------- -----
<S> <C> <C> <C>
Embassy Suites 58 58
Holiday Inn 45 45
Doubletree and Doubletree Guest Suites(R) 16 16
Crowne Plaza and Crowne Plaza Suites(R) 17 17
Holiday Inn Select(R) 10 10
Sheraton(R)and Sheraton Suites(R) 9 9
Hampton Inn(R) 9 9
Holiday Inn Express(R) 5 5
Fairfield Inn(R) 5 5
Harvey Hotel(R) 4 4
Independent 1 2 3
Courtyard by Marriott(R) 2 2
Four Points by Sheraton(R) 1 1
Hilton Suites(R) 1 1
Homewood Suites(R) 1 1
Westin(R) 1 1
---- ----- -----
Total Hotels 86 101 187
==== ===== =====
</TABLE>
The Hotels are located in the United States (34 states) and Canada,
with 79 hotels in California, Florida and Texas. The following table provides
information regarding the net acquisition of hotels through June 30, 1999:
<TABLE>
<CAPTION>
NET HOTELS
ACQUIRED/(DISPOSED)
-------------------
<S> <C>
1994 7
1995 13
1996 23
1997 30
1998 120
FIRST QUARTER 1999 (4)
SECOND QUARTER 1999 (2)
----
187
====
</TABLE>
At June 30, 1999 the Company leased 86 of the Hotels to DJONT
Operations, L.L.C., a Delaware limited liability company, or a consolidated
subsidiary thereof (collectively "DJONT"), 100 of the Hotels to Bristol Hotels &
Resorts or a consolidated subsidiary thereof ("Bristol" and, together with
DJONT, the "Lessees"). One hotel, managed by Bristol, was not leased.
6
<PAGE> 7
FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND SECOND QUARTER HIGHLIGHTS (CONTINUED)
Thomas J. Corcoran, Jr., the President, Chief Executive Officer, and a
Director of FelCor, and Hervey A. Feldman, Chairman Emeritus of FelCor,
beneficially own a 50% voting common equity interest in DJONT. The remaining 50%
nonvoting common equity interest is beneficially owned by the children of
Charles N. Mathewson, a director of FelCor and major initial investor in the
Company. DJONT has entered into management agreements pursuant to which 73 of
the Hotels leased by it are managed by subsidiaries of Promus Hotel Corporation
("Promus"), ten are managed by subsidiaries of Starwood Hotels & Resorts
Worldwide, Inc.
("Starwood"), and three are managed by two independent management companies.
Bristol leases and manages 100 Hotels and manages one hotel which
operates without a lease. Bristol is one of the largest independent hotel
operating companies in North America and operates the largest number of Bass
Hotels & Resorts-branded hotels in the world.
A brief discussion of the second quarter 1999 highlights follows:
o Completed renovations at 20 hotels at a total project cost of
$123.6 million.
o Ten additional hotels were undergoing renovation.
o Capital expenditures to the Hotel portfolio per the Company's
renovation and redevelopment program totaled $56 million in
addition to $11 million of routine capital replacements and
improvements.
o Raised $550 million of new long term debt (five and ten year
maturities), which was used to prepay the $250 million term loan
due December 31, 1999, and initially to reduce outstanding
borrowings under the Company's Line of Credit. An extraordinary
charge of $1.1 million was incurred for the early retirement of the
$250 million term loan.
These unaudited financial statements have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission ("SEC") and
should be read in conjunction with the financial statements and notes thereto of
the Company and DJONT included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1998 (the "10-K"). The notes to the financial
statements included herein highlight significant changes to the notes included
in the 10-K and present interim disclosures required by the SEC. The financial
statements for the three and six months ended June 30, 1999 and 1998 are
unaudited; however, in the opinion of management, all adjustments (which include
only normal recurring accruals) have been made which are considered necessary to
present fairly the operating results and financial position of the Company for
the unaudited periods.
2. INVESTMENT IN UNCONSOLIDATED ENTITIES
At June 30, 1999, the Company owned 50% interests in separate entities
owning 15 hotels, a parcel of undeveloped land, and a condominium management
company. The Company also owned a 97% nonvoting interest in an entity that is
developing condominiums for sale and owns a recently completed hotel annex. The
Company accounts for its investments in these unconsolidated entities under the
equity method.
7
<PAGE> 8
FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. INVESTMENT IN UNCONSOLIDATED ENTITIES (CONTINUED)
Summarized combined financial information for 100% of these
unconsolidated entities is as follows (in thousands):
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
------------ ------------
<S> <C> <C>
Balance sheet information:
Investment in hotels, net of accumulated depreciation ..... $ 269,123 $ 269,881
Non-recourse mortgage debt ................................ $ 196,462 $ 176,755
Equity .................................................... $ 93,524 $ 105,347
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- --------------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Statements of Operations Information:
Percentage lease revenue ....................... $ 14,399 $ 14,222 $ 26,970 $ 26,569
Other income ................................... 2,738 954 4,327 1,114
---------- ---------- ---------- ----------
Total revenue ......................... 17,137 15,176 31,297 27,683
---------- ---------- ---------- ----------
Expenses:
Depreciation .............................. 4,629 4,278 9,508 8,543
Taxes, insurance, and other ............... 2,682 1,594 5,024 3,160
Interest expense .......................... 3,468 3,095 6,687 6,354
---------- ---------- ---------- ----------
Total expenses ........................ 10,779 8,967 21,219 18,057
---------- ---------- ---------- ----------
Net income ..................................... $ 6,358 $ 6,209 $ 10,078 $ 9,626
========== ========== ========== ==========
Net income attributable to the Company ......... $ 3,127 $ 3,105 $ 4,908 $ 4,813
Amortization of cost in excess of book value ... (536) (416) (1,071) (831)
---------- ---------- ---------- ----------
Equity in income from unconsolidated entities .. $ 2,591 $ 2,689 $ 3,837 $ 3,982
========== ========== ========== ==========
</TABLE>
3. DEBT
On April 1, 1999, the Company closed a five-year, $375 million term
loan (the "Senior Term Loan"). The Senior Term Loan is collateralized by
FelCor's stock and partnership interests in certain subsidiaries of the Company
and bears interest at 250 basis points over LIBOR (30-day LIBOR at June 30,
1999, was 5.24%). The financial covenants in the Senior Term Loan are consistent
with those in the Company's existing Line of Credit. In connection with this
transaction, the Company's $850 million Line of Credit and existing seven and
10-year publicly-traded term notes were equally and ratably collateralized by
the same collateral as the Senior Term Loan. If the Company achieves investment
grade credit ratings from the applicable rating agencies, the stock and
partnership interest collateral will be released. The proceeds of the Senior
Term Loan were used to prepay the $250 million term loan, which was to mature on
December 31, 1999 and initially to reduce borrowings under the Company's Line of
Credit.
