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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 Form 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from            to
 Commission file number 1-14236
 FelCor Lodging Trust Incorporated
  Maryland
(State or other jurisdiction of 
incorporation or organization)
    
    75-2541756
(I.R.S. Employer
Identification No.)545 E. John Carpenter Frwy., Suite 1300, Irving, Texas
(Address of principal executive offices)
    
    75062
(Zip Code)
 (972) 444-4900
  Title
of each class
    
    Name of each exchange
on which registeredCommon Stock
$1.95 Series A Cumulative Convertible Preferred Stock 
Depositary Shares representing 8% Series C Cumulative 
Redeemable Preferred Stock
    
    New York Stock Exchange, Inc.
New York Stock Exchange, Inc.New
York Stock Exchange, Inc.
  None
 þ o
 o þ
 þ o
 o
 o þ
   þ o o
  DOCUMENTS INCORPORATED BY REFERENCE




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##### 



FELCOR LODGING TRUST INCORPORATED
 INDEX
 Form 10-KReportItem No.
    
    
    PagePART I1.
    
    Business
    
    
    21A.
    
    Risk Factors
    
    
    81B.
    
    Unresolved Staff Comments
    
    
    172.
    
    Properties
    
    
    173.
    
    Legal Proceedings
    
    
    264.
    
    Submission of Matters to a Vote of Security Holders
    
    
    26PART II5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Purchases of Equity Securities
    
    
    276.
    
    Selected Financial Data
    
    
    297.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    317A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    508.
    
    Financial Statements and Supplementary Data
    
    
    529.
    
    Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
    
    
    899A.
    
    Controls and Procedures
    
    
    899B.
    
    Other Information
    
    
    89PART III10.
    
    Directors and Executive Officers of the Registrant
    
    
    9011.
    
    Executive Compensation
    
    
    9012.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    9013.
    
    Certain Relationships and Related Transactions
    
    
    9014.
    
    Principal Accountant Fees and Services
    
    
    90PART IV15.
    
    Exhibits and Financial Statement Schedules
    
    
    91Fourth Supplemental IndentureFirst Supplemental IndentureForm of Amended and Restated Change in Control and Severance AgreementAmended and Restated Non-Qualified Deferred Compensation PlanJoinder Agreement to Subsidiary GuarantyLoan AgreementFirst Amendment to Loan Agreement and Other Loan DocumentsForm of Mortgage, Deed of Trust and Security AgreementForm of Amended and Restated Promissory NoteGuaranty of Recourse Obligations of BorrowerSubsidiariesConsent of PricewaterhouseCoopers LLPCertification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906
  ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ®




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PART I
 
 Item 1. Business
       http://www.felcor.com http://www.sec.gov
 2




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Developments During 2006
       Management Changes
  3




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Board of Director Changes
  Recent Developments
   The Industry
     4




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Year Ended December 31,2006
    
    2005
    
    2004
    
    2003
    
    2002Number of FelCor Hotels
    
    
    83
    
    
    
    125
    
    
    
    142
    
    
    
    159
    
    
    
    183Occupancy:FelCor hotels (1)
    
    
    72.6
    %
    
    
    69.3
    %
    
    
    65.5
    %
    
    
    62.4
    %
    
    
    62.1
    %All Upscale U.S. hotels (2)
    
    
    65.5
    
    
    
    65.2
    
    
    
    63.0
    
    
    
    60.8
    
    
    
    60.8All Midprice U.S. hotels (3)
    
    
    61.0
    
    
    
    61.0
    
    
    
    59.4
    
    
    
    57.2
    
    
    
    56.8All U.S. hotels
    
    
    63.4
    
    
    
    63.1
    
    
    
    61.3
    
    
    
    59.2
    
    
    
    59.0ADR:FelCor hotels (1)
    
    $
    125.93
    
    
    $
    107.18
    
    
    $
    99.07
    
    
    $
    94.92
    
    
    $
    96.84All Upscale U.S. hotels (2)
    
    
    107.37
    
    
    
    101.60
    
    
    
    94.05
    
    
    
    90.55
    
    
    
    90.47All Midprice U.S. hotels (3)
    
    
    78.12
    
    
    
    73.96
    
    
    
    69.81
    
    
    
    67.54
    
    
    
    67.96All U.S. hotels
    
    
    97.31
    
    
    
    90.95
    
    
    
    86.20
    
    
    
    82.92
    
    
    
    82.83RevPAR:FelCor hotels (1)
    
    $
    91.49
    
    
    $
    74.29
    
    
    $
    64.91
    
    
    $
    59.19
    
    
    $
    60.16All Upscale U.S. hotels (2)
    
    
    70.31
    
    
    
    66.21
    
    
    
    59.26
    
    
    
    55.06
    
    
    
    55.02All Midprice U.S. hotels (3)
    
    
    47.66
    
    
    
    45.12
    
    
    
    41.47
    
    
    
    38.60
    
    
    
    38.58All U.S. hotels
    
    
    61.69
    
    
    
    57.39
    
    
    
    52.88
    
    
    
    49.07
    
    
    
    48.87
 
 (1)
    
    Information is based on historical presentations.(2)
    
    This category includes hotels in the upscale price level, defined as hotels with ADRs in
the 70th to 85th%iles in their respective markets.(3)
    
    This category includes hotels in the midprice level, defined as hotels with ADRs in the
40th to 70th%iles in their respective markets. Business Strategy
  Portfolio Repositioning
   5




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Debt Reduction
 Internal Growth
 
    
    Comprehensive Renovation of our Portfolio of Core Hotels. We have
implemented a long-term capital plan for each core hotel to enhance our portfolios
competitive position. We plan to spend approximately $430 million in capital from 2006
to 2008, of which $131 million was spent during 2006, approximately $225 million will
be spent in 2007 and the remainder will be spent during 2008.
    
    Redevelopment Opportunities. We have currently identified opportunities at
14 core hotels to add significant value through the maximization of our real estate
(e.g., adding meeting space, guest rooms and/or spas, utilizing excess land at
beach-front properties for condominium developments and re-branding opportunities) and
added earnings growth. We plan to use approximately $150 million of the proceeds from
selling non-strategic hotels to fund redevelopment projects.
    
    Modified Asset Management Approach. We seek to improve the competitive
position of our core hotels through aggressive asset management and strong
relationships with our brand-owner managers. During 2006, we completed changes to our
asset management approach. While REIT requirements prohibit us from directly managing
our hotels, we are taking a more intensive approach to asset management. Through the
selling of non-strategic hotels and the hiring of additional asset managers, our asset
managers have more time to dedicate to each hotel. In addition, we are taking a more
active role in working closely with our brand-owner managers to actively monitor and
review hotel operations. We strongly urge our brand-owner managers to implement best
practices in expense and revenue management at our hotels, and we strive to influence
brand strategy on marketing and revenue enhancement programs. See Business 
Strategic Relationships.
 External Growth.
 Strategic Relationships
  
    
    Hilton Hotels Corporation (www.hiltonworldwide.com) is
recognized internationally as a preeminent hospitality
company. Hilton develops, owns, manages or franchises more
than 2,300 hotels, resorts and vacation ownership properties.
Its portfolio includes many of the worlds best known and
most highly regarded hotel brands, including Hilton, Hilton
Garden Inn, Doubletree, Embassy Suites Hotels, Conrad,
Hampton Inn and Homewood Suites by Hilton, among others.
Subsidiaries of Hilton managed 54 of our hotels at December
31, 2006. Hilton is a 50% partner in joint ventures with us
in the ownership of 12 hotels and the management of
residential condominiums, and is the holder of a 10% equity
interest in certain of our consolidated subsidiaries owning
four hotels.
 6




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
    
    InterContinental Hotels Group PLC
(www.ichotelsgroup.com) of the United Kingdom is the worlds
largest hotel company by number of rooms. IHG owns, manages,
leases or franchises, through various subsidiaries, more than
3,600 hotels and 540,000 guest rooms in nearly 100 countries
and territories around the world. IHG owns a portfolio of
well recognized and respected hotel brands including
InterContinental Hotels & Resorts, Crowne Plaza Hotels &
Resorts, Holiday Inn, Holiday Inn Express, Hotel Indigo,
Staybridge Suites, Candlewood Suites, and also manages the
worlds largest hotel loyalty program, Priority Club Rewards,
with more than 30 million members worldwide. At December 31,
2006, subsidiaries of IHG managed 18 of our hotels.
 
    
    Starwood Hotels & Resorts Worldwide, Inc.
(www.starwoodhotels.com) is one of the leading hotel and
leisure companies in the world with more than 860 properties
with 264,000 rooms in 95 countries. With internationally
renowned brands, Starwood is a fully integrated owner,
operator and franchisor of hotels and resorts including: St.
Regis, The Luxury Collection, Le Méridien, Sheraton, Westin,
Four Points by Sheraton and W brands. Subsidiaries of
Starwood managed seven of our hotels at December 31, 2006.
Starwood is a 40% joint venture partner with us in the
ownership of two hotels and a 50% joint venture partner with
us in the ownership of one hotel.
 Competition
  Environmental Matters
   Tax Status
  7




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Employees
   
 Item 1A. Risk Factors
 Certain statements and analyses contained in this Annual Report on Form 10-K , in our 2007
Annual Report to Shareholders, or that may in the future be made by, or be attributable to, us, may
constitute forward-looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995, and can be identified by the use of forward-looking terminology such as may,
will, expect, anticipate, estimate or continue or the negative thereof or other
variations thereon or comparable terminology. All of such forward-looking statements are based
upon present expectations and assumptions that may or may not actually occur. The following
factors constitute cautionary statements identifying important factors, including material risks
and uncertainties that could cause actual results to differ materially from those reflected in such
forward-looking statements or in our historical results. Each of the following factors, among
others, could adversely affect our ability to meet the current expectations of management.
 Future terrorist activities and United States military involvement in the Middle East and elsewhere
may adversely affect, and create uncertainty in, our business
  There are significant risks associated with our planned renovation and redevelopment projects,
which could adversely affect our financial condition, results of operations or cash flows from
these projects
  8




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We are subject to the risks of real estate ownership, which could increase our costs of operations
 General Risks.
 
    
    adverse changes in general or local economic or real estate market conditions;
    
    changes in zoning laws;
    
    increases in supply or competition;
    
    changes in traffic patterns and neighborhood characteristics;
    
    increases in assessed valuation and real estate tax rates;
    
    increases in the cost of property insurance;
    
    increases in the cost of wood, steel, concrete and other building
materials, which increase the cost of renovations, expansions and new construction;
    
    costly governmental regulations and fiscal policies;
    
    the potential for uninsured or underinsured property losses;
    
    the potential that we are unable to meet all requirements under the
Americans with Disabilities Act;
    
    the impact of environmental laws and regulations; and
    
    other circumstances beyond our control.
  Compliance with environmental laws may adversely affect our financial condition.
  9




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Compliance with the Americans with Disabilities Act may adversely affect our financial
condition.
 We will encounter industry-related risks that may adversely affect our business
 We are subject to the risks of hotel operations.
 
    
    wage and benefit costs, including hotels that employ unionized labor;
    
    repair and maintenance expenses;
    
    gas and electricity costs;
    
    insurance costs, including health, general liability and workers compensation; and
    
    other operating expenses.
  An economic slowdown can have a significant adverse effect on our RevPAR performance and
results of operations. Unless current economic growth continues, the effects of a slowdown on our
financial condition could be material.
 Investing in hotel assets involves special risks.
 
    
    competition from other hotels;
    
    construction of more hotel rooms in a particular area than needed to meet demand;
    
    current high, and any further increases in, energy costs and other travel expenses;
    
    other events, such as terrorist acts or war that reduce business and leisure travel;
    
    adverse effects of declines in general and local economic activity;
    
    fluctuations in our revenue caused by the seasonal nature of the hotel industry;
    
    an outbreak of a pandemic disease affecting the travel industry;
    
    a downturn in the hotel industry; and
    
    risks generally associated with the ownership of hotels and real estate, as discussed below.
 10




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We have embarked on a strategy to improve our customer mix.
 We could face increased competition.
 We face reduced coverages and increased costs of insurance.
 We have geographic concentrations that may create risks from regional or local economic,
seismic or weather conditions.
 We had nine hotels at February 25, 2007, that we intend to sell in 2007.
 We are subject to possible adverse effects of management franchise and license agreement
requirements.
 We are subject to the risks of brand concentration.
 11




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% of 2006HotelHotels
    
    EBITDAEmbassy Suites Hotels
    
    
    47
    
    
    
    57
    %Holiday Inn-branded hotels
    
    
    17
    
    
    
    18Starwood-branded hotels
    
    
    9
    
    
    
    15Doubletree-branded hotels
    
    
    7
    
    
    
    7Hilton-branded hotels
    
    
    2
    
    
    
    2Other
    
    
    1
    
    
    
    1
  The lodging business is seasonal in nature.
 As a REIT, we are subject to specific tax laws and regulations, the violation of which could
subject us to significant tax liabilities
 The federal income tax laws governing REITs are complex.
 Failure to make required distributions would subject us to tax.
 Failure to qualify as a REIT would subject us to federal income tax.
 A sale of assets acquired from Bristol Hotel Company, or Bristol, within ten years after the
merger may result in us incurring corporate income tax.
 
    
    the amount of gain recognized at the time of the sale; or
    
    the amount of gain that we would have recognized if we had sold the
asset at the time of the Bristol merger for its then fair market value.
 12




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We lack control over the management and operations of our hotels.
 We depend on external sources of capital for future growth, and we may be unable to access capital
when necessary
  We have substantial financial leverage
    
    
    limit our ability to obtain additional financing for working capital,
renovation, redevelopment and rebranding plans, acquisitions, debt service
requirements and other purposes;
    
    require us to agree to additional restrictions and limitations on our
business operations and capital structure to obtain financing;
    
    increase our vulnerability to adverse economic and industry conditions,
and to interest rate fluctuations;
    
    require us to dedicate a substantial portion of our cash flow from
operations to payments on our debt, thereby reducing funds available for capital
expenditures, future business opportunities, paying dividends or other purposes;
 13




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
    
    limit our flexibility to make, or react to, changes in our business and our industry; and
    
    place us at a competitive disadvantage, compared to our competitors that have less debt.
 Our debt agreements will allow us to incur additional debt, which, if incurred, could exacerbate
the other risks described herein
   We have restrictive debt covenants that could adversely affect our ability to finance our
operations or engage in other business activities
  
    
    incur any additional indebtedness;
    
    make common or preferred distributions;
    
    make investments;
    
    engage in transactions with affiliates;
    
    incur liens;
    
    merge or consolidate with another person;
    
    dispose of all or substantially all of our assets; and
    
    permit limitations on the ability of our subsidiaries to make payments to us.
    14




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We own, and may acquire, interests in hotel joint ventures with third parties that expose us to
some risk of additional liabilities or capital requirements
    Existing circumstances may result in two of our directors having interests that may conflict with
our interests
 Adverse tax consequences to affiliates upon a sale of certain hotels.
 Conflicts of interest.
 15




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Departure of key personnel would deprive us of the institutional knowledge, expertise and
leadership they provide
  Our charter contains limitations on ownership and transfer of shares of our stock that could
adversely affect attempted transfers of our capital stock
  Some provisions in our charter and bylaws and Maryland law make a takeover of us more difficult
 Ownership Limit.
 Staggered Board
 Authority to Issue Additional Shares.
 Maryland Takeover Statutes.
 16




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Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
  % of
    
    % of 2006Top Markets
    
    Hotels
    
    Rooms
    
    Total Rooms
    
    Hotel EBITDA(a)South Florida area
    
    
    5
    
    
    
    1,434
    
    
    
    6
    
    
    
    7Atlanta
    
    
    5
    
    
    
    1,462
    
    
    
    6
    
    
    
    7San Francisco Bay area
    
    
    6
    
    
    
    2,141
    
    
    
    9
    
    
    
    6Los Angeles area
    
    
    4
    
    
    
    898
    
    
    
    4
    
    
    
    5Orlando
    
    
    5
    
    
    
    1,690
    
    
    
    7
    
    
    
    5Dallas
    
    
    4
    
    
    
    1,333
    
    
    
    6
    
    
    
    5Phoenix
    
    
    3
    
    
    
    798
    
    
    
    3
    
    
    
    4San Diego
    
    
    1
    
    
    
    600
    
    
    
    2
    
    
    
    4Minneapolis
    
    
    3
    
    
    
    739
    
    
    
    3
    
    
    
    4Northern New Jersey
    
    
    3
    
    
    
    756
    
    
    
    3
    
    
    
    3Washington, D.C.
    
