Exhibit 99.1
 CNL Income GWPartnership, LLLP andSubsidiaries  Consolidated Financial Statements  December 31, 2008 and 2007




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CNL Income GW Partnership, LLLP and Subsidiaries  December 31, 2008 and 2007
 Page(s)Report of Independent Certified Public Accountants
    
    
    1Consolidated Financial StatementsConsolidated Balance Sheets
    
    
    2Consolidated Statements of Operations
    
    
    3Consolidated Statements of Partners Capital
    
    
    4Consolidated Statements of Cash Flows
    
    
    5-6Notes to Consolidated Financial Statements
    
    
    7-15




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Report of Independent Certified Public Accountants
 
    
 1




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CNL Income GW Partnership, LLLP and Subsidiaries
Consolidated Balance Sheets
December 31, 2008 and 2007
 
 December 31,2008
    
    
    2007(not covered byauditors report)AssetsCurrent assets:Cash and cash equivalents
    
    $
    968,390
    
    
    $
    1,687,430Restricted cash
    
    
    1,390,733
    
    
    
    1,965,757Accounts receivable
    
    
    930,242
    
    
    
    1,203,424Due from affiliates
    
    
    973,431
    
    
    
    Prepaid expenses and other current assets
    
    
    1,169,189
    
    
    
    1,330,1315,431,985
    
    
    
    6,186,742Loan costs
    
    
    438,405
    
    
    
    542,523Property and equipment, net
    
    
    98,628,211
    
    
    
    104,921,296Other intangible assets, net
    
    
    213,171
    
    
    
    368,205Total assets
    
    $
    104,711,772
    
    
    $
    112,018,766Liabilities and Partners CapitalCurrent liabilities:Accounts payable and accrued expenses
    
    $
    5,595,957
    
    
    $
    6,827,095Mortgage loan payable, current portion
    
    
    513,043
    
    
    $
    Due to affiliates
    
    
    
    
    
    
    63,807Advanced deposits
    
    
    1,015,643
    
    
    
    1,068,0497,124,643
    
    
    
    7,958,951Mortgage loan payable
    
    
    62,486,957
    
    
    
    63,000,000Total liabilities
    
    
    69,611,600
    
    
    
    70,958,951Partners capital
    
    
    35,100,172
    
    
    
    41,059,815Total liabilities and partners capital
    
    $
    104,711,772
    
    
    $
    112,018,766
  2




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CNL Income GW Partnership, LLLP and Subsidiaries
Consolidated Statements of Operations
Years Ended December 31, 2008, 2007 and 2006
 
 Year Ended December 312008
    
    
    2007
    
    
    2006(not covered by auditors report)RevenuesRooms
    
    $
    22,111,582
    
    
    $
    24,016,962
    
    
    $
    26,175,125Food and beverage
    
    
    5,165,671
    
    
    
    5,726,252
    
    
    
    5,975,545Other operating departments
    
    
    4,232,432
    
    
    
    4,854,177
    
    
    
    5,277,07431,509,685
    
    
    
    34,597,391
    
    
    
    37,427,744Cost of sales and other expensesRooms
    
    
    3,920,976
    
    
    
    3,936,089
    
    
    
    4,371,340Food and beverage
    
    
    4,725,934
    
    
    
    5,042,643
    
    
    
    5,222,952Other operating departments
    
    
    5,293,681
    
    
    
    5,505,790
    
    
    
    5,152,542Property operations and maintenance
    
    
    6,201,572
    
    
    
    6,462,936
    
    
    
    5,670,212Management fees
    
    
    315,097
    
    
    
    1,037,922
    
    
    
    1,122,832Franchise and licensing fees
    
    
    945,291
    
    
    
    1,037,922
    
    
    
    1,122,832General and administrative
    
    
    3,459,059
    
    
    
    3,921,479
    
    
    
    4,316,700Sales and marketing
    
    
    3,296,099
    
    
    
    3,254,141
    
    
    
    3,663,104Depreciation and amortization
    
    
    7,334,696
    
    
    
    7,111,968
    
    
    
    6,406,51635,492,405
    
    
    
    37,310,890
    
    
    
    37,049,030Interest and other income
    
    
    21,436
    
    
    
    101,683
    
    
    
    60,703Interest expense and loan cost amortization
    
    
    (3,998,359
    )
    