On April 1, 1999, the Company also closed a 10-year, $100 million
mortgage loan (the "April 1999 First Mortgage Term Loan"). The April 1999 First
Mortgage Term Loan is non-recourse (with certain exceptions), is collateralized
by seven Embassy Suites hotels, carries a fixed rate coupon of 7.54%, matures in
April 2009 and amortizes over 25 years. The proceeds from this loan were used
initially to reduce outstanding borrowings under the Company's Line of Credit.
8
<PAGE> 9
FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. DEBT (CONTINUED)
On May 13, 1999, the Company closed a 10-year, $75 million mortgage
loan (the "May 1999 First Mortgage Term Loan"). This loan is non-recourse (with
certain exceptions), is collateralized by six Embassy Suites hotels, carries a
fixed rate coupon of 7.55%, matures in June 2009 and amortizes over 25 years.
The proceeds from this loan were used initially to reduce outstanding borrowings
under the Company's Line of Credit
Debt at June 30, 1999 and December 31, 1998 consisted of the following
(in thousands):
<TABLE>
<CAPTION>
OUTSTANDING BALANCE
-------------------------------------
INTEREST RATE MATURITY DATE JUNE 30, 1999 DECEMBER 31, 1998
------------- ------------- ------------- -----------------
<S> <C> <C> <C> <C>
FLOATING RATE DEBT:
Line of Credit LIBOR + 150bps June 2001 $ 347,000 $ 411,000
Term Loan LIBOR + 150bps December 1999 250,000
Senior Term Loan LIBOR + 250bps March 2004 250,000
Mortgage debt LIBOR + 200bps February 2003 62,851
Other Up to LIBOR + 200bps Various 24,400 34,750
----------- -----------
Total floating rate debt 684,251 695,750
----------- -----------
FIXED RATE DEBT:
Line of credit - swapped 7.24% June 2001 200,000 325,000
Publicly-traded term notes 7.38% October 2004 174,313 174,249
Publicly-traded term notes 7.63% October 2007 124,172 124,122
Mortgage debt 7.24% November 2007 143,675 145,062
Senior Term Loan - swapped 8.30% March 2004 125,000
Mortgage debt 6.97% December 2002 43,836
Mortgage debt 7.54% April 2009 99,773
Mortgage debt 7.55% June 2009 75,000
Other 6.96% - 7.23% 2000 - 2005 86,356 86,715
----------- -----------
Total fixed rate debt 1,028,289 898,984
----------- -----------
Total Consolidated Debt $ 1,712,540 $ 1,594,734
=========== ===========
</TABLE>
A portion of the Company's Line of Credit and Senior Term Loan is
matched with interest rate swap agreements which effectively convert the
variable rate on the Line of Credit and Senior Term Loan to a fixed rate.
The Line of Credit and the Senior Term Loan contain various affirmative
and negative covenants including limitations on total indebtedness, total
secured indebtedness, and cash distributions, as well as the obligation to
maintain certain minimum tangible net worth and certain minimum interest and
debt service coverage ratios. At June 30, 1999, the Company was in compliance
with all such covenants.
9
<PAGE> 10
FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. DEBT (CONTINUED)
The Company's other borrowings contain affirmative and negative
covenants that are generally equal to or less restrictive than the Line of
Credit and Senior Term Loan. Most of 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.
Future scheduled debt principal payments at June 30, 1999 are as
follows (in thousands):
<TABLE>
<CAPTION>
YEAR
----
<S> <C>
Remainder of 1999 $ 8,514
2000 31,979
2001 566,629
2002 9,590
2003 91,212
2004 and thereafter 1,006,131
-----------
1,714,055
Discount accretion over term (1,515)
-----------
$ 1,712,540
===========
</TABLE>
4. TAXES, INSURANCE, AND OTHER
Taxes, insurance, and other is comprised of the following for the six
months ended June 30, 1999 and 1998 (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Real estate and personal property taxes ........... $ 13,603 $ 6,456 $ 28,623 $ 13,023
Property insurance ................................ 875 293 1,728 545
Land lease expense ................................ 4,479 579 8,485 805
State franchise taxes and Canadian income tax ..... 947 240 2,021 465
--------- --------- --------- ---------
Total taxes, insurance, and other ........ $ 19,904 $ 7,568 $ 40,857 $ 14,838
========= ========= ========= =========
</TABLE>
5. COMMITMENTS AND RELATED PARTY TRANSACTIONS
The Company is to receive rental income from the Lessees under the
Percentage Leases which expire in 2002 (six hotels), 2003 (three hotels), 2004
(12 hotels), 2005 (19 hotels), 2006 (26 hotels), 2007 (37 hotels), 2008 (54
hotels), and thereafter (15 hotels). The rental income under the Percentage
Leases between 14 of the unconsolidated entities, of which the Company owns 50%,
is payable by the Lessee to the respective entities and is not included in the
schedule of future lease commitments to the Company. Minimum future rental
income (i.e., base rents) payable to the Company under these noncancellable
operating leases at June 30, 1999 is as follows (in thousands):
<TABLE>
<CAPTION>
DJONT BRISTOL TOTAL
---------- ---------- ----------
<S> <C> <C> <C>
Remainder of 1999 ................. $ 69,594 $ 77,787 $ 147,381
2000 .............................. 140,749 180,055 320,804
2001 .............................. 144,123 180,076 324,199
2002 .............................. 144,480 180,049 324,529
2003 .............................. 130,445 177,302 307,747
2004 and thereafter ............... 519,383 820,168 1,339,551
---------- ---------- ----------
$1,148,774 $1,615,437 $2,764,211
========== ========== ==========
</TABLE>
10
<PAGE> 11
FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. COMMITMENTS AND RELATED PARTY TRANSACTIONS (CONTINUED)
Certain entities owning interests in DJONT and managers for certain
hotels have agreed to make loans to DJONT of up to an aggregate of approximately
$17.3 million to the extent necessary to enable DJONT to pay rent and other
obligations due under the respective Percentage Leases relating to a total of 34
of the Hotels. No loans were outstanding under such agreements at June 30, 1999.
DJONT engages third-party managers to operate the Hotels leased by it
and generally pays such managers a base management fee based on a percentage of
room and suite revenue and an incentive management fee based on DJONT's income
before overhead expenses for each hotel. In certain instances, the hotel
managers have subordinated fees and committed to make subordinated loans to
DJONT, if needed, to meet its rental and other obligations under the Percentage
Leases.
Bristol serves as both the lessee and manager of 100 Hotels leased to
it by the Company at June 30, 1999 and, as such, is compensated for both roles
through the profitability of the Hotels, after meeting their operating expenses
and rental obligations under the Percentage Leases.