    
    1
    
    
    
    443
    
    
    
    2
    
    
    
    3Philadelphia
    
    
    2
    
    
    
    729
    
    
    
    3
    
    
    
    3Chicago
    
    
    3
    
    
    
    795
    
    
    
    3
    
    
    
    3San Antonio
    
    
    3
    
    
    
    874
    
    
    
    4
    
    
    
    4Boston
    
    
    2
    
    
    
    532
    
    
    
    2
    
    
    
    3LocationSuburban
    
    
    32
    
    
    
    8,200
    
    
    
    34
    
    
    
    37Urban
    
    
    20
    
    
    
    6,361
    
    
    
    26
    
    
    
    25Airport
    
    
    20
    
    
    
    6,203
    
    
    
    26
    
    
    
    24Resort
    
    
    11
    
    
    
    3,317
    
    
    
    14
    
    
    
    14SegmentUpper-upscale
    
    
    65
    
    
    
    17,377
    
    
    
    72
    
    
    
    81Upscale
    
    
    1
    
    
    
    403
    
    
    
    2
    
    
    
    1Full service
    
    
    17
    
    
    
    6,301
    
    
    
    26
    
    
    
    18
 
 (a)
    
    A detailed description and computation of Hotel EBITDA is contained in the
Non-GAAP Financial Measures section of Managements Discussion and Analysis of
Financial Condition and Results of Operations in Item 7 of this Annual Report on Form
10-K. 17




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Hotel Brands
  Brand Distribution
 % of
    
    % of 2006Brand
    
    Hotels
    
    Rooms
    
    Total Rooms
    
    Hotel EBITDA(a)Embassy Suites Hotels
    
    
    47
    
    
    
    12,130
    
    
    
    51
    
    
    
    57Holiday Inn-branded
    
    
    17
    
    
    
    6,301
    
    
    
    26
    
    
    
    18Starwood-branded
    
    
    9
    
    
    
    3,217
    
    
    
    13
    
    
    
    15Doubletree-branded
    
    
    7
    
    
    
    1,471
    
    
    
    6
    
    
    
    7Hilton-branded
    
    
    2
    
    
    
    559
    
    
    
    2
    
    
    
    2Other
    
    
    1
    
    
    
    403
    
    
    
    2
    
    
    
    1
 18




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Hotel Operating Statistics
  Operating Statistics by Brand
 Occupancy (%)(a)Year Ended December 31,2006
    
    2005
    
    %VarianceEmbassy Suites Hotels
    
    
    75.1
    
    
    
    74.3
    
    
    
    1.1Holiday Inn-branded hotels
    
    
    69.3
    
    
    
    72.1
    
    
    
    (3.9
    )Sheraton-branded hotels
    
    
    72.0
    
    
    
    74.1
    
    
    
    (2.8
    )Doubletree-branded hotels
    
    
    74.2
    
    
    
    72.3
    
    
    
    2.7Other hotels(b)
    
    
    66.9
    
    
    
    67.3
    
    
    
    (0.6
    )Total hotels
    
    
    72.6
    
    
    
    73.1
    
    
    
    (0.7
    )
 ADR ($)Year Ended December 31,2006
    
    2005
    
    %VarianceEmbassy Suites Hotels
    
    
    134.01
    
    
    
    124.36
    
    
    
    7.8Holiday Inn-branded hotels
    
    
    109.59
    
    
    
    101.77
    
    
    
    7.7Sheraton-branded hotels
    
    
    123.85
    
    
    
    111.20
    
    
    
    11.4Doubletree-branded hotels
    
    
    130.27
    
    
    
    117.35
    
    
    
    11.0Other hotels(b)
    
    
    123.23
    
    
    
    114.34
    
    
    
    7.8Total hotels
    
    
    125.93
    
    
    
    116.04
    
    
    
    8.5
 RevPAR ($)Year Ended December 31,2006
    
    2005
    
    %VarianceEmbassy Suites Hotels
    
    
    100.60
    
    
    
    92.36
    
    
    
    8.9Holiday Inn-branded hotels
    
    
    75.93
    
    
    
    73.41
    
    
    
    3.4Sheraton-branded hotels
    
    
    89.15
    
    
    
    82.35
    
    
    
    8.3Doubletree-branded hotels
    
    
    96.68
    
    
    
    84.81
    
    
    
    14.0Other hotels(b)
    
    
    82.50
    
    
    
    77.01
    
    
    
    7.1Total hotels
    
    
    91.49
    
    
    
    84.86
    
    
    
    7.8
 
 (a)
    
    Hotels have been excluded in both the current and prior year for those months directly
impacted by hurricanes(b)
    
    Other hotels include two Hilton-branded hotels, one Westin and one Crowne Plaza. 
 19




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Operating Statistics for Our Top Markets
 Occupancy (%)Year Ended December 31,2006
    
    2005
    
    %VarianceSouth Florida area
    
    
    79.8
    
    
    
    78.2
    
    
    
    2.1Atlanta
    
    
    75.2
    
    
    
    78.1
    
    
    
    (3.8
    )San Francisco Bay area
    
    
    76.0
    
    
    
    74.8
    
    
    
    1.7Los Angeles area
    
    
    75.2
    
    
    
    76.2
    
    
    
    (1.3
    )Orlando
    
    
    76.6
    
    
    
    77.6
    
    
    
    (1.3
    )Dallas
    
    
    69.9
    
    
    
    66.2
    
    
    
    5.6Phoenix
    
    
    72.9
    
    
    
    72.4
    
    
    
    0.6San Diego
    
    
    81.5
    
    
    
    81.6
    
    
    
    (0.2
    )Minneapolis
    
    
    70.2
    
    
    
    71.7
    
    
    
    (2.1
    )Northern New Jersey
    
    
    69.3
    
    
    
    70.3
    
    
    
    (1.3
    )Washington, D.C.
    
    
    66.4
    
    
    
    74.3
    
    
    
    (10.6
    )Philadelphia
    
    
    73.4
    
    
    
    74.5
    
    
    
    (1.5
    )Chicago
    
    
    74.9
    
    
    
    74.9
    
    
    
    0.0San Antonio
    
    
    76.1
    
    
    
    76.4
    
    
    
    (0.3
    )Boston
    
    
    73.0
    
    
    
    71.0
    
    
    
    2.7
 ADR ($)Year Ended December 31,2006
    
    2005
    
    %VarianceSouth Florida area
    
    
    139.51
    
    
    
    126.38
    
    
    
    10.4Atlanta
    
    
    118.35
    
    
    
    106.28
    
    
    
    11.4San Francisco Bay area
    
    
    130.97
    
    
    
    119.14
    
    
    
    9.9Los Angeles area
    
    
    142.74
    
    
    
    128.02
    
    
    
    11.5Orlando
    
    
    100.24
    
    
    
    93.41
    
    
    
    7.3Dallas
    
    
    112.87
    
    
    
    105.34
    
    
    
    7.2Phoenix
    
    
    133.17
    
    
    
    121.78
    
    
    
    9.3San Diego
    
    
    140.40
    
    
    
    128.47
    
    
    
    9.3Minneapolis
    
    
    137.72
    
    
    
    129.39
    
    
    
    6.4Northern New Jersey
    
    
    148.76
    
    
    
    138.67
    
    
    
    7.3Washington, D.C.
    
    
    161.75
    
    
    
    145.47
    
    
    
    11.2Philadelphia
    
    
    130.00
    
    
    
    118.35
    
    
    
    9.8Chicago
    
    
    123.78
    
    
    
    107.56
    
    
    
    15.1San Antonio
    
    
    103.94
    
    
    
    92.27
    
    
    
    12.6Boston
    
    
    151.65
    
    
    
    137.68
    
    
    
    10.1
 RevPAR ($)Year Ended December 31,2006
    
    2005
    
    %VarianceSouth Florida area
    
    
    111.31
    
    
    
    98.78
    
    
    
    12.7Atlanta
    
    
    88.95
    
    
    
    83.04
    
    
    
    7.1San Francisco Bay area
    
    
    99.53
    
    
    
    89.06
    
    
    
    11.8Los Angeles area
    
    
    107.36
    
    
    
    97.56
    
    
    
    10.1Orlando
    
    
    76.78
    
    
    
    72.51
    
    
    
    5.9Dallas
    
    
    78.94
    
    
    
    69.77
    
    
    
    13.1Phoenix
    
    
    97.05
    
    
    
    88.21
    
    
    
    10.0San Diego
    
    
    114.36
    
    
    
    104.86
    
    
    
    9.1Minneapolis
    
    
    96.69
    
    
    
    92.82
    
    
    
    4.2Northern New Jersey
    
    
    103.16
    
    
    
    97.47
    
    
    
    5.8Washington, D.C.
    
    
    107.42
    
    
    
    108.09
    
    
    
    (0.6
    )Philadelphia
    
    
    95.36
    
    
    
    88.18
    
    
    
    8.1Chicago
    
    
    92.75
    
    
    
    80.60
    
    
    
    15.1San Antonio
    
    
    79.14
    
    
    
    70.49
    
    
    
    12.3Boston
    
    
    110.67
    
    
    
    97.80
    
    
    
    13.2
 20




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##### Table of Contents



Embassy Suites Hotels
  Doubletree and Doubletree Guest Suites Hotels
  Holiday Inn Hotels
  Sheraton and Sheraton Suites Hotels
  Other Hotels
  21




---



##### Table of Contents



Hotel Portfolio
  State
    
    Rooms
    
    % Owned(a)
    
    BrandConsolidated OperationsCore HotelsBirmingham(b)
    
    AL
    
    
    242
    
    
    
    
    
    
    Embassy Suites HotelPhoenix  Biltmore(b)
    
    AZ
    
    
    232
    
    
    
    
    
    
    Embassy Suites HotelPhoenix Crescent Hotel(b)
    
    AZ
    
    
    342
    
    
    
    
    
    
    SheratonPhoenix Tempe(b)
    
    AZ
    
    
    224
    
    
    
    
    
    
    Embassy Suites HotelDana Point  Doheny Beach
    
    CA
    
    
    195
    
    
    
    
    
    
    Doubletree Guest SuitesLos Angeles  Anaheim (Located near Disneyland Park)(b)
    
    CA
    
    
    222
    
    
    
    
    
    
    Embassy Suites HotelLos Angeles  El Segundo  International Airport South
    
    CA
    
    
    349
    
    
    
    97
    %
    
    Embassy Suites HotelMilpitas  Silicon Valley(b)
    
    CA
    
    
    266
    
    
    
    
    
    
    Embassy Suites HotelNapa Valley(b)
    
    CA
    
    
    205
    
    
    
    
    
    
    Embassy Suites HotelOxnard  Mandalay Beach Resort & Conference Center
    
    CA
    
    
    248
    
    
    
    
    
    
    Embassy Suites HotelSan Diego  On the Bay
    
    CA
    
    
    600
    
    
    
    
    
    
    Holiday InnSan Francisco  Burlingame Airport
    
    CA
    
    
    340
    
    
    
    
    
    
    Embassy Suites HotelSan Francisco  South San Francisco Airport(b)
    
    CA
    
    
    312
    
    
    
    
    
    
    Embassy Suites HotelSan Francisco  Fishermans Wharf
    
    CA
    
    
    585
    
    
    
    
    
    
    Holiday InnSan Francisco  Union Square
    
    CA
    
    
    403
    
    
    
    
    
    
    Crowne PlazaSan Rafael  Marin County/Conference Center(b)
    
    CA
    
    
    235
    
    
    
    50
    %
    
    Embassy Suites HotelSanta Barbara  Goleta
    
    CA
    
    
    160
    
    
    
    
    
    
    Holiday InnSanta Monica  Beach at the Pier
    
    CA
    
    
    132
    
    
    
    
    
    
    Holiday InnWilmington(b)
    
    DE
    
    
    244
    
    
    
    90
    %
    
    DoubletreeBoca Raton(b)
    
    FL
    
    
    263
    
    
    
    
    
    
    Embassy Suites HotelCocoa Beach  Oceanfront
    
    FL
    
    
    500
    
    
    
    
    
    
    Holiday InnDeerfield Beach  Boca Raton/Deerfield Beach Resort(b)
    
    FL
    
    
    244
    
    
    
    
    
    
    Embassy Suites HotelFt. Lauderdale  17th Street(b)
    
    FL
    
    
    358
    
    
    
    
    
    
    Embassy Suites HotelFt. Lauderdale  Cypress Creek(b)
    
    FL
    
    
    253
    
    
    
    
    
    
    Sheraton SuitesJacksonville  Baymeadows(b)
    
    FL
    
    
    277
    
    
    
    
    
    
    Embassy Suites HotelMiami  International Airport(b)
    
    FL
    
    
    316
    
    
    
    
    
    
    Embassy Suites HotelOrlando  International Airport(b)
    
    FL
    
    
    288
    
    
    
    
    
    
    Holiday Inn SelectOrlando  International Drive  Resort
    
    FL
    
    
    652
    
    
    
    
    
    
    Holiday InnOrlando  International Drive South/Convention Center(b)
    
    FL
    
    
    244
    
    
    
    
    
    
    Embassy Suites HotelOrlando (North)
    
    FL
    
    
    277
    
    
    
    
    
    
    Embassy Suites HotelOrlando  Walt Disney World Resort
    
    FL
    
    
    229
    
    
    
    
    
    
    Doubletree Guest SuitesTampa On Tampa Bay(b)
    
    FL
    
    
    203
    
    
    
    
    
    
    Doubletree Guest SuitesAtlanta  Airport(b)
    