    
    (3,954,843
    )
    
    
    (3,112,914
    )Net loss
    
    $
    (7,959,643
    )
    
    $
    (6,566,659
    )
    
    $
    (2,673,497
    )
  3




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CNL
Income GW Partnership, LLLP and Subsidiaries  Consolidated Statements of Partners Capital  Years Ended December 31, 2008, 2007 and 2006
 
 GeneralPartner
    
    
    CNL LP
    
    
    GW
    
    
    TotalBalance, December 31, 2005 (not covered by auditors report)
    
    $
    11,160
    
    
    $
    78,108,832
    
    
    $
    33,479,995
    
    
    $
    111,599,987Capital contributions
    
    
    120
    
    
    
    837,497
    
    
    
    358,979
    
    
    
    1,196,596Distribution of loan proceeds
    
    
    (6,244
    )
    
    
    (43,696,070
    )
    
    
    (18,734,656
    )
    
    
    (62,436,970
    )Distribution of operating cash flows
    
    
    (44
    )
    
    
    (309,598
    )
    
    
    
    
    
    
    (309,642
    )Net loss
    
    
    (255
    )
    
    
    (1,781,866
    )
    
    
    (891,376
    )
    
    
    (2,673,497
    )Balance, December 31, 2006 (not covered by auditors report)
    
    
    4,737
    
    
    
    33,158,795
    
    
    
    14,212,942
    
    
    
    47,376,474Capital contributions
    
    
    
    
    
    
    
    
    
    
    250,000
    
    
    
    250,000Net loss
    
    
    (653
    )
    
    
    (4,552,399
    )
    
    
    (2,013,607
    )
    
    
    (6,566,659
    )Balance, December 31, 2007 (not covered by auditors report)
    
    
    4,084
    
    
    
    28,606,396
    
    
    
    12,449,335
    
    
    
    41,059,815Capital contributions
    
    
    200
    
    
    
    1,393,400
    
    
    
    606,400
    
    
    
    2,000,000Net loss
    
    
    (55,463
    )
    
    
    (5,490,816
    )
    
    
    (2,413,364
    )
    
    
    (7,959,643
    )Balance, December 31, 2008
    
    $
    (51,179
    )
    
    $
    24,508,980
    
    
    $
    10,642,371
    
    
    $
    35,100,172
  4




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CNL
Income GW Partnership, LLLP and Subsidiaries  Consolidated Statements of Cash Flows  Years Ended December 31, 2008, 2007 and 2006
 
 2008
    
    
    2007
    
    
    2006(not covered by auditors report)Cash Flows from operating activitiesNet loss
    
    $
    (7,959,643
    )
    
    $
    (6,566,659
    )
    
    $
    (2,673,497
    )Adjustments to reconcile net loss to net cash (used in)
provided by operating activitiesDepreciation and amortization
    
    
    7,334,696
    
    
    
    7,111,968
    
    
    
    6,406,516Loan cost amortization
    
    
    104,118
    
    
    
    71,243
    
    
    
    115,386Changes in assets and liabilities, net of business
acquiredAccounts receivable
    
    
    273,182
    
    
    
    304,603
    
    
    
    (417,806
    )Due from affiliates
    
    
    (973,431
    )
    
    
    
    
    
    
    Prepaid expenses and other current assets
    
    
    160,942
    
    
    
    (131,708
    )
    
    
    33,581Accounts payable and accrued expenses
    
    
    (1,231,138
    )
    
    
    637,934
    
    
    
    477,047Due to affiliates
    
    
    (63,807
    )
    
    
    (544,529
    )
    
    
    465,051Advanced deposits
    
    
    (52,406
    )
    
    
    61,626
    
    
    
    (60,558
    )Net cash provided by (used in)
operating activities
    
    
    (2,407,487
    )
    
    
    944,478
    
    
    
    4,345,720Cash Flows from investing activitiesAcquisition of property and equipment
    
    
    (886,577
    )
    
    
    (1,311,707
    )
    
    
    (15,071,819
    )Decrease (increase) in restricted cash
    
    
    575,024
    
    
    
    (457,378
    )
    
    
    11,311,526Net cash used in investing activities
    
    
    (311,553
    )
    
    
    (1,769,085
    )
    
    
    (3,760,293
    )Cash Flows from financing activitiesCapital contributions from partners
    