Bristol has entered into an absolute and unconditional guarantee of the
obligations of the Bristol Lessees under the Percentage Leases. As an additional
credit enhancement, the Bristol Lessees obtained a letter of credit (the "Letter
of Credit") for the benefit of the Company in the original amount of $20 million
that is required to be maintained until July 27, 1999. This Letter of Credit is
subject to periodic reductions upon satisfaction of certain conditions and at
June 30, 1999, was in the amount of $9.1 million. According to Bristol's
financial statements filed with the SEC, for the three and six months ending
June 30, 1999 Bristol had net income of $4.5 million and $5.6 million,
respectively, and at June 30, 1999 had stockholders' equity of $41.2 million.
Bristol is a public company whose common stock is listed on the New
York Stock Exchange under the symbol BH and that files its financial statements
with the SEC in accordance with the Securities and Exchange Act of 1934.
The Company has a Renovation and Redevelopment Program for the Hotels
and presently expects approximately $160 million to be invested during 1999
under this program, which may be funded from cash on hand or borrowings under
its Line of Credit. Through the six months ending June 30, 1999 the Company has
spent approximately $129 million under the Renovation and Redevelopment program.
6. SUPPLEMENTAL CASH FLOW INFORMATION
During the first six months of 1999, the Company purchased the land
related to three hotels which were previously leased under long term land leases
for an aggregate purchase price of $19.8 million as follows (in thousands):
<TABLE>
<S> <C>
Assets acquired................................................. $19,776
Debt assumed.................................................... (7,800)
Operating Partnership units issued.............................. (1,174)
-------
Net cash paid by the Company............................... $10,802
=======
</TABLE>
The debt assumed was paid off immediately after the purchase.
11
<PAGE> 12
FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. 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 June 30, 1999 were DJONT and
Bristol. Prior to July 28, 1998 (the date of the Bristol Merger) the Company had
only one Lessee, DJONT. Accordingly, segment information is not disclosed for
the six months ended June 30, 1998.
The following table presents information for the reportable segments
for the six months ended June 30, 1999 (in thousands):
<TABLE>
<CAPTION>
CORPORATE
SEGMENT NOT ALLOCABLE CONSOLIDATED
DJONT BRISTOL TOTAL TO SEGMENTS TOTAL
---------- ---------- ---------- ------------- ------------
<S> <C> <C> <C> <C>
Statements of Operations Information:
Revenues:
Percentage lease revenue ................. $ 143,496 $ 113,386 $ 256,882 $ 256,882
Equity in income from unconsolidated
entities ................................ 3,302 535 3,837 3,837
Other revenue ............................ 103 831 934 $ 451 1,385
---------- ---------- ---------- ---------- ----------
Total revenues ................. 146,901 114,752 261,653 451 262,104
---------- ---------- ---------- ---------- ----------
Expenses:
General and administrative ............... 4,753 4,753
Depreciation ............................. 39,983 34,179 74,162 74,162
Taxes, insurance, and other .............. 18,079 22,778 40,857 40,857
Interest expense ......................... 59,172 59,172
Minority interest in other partnerships .. 1,639 1,639 1,639
---------- ---------- ---------- ---------- ----------
Total expenses ................. 59,701 56,957 116,658 63,925 180,583
---------- ---------- ---------- ---------- ----------
Income before extraordinary charge .......... $ 87,200 $ 57,795 $ 144,995 $ (63,474) $ 81,521
========== ========== ========== ========== ==========
Funds From Operations:
Income before extraordinary charge .......... $ 87,200 $ 57,795 $ 144,995 $ (63,474) $ 81,521
Series B preferred distributions ............ (6,469) (6,469)
Depreciation ................................ 39,983 34,179 74,162 74,162
Depreciation for unconsolidated entities .... 4,644 374 5,018 5,018
---------- ---------- ---------- ---------- ----------
Funds from operations ....................... $ 131,827 $ 92,348 $ 224,175 $ (69,943) $ 154,232
========== ========== ========== ========== ==========
Weighted average units outstanding (1) ...... 76,008
==========
</TABLE>
(1) Weighted average units outstanding are computed including dilutive
options, unvested stock grants, and assuming conversion of Series A
Preferred Units to Units.
12
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
For background information relating to the Company and the definitions
of certain capitalized terms used herein, reference is made to Note 1 of Notes
to Consolidated Financial Statements of FelCor Lodging Limited Partnership
appearing elsewhere herein.
SECOND QUARTER HIGHLIGHTS:
FINANCIAL PERFORMANCE:
o Revenues increased 101%
o EBITDA increased 87% and EBITDA per share increased 10%
o Funds From Operations ("FFO") per diluted unit increased 5.0%
o Total portfolio (184 hotels) revenue per available room
("RevPAR") increased 1.3% and comparable hotels (134 hotels)
RevPAR increased 0.3%
o Crowne Plaza(R) non-comparable hotels (10 hotels) RevPAR
increased 22.6%
o Holiday-branded comparable hotels (37 hotels) RevPAR
increased 1.8%
o Doubletree-branded comparable hotels (15 hotels) RevPAR
increased 3.2%
o Sold two non-strategic hotels for an aggregate sales price of
$5.4 million
HOTEL RENOVATION, REDEVELOPMENT AND REBRANDING:
o Completed renovations at 20 hotels totaling $123.6 million
o Ten additional hotels were undergoing renovation
o Capital expenditures to the hotel portfolio totaled $67
million
o Approximately 2.5% of room nights were out-of-service
o Six hotels were rebranded:
<TABLE>
<CAPTION>
NEW BRAND PRIOR BRAND Location
- --------- ----------- --------
<S> <C> <C>
Embassy Suites(R) Doubletree Guest Suites(R) Dallas, Texas
Beaver Creek Lodge Embassy Suites Beaver Creek, Colorado
Crowne Plaza Holiday Inn Select(R) Irvine, California
Crowne Plaza Holiday Inn(R) San Jose, California
Crowne Plaza Independent Chicago, Illinois
Doubletree(R) Radisson(R) Wilmington, Delaware
</TABLE>
CAPITALIZATION:
o Raised $550 million of new long term debt (five and ten
year), paid off its $250 million term loan maturing December
31, 1999, and reduced outstanding borrowings under Company's
Line of Credit. An extraordinary charge of $1.1 million was
recognized for the early extinguishment of the $250 million
term loan.
RESULTS OF OPERATIONS
The Company
Six Months Ended June 30, 1999 and 1998
For the six months ended June 30, 1999 and 1998, the Company had
revenues of $262.1 million and $124.9 million, respectively, consisting
primarily of Percentage Lease revenues of $256.9 million and $118.9
13
<PAGE> 14
million, respectively. The increase in total revenue is primarily attributable
to the Company's acquisition and subsequent leasing, pursuant to Percentage
Leases, of interests in more than 100 additional hotels since June 30, 1998,
including 101 hotels (net of hotels subsequently sold) that were acquired
through the Bristol Merger on July 28, 1998. Additionally, those hotels owned at
both June 30, 1999 and 1998 recorded an increase in Percentage Lease revenues of
$2.0 million or 1.4%.