    GA
    
    
    232
    
    
    
    
    
    
    Embassy Suites HotelAtlanta  Buckhead(b)
    
    GA
    
    
    316
    
    
    
    
    
    
    Embassy Suites HotelAtlanta  Galleria(b)
    
    GA
    
    
    278
    
    
    
    
    
    
    Sheraton SuitesAtlanta  Gateway  Atlanta Airport
    
    GA
    
    
    395
    
    
    
    
    
    
    SheratonAtlanta  Perimeter Center(b)
    
    GA
    
    
    241
    
    
    
    50
    %
    
    Embassy Suites HotelChicago  Lombard/Oak Brook(b)
    
    IL
    
    
    262
    
    
    
    50
    %
    
    Embassy Suites HotelChicago  Northshore/Deerfield (Northbrook)(b)
    
    IL
    
    
    237
    
    
    
    
    
    
    Embassy Suites HotelChicago OHare Airport(b)
    
    IL
    
    
    296
    
    
    
    
    
    
    Sheraton SuitesIndianapolis  North(b)
    
    IN
    
    
    221
    
    
    
    75
    %
    
    Embassy Suites HotelKansas City  Overland Park(b)
    
    KS
    
    
    199
    
    
    
    50
    %
    
    Embassy Suites HotelLexington  Lexington Green(b)
    
    KY
    
    
    174
    
    
    
    
    
    
    Hilton SuitesBaton Rouge(b)
    
    LA
    
    
    223
    
    
    
    
    
    
    Embassy Suites HotelNew Orleans(b)
    
    LA
    
    
    370
    
    
    
    
    
    
    Embassy Suites HotelNew Orleans  French Quarter
    
    LA
    
    
    374
    
    
    
    
    
    
    Holiday Inn
 22




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##### Table of Contents



State
    
    Rooms
    
    % Owned(a)
    
    BrandBoston  Government Center
    
    MA
    
    
    303
    
    
    
    
    
    
    Holiday Inn SelectBoston  Marlborough(b)
    
    MA
    
    
    229
    
    
    
    
    
    
    Embassy Suites HotelBaltimore  BWI Airport(b)
    
    MD
    
    
    251
    
    
    
    90
    %
    
    Embassy Suites HotelBloomington(b)
    
    MN
    
    
    219
    
    
    
    
    
    
    Embassy Suites HotelMinneapolis  Airport(b)
    
    MN
    
    
    310
    
    
    
    
    
    
    Embassy Suites HotelSt. Paul  Downtown(b)
    
    MN
    
    
    210
    
    
    
    
    
    
    Embassy Suites HotelKansas City  Plaza(b)
    
    MO
    
    
    266
    
    
    
    50
    %
    
    Embassy Suites HotelCharlotte(b)
    
    NC
    
    
    274
    
    
    
    50
    %
    
    Embassy Suites HotelCharlotte SouthPark
    
    NC
    
    
    208
    
    
    
    
    
    
    Doubletree Guest SuitesRaleigh(b)
    
    NC
    
    
    203
    
    
    
    
    
    
    Doubletree Guest SuitesRaleigh  Crabtree(b)
    
    NC
    
    
    225
    
    
    
    50
    %
    
    Embassy Suites HotelParsippany(b)
    
    NJ
    
    
    274
    
    
    
    50
    %
    
    Embassy Suites HotelPiscataway  Somerset(b)
    
    NJ
    
    
    221
    
    
    
    
    
    
    Embassy Suites HotelSecaucus  Meadowlands(b)
    
    NJ
    
    
    261
    
    
    
    50
    %
    
    Embassy Suites HotelPhiladelphia  Historic District
    
    PA
    
    
    364
    
    
    
    
    
    
    Holiday InnPhiladelphia  Society Hill(b)
    
    PA
    
    
    365
    
    
    
    
    
    
    SheratonPittsburgh  At University Center (Oakland)(b)
    
    PA
    
    
    251
    
    
    
    
    
    
    Holiday Inn SelectCharleston  Mills House (Historic Downtown)(b)
    
    SC
    
    
    214
    
    
    
    
    
    
    Holiday InnMyrtle Beach  At Kingston Plantation
    
    SC
    
    
    255
    
    
    
    
    
    
    Embassy Suites HotelMyrtle Beach Resort
    
    SC
    
    
    385
    
    
    
    
    
    
    HiltonNashville  Airport/Opryland Area
    
    TN
    
    
    296
    
    
    
    
    
    
    Embassy Suites HotelNashville  Opryland/Airport (Briley Parkway)
    
    TN
    
    
    382
    
    
    
    
    
    
    Holiday Inn SelectAustin(b)
    
    TX
    
    
    189
    
    
    
    90
    %
    
    Doubletree Guest SuitesAustin  North(b)
    
    TX
    
    
    260
    
    
    
    50
    %
    
    Embassy Suites HotelCorpus Christi(b)
    
    TX
    
    
    150
    
    
    
    
    
    
    Embassy Suites HotelDallas  DFW International Airport-South(b)
    
    TX
    
    
    305
    
    
    
    
    
    
    Embassy Suites HotelDallas  Love Field(b)
    
    TX
    
    
    248
    
    
    
    
    
    
    Embassy Suites HotelDallas  Market Center
    
    TX
    
    
    244
    
    
    
    
    
    
    Embassy Suites HotelDallas  Park Central
    
    TX
    
    
    536
    
    
    
    60
    %
    
    WestinHouston  Medical Center
    
    TX
    
    
    284
    
    
    
    
    
    
    Holiday Inn & SuitesSan Antonio  International Airport(b)
    
    TX
    
    
    261
    
    
    
    50
    %
    
    Embassy Suites HotelSan Antonio  International Airport(b)
    
    TX
    
    
    397
    
    
    
    
    
    
    Holiday Inn SelectSan Antonio  N.W. I-10(b)
    
    TX
    
    
    216
    
    
    
    50
    %
    
    Embassy Suites HotelBurlington Hotel & Conference Center(b)
    
    VT
    
    
    309
    
    
    
    
    
    
    SheratonVienna  At Tysons Corner(b)
    
    VA
    
    
    443
    
    
    
    50
    %
    
    SheratonCanadaToronto  Airport
    
    Ontario
    
    
    445
    
    
    
    
    
    
    Holiday Inn SelectToronto  Yorkdale
    
    Ontario
    
    
    370
    
    
    
    
    
    
    Holiday InnNon-Strategic Hotels designated as Held for SaleLos Angeles  Covina/I-10(c)
    
    CA
    
    
    202
    
    
    
    50
    %
    
    Embassy Suites HotelPalm Desert  Palm Desert Resort(c)
    
    CA
    
    
    198
    
    
    
    
    
    
    Embassy Suites HotelStamford
    
    CT
    
    
    380
    
    
    
    
    
    
    Holiday Inn SelectBrunswick
    
    GA
    
    
    130
    
    
    
    
    
    
    Embassy Suites HotelLexington
    
    KY
    
    
    155
    
    
    
    
    
    
    Sheraton SuitesTroy  North (Auburn Hills)(b)
    
    MI
    
    
    251
    
    
    
    90
    %
    
    Embassy Suites HotelTulsa  I-44
    
    OK
    
    
    244
    
    
    
    
    
    
    Embassy Suites HotelDallas  Park Central
    
    TX
    
    
    438
    
    
    
    60
    %
    
    SheratonDallas  Park Central Area
    
    TX
    
    
    279
    
    
    
    
    
    
    Embassy Suites HotelDallas  West End/Convention Center
    
    TX
    
    
    309
    
    
    
    
    
    
    Hampton InnHouston  Intercontinental Airport
    
    TX
    
    
    415
    
    
    
    
    
    
    Holiday Inn
 23




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##### Table of Contents



State
    
    Rooms
    
    % Owned(a)
    
    BrandUnconsolidated OperationsHays(b)
    
    KS
    
    
    114
    
    
    
    50
    %
    
    Hampton InnHays(b)
    
    KS
    
    
    191
    
    
    
    50
    %
    
    Holiday InnSalina(b)
    
    KS
    
    
    192
    
    
    
    50
    %
    
    Holiday InnSalina  I-70(b)
    
    KS
    
    
    93
    
    
    
    50
    %
    
    Holiday Inn Express & SuitesNew Orleans  Chateau LeMoyne (In French
Quarter/Historic Area)(b)
    
    LA
    
    
    171
    
    
    
    50
    %
    
    Holiday Inn
 
 (a)
    
    We own 100% of the real estate interests unless otherwise noted.(b)
    
    This hotel was encumbered by mortgage debt or capital lease
obligation at December 31, 2006.(c)
    
    This hotel was sold subsequent to December 31, 2006. Management Agreements
  Management Fees and Performance Standards.
  
    
    Embassy Suites Hotels (47 hotels)  2% of the hotels total revenue per
month;
    
    Holiday Inn  Crowne Plaza (18 hotels)  2% of the hotels total revenue plus
5% of the hotels room revenue per month;
    
    Sheraton  Westin (9 hotels)  2% of the hotels total revenue per month; and
    
    Doubletree (7 hotels)  between 2% and 3% of the hotels total revenue per month.
   Management Fees Paid DuringYear Ended December 31,Brand
    
    2006
    
    
    2005
    
    
    2004Holiday Inn
    
    $
    14,682
    
    
    $
    12,600
    
    
    $
    11,236Embassy Suites
    
    
    9,868
    
    
    
    9,524
    
    
    
    9,002Sheraton  Westin
    
    
    6,956
    
    
    
    4,587
    
    
    
    4,358Doubletree
    
    
    1,453
    
    
    
    1,548
    
    
    
    1,409Other
    
    
    791
    
    
    
    881
    
    
    
    1,441Total
    
    $
    33,750
    
    
    $
    29,140
    
    
    $
    27,446
 24




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##### Table of Contents



Term and Termination.
 Number of Management Agreements Expiring inBrand
    
    2007
    
    2008
    
    2009
    
    2010
    
    2011
    
    ThereafterEmbassy Suites
    
    
    5
    
    
    
    0
    
    
    
    6
    
    
    
    7
    
    
    
    18
    
    
    
    11Sheraton  Westin
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    9Doubletree
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    3
    
    
    
    4Holiday Inn
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    17Other
    
    
    1
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    2Total
    
    
    6
    
    
    
    0
    
    
    
    6
    
    
    
    7
    
    
    
    21
    
    
    
    43
  Assignment.
 Franchise Agreements
   License Fees Paid DuringYear Ended December 31,Brand
    
    2006
    
    
    2005
    
    
    2004Embassy Suites Hotels
    
    $
    17,183
    
    
    $
    15,834
    
    
    $
    14,906Other
    
    
    304
    
    
    
    241
    
    
    
    312Total
    
    $
    17,487
    
    
    $
    16,075
    
    
    $
    15,218
 25




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##### Table of Contents



Number of Franchise Agreements Expiring inBrand
    
    2007
    
    2008
    
    2009
    
    2010
    
    2011
    
    ThereafterEmbassy Suites Hotels
    
    
    0
    
    
    
    0
    
    
    
    3
    
    
    
    1
    
    
    
    0
    
    
    
    43Hilton Suites
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    1Total
    
    
    0
    
    
    
    0
    
    
    
    3
    
    
    
    1
    
    
    
    0
    
    
    
    44
 
 Item 3. Legal Proceedings
  
 Item 4. Submission of Matters to a Vote of Security Holders
  26




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##### Table of Contents



PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Purchases
of Equity Securities
  DividendsDeclaredHigh
    
    Low
    
    Per Share2006First quarter
    
    $
    22.10
    
    
    $
    16.78
    
    
    $
    0.15Second quarter
    
    
    22.89
    
    
    
    19.70
    
    
    
    0.20Third quarter
    
    
    22.95
    
    
    
    18.73
    
    
    
    0.20Fourth quarter
    
    
    22.80
    
    
    
    19.12
    
    
    
    0.252005First quarter
    
    $
    14.99
    
    
    $
    12.20
    
    
    $
    Second quarter
    
    
    14.75
    
    
    
    11.78
    
    
    
    Third quarter
    
    
    16.40
    
    
    
    14.20
    
    
    
    Fourth quarter
    
    
    17.59
    
    
    
    13.27
    
    
    
    0.15
 Stockholder Information
  IN ORDER TO COMPLY WITH CERTAIN REQUIREMENTS RELATED TO OUR QUALIFICATION AS A REIT, OUR
CHARTER LIMITS, SUBJECT TO CERTAIN EXCEPTIONS, THE NUMBER OF SHARES OF COMMON STOCK THAT MAY BE
OWNED BY ANY SINGLE PERSON OR AFFILIATED GROUP TO 9.9% OF THE OUTSTANDING COMMON STOCK.
 Distribution Information
  27




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##### Table of Contents



Issuances of Unregistered Securities
  Equity Compensation Plan Information
  Equity Compensation Plan Information
 Number of shares to be
    
    Weighted averageissued upon exercise of
    
    exercise price of
    
    Number of sharesoutstanding options,
    
    outstanding options,
    
    remaining availablePlan category
    
    warrants and rights
    
    warrants and rights
    
    for future issuanceEquity compensation
plans approved by security
holders:Stock Options
    
    
    598,366Unvested Restricted Stock
    
    
    771,263
    
    
    $
    22.62Total
    
    
    1,369,629
    
    
    
    
    
    
    
    797,114
 28




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##### Table of Contents



Item 6. Selected Financial Data
  SELECTED FINANCIAL DATA
(in thousands, except per share data)
 Year Ended December 31,2006
    
    2005
    
    2004
    
    2003
    
    2002Statement of Operations Data:(1)Total revenues
    
    $
    991,038
    
    
    $
    914,655
    
    
    $
    842,612
    
    
    $
    786,883
    
    
    $
    815,366Income (loss) from continuing operations(2)
    
    
    8,565
    
    
    
    (16,916
    )
    
    
    (78,376
    )
    
    
    (73,564)
    
    
    
    (55,331
    )Diluted earnings per share:Net loss from continuing operations
applicable to common stockholders
    
    $
    (0.50
    )
    
    $
    (1.06
    )
    
    $
    (1.92
    )
    
    $
    (1.71
    )
    
    $
    (1.51
    )Other Data:Cash distributions declared per common share(3)
    
    $
    0.80
    
    
    $
    0.15
    
    
    $
    
    
    
    $
    
    
    
    $
    0.60Funds From Operations (4)
    
    
    93,451
    
    
    
    (191,139
    )
    
    
    (30,608
    )
    
    
    (207,462
    )
    
    
    (60,018
    )EBITDA(4)
    
    
    300,460
    
    
    
    12,475
    
    
    
    184,950
    
    
    
    (532
    )
    
    
    150,024Cash flows provided by operating activities
    
    
    147,700
    
    
    
    111,482
    
    
    
    33,281
    
    
    
    52,914
    
    
    
    106,037Balance Sheet Data (at end of period):Total assets
    
    $
    2,583,249
    
    
    $
    2,920,263
    
    
    $
    3,318,191
    
    
    $
    3,590,893
    
    
    $
    3,780,363Total debt, net of discount
    
    
    1,369,153
    
    
    