    
    2,000,000
    
    
    
    
    
    
    
    1,196,596Proceeds from mortgage loan
    
    
    
    
    
    
    
    
    
    
    63,000,000Distribution of loan proceeds to partners
    
    
    
    
    
    
    
    
    
    
    (62,436,970
    )(Distributions to) refunds from partners
    
    
    
    
    
    
    1,225,508
    
    
    
    (3,897,068
    )Payment of loan costs
    
    
    
    
    
    
    
    
    
    
    (729,152
    )Deposit released from (made with) lender for mortgage
loan
    
    
    
    
    
    
    
    
    
    
    680,000Net cash provided by (used in)
financing activities
    
    
    2,000,000
    
    
    
    1,225,508
    
    
    
    (2,186,594
    )Net increase (decrease) in cash and cash equivalents
    
    
    (719,040
    )
    
    
    400,901
    
    
    
    (1,601,167
    )Cash and cash equivalentsBeginning of period
    
    
    1,687,430
    
    
    
    1,286,529
    
    
    
    2,887,696End of period
    
    $
    968,390
    
    
    $
    1,687,430
    
    
    $
    1,286,529
  5




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CNL
Income GW Partnership, LLLP and Subsidiaries  Consolidated Statements of Cash Flows  Continued  Years ended December 31, 2008, 2007 and 2006
 
 2008
    
    
    2007
    
    
    2006(not covered by auditors report)Supplemental disclosure of noncash financing
activitiesDistributions due to (refundable from) partners
    
    $
    
    
    
    $
    
    
    
    $
    (1,225,508
    )Capital contributions (equipment) from partners
    
    $
    
    
    
    $
    250,000
    
    
    $
    Supplemental disclosure of cash flow informationCash paid during the period for interest
    
    $
    3,894,241
    
    
    $
    3,884,227
    
    
    $
    2,667,688
  6




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CNL
Income GW Partnership, LLLP and Subsidiaries  Notes to Consolidated Financial Statements  Years ended December 31, 2008, 2007 and 2006
 
 1.
    
    BusinessOrganizationCNL Income GW Partnership, LLLP (the Partnership) was organized pursuant to the laws of the
State of Delaware on October 11, 2005. CNL Income GW WI-DEL, LP, CNL Income GW Sandusky, LP,
CNL Income GW Corp., CNL Income GW WI-DEL Tenant, LP and CNL Income GW Sandusky Tenant, LP
are wholly owned subsidiaries of the Partnership. The Partnerships general partner is CNL
Income GW GP, LLC (the General Partner) and limited partners are CNL Income Partners, LP
(CNL LP) and Great Bear Lodge of Wisconsin Dells, LLC (GW), (collectively, the Limited
Partners). GW is an affiliate of Great Wolf Resorts, Inc. The General Partner and CNL LP
are collectively referred to as the CNL Partners and are wholly owned subsidiaries of CNL
Lifestyle Properties, Inc., formerly known as CNL Income Properties, Inc.The Partnership owns the (i) 309-room hotel and recreational facilities known as the Great
Wolf Lodge-Wisconsin Dells located in Lake Delton, Wisconsin, and (ii) the 271-room hotel
and recreational facilities known as the Great Wolf Lodge-Sandusky located in Sandusky,
Ohio (collectively referred to as the Properties). The Properties day-to-day operations
are managed by an affiliate of GW, however, all Partners must agree to key decisions
affecting the Properties.The structure of the Partnership is designed to allow the parent of the CNL Partners to
continue to qualify as a real estate investment trust, which is generally not subject to
federal income taxes. In keeping with this objective, the Partnership operates its
Properties through tenant partnership entities owned by the Partnership through a
wholly-owned taxable REIT subsidiary (TRS) entity, as permitted by the REIT Modernization
Act of 1999.The Partnership was formed through a series of transactions, whereby GW contributed its
interests in two subsidiary partnerships to the Partnership in exchange for 100% ownership of
the Partnership. On October 11, 2005 and November 3, 2005, the CNL Partners acquired an
aggregate 70.00% interest in the Partnership from GW for cash.Then on April 1, 2007, GW contributed equipment in the amount of $250,000 resulting in the
General Partner and Limited Partners owning the following percentage interests in the
Partnership as of December 31, 2008:
 Partner
    