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 by such temporary factors as rooms and suites out of service and
disruptions of hotel operations. (A more detailed discussion of hotel room and
suite revenue is contained in "The Hotels" section of this Management's
Discussion and Analysis of Financial Condition and Results of Operations.)
Total expenses increased $105.9 million in the six months ended June
30, 1999, from $74.7 million to $180.6 million, compared to the same period in
1998. This increase resulted primarily from the additional hotels acquired in
1998 through the Bristol Merger. Total expenses as a percentage of total revenue
increased to 68.9% for the six months ended June 30, 1999, from 59.8% in the
same period of 1998.
The major components of the increase in expenses, as a percentage of
total revenue, are: depreciation; taxes, insurance, and other; and interest
expense.
Depreciation increased as a percentage of total revenue to 28.3% in the
six months ended June 30, 1999, from 26.7% in the six months ended June 30,
1998. The relative increase in depreciation expense is primarily attributed to
capital improvements made under the Company's renovation, redevelopment and
rebranding program. Renovations totaling $147.4 million were completed at 26
hotels that were placed back into full service during the six months.
Taxes, insurance, and other increased $26.0 million primarily as a
result of the increased number of hotels owned. As a percentage of total
revenue, taxes, insurance, and other increased from 11.9% to 15.6%. The majority
of the increase, as a percentage of total revenue, is attributed to land lease
expenses, which represent 3.2% of total revenue in 1999 but only 0.6% in 1998.
Land lease expenses, as a percentage of total revenue, increased because of the
greater number of hotels subject to land leases acquired through the Bristol
Merger. The remaining increase in taxes, insurance, and other, as a percentage
of total revenue, is related primarily to increased property taxes resulting
from property tax reassessments.
Interest expense increased, as a percentage of total revenue, to 22.6%
in the six months ended June 30, 1999, from 18.8% in the six months ended June
30, 1998. This increase in interest expense is attributed to the increased use
of debt to finance acquisitions and renovations and the assumption of debt
related to the more highly leveraged Bristol assets. Debt, as a percentage of
total assets, increased from 36% at June 30, 1998 to 40% at June 30, 1999.
Three Months Ended June 30, 1999 and 1998
For the three months ended June 30, 1999 and 1998, the Company had
revenues of $135.2 million and $67.4 million, respectively, consisting primarily
of Percentage Lease revenues of $131.9 million and $62.8 million, respectively.
The increase in total revenue is primarily attributed to the Company's
acquisition and subsequent leasing, pursuant to Percentage Leases, of interests
in more than 100 additional hotels since June 30, 1998, including 101 hotels
(net of hotels subsequently sold) that were acquired through the Bristol Merger
on July 28, 1998. Those hotels owned at both June 30, 1999 and 1998, recorded a
slight increase in Percentage Lease revenues of $28,000 for the three months
ended June 30, 1999 versus 1998.
14
<PAGE> 15
Total expenses increased $51.2 million in the three months ended June
30, 1999, from $40.5 million to $91.7 million, compared to the same period in
1998. This increase resulted primarily from the additional hotels acquired in
1998 through the Bristol Merger. Total expenses as a percentage of total revenue
increased to 67.9% for the three months ended June 30, 1999, from 60.0% in the
same period of 1998.
The major components of the increase in expenses, as a percentage of
total revenue are: depreciation; taxes, insurance, and other; and interest
expense.
Depreciation increased as a percentage of total revenue to 27.9% in the
three months ended June 30, 1999, from 25.9% in the three months ended June 30,
1998. The relative increase in depreciation expense is primarily attributed to
capital improvements made under the Company's renovation, redevelopment and
rebranding program. Renovations totaling $123.6 million were completed at 20
hotels that were placed back into full service during the quarter.
Taxes, insurance, and other, as a percentage of total revenue,
increased from 11.2% to 14.7% in the three months ended June 30, 1999, as
compared to the same quarterly period in 1998. The majority of the increase, as
a percentage of total revenue, is attributed to land lease expenses, which
represented 3.3% of total revenue in 1999, but only 0.9% in 1998. Land lease
expenses as a percentage of total revenue, increased because of the greater
number of hotels subject to land leases that were acquired through the Bristol
Merger. The remaining increase in taxes, insurance, and other, as a percentage
of total revenue, is related primarily to increased property taxes resulting
from property tax reassessments.
Interest expense increased, as a percentage of total revenue, to 22.7%
in the three months ended June 30, 1999, from 20.5% in the three months ended
June 30, 1998. This increase is attributed to the increased use of debt to
finance acquisitions and renovations and the assumption of debt related to the
more highly leveraged Bristol assets. Debt, as a percentage of total assets,
increased from 36% at June 30, 1998 to 40% at June 30, 1999.
Funds From Operations
The Company and FelCor consider Funds From Operations to be a key
measure 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 Funds From Operations as net income or loss (computed in
accordance with GAAP), excluding gains or losses from debt restructuring 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 believes that Funds From
Operations is helpful to investors as a measure of the performance of an equity
REIT because, along with cash flow from operating activities, financing
activities and investing activities, it provides investors with an indication of
the ability of the Company to incur and service debt, to make capital
expenditures, to pay dividends and to fund other cash needs. The Company
computes Funds From Operations in accordance with standards established by
NAREIT which may not be comparable to Funds From Operations reported by other
REITs that do not define the term in accordance with the current NAREIT
definition or that interpret the current NAREIT definition differently than the
Company. Funds From Operations does 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 does it necessarily reflect the funds available to fund the Company's cash
needs, including its ability to make cash distributions. Funds From Operations
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.