    1,675,280
    
    
    
    1,767,122
    
    
    
    2,037,355
    
    
    
    1,877,134
 
 (1)
    
    All years prior to 2006 have been adjusted to reflect those hotels disposed in 2006 or
prior periods as discontinued operations.(2)
    
    Included in income (loss) from continuing operations are the following amounts (in
thousands): Year Ended December 31,2006
    
    2005
    
    2004
    
    2003
    
    2002Charge-off of deferred debt costs
    
    $
    (3,562
    )
    
    $
    (1,448
    )
    
    $
    (6,960
    )
    
    $
    (2,834
    )
    
    $
    (3,222
    )Loss on early extinguishment of debt
    
    
    (12,471
    )
    
    
    (4,037
    )
    
    
    (44,216
    )
    
    
    
    
    
    
    Abandoned projects
    
    
    (33
    )
    
    
    (265
    )
    
    
    
    
    
    
    
    
    
    
    (1,663
    )Gain on swap termination
    
    
    1,715
    
    
    
    
    
    
    
    1,005
    
    
    
    
    
    
    
    Gain (loss) on sale of assets
    
    
    (92
    )
    
    
    469
    
    
    
    
    
    
    
    106
    
    
    
    773
 
 (3)
    
    Commencing with the fourth quarter 2005, we reinstituted a common dividend. We had declared
a quarterly common dividend on our common stock from our inception through 2002, but as a
result of the uncertain geopolitical environment and soft business climate, together with the
decline in Hotel EBITDA margins resulting from continued declines in our portfolios average
daily rate, our board of directors suspended the payment of dividends on our common stock in
2003 and 2004. We have, however, continued to pay the full accrued dividends on our
outstanding preferred stock.(4)
    
    A more detailed description and computation of FFO and EBITDA is contained in the Non-GAAP
Financial Measures section of Managements Discussion and Analysis of Financial Condition and
Results of Operations in Item 7. 29




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Year Ended December 31,2006
    
    2005
    
    2004
    
    2003
    
    2002Impairment loss
    
    $
    (16,474
    )
    
    $
    (266,751
    )
    
    $
    (38,289
    )
    
    $
    (245,509
    )
    
    $
    (157,505
    )Minority interest share of impairment loss
    
    
    927
    
    
    
    8,976
    
    
    
    
    
    
    
    1,770
    
    
    
    Charge-off of deferred debt costs
    
    
    (3,624
    )
    
    
    (2,659
    )
    
    
    (6,960
    )
    
    
    (2,834
    )
    
    
    (3,222
    )Gain (loss) on early extinguishment of debt
    
    
    (13,848
    )
    
    
    (8,641
    )
    
    
    (44,216
    )
    
    
    1,611
    
    
    
    Gain (loss) on swap termination
    
    
    1,715
    
    
    
    
    
    
    
    1,005
    
    
    
    
    
    
    
    Asset disposition costs
    
    
    
    
    
    
    (1,300
    )
    
    
    (4,900
    )
    
    
    
    
    
    
    Abandoned projects
    
    
    (112
    )
    
    
    (265
    )
    
    
    
    
    
    
    
    
    
    
    (1,663
    )Issuance costs of redeemed preferred stock
    
    
    
    
    
    
    (6,522
    )
    
    
    
    
    
    
    
    
    
    
    
  Year Ended December 31,2006
    
    2005
    
    2004
    
    2003
    
    2002Impairment loss, discontinued operations
    
    $
    (16,474
    )
    
    $
    (266,751
    )
    
    $
    (38,289
    )
    
    $
    (245,509
    )
    
    $
    (157,505
    )Minority interest share of impairment loss
    
    
    927
    
    
    
    8,976
    
    
    
    
    
    
    
    1,770
    
    
    
    Charge-off of deferred debt costs
    
    
    (3,624
    )
    
    
    (2,659
    )
    
    
    (6,960
    )
    
    
    (2,834
    )
    
    
    (3,222
    )Gain (loss) on early extinguishment of debt
    
    
    (13,848
    )
    
    
    (8,641
    )
    
    
    (44,216
    )
    
    
    1,611
    
    
    
    Gain on swap termination
    
    
    1,715
    
    
    
    
    
    
    
    1,005
    
    
    
    
    
    
    
    Asset disposition costs
    
    
    
    
    
    
    (1,300
    )
    
    
    (4,900
    )
    
    
    
    
    
    
    Abandoned projects
    
    
    (112
    )
    
    
    (265
    )
    
    
    
    
    
    
    
    
    
    
    (1,663
    )Gain on sale of hotels, net of tax
    
    
    40,650
    
    
    
    12,124
    
    
    
    19,422
    
    
    
    2,668
    
    
    
    5,861
 30




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Item 7. Managements Discussion and Analysis of Financial Condition and Results of
Operations
 General
       31




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##### Table of Contents



Financial Comparison (in thousands, except RevPAR, Hotel EBITDA margin and percentage change)
 Year Ended December 31,% Change
    
    
    
    
    
    % Change2006
    
    2005
    
    2006-2005
    
    2004
    
    2005-2004RevPAR
    
    $
    91.49
    
    
    $
    84.86
    
    
    
    7.8
    %
    
    $
    76.44
    
    
    
    11.0
    %Hotel EBITDA(1)
    
    
    292,419
    
    
    
    252,810
    
    
    
    15.7
    %
    
    
    223,187
    
    
    
    13.3
    %Hotel EBITDA margin(1)
    
    
    29.5
    %
    
    
    27.7
    %
    
    
    6.5
    %
    
    
    26.6
    %
    
    
    4.1
    %Loss from continuing operations
applicable to common
shareholders(2)
    
    
    (30,148
    )
    
    
    (62,846
    )
    
    
    52.0
    %
    
    
    (113,506
    )
    
    
    44.6
    %Funds From Operations
(FFO)(1) (3)
    
    
    93,451
    
    
    
    (191,139
    )
    
    
    148.9
    %
    
    
    (30,608
    )
    
    
    (524.5
    )%Earnings Before Interest, Taxes,
Depreciation and Amortization
(EBITDA)(1) (4)
    
    
    300,460
    
    
    
    12,475
    
    
    
    2,308.5
    %
    
    
    184,950
    
    
    
    (93.3
    )%
 
 (1)
    
    Included in the Financial Comparison are non-GAAP financial measures, including Hotel
EBITDA, Hotel EBITDA margin, FFO and EBITDA. Further discussion and a detailed
reconciliation of these non-GAAP financial measures to our financial statements are found
elsewhere in this Managements Discussion and Analysis of Financial Condition and Results
of Operations.(2)
    
    Included in loss from continuing operations applicable to common shareholders are the
following amounts
(in thousands):
 Year Ended December 31,2006
    
    
    2005
    
    
    2004Loss on early extinguishment of debt
    
    $
    (12,471
    )
    
    $
    (4,037
    )
    
    $
    (44,216
    )Charge-off of deferred debt costs
    
    
    (3,562
    )
    
    
    (1,448
    )
    
    
    (6,960
    )Abandoned projects
    
    
    (33
    )
    
    
    (265
    )
    
    
    Gain on swap termination
    
    
    1,715
    
    
    
    
    
    
    
    1,005Gain (loss) on sale of assets
    
    
    (92
    )
    
    
    469
    
    
    
    
 
 (3)
    
    Consistent with SEC guidance on non-GAAP financial measures, FFO has not been adjusted
for the following amounts included in net income (loss) (in thousands, except per share
amounts). 2006
    
    2005
    
    2004Per Share
    
    
    
    
    
    Per Share
    
    
    
    
    
    Per ShareDollars
    
    Amount
    
    Dollars
    
    Amount
    
    Dollars
    
    AmountImpairment loss, discontinued
operations
    
    $
    (16,474
    )
    
    $
    (0.26
    )
    
    $
    (266,751
    )
    
    $
    (4.29
    )
    
    $
    (38,289
    )
    
    $
    (0.62
    )Minority interest share
of impairment loss
    
    
    927
    
    
    
    0.01
    
    
    
    8,976
    
    
    
    0.14
    
    
    
    
    
    
    
    Charge-off of deferred debt
costs
    
    
    (3,624
    )
    
    
    (0.06
    )
    
    
    (2,659
    )
    
    
    (0.04
    )
    
    
    (6,960
    )
    
    
    (0.10
    )Loss on early extinguishment
of debt
    
    
    (13,848
    )
    
    
    (0.22
    )
    
    
    (8,641
    )
    
    
    (0.14
    )
    
    
    (44,216
    )
    
    
    (0.71
    )Asset disposition costs
    
    
    
    
    
    
    
    
    
    
    (1,300
    )
    
    
    (0.02
    )
    
    
    (4,900
    )
    
    
    (0.08
    )Abandoned projects
    
    
    (112
    )
    
    
    
    
    
    
    (265
    )
    
    
    
    
    
    
    
    
    
    
    Gain on swap termination
    
    
    1,715
    
    
    
    0.03
    
    
    
    
    
    
    
    
    
    
    
    1,005
    
    
    
    0.02Issuance costs of redeemed
preferred stock
    
    
    
    
    
    
    
    
    
    
    (6,522
    )
    
    
    (0.10
    )
    
    
    
    
    
    
    
 32




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##### Table of Contents



(4)
    
    Consistent with SEC guidance on non-GAAP financial measures, EBITDA has not been
adjusted for the following amounts included in net income (loss) (in thousands). Year Ended December 31,2006
    
    2005
    
    2004Impairment loss, discontinued operations
    
    $
    (16,474
    )
    
    $
    (266,751
    )
    
    $
    (38,289
    )Minority interest share of impairment loss
    
    
    927
    
    
    
    8,976
    
    
    
    Charge-off of deferred debt costs
    
    
    (3,624
    )
    
    
    (2,659
    )
    
    
    (6,960
    )Gain on early extinguishment of debt
    
    
    (13,848
    )
    
    
    (8,641
    )
    
    
    (44,216
    )Gain on swap termination
    
    
    1,715
    
    
    
    
    
    
    
    1,005Asset disposition costs
    
    
    
    
    
    
    (1,300
    )
    
    
    (4,900
    )Abandoned projects
    
    
    (112
    )
    
    
    (265
    )
    
    
    Gain on sale of hotels, net of tax
    
    
    40,650
    
    
    
    12,124
    
    
    
    19,422
 RevPAR and Hotel Operating Margin
  Refined Investment Strategy
  Results of Operations
 Comparison of the Years Ended December 31, 2006 and 2005
   33




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34




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##### Table of Contents



Comparison of the Years Ended December 31, 2005 and 2004
          35




---



##### Table of Contents



Non-GAAP Financial Measures
  36




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##### Table of Contents



Reconciliation of Net Income (Loss) to FFO
(in thousands, except per share data)
 Year Ended December 31,2006
    
    
    2005
    
    
    2004Per Share
    
    
    
    
    
    
    
    
    
    
    Per Share
    
    
    
    
    
    
    
    
    
    
    Per ShareDollars
    
    
    Shares
    
    
    Amount
    
    
    Dollars
    
    
    Shares
    
    
    Amount
    
    
    Dollars
    
    
    Shares
    
    
    AmountNet income (loss)
    
    $
    51,045
    
    
    
    
    
    
    
    
    
    
    $
    (251,615
    )
    
    
    
    
    
    
    
    
    
    $
    (100,127
    )Issuance costs of redeemed
preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,522
    )Preferred dividends
    
    
    (38,713
    )
    
    
    
    
    
    
    
    
    
    
    (39,408
    )
    
    
    
    
    
    
    
    
    
    
    (35,130
    )Net income (loss) applicable
to common stockholders
    
    
    12,332
    
    
    
    60,734
    
    
    $
    0.20
    
    
    
    (297,545
    )
    
    
    59,436
    
    
    $
    (5.01
    )
    
    
    (135,257
    )
    
    
    59,045
    
    
    $
    (2.29
    )Depreciation from continuing
operations
    
    
    94,579
    
    
    
    
    
    
    
    1.56
    
    
    
    84,448
    
    
    
    
    
    
    
    1.42
    
    
    
    78,116
    
    
    
    
    
    
    
    1.32Depreciation from
unconsolidated entities and
discontinued operations
    
    
    26,911
    
    
    
    
    
    
    
    0.44
    
    
    
    47,759
    
    
    
    
    
    
    
    0.80
    
    
    
    52,636
    
    
    
    
    
    
    
    0.89Gain on sale of hotels, net
of income tax
    
    
    (40,650
    )
    
    
    
    
    
    
    (0.67
    )
    
    
    (12,124
    )
    
    
    
    
    
    
    (0.20
    )
    
    
    (19,422
    )
    
    
    
    
    
    
    (0.33
    )Minority interest in FelCor LP
    
    
    279
    
    
    
    1,864
    
    
    
    (0.04
    )
    
    
    (13,677
    )
    
    
    2,778
    
    
    
    (0.08
    )
    
    
    (6,681
    )
    
    
    2,939
    
    
    $
    (0.08
    )Conversion of options and
unvested restricted stock
    
    
    
    
    
    
    327
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    FFO
    
    $
    93,451
    
    
    
    62,925
    
    
    $
    1.49
    
    
    $
    (191,139
    )
    
    
    62,214
    
    
    $
    (3.07
    )
    
    $
    (30,608
    )
    
    
    61,984
    
    
    $
    (0.49
    )
 Year Ended December 31,2003
    
    
    2002Per Share
    
    
    
    
    
    
    
    
    
    
    Per ShareDollars
    
    
    Shares
    
    
    Amount
    
    
    Dollars
    
    
    Shares
    
    
    AmountNet loss
    
    $
    (310,144
    )
    
    
    
    
    
    
    
    
    
    $
    (178,581
    )Issuance costs of redeemed preferred stock
Preferred dividends
    
    
    (26,908
    )
    
    
    
    
    
    
    
    
    
    
    (26,292
    )Net loss applicable to common stockholders
    
    
    (337,052
    )
    
    
    58,657
    
    
    $
    (5.75
    )
    
    
    (204,873
    )
    
    
    54,173
    
    
    $
    (3.78
    )Depreciation from continuing operations
    
    
    76,288
    
    
    
    
    
    
    
    1.30
    
    
    
    81,381
    
    
    
    
    
    
    
    1.50Depreciation from unconsolidated entities
and discontinued operations
    
    
    73,747
    
    
    
    
    
    
    
    1.26
    
    
    
    83,052
    
    
    
    
    
    
    
    1.53Gain on sale of hotels
    
    
    (2,668
    )
    
    
    
    
    
    
    (0.05
    )
    
    
    (5,861
    )
    
    
    
    
    
    
    (0.11
    )Minority interest in FelCor LP
    
    
    (17,777
    )
    
    
    3,188
    
    
    
    (0.11
    )
    
    
    (13,717
    )
    
    
    7,564
    
    
    
    (0.11
    )FFO
    
    $
    (207,462
    )
    
    
    61,845
    
    
    $
    (3.35
    )
    
    $
    (60,018
    )
    
    
    61,737
    
    
    $
    (0.97
    )
 37




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##### Table of Contents



Year Ended December 31,2006
    
    2005
    
    2004
    
    2003
    
    2002Per
    
    
    