    Percentage InterestGeneral Partner
    
    
    0.01
    %CNL LP
    
    
    69.67
    %GW
    
    
    30.32
    %
 7




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CNL
Income GW Partnership, LLLP and Subsidiaries  Notes to Consolidated Financial Statements  Years ended December 31, 2008, 2007 and 2006
 
 Allocations and DistributionsNet income or loss is allocated between the Partners based on the hypothetical liquidation at
book value (HLBV) method of accounting. Under this method, the Partnership allocates net
income or loss in each period to the Partners based on the change in each Partners share of
the net assets of the Partnership they would receive if the Partnership were to liquidate all
of its assets at net book value and distribute the resulting cash to creditors and partners in
accordance with their respective priorities.On an annual basis, Net Cash Flow, as defined in the Agreement, is distributed in accordance
with the following order of priority; (i) first, to the CNL Partners, pro rata, until the
aggregate distributions received by the CNL Partners with respect to such fiscal year equals
the CNL Preferred Distribution, as defined in the Agreement, (ii) second to GW until the
aggregate distributions received by the GW with respect to such fiscal year equals the GW
Preferred Distribution, as defined in the Agreement, and (iii) thereafter pro-rata among the
Partners in proportion to their respective percentage interests.Capital proceeds, including capital proceeds distributed to partners in winding up the
Partnership, are allocated as follows: (i) first, to establish any reserves pursuant to and
subject to the provisions of which the General Partner reasonably determines to be necessary
to provide for any contingent or unforeseen liabilities or obligations of the Partnership and
the subsidiaries (provided that at such time as the General Partner determines to be
advisable, the balance of the reserves remaining after the payment of such contingencies shall
be deemed capital proceeds available for distribution); (ii) next, to Partners, pro rata, in
proportion to the respective amounts of their Unreturned Capital, as defined in the Agreement,
until the Unreturned Capital of each of the Partners is returned in full; and (iii)
thereafter, among the Partners, pro-rata in proportion to their respective percentage
interests.LiquidityThe Partnership incurred net losses of $7,959,643, $6,566,659 and $2,673,497 for each of the
years in the period ended December 31, 2008. In addition, during the year ended December 31,
2008, $2,407,487 in cash was used in operating activities. The Partnership has been
negatively impacted by a number of factors including increased competition and general
economic slowdowns. During 2008, the partners provided a capital infusion of $2.0 million to
meet operating needs, and an additional $1.0 million was funded by the partners in February
2009.The Partnership expects it may need additional infusions of cash to meet its operating and
debt service needs. The Partners have committed to fund cash requirements through January 1,
2010 to the extent that the Partnerships cash flow from operations is insufficient to meet
its scheduled obligations as they come due.
 
 2.
    
    Summary of Significant Accounting PoliciesA summary of significant accounting principles and practices used in the preparation of the
financial statements follows:Basis of Financial Statement PresentationThe Partnership prepares its consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America. These principles require
management to make estimates and assumptions that affect the reported amounts of assets and
liabilities, disclose contingent assets and liabilities at the date of consolidated financial
statements and report amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
 8




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CNL
Income GW Partnership, LLLP and Subsidiaries  Notes to Consolidated Financial Statements  Years ended December 31, 2008, 2007 and 2006
 