15
<PAGE> 16
The following table details the computation of Funds From Operations
(in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------ ------------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
FUNDS FROM OPERATIONS (FFO):
Net income ................................... $ 42,341 $ 26,944 $ 80,408 $ 49,638
Series B preferred distributions .......... (3,234) (1,905) (6,469) (1,905)
Extraordinary charge from write off
of deferred financing fees ........... 1,113 1,113 556
Depreciation .............................. 37,737 17,429 74,162 33,316
Depreciation for unconsolidated entities .. 2,426 2,555 5,018 5,103
--------- --------- --------- ---------
FFO .......................................... $ 80,383 $ 45,023 $ 154,232 $ 86,708
========= ========= ========= =========
Weighted average units outstanding ........... 76,029 44,572 76,008 44,573
========= ========= ========= =========
</TABLE>
Included in the FFO computed above is the Company's share of FFO from
its interests in separate entities owning 15 hotels, a condominium management
company and an entity that develops condominiums for sale and owns a hotel
annex. The FFO contribution from these unconsolidated entities is derived as
follows (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- ----------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS INFORMATION:
Percentage lease revenue .............................. $ 14,399 $ 14,222 $ 26,970 $ 26,569
Other income .......................................... 2,738 954 4,327 1,114
-------- -------- -------- --------
Total revenue ................................. 17,137 15,176 31,297 27,683
-------- -------- -------- --------
Expenses:
Depreciation ..................................... 4,629 4,278 9,508 8,543
Taxes, insurance, and other ...................... 2,682 1,594 5,024 3,160
Interest expense ................................. 3,468 3,095 6,687 6,354
-------- -------- -------- --------
Total expenses ................................ 10,779 8,967 21,219 18,057
-------- -------- -------- --------
Net income ............................................ $ 6,358 $ 6,209 $ 10,078 $ 9,626
======== ======== ======== ========
Percentage of net income attributable to the Company .. $ 3,127 $ 3,105 $ 4,908 $ 4,813
Amortization of cost in excess of book value .......... (536) (416) (1,071) (831)
-------- -------- -------- --------
Equity in income from unconsolidated entities ......... 2,591 2,689 3,837 3,982
Depreciation .......................................... 2,372 2,139 4,890 4,271
Amortization of cost in excess of book value .......... 536 416 1,071 831
-------- -------- -------- --------
FFO from unconsolidated entities ...................... $ 5,497 $ 5,244 $ 9,798 $ 9,084
======== ======== ======== ========
</TABLE>
16
<PAGE> 17
The Hotels
Upscale and full service hotels, like Embassy Suites, Crowne Plaza,
Holiday Inn and Holiday Inn Select, Doubletree and Doubletree Guest Suites,
Sheraton(R) and Sheraton Suites(R), and Westin(R), are expected to account for
approximately 97% of Percentage Lease revenue in 1999. The following tables set
forth historical occupancy, average daily rate ("ADR") and RevPAR at June 30,
1999 and 1998, and the percentage changes therein between the years presented
for the Hotels in which the Company had an ownership interest at June 30, 1999.
This information is presented regardless of the date of acquisition.
COMPARABLE HOTELS (A)
<TABLE>
<CAPTION>
SECOND QUARTER 1999 YEAR TO DATE 1999
--------------------------------- --------------------------------
OCCUPANCY ADR REVPAR OCCUPANCY ADR REVPAR
--------- --- ------ --------- --- ------
<S> <C> <C> <C> <C> <C> <C>
Original 75.3% $115.41 $86.89 72.9% $117.36 $85.51
CSS Hotels 75.1 123.09 92.48 75.5 129.52 97.84
1996 Acquisitions 75.4 129.99 98.07 73.7 130.67 96.36
1997 Acquisitions 74.8 114.37 85.56 73.7 119.37 88.01
1998 Acquisitions 68.7 96.74 66.43 73.9 102.74 75.95
Total DJONT Comparable Hotels 74.9 119.00 89.13 74.1 124.01 91.93
Total Bristol Comparable Hotels 70.7 83.90 59.33 67.4 81.00 54.56
Total Comparable Hotels 72.9% $102.81 $74.96 70.9% $104.64 $74.21
</TABLE>
<TABLE>
<CAPTION>
SECOND QUARTER 1998 YEAR TO DATE 1998
--------------------------------- --------------------------------
OCCUPANCY ADR REVPAR OCCUPANCY ADR REVPAR
--------- --- ------ --------- --- ------
<S> <C> <C> <C> <C> <C> <C>
Original Hotels 76.9% $115.35 $88.72 75.0% $116.01 $86.99
CSS Hotels 75.6 123.71 93.46 75.2 128.27 96.45
1996 Acquisitions 77.4 127.31 98.48 74.7 127.91 95.58
1997 Acquisitions 75.0 111.55 83.63 73.7 117.63 86.28
1998 Acquisitions 69.9 93.52 65.41 66.3 100.15 66.39
Total DJONT Comparable Hotels 75.7 117.61 89.01 74.4 122.16 90.94
Total Bristol Comparable Hotels 72.4 81.63 59.08 69.3 79.12 54.85
Total Comparable Hotels 74.1% $100.85 $74.74 72.0% $102.46 $73.78
</TABLE>
<TABLE>
<CAPTION>
CHANGE FROM PRIOR PERIOD CHANGE FROM PRIOR PERIOD
2ND QTR. 1999 VS. 2ND QTR. 1998 1999 vs. 1998 Year to Date
--------------------------------- --------------------------------
OCCUPANCY ADR REVPAR OCCUPANCY ADR REVPAR
--------- --- ------ --------- --- ------
<S> <C> <C> <C> <C> <C> <C>
Original Hotels (1.6) pts 0.1% (2.1)% (2.1) pts 1.2% (1.7)%
CSS Hotels (0.5) (0.5) (1.1) 0.3 1.0 1.4
1996 Acquisitions (2.0) 2.1 (0.4) (1.0) 2.2 0.8
1997 Acquisitions (0.2) 2.5 2.3 1.9 2.0
1998 Acquisitions (1.2) 3.4 1.6 7.6 2.6 14.4
Total DJONT Comparable Hotels (0.8) 1.2 0.1 (0.3) 1.5 1.1
Total Bristol Comparable Hotels (1.7) 2.8 0.4 (1.9) 2.4 (0.5)
Total Comparable Hotels (1.2) pts 1.9% 0.3% (1.1) pts 2.1% 0.6%
</TABLE>
(A) DJONT Comparable Hotels includes 71 and 64 hotels, and Bristol Comparable
Hotels includes 63 and 57 hotels, in the second quarter and year to date,
respectively, which were not undergoing redevelopment in either the 1999 or
1998 periods reported.
17
<PAGE> 18
NON-COMPARABLE HOTELS (B)
<TABLE>
<CAPTION>
SECOND QUARTER 1999 YEAR TO DATE 1999
------------------------------- ------------------------------
OCCUPANCY ADR REVPAR OCCUPANCY ADR REVPAR
--------- --------- ------ --------- --------- ------
<S> <C> <C> <C> <C> <C> <C>
DJONT Non-comparable Hotels 67.2% $ 108.30 $72.77 67.5% $ 108.16 $73.02
Bristol Non-comparable Hotels 67.6% $ 91.60 $61.93 66.1% $ 93.73 $62.00
Total Non-comparable Hotels 67.5% $ 96.17 $64.91 66.6% $ 98.54 $65.62
</TABLE>
<TABLE>
<CAPTION>
SECOND QUARTER 1998 YEAR TO DATE 1998
--------------------------------- -----------------------------------
OCCUPANCY ADR REVPAR OCCUPANCY ADR REVPAR
--------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
DJONT Non-comparable Hotels 73.4% $ 105.66 $ 77.54 72.3% $ 105.39 $ 76.24
Bristol Non-comparable Hotels 68.8% $ 82.60 $ 56.82 68.1% $ 84.57 $ 57.58
Total Non-comparable Hotels 70.1% $ 89.21 $ 62.49 69.5% $ 91.65 $ 63.68
</TABLE>
<TABLE>
<CAPTION>
CHANGE FROM PRIOR PERIOD CHANGE FROM PRIOR PERIOD
2ND QTR. 1999 VS. 2ND QTR. 1998 1999 VS. 1998 YEAR TO DATE
------------------------------- ----------------------------
OCCUPANCY ADR REVPAR OCCUPANCY ADR RevPAR
--------- --- ------ --------- --- ------
<S> <C> <C> <C> <C> <C> <C>
DJONT Non-comparable Hotels (6.2)pts 2.5% (6.2)% (4.8) pts 2.6% (4.2)%
Bristol Non-comparable Hotels (1.2)pts 10.9% 9.0 % (2.0) pts 10.8% 7.7%
Total Non-comparable Hotels (2.6)pts 7.8% 3.9 % (2.9) pts 7.5% 3.1%
</TABLE>
(B) DJONT Non-comparable Hotels includes 15 and 22 hotels and Bristol
Non-comparable Hotels includes 35 and 40 hotels, in the second quarter
and year to date, respectively, undergoing redevelopment in either the
1999 or 1998 periods reported. The Bristol Non-comparable Hotels
excludes two and three hotels closed during renovation in the second
quarter and year to date, respectively, and one hotel that was
targeted for sale during both the periods reported.