    
    
    Per
    
    
    
    
    
    Per
    
    
    
    
    
    Per
    
    
    
    
    
    PerShare
    
    
    
    
    
    Share
    
    
    
    
    
    Share
    
    
    
    
    
    Share
    
    
    
    
    
    ShareDollars
    
    Amount
    
    Dollars
    
    Amount
    
    Dollars
    
    Amount
    
    Dollars
    
    Amount
    
    Dollars
    
    AmountImpairment loss
    
    $
    (16,474
    )
    
    $
    (0.26
    )
    
    $
    (266,751
    )
    
    $
    (4.29
    )
    
    $
    (38,289
    )
    
    $
    (0.62
    )
    
    $
    (245,509
    )
    
    $
    (3.97
    )
    
    $
    (157,505
    )
    
    $
    (2.55
    )Minority interest
share of impairment
loss
    
    
    927
    
    
    
    0.01
    
    
    
    8,976
    
    
    
    0.14
    
    
    
    
    
    
    
    
    
    
    
    1,770
    
    
    
    0.03
    
    
    
    
    
    
    
    Charge-off of deferred
debt costs
    
    
    (3,624
    )
    
    
    (0.06
    )
    
    
    (2,659
    )
    
    
    (0.04
    )
    
    
    (6,960
    )
    
    
    (0.10
    )
    
    
    (2,834
    )
    
    
    (0.05
    )
    
    
    (3,222
    )
    
    
    (0.05
    )Gain (loss) on early
extinguishment of debt
    
    
    (13,848
    )
    
    
    (0.22
    )
    
    
    (8,641
    )
    
    
    (0.14
    )
    
    
    (44,216
    )
    
    
    (0.71
    )
    
    
    1,611
    
    
    
    0.03
    
    
    
    
    
    
    
    Gain from swap
termination
    
    
    1,715
    
    
    
    0.03
    
    
    
    
    
    
    
    
    
    
    
    1,005
    
    
    
    0.02
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Abandoned projects
    
    
    (112
    )
    
    
    
    
    
    
    (265
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,663
    )
    
    
    (0.03
    )Asset disposition costs
    
    
    
    
    
    
    
    
    
    
    (1,300
    )
    
    
    (0.02
    )
    
    
    (4,900
    )
    
    
    (0.08
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance costs of
redeemed preferred
stock
    
    
    
    
    
    
    
    
    
    
    (6,522
    )
    
    
    (0.10
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  Reconciliation of Net Income (Loss) to EBITDA
 Year Ended December 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Net income (loss)
    
    $
    51,045
    
    
    $
    (251,615
    )
    
    $
    (100,127
    )
    
    $
    (310,144
    )
    
    $
    (178,581
    )Depreciation from continuing operations
    
    
    94,579
    
    
    
    84,448
    
    
    
    78,116
    
    
    
    76,288
    
    
    
    81,381Depreciation from unconsolidated
entities and discontinued operations
    
    
    26,911
    
    
    
    47,759
    
    
    
    52,636
    
    
    
    73,747
    
    
    
    83,052Interest expense
    
    
    114,909
    
    
    
    125,707
    
    
    
    138,872
    
    
    
    156,327
    
    
    
    155,942Interest expense from unconsolidated
entities and discontinued operations
    
    
    7,657
    
    
    
    16,949
    
    
    
    19,189
    
    
    
    18,817
    
    
    
    19,859Amortization expense
    
    
    5,080
    
    
    
    2,904
    
    
    
    2,945
    
    
    
    2,210
    
    
    
    2,088Minority interest in FelCor LP
    
    
    279
    
    
    
    (13,677
    )
    
    
    (6,681
    )
    
    
    (17,777
    )
    
    
    (13,717
    )EBITDA
    
    $
    300,460
    
    
    $
    12,475
    
    
    $
    184,950
    
    
    $
    (532
    )
    
    $
    150,024
 38




---



##### Table of Contents



Year Ended December 31,2006
    
    2005
    
    2004
    
    2003
    
    2002Impairment loss
    
    $
    (16,474
    )
    
    $
    (266,751
    )
    
    $
    (38,289
    )
    
    $
    (245,509
    )
    
    $
    (157,505
    )Minority interest share of impairment loss
    
    
    927
    
    
    
    8,976
    
    
    
    
    
    
    
    1,770
    
    
    
    Charge-off of deferred debt costs
    
    
    (3,624
    )
    
    
    (2,659
    )
    
    
    (6,960
    )
    
    
    (2,834
    )
    
    
    (3,222
    )Gain (loss) on early extinguishment of debt
    
    
    (13,848
    )
    
    
    (8,641
    )
    
    
    (44,216
    )
    
    
    1,611
    
    
    
    Gain (loss) from swap termination
    
    
    1,715
    
    
    
    
    
    
    
    1,005
    
    
    
    
    
    
    
    Asset disposition costs
    
    
    
    
    
    
    (1,300
    )
    
    
    (4,900
    )
    
    
    
    
    
    
    Abandoned projects
    
    
    (112
    )
    
    
    (265
    )
    
    
    
    
    
    
    
    
    
    
    (1,663
    )Gain on sale of hotels, net of income tax
    
    
    40,650
    
    
    
    12,124
    
    
    
    19,422
    
    
    
    2,668
    
    
    
    5,861
 Hotel EBITDA and Hotel EBITDA Margin
 Year Ended December 31,2006
    
    
    2005
    
    
    2004Continuing OperationsTotal revenue
    
    $
    991,038
    
    
    $
    914,655
    
    
    $
    842,612Retail space rental and other revenue
    
    
    (79
    )
    
    
    (1,506
    )
    
    
    (2,196
    )Hotel revenue
    
    
    990,959
    
    
    
    913,149
    
    
    
    840,416Hotel operating expenses
    
    
    (698,540
    )
    
    
    (660,339
    )
    
    
    (617,229
    )Hotel EBITDA
    
    $
    292,419
    
    
    $
    252,810
    
    
    $
    223,187Hotel EBITDA margin(1)
    
    
    29.5
    %
    
    
    27.7
    %
    
    
    26.6
    %
 
 (1)
    
    Hotel EBITDA as a percentage of hotel revenue. 39




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##### Table of Contents



Hotel Operating Expense Composition
 Year Ended December 31,2006
    
    
    2005
    
    
    2004Continuing OperationsHotel departmental expenses:Room
    
    $
    199,283
    
    
    $
    187,872
    
    
    $
    178,146Food and beverage
    
    
    97,012
    
    
    
    93,136
    
    
    
    90,715Other operating departments
    
    
    23,436
    
    
    
    22,446
    
    
    
    21,758Other property related costs:Administrative and general
    
    
    87,451
    
    
    
    82,607
    
    
    
    76,898Marketing and advertising
    
    
    81,113
    
    
    
    76,151
    
    
    
    71,099Repairs and maintenance
    
    
    52,710
    
    
    
    50,011
    
    
    
    46,063Energy
    
    
    49,027
    
    
    
    46,857
    
    
    
    41,144Taxes, insurance and lease expense
    
    
    57,271
    
    
    
    56,044
    
    
    
    48,742Total other property related costs
    
    
    647,303
    
    
    
    615,124
    
    
    
    574,565Management and franchise fees
    
    
    51,237
    
    
    
    45,215
    
    
    
    42,664Hotel operating expenses
    
    $
    698,540
    
    
    $
    660,339
    
    
    $
    617,229Reconciliation of total operating expense to hotel operating expense:Total operating expenses
    
    $
    871,241
    
    
    $
    812,885
    
    
    $
    755,892Unconsolidated taxes, insurance and lease expense
    
    
    6,273
    
    
    
    5,881
    
    
    
    5,900Consolidated hotel lease expense
    
    
    (61,054
    )
    
    
    (54,689
    )
    
    
    (49,414
    )Abandoned projects
    
    
    (33
    )
    
    
    (265
    )
    
    
    Corporate expenses
    
    
    (23,308
    )
    
    
    (19,025
    )
    
    
    (17,033
    )Depreciation
    
    
    (94,579
    )
    
    
    (84,448
    )
    
    
    (78,116
    )Hotel operating expenses
    
    $
    698,540
    
    
    $
    660,339
    
    
    $
    617,229
 Reconciliation of Net Income (Loss) to Hotel EBITDA
 Year Ended December 31,2006
    
    
    2005
    
    
    2004Net income (loss)
    
    $
    51,045
    
    
    $
    (251,615
    )
    
    $
    (100,127
    )Discontinued operations
    
    
    (42,480
    )
    
    
    234,699
    
    
    
    21,751Equity in income from unconsolidated entities
    
    
    (11,537
    )
    
    
    (10,169
    )
    
    
    (17,121
    )Minority interests
    
    
    (2,508
    )
    
    
    (4,310
    )
    
    
    (6,223
    )Consolidated hotel lease expense
    
    
    61,054
    
    
    
    54,689
    
    
    
    49,414Unconsolidated taxes, insurance and lease expense
    
    
    (6,273
    )
    
    
    (5,881
    )
    
    
    (5,900
    )Interest expense, net
    
    
    110,867
    
    
    
    121,668
    
    
    
    136,144Hurricane loss
    
    
    
    
    
    
    6,481
    
    
    
    2,125Loss on early extinguishment of debt
    
    
    12,471
    
    
    
    4,037
    
    
    
    44,216Charge-off of deferred financing costs
    
    
    3,562
    
    
    
    1,448
    
    
    
    6,960Gain on swap termination
    
    
    (1,715
    )
    
    
    
    
    
    
    (1,005
    )Corporate expenses
    
    
    23,308
    
    
    
    19,025
    
    
    
    17,033Depreciation
    
    
    94,579
    
    
    
    84,448
    
    
    
    78,116Retail space rental and other revenue
    
    
    (79
    )
    
    
    (1,506
    )
    
    
    (2,196
    )Abandoned projects
    
    
    33
    
    
    
    265
    
    
    
    Gain on sale of assets
    
    
    92
    
    
    
    (469
    )
    
    
    Hotel EBITDA
    
    $
    292,419
    
    
    $
    252,810
    
    
    $
    223,187
 40




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##### Table of Contents



Reconciliation of Ratio of Operating Income to Total Revenues to Hotel EBITDA Margin
 Year Ended December 31,2006
    
    2005
    
    2004Ratio of operating income to total revenues
    
    
    12.1
    
    
    
    11.1
    %
    
    
    10.3
    %Retail space rental and other revenue
    
    
    
    
    
    
    (0.2
    )
    
    
    (0.3
    )Unconsolidated taxes, insurance and lease expense
    
    
    (0.7
    )
    
    
    (0.5
    )
    
    
    (0.6
    )Consolidated lease expense
    
    
    6.2
    
    
    
    6.0
    
    
    
    5.9Corporate expenses
    
    
    2.4
    
    
    
    2.1
    
    
    
    2.0Depreciation
    
    
    9.5
    
    
    
    9.2
    
    
    
    9.3Hotel EBITDA margin
    
    
    29.5
    %
    
    
    27.7
    %
    
    
    26.6
    %
  FFO and EBITDA
   Hotel EBITDA and Hotel EBITDA Margin
  41




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##### Table of Contents



Use and Limitations of Non-GAAP Measures
    Liquidity and Capital Resources
   42




---



##### Table of Contents



Debt
  43




---



##### Table of Contents



Line of Credit
    Construction Loan
 Mortgage Debt
  44




---



##### Table of Contents



Senior Notes
   45




---



##### Table of Contents



Balance OutstandingEncumbered
    
    Interest Rate at
    
    
    Maturity
    
    December 31,Hotels
    
    December 31, 2006
    
    
    Date
    
    2006
    
    
    2005Promissory note
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    650Line of credit(a)
    
    none
    
    
    L + 1.75
    
    
    January 2009
    
    
    
    
    
    
    Senior term notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    123,358Senior term notes
    
    none
    
    
    8.50
    
    
    June 2011
    
    
    298,911
    
    
    
    298,660Term loan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    225,000Senior term notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    290,000Senior term notes
    
    none
    
    
    L + 1.875
    
    
    December 2011
    
    
    215,000
    
    
    
    Total line of credit and senior
debt(d)
    
    
    
    
    7.98
    
    
    
    
    
    513,911
    
    
    
    937,668Mortgage debt(b)
    
    12 hotels
    
    
    L + 0.93
    
    
    November 2008
    
    
    250,000
    
    
    
    Mortgage debt
    
    8 hotels
    
    
    6.56
    
    
    July 2009-2014
    
    
    97,553
    
    
    
    104,282Mortgage debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    117,913Mortgage debt
    
    7 hotels
    
    
    7.32
    
    
    March 2009
    
    
    124,263
    
    
    
    127,455Mortgage debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41,912Mortgage debt
    
    8 hotels
    
    
    8.70
    
    
    May 2010
    
    
    169,438
    
    
    
    172,604Mortgage debt
    
    6 hotels
    
    
    8.73
    
    
    May 2010
    
    
    122,578
    
    
    
    133,374Mortgage debt
    
    1 hotel
    
    
    L + 2.85
    
    
    August 2008
    
    
    15,500
    
    
    
    15,500Mortgage debt
    
    1 hotel
    
    
    5.81
    
    
    July 2016
    
    
    12,861
    
    
    
    10,457Other
    
    1 hotel
    
    
    9.17
    
    
    August 2011
    
    
    4,452
    
    
    
    5,204Construction loan(c)
    
    
    
    
    L + 2.00
    
    
    October 2007
    
    
    58,597
    
    
    
    8,911Total mortgage debt(d)
    
    44 hotels
    
    
    7.41
    
    
    
    
    
    855,242
    
    
    
    737,612Total(d)
    
    
    
    
    7.62
    %
    
    
    
    $
    1,369,153
    
    
    $
    1,675,280
 
 (a)
    
    We have a borrowing capacity of $125 million on our line of credit. The interest on
this line can range from 175 to 225 basis points over LIBOR based on our leverage ratio as
defined in our line of credit agreement.(b)
    
    This debt has three, one-year extension options.(c)
    
    We have a recourse construction loan facility for the development of a 184-unit condominium
project in Myrtle Beach, South Carolina. The interest on this facility is being capitalized
as part of the cost of the project. We have pre sold approximately 98% of these
condominiums and expect to start repaying the construction loan as the units sales are
finalized, beginning in the second quarter of 2007.(d)
    
    Interest rates are calculated based on the weighted average outstanding debt at December
31, 2006. Contractual Obligations
  Less Than
    
    
    1  3
    
    
    4  5
    
    
    AfterTotal
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    5 YearsDebt (a)
    
    $
    1,744,715
    
    
    $
    173,360
    
    
    $
    592,046
    
    
    $
    879,377
    
    
    $
    99,932Operating leases
    
    
    170,407
    
    
    
    22,449
    
    
    
    28,747
    
    
    
    25,096
    
    
    
    94,115Purchase obligations
    
    
    152,160
    
    
    
    152,160
    
    
    
    
    
    
    
    
    
    
    
    Total contractual obligations
    
    $
    2,067,282
    
    
    $
    347,969
    
    
    $
    620,793
    
    
    $
    904,473
    
    
    $
    194,047
 
 (a)
    
    Our long-term debt consists of both secured and unsecured debt and includes
both principal and interest. Interest expense for variable rate debt was calculated
using the interest rate at December 31, 2006. 46




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##### Table of Contents



Off-Balance Sheet Arrangements
      Inflation
  47




---



##### Table of Contents



Seasonality
  Critical Accounting Policies and Estimates
    
    
    We are required by GAAP to record an impairment charge when we believe that an
investment in one or more of our hotels held for investment has been impaired, such
that future undiscounted cash flows would not recover the book basis, or net book
value, of the investment. We test for impairment when certain events occur,
including one or more of the following: projected cash flows are significantly
less than recent historical cash flows; significant changes in legal factors or
actions by a regulator that could affect the value of our hotels; events that could
cause changes or uncertainty in travel patterns; and a current expectation that,
more likely than not, a hotel will be sold or otherwise disposed of significantly
before the end of its previously estimated useful life. Over the past three years
we identified 36 non-strategic hotels that we expected to sell significantly before
the end of their previously estimated useful life. The shorter probable holding
periods related to our decision to sell these hotels was the primary factor that
led to impairment charges on these hotels. As these hotels are sold, we may
recognize additional losses or gains on sale. In the evaluation of impairment of
our hotels, and in establishing impairment charges, we made many assumptions and
estimates on a hotel by hotel basis, which included the following:
 o
    
    Annual cash flow growth rates for revenues and expenses;o
    
    Holding periods;o
    
    Expected remaining useful lives of assets;o
    
    Estimates in fair values taking into consideration future
cash flows, capitalization rates, discount rates and comparable selling
prices; ando
    
    Future capital expenditures.
  48




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##### Table of Contents



At December 31, 2006, we had 11 hotels that were classified as held for sale and
were carried at the lower of historical net book value or fair value less costs to
sell. We made estimates of fair values of these hotels based on pending contracts,
offers received, cash flows, capitalization rates and comparable selling prices. We
also made estimates of selling costs based on commission rates and other selling
costs expected to be incurred.
    