 Principles of ConsolidationThe accompanying consolidated financial statements include the accounts of CNL Income GW
Partnership, LLLP and its wholly owned subsidiaries. All significant inter-partnership
balances and transactions have been eliminated in consolidation.Cash and Cash EquivalentsThe Partnership considers all amounts held in highly liquid instruments with original
purchased maturities of three months or less as cash and cash equivalents. Cash and cash
equivalents consists primarily of demand deposit accounts at commercial banks. Cash accounts
maintained on behalf of the Partnership in demand deposits at commercial banks may exceed
federally insured levels; however, the Partnership has not experienced any losses in such
accounts. Management believes the credit risk associated with cash and cash equivalents to
be low due to the quality of the financial institutions in which these assets are held.Restricted CashCertain amounts of cash have been restricted under the management agreements with GW for
maintenance and replacement of furniture, fixtures and equipment at the Partnerships
Properties. Cash for the replacement of furniture, fixtures and equipment is set aside each
month as a set percentage of total gross revenues of the Properties in accordance with the
hotel management agreements and is used as necessary for the replacement of furniture,
fixtures and equipment. As of December 31, 2008 and 2007, the Partnership had approximately
$1.4 million and $2.0 million in restricted cash, respectively, to fund future replacements.Property and EquipmentProperty and equipment is stated at cost and includes land, buildings and improvements, and
furniture, fixtures and equipment. Buildings and improvements, and furniture, fixtures and
equipment are depreciated on the straight-line method over the assets estimated useful lives
ranging from 39 to 3 years, respectively. Expenditures for major renewals and betterments
are capitalized and depreciated over the related assets estimated useful lives.
Expenditures for repairs and maintenance are expensed when incurred.Other Intangible AssetsThe Partnership follows Statement of Financial Accounting Standards No. 142 Goodwill and
Other Intangible Assets, which addresses financial accounting and reporting for acquired
goodwill and other intangible assets. Goodwill and other intangible assets that have
indefinite useful lives are not amortized into results of operations but, instead, are tested
at least annually for impairment and written down when impaired.Other intangible assets represent the value assigned to the revenue stream from a condo
rental
    pool at the Wisconsin Dells property. The condo rental pool intangible asset is being
amortized on a straight-line basis over the average remaining life of the existing rental
pool agreements which was approximately 4.6 years.Loan CostsLoan costs incurred in connection with securing financing have been capitalized and are being
amortized over the term of the loan using the straight-line method. For the years ended
December 31, 2008, 2007 and 2006, amortization of loan cost was $104,118, $71,243 and
$115,386, respectively.
 9




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CNL
Income GW Partnership, LLLP and Subsidiaries  Notes to Consolidated Financial Statements  Years ended December 31, 2008, 2007 and 2006
 
 Revenue RecognitionThe Propertys revenues are derived from its operations and include revenues from the rental
of rooms, food and beverage sales, telephone usage, the management of a condo rental pool at
the Wisconsin Dells property and other service revenue. Revenue is recognized when rooms are
occupied and services have been performed. Cash received from customers for events occurring
after the end of each respective year have been recorded as advanced deposits in the
accompanying consolidated balance sheets.Advertising and Promotion CostsThe costs of advertising, promotional, sales and marketing programs are charged to operations
in the year incurred and are included as sales and marketing expenses in the accompanying
consolidated statement of operations. Advertising, promotional, sales and marketing costs
totaled approximately $3.3 million for each of the years ended December 31, 2008 and 2007,
and $3.7 million for the year ended December 31, 2006.InventoryInventory, primarily consisting of food, beverage and operating supplies, is accounted for
using the first in, first out method and is stated at the lower of cost or market. Inventory
is recorded in prepaid expenses and other current assets in the accompanying consolidated
balance sheets.Income TaxesUnder the provisions of the Internal Revenue Code and applicable state laws, the Partnership
is only subject to taxation of income on the profits and losses from its TRS. The tax
consequences of other Partnership revenues and expenses, unrelated to the operation of the
properties, will accrue to the partners. Certain of these other revenues and expenses may be
treated differently in the Partnerships income tax return than in the accompanying
consolidated financial statements. Therefore, amounts reported in the consolidated financial
statements may not be the same as reported in the partners income tax returns.The Partnership accounts for federal and state income taxes on its TRS using the asset and
liability method. Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statements carrying amounts of
existing assets and liabilities and their respective tax bases and operating loss and
tax-credit carry forwards. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that includes the
enactment date. Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized.
 
 The Partnership analyzes its material tax position under FASB Interpretation Number 48,
Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109
(FIN 48) and determined that it has not taken any uncertain tax position within the meaning
of the interpretation.LeasesThe Partnership has entered into operating leases for equipment used at its Properties. Rent
expense is recognized on a straight-line basis over the term of the leases.
 10




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CNL
Income GW Partnership, LLLP and Subsidiaries  Notes to Consolidated Financial Statements  Years ended December 31, 2008, 2007 and 2006
 