ALL HOTELS (C)
<TABLE>
<CAPTION>
SECOND QUARTER 1999 YEAR TO DATE 1999
----------------------------------- ------------------------------------
OCCUPANCY ADR REVPAR OCCUPANCY ADR RevPAR
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Comparable Hotels 72.9% $ 102.81 $ 74.96 70.9% $ 104.64 $ 74.21
Non-comparable Hotels 67.5% $ 96.17 $ 64.91 66.6% $ 98.54 $ 65.62
Total Hotels 71.2% $ 100.82 $ 71.78 69.2% $ 102.36 $ 70.88
</TABLE>
<TABLE>
<CAPTION>
SECOND QUARTER 1998 YEAR TO DATE 1998
----------------------------------- ------------------------------------
OCCUPANCY ADR REVPAR OCCUPANCY ADR RevPAR
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Comparable Hotels 74.1% $ 100.85 $ 74.74 72.0% $ 102.46 $ 73.78
Non-comparable Hotels 70.1% $ 89.21 $ 62.49 69.5% $ 91.65 $ 63.68
Total Hotels 72.8% $ 97.31 $ 70.87 71.0% $ 98.36 $ 69.86
</TABLE>
<TABLE>
<CAPTION>
CHANGE FROM PRIOR PERIOD CHANGE FROM PRIOR PERIOD
2ND QTR. 1999 VS. 2ND QTR. 1998 1999 VS. 1998 YEAR TO DATE
----------------------------------- ------------------------------------
OCCUPANCY ADR REVPAR OCCUPANCY ADR RevPAR
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Comparable Hotels (1.2)pts 1.9% 0.3% (1.1) pts 2.1% 0.6%
Non-comparable Hotels (2.6)pts 7.8% 3.9% (2.9) pts 7.5% 3.1%
Total Hotels (1.6)pts 3.6% 1.3% (1.8) pts 4.1% 1.5%
</TABLE>
(C) Excludes two and three hotels closed during renovation in the second
quarter and year to date, respectively, and one hotel that was
targeted for sale during both the periods reported.
18
<PAGE> 19
Comparison of The Hotels' Operating Statistics for the Three and Six Months
Ended June 30, 1999 and 1998
For the six months ended June 30, 1999, the Company's Hotels had an
average increase in RevPAR of 1.5% over the same period last year. The
components of this increase were a 4.1% increase in ADR partially offset by a
decrease in occupancy of 1.8 percentage points.
The Comparable Hotels' RevPAR increased 0.6% for the six months ended
June 30, 1999, as compared to the same period in 1998. This was comprised of a
2.1% increase in ADR, which was largely offset by a decrease in occupancy of 1.1
percentage points. In the first quarter of 1999 increases in RevPAR, over the
same periods in 1998, were greater for each successive month, however, the
second quarter did not maintain this trend. In the second quarter, the rate of
RevPAR growth decreased each successive month and for the three months ended
June 30, 1999, RevPAR increased only 0.3% over the same period in 1998.
Hotels in California, Texas, Florida and Georgia accounted for
approximately 54% of the Comparable Hotels' room revenues for the three months
ended June 30, 1999. RevPAR changes and the percentage of the total Comparable
Hotels' room revenues for the three months ended June 30, 1999, as compared to
the same period in 1998, from these four states were as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF
COMPARABLE
REVPAR HOTELS' ROOM
CHANGE REVENUES
------ --------
<S> <C> <C> <C>
California (15 hotels) 2.4 % 17.3%
Texas (28 hotels) (3.3)% 17.0%
Florida (11 hotels) 1.1 % 10.2%
Georgia (12 hotels) 0.6 % 9.3%
</TABLE>
The Company attributes the RevPAR decrease for the Texas hotels, and
the moderate RevPAR growth in other markets, to the addition of new hotel rooms
throughout many markets. However, nationally, hotel construction starts dropped
13% in the fourth quarter of 1998 and 10% in the first six months of 1999. If
these declines in supply growth continue, along with a continuation of current
demand levels, stronger RevPAR growth should be seen, beginning by the end of
1999 or during 2000.
The Non-comparable Hotels' RevPAR increased 3.1% for the six months
ended June 30, 1999, versus the same period in 1998, and increased 3.9% for the
three months ended June 30, 1999 compared to 1998.
Included in the Non-comparable Hotels for the quarter are 25 hotels
which completed renovation programs in 1998 and 25 hotels undergoing renovation
in 1999. RevPAR increased 16.5% in the quarter for those hotels that completed
their renovation program in 1998 and RevPAR decreased 18.2% in the quarter for
those hotels undergoing renovation in 1999.
There are 12 hotels that were rebranded to Crowne Plaza hotels included
in the Non-comparable Hotels for the six months ended June 30, 1999. The RevPAR
for these hotels increased 19.5%, which was derived from a 12.7% increase in ADR
and a 3.9 percentage point increase in occupancy.
RENOVATION, REDEVELOPMENT, AND REBRANDING
Through June 30, 1999, the Company had spent $129 million (of a planned
$160 million) on its 1999 program for the renovation, redevelopment, or
rebranding of over 50 hotels. An additional $20 million of capital expenditures
were made during the same period to maintain the remaining hotels in a
competitive condition. In the second quarter of 1999, approximately $56 million
was spent on the 1999 renovation program and $11 million was spent on other
routine capital improvements. The renovation and redevelopment program for 1999
was approximately 80% complete as of the end of the second quarter.
Approximately $50 million of renovations were
19
<PAGE> 20
completed at the Allerton Crowne Plaza hotel in Chicago, Illinois, which was
closed during most of the first half of 1999. The remaining 1999 renovation
expenditures will be used to complete the 10 projects in process at the end of
the second quarter and to complete 10 additional smaller renovation projects. In
2000, the Company currently expects to spend approximately $40 million on the
renovation, redevelopment and rebranding of its existing hotels.