    We make estimates with respect to contingent liabilities for losses covered by
insurance in accordance with Financial Accounting Standard 5, Accounting for
Contingencies. We record liabilities for self insured losses under our insurance
programs when it becomes probable that an asset has been impaired or a liability
has been incurred at the date of our financial statements and the amount of the
loss can be reasonably estimated. We are self-insured for the first $250,000, per
occurrence, of our general liability claims with regard to 67 of our hotels. We
review the adequacy of our reserves for our self-insured claims on a regular basis.
Our reserves are intended to cover the estimated ultimate uninsured liability for
losses with respect to reported and unreported claims incurred at the end of each
accounting period. These reserves represent estimates at a given date, generally
utilizing projections based on claims, historical settlement of claims and
estimates of future costs to settle claims. Estimates are also required since
there may be delays in reporting. Because establishment of insurance reserves is
an inherently uncertain process involving estimates, currently established reserves
may not be sufficient. If our insurance reserves of $4.3 million, at December 31,
2006, for general liability losses are insufficient, we will record an additional
expense in future periods. Property and catastrophic losses are event-driven
losses and, as such, until a loss occurs and the amount of loss can be reasonably
estimated, no liability is recorded. We had recorded no contingent liabilities
with regard to property or catastrophic losses at December 31, 2006.
    
    Our Taxable REIT Subsidiaries, or TRSs, have cumulative potential future tax
deductions totaling $343.3 million. The net deferred income tax asset associated
with these potential future tax deductions was $130.5 million. We have recorded a
valuation allowance equal to 100% of our $130.5 million deferred tax asset related
to our TRSs, because of the uncertainty of realizing the benefit of the deferred
tax asset. SFAS 109, Accounting for Income Taxes, establishes financial
accounting and reporting standards for the effect of income taxes. The objectives
of accounting for income taxes are to recognize the amount of taxes payable or
refundable for the current year and deferred tax liabilities and assets for the
future tax consequences of events that have been recognized in an entitys
financial statements or tax returns. In accordance with SFAS 109, we have
considered future taxable income and ongoing prudent and feasible tax planning
strategies in assessing the need for a valuation allowance. In the event we were
to determine that we would be able to realize all or a portion of our deferred tax
assets in the future, an adjustment to the deferred tax asset would increase
operating income in the period such determination was made.
 Recent Accounting Announcements
 Accounting for Uncertainty in
Income Taxes, an Interpretation of FASB Statement No. 109 Accounting for Income Taxes Accounting for Contingencies
 49




---



##### Table of Contents



Fair Value Measurements
 Disclosure Regarding Forward Looking Statements
  
    
    general economic and lodging industry conditions, including the anticipated
continuation of economic growth, the realization of anticipated job growth, the impact of
the United States military involvement in the Middle East and elsewhere, future acts of
terrorism, the threat or outbreak of a pandemic disease affecting the travel industry, the
impact on the travel industry of high fuel costs and increased security precautions, and
the impact that the bankruptcy of additional major air carriers may have on our revenues
and receivables;
    
    our overall debt levels and our ability to obtain new financing and service debt;
    
    our inability to retain earnings;
    
    our liquidity and capital expenditures;
    
    our growth strategy and acquisition activities;
    
    our inability to sell the hotels being marketed for sale at anticipated prices; and
    
    competitive conditions in the lodging industry.
    
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk
  50




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##### Table of Contents



Expected Maturity Date
at December 31, 2006
(dollars in thousands)
 Fair2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    Thereafter
    
    
    Total
    
    
    ValueLiabilitiesFixed rate:Debt
    
    $
    12,739
    
    
    $
    13,733
    
    
    $
    142,240
    
    
    $
    274,535
    
    
    $
    303,030
    
    
    $
    84,868
    
    
    $
    831,145
    
    
    $
    887,575Average interest rate
    
    
    7.98
    %
    
    
    7.98
    %
    
    
    7.26
    %
    
    
    8.70
    %
    
    
    8.49
    %
    
    
    6.53
    %
    
    
    8.13
    %Floating rate:Debt
    
    
    58,597
    
    
    
    265,500
    
    
    
    
    
    
    
    
    
    
    
    215,000
    
    
    
    
    
    
    
    539,097
    
    
    
    539,097Average interest rate(a)
    
    
    7.32
    %
    
    
    6.14
    %
    
    
    
    
    
    
    
    
    
    
    7.10
    %
    
    
    
    
    
    
    6.65
    %Total debt
    
    $
    71,336
    
    
    $
    279,233
    
    
    $
    142,240
    
    
    $
    274,535
    
    
    $
    518,030
    
    
    $
    84,868
    
    
    $
    1,370,242Average interest rate
    
    
    7.44
    %
    
    
    6.23
    %
    
    
    7.26
    %
    
    
    8.70
    %
    
    
    7.91
    %
    
    
    6.53
    %
    
    
    7.55
    %Net discount
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,089
    )Total debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,369,153
 
 (a)
    
    The average floating rate of interest represents the implied forward rates in the
yield curve at December 31, 2006. Expected Maturity Date
at December 31, 2005
(dollars in thousands)
 Fair2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    Thereafter
    
    
    Total
    
    
    ValueLiabilitiesFixed rate:Debt
    
    $
    13,726
    
    
    $
    149,737
    
    
    $
    15,695
    
    
    $
    176,560
    
    
    $
    281,843
    
    
    $
    382,727
    
    
    $
    1,020,288
    
    
    $
    987,451Average interest rate
    
    
    7.95
    %
    
    
    7.68
    %
    
    
    7.96
    %
    
    
    7.37
    %
    
    
    8.70
    %
    
    
    8.47
    %
    
    
    8.21
    %Floating rate:Debt
    
    
    342,913
    
    
    
    
    
    
    
    24,411
    
    
    
    
    
    
    
    
    
    
    
    290,650
    
    
    
    657,974
    
    
    
    557,974Average interest rate(a)
    
    
    6.09
    %
    
    
    
    
    
    
    6.66
    %
    
    
    
    
    
    
    
    
    
    
    8.47
    %
    
    
    7.16
    %Total debt
    
    $
    356,639
    
    
    $
    149,737
    
    
    $
    40,106
    
    
    $
    176,560
    
    
    $
    281,843
    
    
    $
    673,377
    
    
    $
    1,678,262Average interest rate
    
    
    6.16
    %
    
    
    7.68
    %
    
    
    7.17
    %
    
    
    7.37
    %
    
    
    8.70
    %
    
    
    8.47
    %
    
    
    7.80
    %Net discount
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,982
    )Total debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,675,280Interest rate swaps (floating to fixed)(b)Notional amount
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000
    
    
    
    100,000
    
    
    
    102,222Pay rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7.80
    %
    
    
    7.80
    %Receive rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
 (a)
    
    The average floating rate of interest represents the implied forward rates in the
yield curve at December 31, 2005.(b)
    
    The interest rate swaps in effect during 2005 increased our interest expense by a net
$0.3 million during 2005. The interest rate swaps in effect at December 31, 2005, mature in
2007 but are matched with debt maturing in 2011.  51




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##### Table of Contents



Item 8. Financial Statements and Supplementary Data
 FELCOR LODGING TRUST INCORPORATED
 INDEX TO FINANCIAL STATEMENTS
 PART I  FINANCIAL INFORMATION
 Report of Independent Registered Public Accounting Firm
    
    
    53Consolidated Balance Sheets  December 31, 2006 and 2005
    
    
    55Consolidated Statements of Operations for the years ended December 31, 2006, 2005 and 2004
    
    
    56Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2006, 2005 and 2004
    
    
    57Consolidated Statements of Stockholders Equity for the years ended December 31, 2006, 2005 and 2004
    
    
    58Consolidated Statements of Cash Flows for the years ended December 31, 2006, 2005 and 2004
    
    
    59Notes to Consolidated Financial Statements
    
    
    60Schedule III  Real Estate and Accumulated Depreciation as of December 31, 2006
    
    
    86
 
 52




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
   Consolidated financial statements and financial statement schedule
 
 Internal control over financial reporting
  53




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##### Table of Contents



54




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##### Table of Contents



FELCOR LODGING TRUST INCORPORATED
 
 CONSOLIDATED BALANCE SHEETS
December 31, 2006 and 2005
(in thousands)
 2006
    
    
    2005ASSETSInvestment in hotels, net of accumulated depreciation of $612,286 in 2006
and $1,019,123 in 2005
    
    $
    2,044,285
    
    
    $
    2,584,379Investment in unconsolidated entities
    
    
    111,716
    
    
    
    109,262Hotels held for sale
    
    
    133,801
    
    
    
    Cash and cash equivalents
    
    
    124,179
    
    
    
    94,564Restricted cash
    
    
    22,753
    
    
    
    18,298Accounts receivable, net of allowance for doubtful accounts of $962 in
2006 and $2,203 in 2005
    
    
    33,395
    
    
    
    54,815Deferred expenses, net of accumulated amortization of $8,841 in 2006 and
$12,150 in 2005
    
    
    9,480
    
    
    
    12,423Condominium development project
    
    
    70,661
    
    
    
    16,051Other assets
    
    
    32,979
    
    
    
    30,471Total assets
    
    $
    2,583,249
    
    
    $
    2,920,263LIABILITIES AND STOCKHOLDERS EQUITYDebt, net of discount of $1,089 in 2006 and $2,982 in 2005
    
    $
    1,369,153
    
    
    $
    1,675,280Distributions payable
    
    
    24,078
    
    
    
    8,596Accrued expenses and other liabilities
    
    
    139,277
    
    
    
    139,187Total liabilities
    
    
    1,532,508
    
    
    
    1,823,063Commitments and contingenciesMinority
interest in FelCor LP 1,355 and 2,763 units issued and
outstanding at December 31, 2006 and 2005, respectively
    
    
    11,638
    
    
    
    25,393Minority interest in other partnerships
    
    
    28,172
    
    
    
    40,014Stockholders equity:Preferred stock, $.01 par value, 20,000 shares authorized:Series A Cumulative Convertible Preferred Stock, 12,880 shares,
liquidation value of $322,011 issued and outstanding at December 31,
2006 and December 31, 2005
    
    
    309,362
    
    
    
    309,362Series C Cumulative Redeemable Preferred Stock, 68 shares,
liquidation value of $169,950 issued and outstanding at December 31,
2006
    
    
    169,412
    
    
    
    169,412Common stock, $.01 par value, 200,000 shares authorized and 69,438 and
69,440 shares issued, including shares in treasury, at December 31, 2006
and 2005, respectively
    
    
    694
    
    
    
    694Additional paid-in capital
    
    
    2,066,694
    
    
    
    2,081,869Accumulated other comprehensive income
    
    
    15,839
    
    
    
    19,602Accumulated deficit
    
    
    (1,409,790
    )
    
    
    (1,372,720
    )Less: Common stock in treasury, at cost, of 7,386 and 9,231 shares
at December 31, 2006 and 2005, respectively
    
    
    (141,280
    )
    
    
    (176,426
    )Total stockholders equity
    
    
    1,010,931
    
    
    
    1,031,793Total liabilities and stockholders equity
    
    $
    2,583,249
    
    
    $
    2,920,263
  55




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##### Table of Contents



FELCOR LODGING TRUST INCORPORATED
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2006, 2005 and 2004
(in thousands, except per share data)
 2006
    
    
    2005
    
    
    2004Revenues:Hotel operating revenue
    
    $
    990,959
    
    
    $
    913,149
    
    
    $
    840,416Retail space rental and other revenue
    
    
    79
    
    
    
    1,506
    
    
    
    2,196Total revenues
    
    
    991,038
    
    
    
    914,655
    
    
    
    842,612Expenses:Hotel departmental expenses
    
    
    319,731
    
    
    
    303,454
    
    
    
    290,619Other property operating costs
    
    
    270,301
    
    
    
    255,626
    
    
    
    235,204Management and franchise fees
    
    
    51,237
    
    
    
    45,215
    
    
    
    42,664Taxes, insurance and lease expense
    
    
    112,052
    
    
    
    104,852
    
    
    
    92,256Abandoned projects
    
    
    33
    
    
    
    265
    
    
    
    Corporate expenses
    
    
    23,308
    
    
    
    19,025
    
    
    
    17,033Depreciation
    
    
    94,579
    
    
    
    84,448
    
    
    
    78,116Total operating expenses
    
    
    871,241
    
    
    
    812,885
    
    
    
    755,892Operating income
    
    
    119,797
    
    
    
    101,770
    
    
    
    86,720Interest expense, net
    
    
    110,867
    
    
    
    121,668
    
    
    
    136,144Hurricane loss
    
    
    
    
    
    
    6,481
    
    
    
    2,125Charge-off of deferred financing costs
    
    
    3,562
    
    
    
    1,448
    
    
    
    6,960Loss on early extinguishment of debt
    
    
    12,471
    
    
    
    4,037
    
    
    
    44,216Gain on swap termination
    
    
    (1,715
    )
    
    
    
    
    