 Impairment of Long-Lived AssetsIn accordance with Statement of Financial Accounting Standards No. 144 Accounting for the
Impairment or Disposal of Long-Lived Assets, the Partnerships long-lived assets are tested
for impairment annually or whenever events or changes in circumstances indicate that their
carrying amount may not be recoverable. The Partnership assesses impairment by comparing the
carrying value of long-lived assets to future estimated undiscounted operating cash flows
expected to be generated over the life of the assets and from their eventual disposition. In
the event the carrying amount exceeds the estimated future undiscounted cash flows, the
Partnership would recognize an impairment loss to adjust the carrying amount of the asset to
the estimated fair value. For the years ended December 31, 2008, 2007 and 2006, the
Partnership recorded no impairment charges.Fair Value of Financial InstrumentsThe estimated fair value of cash and cash equivalents, accounts receivable, accounts payable
and accrued expenses approximates carrying values because of the liquid nature of the assets
and short maturities of the obligations. The Partnership believes the fair value of its
long-term debt was approximately $56.8 million and $60.5 million as of December 31, 2008 and
2007, respectively, based on discounted cash flows at the market rates it believes it could
obtain for similar borrowings at that time.Concentration of Credit RiskFinancial instruments which potentially subject the Partnership to a concentration of credit
risk consist principally of guest and trade accounts receivable. Concentration of credit
risk with respect to guest and trade accounts receivable is limited due to the wide variety
of customers and industries to which the Properties services are sold, as well as the
dispersion of customers across many geographic areas.3.
    
    Property and EquipmentProperty and equipment consist of the following at December 31, 2008 and 2007:
 
 2008
    
    
    2007Land and land improvements
    
    $
    7,611,511
    
    
    $
    7,611,511Building and improvements
    
    
    82,825,136
    
    
    
    82,762,874Furniture, fixtures and equipment
    
    
    29,585,681
    
    
    
    28,761,366120,022,328
    
    
    
    119,135,751Less: accumulated depreciation
    
    
    (21,394,117
    )
    
    
    (14,214,455
    )$
    98,628,211
    
    
    $
    104,921,296
 Depreciation expense for the years ended December 31, 2008, 2007 and 2006 was $7.2 million,
$7.0 million and $6.2 million, respectively.
 11




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##### 



CNL
Income GW Partnership, LLLP and Subsidiaries  Notes to Consolidated Financial Statements  Years ended December 31, 2008, 2007 and 2006
 
 4.
    
    Other Intangible AssetsThe gross carrying amount and accumulated amortization of the Partnerships other intangible
assets consist of the following at December 31, 2008 and 2007:
 2008
    
    
    2007Condo rental pool
    
    $
    710,570
    
    
    $
    710,570Less: accumulated amortization
    
    
    (497,399
    )
    
    
    (342,365
    )$
    213,171
    
    
    $
    368,205
 Amortization expense related to condo rental pool intangible asset was $155,034 for the years
ended December 31, 2008 and 2007, and $166,184 for the year ended December 31, 2006. The
anticipated amortization of the condo rental pool intangible asset over each of the next
three years is as follows:
 2009
    
    $
    155,0332010
    
    
    58,138$
    213,171
 5.
    
    Related Party TransactionsHotel Management AgreementsThe Partnership entered into an agreement with an affiliate of GW (the Manager) to manage
the Properties. The management agreements have a term of 15 years. Under terms of the
agreements, the Manager operates the Properties in return for a fixed management fee of 3
percent of Gross Operating Revenues, as defined in the management agreements, for each
property. The Manager may also earn an incentive management fee equal to 30 percent of the
amount by which net operating income exceeds 10 percent of the average Invested Capital, as
defined in the agreement. The Partnership incurred base management fees of approximately
$0.3
    million, $1.0 million and $1.1 million and no incentive management fees for the years
ended December 31, 2008, 2007 and 2006, respectively. The management agreements were amended
resulting in a reduction in management fees to the Manager for the year ended December 31,
2008 (See Note 10.) As of December 31, 2008, the Partnership was due approximately $0.9
million from GW relating primarily to the reduction in management fees that were refundable
to the Partnership from the Manager. The management agreements may be terminated if certain
performance thresholds are not met, as defined in the management agreements.Licensing AgreementsThe Partnership also entered into licensing agreement with an affiliate of GW (the
Franchisor) for each property. The license agreements have a term of 15 years. Under
terms of the agreements, the Partnership is required to pay franchise and licensing fees
equal to 3 percent of Gross Operating Revenues, as defined in the licensing agreements, for
each property. The Partnership incurred licensing fees of approximately $0.9 million, $1.0
million and $1.1 million for the years ended December 31, 2008, 2007 and 2006, respectively.
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CNL
Income GW Partnership, LLLP and Subsidiaries  Notes to Consolidated Financial Statements  Years ended December 31, 2008, 2007 and 2006
 
 OtherThe Partnership has entered into various other agreements with GW and its affiliates to
provide services such as property insurance, health insurance, and workers compensation
insurance. The Partnership incurred $1.2 million for the years ended December 31, 2008 and
2007, and $1.4 million for the year ended December 31, 2006 for such expenses. These amounts
have been included in costs and expenses for room, food and beverage, and other operating
departments in the accompanying consolidated statements of operations.6.
    