Thirty hotels (18 of which are Bristol-operated hotels) were undergoing
renovation, redevelopment, or rebranding during the quarter, which resulted in
approximately 113,000 room nights out-of-service, or approximately 2.5% of
available room nights. This included 15 Holiday Inn or Holiday Inn Select, six
Embassy Suites, three Doubletree, three Sheraton, and three Crowne Plaza hotels.
Approximately 3.0% of available rooms were out-of-service for the first six
months of 1999. Many of these projects also include renovations to the hotel's
exterior, public areas, meeting spaces and restaurants, which typically have a
negative impact on hotel revenues.
Included in the 30 hotels undergoing renovation during the quarter were
20 hotels, containing approximately 5,800 rooms, where renovations were
completed during the quarter. Many of these renovation projects commenced during
1998. The renovation and redevelopment expenditures on these 20 hotels totaled
$123.6 million.
FELCOR LODGING LIMITED PARTNERSHIP
RENOVATION PROJECTS COMPLETED IN SECOND QUARTER 1999
<TABLE>
<CAPTION>
TOTAL
HOTEL RENOVATION COST LOCATION
----- --------------- --------
(IN MILLIONS)
<S> <C> <C>
443-room Allerton Crowne Plaza* $50.0 Chicago, Illinois
335-room Crowne Plaza* 2.9 Irvine, California
305-room Crowne Plaza* 7.5 San Jose, California
248-room Doubletree 2.6 Denver, Colorado
138-room Doubletree Guest Suites 0.9 Dayton, Ohio
233-room Embassy Suites 2.2 Atlanta (Airport), Georgia
308-room Embassy Suites* 3.8 Dallas (Airport), Texas
198-room Embassy Suites 4.1 Palm Desert, California
247-room Holiday Inn 2.9 Amarillo, Texas
190-room Holiday Inn 2.6 Beaumont, Texas
139-room Holiday Inn 2.0 Cambridge, Ontario, Canada
500-room Holiday Inn 12.8 Cocoa Beach, Florida
223-room Holiday Inn 2.9 Columbus, Georgia
530-room Holiday Inn 7.8 Orlando, Florida
155-room Holiday Inn 1.1 Peterborough, Ontario, Canada
364-room Holiday Inn 7.1 Philadelphia, Pennsylvania
210-room Holiday Inn 1.7 Texarkana, Texas
382-room Holiday Inn Select 3.1 Nashville, Tennessee
251-room Holiday Inn Select 3.1 Pittsburgh, Pennsylvania
397-room Holiday Inn Select 2.5 San Antonio (Airport), Texas
- ------ -------
5,796 rooms $ 123.6
====== =======
</TABLE>
* Denotes those hotels which were also rebranded.
20
<PAGE> 21
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal source of cash to meet its cash requirements,
including distributions and repayments of indebtedness, is its share of the cash
flow from the Percentage Leases. For the six months ended June 30, 1999, cash
flow provided by operating activities, consisting primarily of Percentage Lease
revenue, was $150.0 million and Funds From Operations was $154.2 million.
The Lessees' obligations under the Percentage Leases are largely
unsecured. The Lessees have limited capital resources, and, accordingly, their
ability to make lease payments under the Percentage Leases is substantially
dependent on the ability of the Lessees to generate sufficient cash flow from
the operation of the Hotels.
At June 30, 1999, DJONT had a cumulative shareholders' deficit of $14.5
million. The shareholders' deficit results primarily from losses incurred as a
consequence of the one-time costs of the renovation, redevelopment and
rebranding programs at the Hotels and the substantial number of room and suite
nights lost due to renovation. Currently, management expects DJONT to be
profitable for the year and it is anticipated that a substantial portion of any
future profits of DJONT will be retained until a positive shareholders' equity
is restored. It is anticipated that DJONT's future earnings will be sufficient
to enable it to continue to make its lease payments under the Percentage Leases.
Certain entities owning interests in DJONT and the managers of certain
hotels have agreed to make loans to DJONT of up to an aggregate of approximately
$17.3 million to the extent necessary to enable DJONT to pay rent and other
obligations when due under the respective Percentage Leases relating to a total
of 34 of the Hotels.
No loans were outstanding under such agreements at June 30, 1999.
Bristol has entered into an absolute and unconditional guarantee of the
obligations of the Bristol Lessees under the Percentage Leases. As an additional
credit enhancement, the Bristol Lessees obtained a letter of credit for the
benefit of the Company in the original amount of $20 million that is required to
be maintained until July 27, 1999. This letter of credit is subject to periodic
reductions upon satisfaction of certain conditions and, at June 30, 1999, was in
the amount of $9.1 million. According to Bristol's financial statements filed
with the SEC, for the three and six months ended June 30, 1999, Bristol had net
income of $4.5 and $5.6 million, respectively, and at June 30, 1999, had
stockholders' equity of $41.2 million.
The Company may incur indebtedness to make property acquisitions, to
purchase shares of FelCor's 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. Management is evaluating a number of potential opportunities to
enhance shareholder value, which has been created by the depressed prices at
which FelCor's capital stock is currently trading.
During the second quarter, the Company completed $550 million of
long-term debt financings. The proceeds from these loans were used to prepay the
Company's $250 million unsecured term loan, which was to mature on December 31,
1999, and to reduce outstanding borrowings under its existing $850 million Line
of Credit. These debt financings consisted of:
o A five-year, $375 million Senior Term Loan (LIBOR + 250 bps)
o A ten-year, $100 million Mortgage debt (7.54% Fixed)
o A ten-year, $75 million Mortgage debt (7.55% Fixed)
The Line of Credit and the Senior Term Loan contain various affirmative
and negative covenants, including limitations on total indebtedness, total
secured indebtedness, and cash distributions, as well as the obligation to
maintain certain minimum tangible net worth and certain minimum interest and
debt service coverage ratios. At June 30, 1999, the Company was in compliance
with all such covenants.
21
<PAGE> 22
The Company's other borrowings contain affirmative and negative
covenants that are generally equal to or less restrictive than the Line of
Credit and Senior Term Loan. Most of 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.
At June 30, 1999, the Company had $50.6 million of cash and cash
equivalents and had utilized $547 million of the $850 million available under
the Line of Credit. Certain significant credit and debt statistics at June 30,
1999 are as follows:
o Interest coverage ratio of 3.5x
o Total debt to annualized EBITDA of 4.2x
o Borrowing capacity of $303 million under the Line of Credit
o Consolidated debt equal to 38% of investment in hotels at cost
o Fixed interest rate debt equal to 62% of total debt
o Weighted average maturity of fixed interest rate debt of
approximately six years
o Mortgage debt to total assets of 11%
o Debt of less than $9 million and $32 million maturing in the
remainder of 1999 and 2000, respectively.