    
    (1,005
    )Loss before equity in income of unconsolidated entities,
minority interests and gain on sale of assets
    
    
    (5,388
    )
    
    
    (31,864
    )
    
    
    (101,720
    )Equity in income from unconsolidated entities
    
    
    11,537
    
    
    
    10,169
    
    
    
    17,121Gain (loss) on sale of assets
    
    
    (92
    )
    
    
    469
    
    
    
    Minority interests
    
    
    2,508
    
    
    
    4,310
    
    
    
    6,223Income (loss) from continuing operations
    
    
    8,565
    
    
    
    (16,916
    )
    
    
    (78,376
    )Discontinued operations
    
    
    42,480
    
    
    
    (234,699
    )
    
    
    (21,751
    )Net income (loss)
    
    
    51,045
    
    
    
    (251,615
    )
    
    
    (100,127
    )Preferred dividends
    
    
    (38,713
    )
    
    
    (39,408
    )
    
    
    (35,130
    )Issuance costs of redeemed preferred stock
    
    
    
    
    
    
    (6,522
    )
    
    
    Net income (loss) applicable to common stockholders
    
    $
    12,332
    
    
    $
    (297,545
    )
    
    $
    (135,257
    )Income (loss) per common share data:Basic and diluted:Loss from continuing operations
    
    $
    (0.50
    )
    
    $
    (1.06
    )
    
    $
    (1.92
    )Net income (loss)
    
    $
    0.20
    
    
    $
    (5.01
    )
    
    $
    (2.29
    )Weighted average common shares outstanding
    
    
    60,734
    
    
    
    59,436
    
    
    
    59,045Cash dividends declared on common stock
    
    $
    0.80
    
    
    $
    0.15
    
    
    $
    
  56




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##### Table of Contents



FELCOR LODGING TRUST INCORPORATED
 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
For the years ended December 31, 2006, 2005 and 2004
(in thousands)
 2006
    
    
    2005
    
    
    2004Net income (loss)
    
    $
    51,045
    
    
    $
    (251,615
    )
    
    $
    (100,127
    )Unrealized holding gains (loss) from interest rate swaps
    
    
    (507
    )
    
    
    2,074
    
    
    
    147Realized gain from interest rate swaps
    
    
    (1,715
    )
    
    
    
    
    
    
    Foreign currency translation adjustment
    
    
    (1,541
    )
    
    
    1,748
    
    
    
    6,155Comprehensive income (loss)
    
    $
    47,282
    
    
    $
    (247,793
    )
    
    $
    (93,825
    )
  57




---



##### Table of Contents



FELCOR LODGING TRUST INCORPORATED
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
For the years ended December 31, 2006, 2005, and 2004
(in thousands)
 Preferred Stock
    
    
    Common Stock
    
    
    
    
    
    
    AccumulatedNumber
    
    
    
    
    
    
    Number
    
    
    
    
    
    
    Additional
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    Totalof
    
    
    
    
    
    
    of
    
    
    
    
    
    
    Paid-in
    
    
    Comprehensive
    
    
    Accumulated
    
    
    Treasury
    
    
    StockholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Income
    
    
    Deficit
    
    
    Stock
    
    
    EquityBalance at December 31, 2003
    
    
    6,048
    
    
    $
    318,907
    
    
    
    69,429
    
    
    $
    694
    
    
    $
    2,095,356
    
    
    $
    9,478
    
    
    $
    (930,886
    )
    
    $
    (197,277
    )
    
    $
    1,296,272Foreign exchange translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,155
    
    
    
    
    
    
    
    
    
    
    
    6,155Issuance of Series A preferred stock
    
    
    6,900
    
    
    
    159,850
    
    
    
    
    
    
    
    
    
    
    
    (3,850
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    156,000Issuance of stock awards
    
    
    
    
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    (9,067
    )
    
    
    
    
    
    
    
    
    
    
    9,092
    
    
    
    25Amortization of stock awards
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,179
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,179Unrealized gain on hedging
transaction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    147
    
    
    
    
    
    
    
    
    
    
    
    147Conversion of operating partnership
units into common shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,999
    )
    
    
    
    
    
    
    
    
    
    
    4,692
    
    
    
    2,693Allocation from minority units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,109
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,109Forfeitures of stock awards
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    461
    
    
    
    
    
    
    
    
    
    
    
    (461
    )
    
    
    Dividends declared:$1.95 per Series A preferred share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,884
    )
    
    
    
    
    
    
    (19,884
    )$2.25 per Series B depositary
preferred share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,246
    )
    
    
    
    
    
    
    (15,246
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (100,127
    )
    
    
    
    
    
    
    (100,127
    )Balance at December 31, 2004
    
    
    12,948
    
    
    
    478,757
    
    
    
    69,436
    
    
    
    694
    
    
    
    2,085,189
    
    
    
    15,780
    
    
    
    (1,066,143
    )
    
    
    (183,954
    )
    
    
    1,330,323Foreign exchange translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,748
    
    
    
    
    
    
    
    
    
    
    
    1,748Issuance of Series C preferred stock
    
    
    68
    
    
    
    169,412
    
    
    
    
    
    
    
    
    
    
    
    (5,492
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    163,920Retirement of Series B preferred
stock
    
    
    (68
    )
    
    
    (169,395
    )
    
    
    
    
    
    
    
    
    
    
    6,522
    
    
    
    
    
    
    
    (6,522
    )
    
    
    
    
    
    
    (169,395
    )Issuance of stock awards
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    (7,285
    )
    
    
    
    
    
    
    
    
    
    
    7,022
    
    
    
    (263
    )Amortization of stock awards
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,265
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,265Unrealized gain on hedging
transaction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,074
    
    
    
    
    
    
    
    
    
    
    
    2,074Conversion of operating partnership
units into common shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (118
    )
    
    
    
    
    
    
    
    
    
    
    506
    
    
    
    388Allocation from minority units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (212
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (212
    )Dividends declared:
    
    
    $0.15 per common share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,032
    )
    
    
    
    
    
    
    (9,032
    )$1.95 per Series A preferred share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,117
    )
    
    
    
    
    
    
    (25,117
    )$1.125 per Series B depositary
preferred share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,432
    )
    
    
    
    
    
    
    (5,432
    )$1.63 per Series C depositary
preferred share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,859
    )
    
    
    
    
    
    
    (8,859
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (251,615
    )
    
    
    
    
    
    
    (251,615
    )Balance at December 31, 2005
    
    
    12,948
    
    
    
    478,774
    
    
    
    69,440
    
    
    
    694
    
    
    
    2,081,869
    
    
    
    19,602
    
    
    
    (1,372,720
    )
    
    
    (176,426
    )
    
    
    1,031,793Foreign exchange translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,541
    )
    
    
    
    
    
    
    
    
    
    
    (1,541
    )Issuance of stock awards
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    
    
    
    
    (6,371
    )
    
    
    
    
    
    
    
    
    
    
    6,933
    
    
    
    562Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (482
    )
    
    
    
    
    
    
    
    
    
    
    2,670
    
    
    
    2,188Amortization of stock awards
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,169
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,169Forfeiture of stock awards
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    579
    
    
    
    
    
    
    
    
    
    
    
    (866
    )
    
    
    (287
    )Repurchase of common shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (818
    )
    
    
    (818
    )Common stock exchanged for treasury
shares
    
    
    
    
    
    
    
    
    
    
    (21
    )
    
    
    
    
    
    
    (357
    )
    
    
    
    
    
    
    
    
    
    
    357
    
    
    
    Unrealized loss on hedging
transaction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (507
    )
    
    
    
    
    
    
    
    
    
    
    (507
    )Realized gain on hedging transaction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,715
    )
    
    
    
    
    
    
    
    
    
    
    (1,715
    )Conversion of operating partnership
units into common shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (26,870
    )
    
    
    
    
    
    
    
    
    
    
    26,870
    
    
    
    Allocation from minority units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,157
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,157Dividends declared:$0.80 per common share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (49,402
    )
    
    
    
    
    
    
    (49,402
    )$1.95 per Series A preferred share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,117
    )
    
    
    
    
    
    
    (25,117
    )$2.00 per Series C depositary
preferred share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,596
    )
    
    
    
    
    
    
    (13,596
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    51,045
    
    
    
    
    
    
    
    51,045Balance at December 31, 2006
    
    
    12,948
    
    
    $
    478,774
    
    
    
    69,438
    
    
    $
    694
    
    
    $
    2,066,694
    
    
    $
    15,839
    
    
    $
    (1,409,790
    )
    
    $
    (141,280
    )
    
    $
    1,010,931
  58




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##### Table of Contents



FELCOR LODGING TRUST INCORPORATED
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2006, 2005 and 2004
(in thousands)
 2006
    
    
    2005
    
    
    2004Cash flows from operating activities:Net income (loss)
    
    $
    51,045
    
    
    $
    (251,615
    )
    
    $
    (100,127
    )Adjustments to reconcile net income (loss) to net cash provided by operating activities:Depreciation
    
    
    110,274
    
    
    
    122,535
    
    
    
    122,653Gain on sale of assets
    
    
    (48,802
    )
    
    
    (12,522
    )
    
    
    (20,589
    )Amortization of deferred financing fees
    
    
    3,351
    
    
    
    3,399
    
    
    
    4,161Accretion amortization of debt
    
    
    1,105
    
    
    
    1,167
    
    
    
    510Amortization of unearned officers and directors compensation
    
    
    5,080
    
    
    
    2,904
    
    
    
    2,945Equity in income from unconsolidated entities
    
    
    (11,537
    )
    
    
    (10,169
    )
    
    
    (17,121
    )Distributions of income from unconsolidated entities
    
    
    3,632
    
    
    
    1,062
    
    
    
    11,932Charge-off of deferred financing costs
    
    
    3,643
    
    
    
    2,659
    
    
    
    6,960Loss on early extinguishment of debt
    
    
    13,701
    
    
    
    8,641
    
    
    
    44,216Impairment loss hotels
    
    
    16,474
    
    
    
    266,751
    
    
    
    38,289Minority interests
    
    
    (789
    )
    
    
    (23,295
    )
    
    
    (7,375
    )Changes in assets and liabilities:Accounts receivable
    
    
    12,571
    
    
    
    (6,178
    )
    
    
    (2,213
    )Restricted cash-operations
    
    
    (2,687
    )
    
    
    (6,941
    )
    
    
    (23,467
    )Other assets
    
    
    (9,076
    )
    
    
    (6,057
    )
    
    
    (957
    )Accrued expenses and other liabilities
    
    
    (285
    )
    
    
    19,141
    
    
    
    (26,536
    )Net cash flow provided by operating activities
    
    
    147,700
    
    
    
    111,482
    
    
    
    33,281Cash flows provided by (used in) investing activities:Acquisition of hotels
    
    
    
    
    
    
    
    
    
    
    (27,759
    )Improvements and additions to hotels
    
    
    (168,525
    )
    
    
    (111,664
    )
    
    
    (95,599
    )Additions to condominium project
    
    
    (51,200
    )
    
    
    (11,546
    )
    
    
    Acquisition of joint venture
    
    
    
    
    
    
    (1,197
    )
    
    
    Cash from consolidation of venture
    
    
    
    
    
    
    3,204
    
    
    
    Proceeds from asset dispositions
    
    
    346,332
    
    
    
    73,502
    
    
    
    152,686Proceeds received from property damage insurance
    
    
    7,535
    
    
    
    3,131
    
    
    
    Decrease in restricted cash-investing
    
    
    1,008
    
    
    
    10,804
    
    
    
    8,155Cash distributions from unconsolidated entities
    
    
    5,700
    
    
    
    6,578
    
    
    
    10,899Capital contributions to unconsolidated entities
    
    
    (250
    )
    
    
    (1,350
    )
    
    
    Net cash flow provided by (used in) investing activities
    
    
    140,600
    
    
    
    (28,538
    )
    
    
    48,382Cash flows provided by (used in) financing activities:Proceeds from borrowings
    
    
    540,494
    
    
    
    233,911
    
    
    
    523,802Repayment of borrowings
    
    
    (716,006
    )
    
    
    (292,990
    )
    
    
    (838,891
    )Payment of debt issuance costs
    
    
    (3,985
    )
    
    
    (659
    )
    
    
    (5,517
    )Decrease in restricted cash-financing
    
    
    2,825
    
    
    
    4,401
    
    
    
    Net proceeds from sale of preferred stock
    
    
    
    
    
    
    164,147
    
    
    
    158,990Redemption of preferred stock
    
    
    
    
    
    
    (169,395
    )
    
    
    Exercise of stock options
    
    
    2,188
    
    
    
    
    
    
    
    Distributions paid to other partnerships minority holders
    
    
    (13,167
    )
    
    
    
    
    
    
    (4,000
    )Contribution from minority interest holders
    
    
    2,519
    
    
    
    2,200
    
    
    
    3,247Distributions paid to FelCor LP limited partners
    
    
    (878
    )
    
    
    (414
    )
    
    
    Distributions paid to preferred stockholders
    
    
    (38,713
    )
    
    
    (39,905
    )
    
    
    (34,757
    )Distributions paid to common stockholders
    
    
    (33,951
    )
    
    
    (9,032
    )
    
    
    Net cash flow used in financing activities
    
    
    (258,674
    )
    
    
    (107,736
    )
    
    
    (197,126
    )Effect of exchange rate changes on cash
    
    
    (11
    )
    
    
    46
    
    
    
    2,888Net change in cash and cash equivalents
    
    
    29,615
    
    
    
    (24,746
    )
    
    
    (112,575
    )Cash and cash equivalents at beginning of periods
    
    
    94,564
    
    
    
    119,310
    
    
    
    231,885Cash and cash equivalents at end of periods
    
    $
    124,179
    
    
    $
    94,564
    
    
    $
    119,310Supplemental cash flow information  Interest paid
    
    $
    118,502
    
    
    $
    132,091
    
    
    $
    162,324
  59




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##### Table of Contents



FELCOR LODGING TRUST INCORPORATED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Organization
      Brand
    
    Hotels
    
    RoomsEmbassy Suites Hotels
    
    
    47
    
    
    
    12,130Holiday Inn-branded
    
    
    17
    
    
    
    6,301Starwood-branded
    
    
    9
    
    
    
    3,217Doubletree-branded
    
    
    7
    
    
    
    1,471Hilton-branded
    
    
    2
    
    
    
    559Other brands
    
    
    1
    
    
    
    403Total hotels
    
    
    83
    60




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##### Table of Contents



FELCOR LODGING TRUST INCORPORATED
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 2. Summary of Significant Accounting Policies
 Principles of Consolidation
 Use of Estimates
 Investment in Hotels
   Acquisition of Hotels
 Investment in Unconsolidated Entities
 61




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##### Table of Contents



FELCOR LODGING TRUST INCORPORATED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 2. Summary of Significant Accounting Policies  (continued)
 Hotels Held for Sale 
  Cash and Cash Equivalents
  Restricted Cash
 Deferred Expenses
 Other Assets 
 Revenue Recognition
 62