    Income TaxesUnder the provisions of the Internal Revenue Code and applicable state laws, the Partnership
is only subject to taxation of income on the profits and losses from its TRS operations. The
components of the deferred taxes recognized in the accompanying consolidated balance sheets
at December 31, 2008 and 2007 are as follows:
 2008
    
    
    2007Deferred tax asset:Net operating loss
    
    $
    7,829,779
    
    
    $
    5,006,248Other book/tax differences
    
    
    341,589
    
    
    
    251,571Total deferred tax asset
    
    
    8,171,368
    
    
    
    5,257,819Deferred tax liability:Book/tax differences in acquired assets
    
    
    1,472,517
    
    
    
    1,438,237Total deferred tax liability
    
    
    1,472,517
    
    
    
    1,438,237Net deferred tax asset
    
    
    6,698,851
    
    
    
    3,819,582Valuation allowance
    
    
    (6,698,851
    )
    
    
    (3,819,582
    )$
    
    
    
    $
    
 The types of temporary differences between the tax basis of assets and liabilities and their
    financial statement reporting amounts are attributable to book/tax differences in the
acquired assets and net operating losses. The TRS had a net operating loss carry-forward for
federal and state purposes of approximately $20.6 million as of December 31, 2008 to offset
future taxable income. The estimated net operating loss carry-forward will expire as
follows: $1.5 million expiring in 2025, $3.9 million expiring in 2026, $6.6 million expiring
in 2027 and $8.6 million expiring in 2028. The Partnership has not recorded these potential
future benefits because its TRS subsidiary does not have sufficient historical earnings on
which to base a potential future benefit.7.
    
    LeasesThe Partnership is a lessee of various types of equipment used in operating the Properties.
Leases are categorized as operating leases based upon the terms in the lease agreements.
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##### 



CNL
Income GW Partnership, LLLP and Subsidiaries  Notes to Consolidated Financial Statements  Years ended December 31, 2008, 2007 and 2006
 
 Future minimum rental payments required under operating leases that have initial or remaining
non-cancelable lease terms in excess of one year as of December 31, 2008 are as follows:
 2009
    
    $
    63,5042010
    
    
    63,5042011
    
    
    41,7292012
    
    
    5,9042013
    
    
    163$
    174,804
 Rent expense was $75,108, $63,756 and $49,092 for the years ended December 31, 2008, 2007
and 2006, respectively, and is included in property operations in the accompanying
consolidated statements of operations.8.
    
    Mortgage Loan PayableIn March 2006, the Partnership obtained a mortgage loan collateralized by the Properties in
the principal amount of $63.0 million. The loan bears interest at an annual rate of 6.08%,
requires monthly payments of interest-only for the first three years and equal monthly
payments of principal and interest of $380,963 thereafter until the loans maturity on March
1, 2013. Future principal payments due under the loan are as follows:
 
 2009
    
    $
    513,0432010
    
    
    740,4412011
    
    
    787,3972012
    
    
    826,5692013
    
    
    60,132,550$
    63,000,000
 9.
    
    Commitments and ContingenciesFrom time to time the Partnership may be exposed to litigation arising from operations of its
business in the ordinary course of business. Management is not aware of any such litigation
that it believes will have a material adverse impact on the Partnerships financial condition
or results of operations.10.
    
    Subsequent EventsIn February 2009, the Partnership entered into an agreement with the manager which reduced
base management fees for 2008 and 2009 based on certain net operating income thresholds.
During 2008, management fees were reduced from 3 percent of gross operating revenues to 1
percent of gross operating revenues. During 2009, the management fees will be reduced based
on actual net operating income subject to a floor equal to 1 percent of gross operating
revenues.On February 13, 2009, the Partnership made a capital call of $1.0 million to cover working
capital shortfalls and debt service.
 14