To manage the relative mix of its debt between fixed and variable rate
instruments, the Company has entered into interest rate swap agreements with six
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 and Senior Term Loan without an exchange of the underlying principal
amount, and effectively convert variable rate debt to a fixed rate. The fixed
rates to be paid, the effective fixed rate, and the variable rate to be received
by the Company at June 30, 1999, are summarized in the following table:
<TABLE>
<CAPTION>
SWAP RATE
RECEIVED
SWAP RATE EFFECTIVE (VARIABLE) AT SWAP
NOTIONAL AMOUNT PAID (FIXED) FIXED RATE 6/30/99 MATURITY
--------------- ------------ ---------- --------- -------------
<S> <C> <C> <C> <C>
$ 50 million 6.111% 7.611% 5.000% October 1999
$ 25 million 5.955% 7.455% 5.000% November 1999
$ 25 million 5.558% 7.058% 4.930% July 2001
$ 25 million 5.548% 7.048% 4.930% July 2001
$ 75 million 5.555% 7.055% 4.930% July 2001
$100 million 5.796% 8.296% 4.930% July 2003
$ 25 million 5.826% 8.326% 4.930% July 2003
------------
$325 million
============
</TABLE>
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. Agreements such as these contain a credit risk 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,
which are limited to major banks and financial institutions, and it does not
anticipate nonperformance by the counterparties.
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.
22
<PAGE> 23
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 Lessees' ability to raise room rates.
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 lease revenue, particularly during the fourth quarter, to
the extent that it receives Percentage Rent. To the extent that cash flow from
operations is insufficient during any quarter, due to temporary or seasonal
fluctuations in lease revenue, the Company expects to utilize cash on hand or
borrowings under the Line of Credit to make distributions to its equity holders.
YEAR 2000
The Year 2000 issue relates to computer programs that were written
using two digits, rather than four, to define the applicable year. In those
programs the year 2000 may be incorrectly identified as the year 1900, which
could result in a system failure or miscalculation causing a disruption of
operations, including a temporary inability to process transactions, prepare
financial statements, or engage in other normal business activities.
The Company believes that its efforts to identify and resolve the Year
2000 issues will avoid a major disruption of its business. The Company has
assessed its internal computer systems and believe that they will properly
utilize dates beyond December 31, 1999.
The Company and its managers have completed the assessment of both
computer and noninformation technology systems to determine if the Hotels are
Year 2000 compliant. This assessment included embedded systems that operate
elevators, phone systems, energy maintenance systems, security systems, and
other systems. Most of the upgrades to make a hotel Year 2000 compliant had been
anticipated as part of the renovation, redevelopment, and rebranding program
that the Company generally undertakes upon acquisition of a hotel.
The Company has spent approximately $6 million through the second
quarter of 1999 to remediate Year 2000 issues and anticipates spending an
additional $ 4 million to remediate all Year 2000 issues, which amount is
included in the Company's 1999 capital plans. The majority of the unspent funds
relate to the acquisition and systematic implementation of Year 2000 compliant
computer hardware and software for the Hotels.
The Company has requested and received assurances from the managers of
the Hotels, the franchisors of the Hotels and the Lessees, that they have
implemented appropriate steps to insure that they will avoid a major disruption
of business due to Year 2000 issues. However, the Company cannot assure that
such third parties will successfully avoid a disruption due to Year 2000 issues,
and such disruptions could have an adverse effect upon the Company's business,
financial condition or results of operations.
Concurrent with the assessment of the Year 2000 issue, the Company and
its hotel managers and Lessees are developing contingency plans intended to
mitigate the possible disruption in business operations that may result from
Year 2000 issues, and are developing cost estimates for such plans. Once
developed, contingency plans and related cost estimates will be continually
refined as additional information becomes available.
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS
Portions of this Quarterly Report on Form 10-Q 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. Important factors that could
cause actual results to differ materially from the
23
<PAGE> 24
Company's current expectations are disclosed herein and in the Company's other
filings under the Securities Act of 1933, as amended, and the Securities
Exchange Act of 1934, as amended, (collectively, "Cautionary Disclosures"). The
forward looking statements included herein, and all subsequent written and oral
forward looking statements attributable to the Company or persons acting on its
behalf, are expressly qualified in their entirety by the Cautionary Statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information and disclosures regarding market risks applicable to the
Company is incorporated herein by reference to the discussion under "Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations-Liquidity and Capital Resources" contained elsewhere in this
Quarterly Report on Form 10-Q for the three and six months ended June 30, 1999.
24
<PAGE> 25
PART II. -- OTHER INFORMATION
ITEM 5. OTHER INFORMATION.
For information relating to asset acquisitions and certain other
transactions by the Company through June 30, 1999, see Note 1 of Notes to
Consolidated Financial Statements of FelCor Lodging Limited Partnership
contained in Item 1 of Part I of this Quarterly Report on Form 10-Q. Such
information is incorporated herein by reference.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
Exhibit
Number Description
------ -----------
10.22.1 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).
10.22.2 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).
10.22.3 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).
10.23.1 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).
10.23.2 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-
25
<PAGE> 26
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).
27 Financial Data Schedule.
(b) Reports on Form 8-K:
Registrant did not file any reports on Form 8-K during the second
quarter of 1999.
26
<PAGE> 27
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: August 13, 1999
FELCOR LODGING LIMITED PARTNERSHIP
By: FelCor Lodging Trust Incorporated
Its General Partner
By: /s/ Randall L. Churchey
-------------------------------------------------
Randall L. Churchey
Senior Vice President and Chief Financial Officer
(Chief Financial Officer)
27
<PAGE> 28
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
10.22.1 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).
10.22.2 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).
10.22.3 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).
10.23.1 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).
10.23.2 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).
27 Financial Data Schedule.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JUNE 30,
1999 10-Q OF FELCOR LODGING LIMITED PARTNERSHIP CONSOLIDATED BALANCE SHEET AND
STATEMENT OF OPERATION AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS DATED JUNE 30, 1999 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 50,569
<SECURITIES> 0
<RECEIVABLES> 32,324
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 82,893
<PP&E> 4,289,883
<DEPRECIATION> 251,924
<TOTAL-ASSETS> 4,280,626
<CURRENT-LIABILITIES> 121,302
<BONDS> 1,712,540
0
295,000
<COMMON> 0
<OTHER-SE> 2,100,056
<TOTAL-LIABILITY-AND-EQUITY> 4,280,626
<SALES> 0
<TOTAL-REVENUES> 262,104
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 59,172
<INCOME-PRETAX> 81,521
<INCOME-TAX> 0
<INCOME-CONTINUING> 81,521
<DISCONTINUED> 0
<EXTRAORDINARY> 1,113
<CHANGES> 0
<NET-INCOME> 80,408
<EPS-BASIC> 0.96
<EPS-DILUTED> 0.95
</TABLE>