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##### Table of Contents



FELCOR LODGING TRUST INCORPORATED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 2. Summary of Significant Accounting Policies  (continued)
   Foreign Currency Translation
 Capitalized Cost
 Net Income (Loss) Per Common Share
  Stock Compensation 3⁄4
 63




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##### Table of Contents



FELCOR LODGING TRUST INCORPORATED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 2. Summary of Significant Accounting Policies 3⁄4 (continued)
  2005
    
    
    2004Loss from continuing operations, as reported
    
    $
    (16,916
    )
    
    $
    (78,376
    )Add stock based compensation included in the net loss, as reported
    
    
    2,904
    
    
    
    2,945Less stock based compensation expense that would have been included in
the determination of net loss if the fair value method had been
applied to all awards
    
    
    (2,914
    )
    
    
    (3,001
    )Loss from continuing operations, pro forma
    
    $
    (16,926
    )
    
    $
    (78,432
    )Basic and diluted net loss from continuing operations per common share:As reported
    
    $
    (1.06
    )
    
    $
    (1.92
    )Pro forma
    
    $
    (1.06
    )
    
    $
    (1.92
    )
  Derivatives 3⁄4
 Segment Information 3⁄4
 Distributions and Dividends
 Minority Interests
 Income Taxes
 64




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##### Table of Contents



FELCOR LODGING TRUST INCORPORATED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 3. Investment in Hotels
  2006
    
    
    2005Building and improvements
    
    $
    2,058,563
    
    
    $
    2,710,465Furniture, fixtures and equipment
    
    
    308,838
    
    
    
    567,330Land
    
    
    203,791
    
    
    
    291,074Construction in progress
    
    
    85,379
    
    
    
    34,6332,656,571
    
    
    
    3,603,502Accumulated depreciation
    
    
    (612,286
    )
    
    
    (1,019,123
    )$
    2,044,285
    
    
    $
    2,584,379
    4. Impairment Charges
     65




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##### Table of Contents



FELCOR LODGING TRUST INCORPORATED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 4. Impairment Charges  (continued)
      5. Discontinued Operations
  66




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##### Table of Contents



FELCOR LODGING TRUST INCORPORATED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 5. Discontinued Operations  (continued)
  Year Ended December 31,2006
    
    
    2005
    
    
    2004Hotel operating revenue
    
    $
    204,494
    
    
    $
    343,492
    
    
    $
    418,271Operating expenses
    
    
    (200,958
    )
    
    
    (593,211
    )
    
    
    (448,297
    )Operating income (loss)
    
    
    3,536
    
    
    
    (249,719
    )
    
    
    (30,026
    )Direct interest costs, net
    
    
    (1,206
    )
    
    
    (10,203
    )
    
    
    (13,466
    )Loss on the early extinguishment of debt
    
    
    (1,311
    )
    
    
    (5,815
    )
    
    
    Gain on sale, net of tax
    
    
    43,180
    
    
    
    12,053
    
    
    
    20,589Minority interest
    
    
    (1,719
    )
    
    
    18,985
    
    
    
    1,152Income (loss) from discontinued operations
    
    $
    42,480
    
    
    $
    (234,699
    )
    
    $
    (21,751
    )
     6. Investment in Unconsolidated Entities
   December 31,2006
    
    2005Balance sheet information:Investment in hotels, net of accumulated depreciation
    
    $
    260,628
    
    
    $
    259,645Total assets
    
    $
    297,712
    
    
    $
    295,065Debt
    
    $
    197,462
    
    
    $
    203,880Total liabilities
    
    $
    203,659
    
    
    $
    211,174Equity
    
    $
    94,053
    
    
    $
    83,891
  67




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##### Table of Contents



FELCOR LODGING TRUST INCORPORATED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 6. Investment in Unconsolidated Entities  (continued)
  2006
    
    
    2005
    
    
    2004Total revenues
    
    $
    83,766
    
    
    $
    75,396
    
    
    $
    67,902Net income
    
    $
    26,764
    
    
    $
    21,801
    
    
    $
    33,746
    (a)Net income attributable to FelCor
    
    $
    13,382
    
    
    $
    11,348
    
    
    $
    18,483Preferred return
    
    
    
    
    
    
    516
    
    
    
    516Depreciation of cost in excess of book value
    
    
    (1,845
    )
    
    
    (1,695
    )
    
    
    (1,878
    )Equity in income from unconsolidated entities
    
    $
    11,537
    
    
    $
    10,169
    
    
    $
    17,121
   2006
    
    
    2005Hotel investments
    
    $
    48,641
    
    
    $
    43,117Cost in excess of book value of hotel investments
    
    
    61,253
    
    
    
    63,098Land and condominium investments
    
    
    3,513
    
    
    
    4,270Hotel lessee investments
    
    
    (1,691
    )
    
    
    (1,223
    )$
    111,716
    
    
    $
    109,262
  2006
    
    
    2005
    
    
    2004Hotel investments
    
    $
    12,090
    
    
    $
    10,691
    
    
    $
    17,673Hotel lessee operations
    
    
    (553
    )
    
    
    (522
    )
    
    
    (552
    )Equity in income from unconsolidated entities
    
    $
    11,537
    
    
    $
    10,169
    
    
    $
    17,121
  68




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##### Table of Contents



FELCOR LODGING TRUST INCORPORATED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 7. Debt
  Balance OutstandingEncumbered
    
    Interest Rate at
    
    
    Maturity
    
    December 31,Hotels
    
    December 31, 2006
    
    
    Date
    
    2006
    
    
    2005Promissory note
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    650Line of credit(a)
    
    none
    
    
    L + 1.75
    
    
    January 2009
    
    
    
    
    
    
    Senior term notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    123,358Senior term notes
    
    none
    
    
    8.50
    
    
    June 2011
    
    
    298,911
    
    
    
    298,660Term loan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    225,000Senior term notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    290,000Senior term notes
    
    none
    
    
    L + 1.875
    
    
    December 2011
    
    
    215,000
    
    
    
    Total line of credit and senior
debt(d)
    
    
    
    
    7.98
    
    
    
    
    
    513,911
    
    
    
    937,668Mortgage debt(b)
    
    12 hotels
    
    
    L + 0.93
    
    
    November 2008
    
    
    250,000
    
    
    
    Mortgage debt
    
    8 hotels
    
    
    6.56
    
    
    July 2009-2014
    
    
    97,553
    
    
    
    104,282Mortgage debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    117,913Mortgage debt
    
    7 hotels
    
    
    7.32
    
    
    March 2009
    
    
    124,263
    
    
    
    127,455Mortgage debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41,912Mortgage debt
    
    8 hotels
    
    
    8.70
    
    
    May 2010
    
    
    169,438
    
    
    
    172,604Mortgage debt
    
    6 hotels
    
    
    8.73
    
    
    May 2010
    
    
    122,578
    
    
    
    133,374Mortgage debt
    
    1 hotel
    
    
    L + 2.85
    
    
    August 2008
    
    
    15,500
    
    
    
    15,500Mortgage debt
    
    1 hotel
    
    
    5.81
    
    
    July 2016
    
    
    12,861
    
    
    
    10,457Other
    
    1 hotel
    
    
    9.17
    
    
    August 2011
    
    
    4,452
    
    
    
    5,204Construction loan(c)
    
    
    
    
    L + 2.00
    
    
    October 2007
    
    
    58,597
    
    
    
    8,911Total mortgage debt(d)
    
    44 hotels
    
    
    7.41
    
    
    
    
    
    855,242
    
    
    
    737,612Total(d)
    
    
    
    
    7.62
    %
    
    
    
    $
    1,369,153
    
    
    $
    1,675,280
 
 (a)
    
    We have a borrowing capacity of $125 million on our line of credit. The interest on
this line can range from 175 to 225 basis points over LIBOR based on our leverage ratio as
defined in our line of credit agreement.(b)
    
    This debt has three, one-year extension options.(c)
    
    We have a recourse construction loan facility for the development of a 184-unit condominium
project in Myrtle Beach, South Carolina. The interest on this facility is being capitalized
as part of the cost of the project. We have pre sold approximately 98% of these condominiums
and expect to start repaying the construction loan as the unit sales are finalized, beginning
in the second quarter of 2007.(d)
    
    Interest rates are calculated based on the weighted average outstanding debt at December
31, 2006.   69




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##### Table of Contents



FELCOR LODGING TRUST INCORPORATED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 7. Debt 3⁄4 (continued)
 5 8
        70




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##### Table of Contents

'

FELCOR LODGING TRUST INCORPORATED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 7. Debt 3⁄4 (continued)
      71




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##### Table of Contents



FELCOR LODGING TRUST INCORPORATED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 7. Debt 3⁄4 (continued)
   Year2007
    
    $
    71,3362008
    
    
    279,233
    (a)2009
    
    
    142,2402010
    
    
    274,5352011
    
    
    518,0302012 and thereafter
    
    
    84,8681,370,242Discount accretion over term
    
    
    (1,089
    )$
    1,369,153
 
 (a)
    
    Includes $250 million of mortgage debt that has three, one-year extension options. 8. Derivatives
    72




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##### Table of Contents



FELCOR LODGING TRUST INCORPORATED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 8. Derivatives  (continued)
      9. Fair Value of Financial Instruments
  73




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##### Table of Contents



FELCOR LODGING TRUST INCORPORATED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 9. Fair Value of Financial Instruments  (continued)
  10. Income Taxes
   Reconciliation between TRSs GAAP net loss and taxable loss:
  2006
    
    
    2005
    
    
    2004GAAP net income (loss)
    
    $
    51,045
    
    
    $
    (251,615
    )
    
    $
    (100,127
    )GAAP net loss (income) from REIT operations
    
    
    (54,894
    )
    
    
    (37,237
    )
    
    
    35,168GAAP net loss of taxable subsidiaries
    
    
    (3,849
    )
    
    
    (288,852
    )
    
    
    (64,959
    )Impairment loss not deductible for tax
    
    
    7,206
    
    
    
    231,605
    
    
    
    8,509Tax gain (loss) in excess of book gains on sale of hotels
    
    
    116,308
    
    
    
    (39,842
    )
    
    
    (51,576
    )Depreciation and amortization(a)
    
    
    (3,379
    )
    
    
    (1,910
    )
    
    
    (4,948
    )Employee benefits not deductible for tax
    
    
    (1,537
    )
    
    
    1,708
    
    
    
    1,040Other book/tax differences
    
    
    (1,653
    )
    
    
    4,779
    
    
    
    (3,216
    )Tax gain (loss) of taxable subsidiaries
    
    $
    113,096
    
    
    $
    (92,512
    )
    
    $
    (115,150
    )
 
 (a)
    
    The changes in book/tax differences in depreciation and amortization
principally result from book and tax basis differences, differences in depreciable
lives and accelerated depreciation methods. 74




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##### Table of Contents



FELCOR LODGING TRUST INCORPORATED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 10. Income Taxes  (continued)
 Summary of TRSs net deferred tax asset:
  2006
    
    
    2005Accumulated net operating losses of our TRS
    
    $
    119,850
    
    
    $
    162,827Tax property basis in excess of book
    
    
    1,128
    
    
    
    Accrued employee benefits not deductible for tax
    
    
    9,111
    
    
    
    9,695Bad debt allowance not deductible for tax
    
    
    367
    
    
    
    837Gross deferred tax assets
    
    
    130,456
    
    
    
    173,359Valuation allowance
    
    
    (130,456
    )
    
    
    (133,138
    )Deferred tax asset after valuation allowance
    
    
    
    
    
    
    40,221Gross deferred tax liability  book property basis in excess of tax
    
    
    
    
    
    
    (40,221
    )Net deferred tax asset
    
    $
    
    
    
    $
    
  Reconciliation between REIT GAAP net loss and taxable income loss:
  2006
    
    
    2005
    
    
    2004GAAP net income (loss) from REIT operations
    
    $
    54,894
    
    
    $
    37,237
    
    
    $
    (35,168
    )Book/tax differences, net:Depreciation and amortization(a)
    
    
    (2,995
    )
    
    
    4,797
    
    
    
    2,386Minority interests
    
    
    (19,869
    )
    
    
    (24,204
    )
    
    
    (2,724
    )Tax loss in excess of book gains on sale of hotels
    
    
    9,268
    
    
    
    (21,547
    )
    
    
    (10,893
    )Impairment loss not deductible for tax
    
    
    (445
    )
    
    
    35,146
    
    
    
    29,779Other
    
    
    (1,444
    )
    
    
    4,045
    
    
    
    1,314Taxable income (loss) subject to distribution requirement(b)
    
    $
    39,409
    
    
    $
    35,474
    
    
    $
    (15,306
    )
 
 (a)
    
    Book/tax differences in depreciation and amortization principally result from
differences in depreciable lives and accelerated depreciation methods.(b)
    
    The dividend distribution requirement is 90%.  75




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##### Table of Contents



FELCOR LODGING TRUST INCORPORATED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 10. Income Taxes  (continued)
 Characterization of distributions:
  2006
    
    
    2005
    
    
    2004Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %Common StockOrdinary income
    
    $
    0.188
    
    
    
    23.45
    
    
    $
    0.028
    
    
    
    18.76
    
    
    $
    
    
    
    
    Return of capital
    
    
    0.612
    
    
    
    76.55
    
    
    
    0.122
    
    
    
    81.24
    
    
    
    
    
    
    
    $
    0.800
    
    
    
    100.00
    
    
    $
    0.150
    
    
    
    100.00
    
    
    $
    
    
    
    
    Preferred Stock  Series AOrdinary income
    
    $
    1.95
    
    
    
    100.00
    
    
    $
    1.95
    
    
    
    100.00
    
    
    $
    0.0425
    
    
    
    2.18Return of capital
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.9075
    
    
    
    97.82$
    1.95
    
    
    
    100.00
    
    
    $
    1.95
    
    
    
    100.00
    
    
    $
    1.9500
    
    
    
    100.00Preferred Stock  Series BOrdinary income
    
    $
    
    
    
    
    
    
    
    $
    1.125
    
    
    
    100.00
    
    
    $
    0.0491
    
    
    
    2.18Return of capital
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.2009
    
    
    
    97.82$
    
    
    
    
    
    
    
    $
    1.125
    
    
    
    100.00
    
    
    $
    2.2500
    
    
    
    100.00Preferred Stock  Series COrdinary income
    
    $
    2.00
    
    
    
    100.00
    
    
    $
    1.633
    
    
    
    100.00
    
    
    $
    
    
    
    
    Return of capital
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2.00
    
    
    
    100.00
    
    
    $
    1.633
    
    
    
    100.00
    
    
    $
    
    
    
    
    
 11. Capital Stock
  Preferred Stock
   76




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##### Table of Contents



FELCOR LODGING TRUST INCORPORATED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 11. Capital Stock  (continued)
     FelCor LP Units
  12. Hotel Operating Revenue, Departmental Expenses, and Other Property Operating Costs
  Year Ended December 31,2006
    
    
    2005
    
    
    2004Room revenue
    
    $
    809,466
    
    
    $
    742,882
    
    
    $
    677,169Food and beverage revenue
    
    
    129,200
    
    
    
    121,836
    
    
    
    116,829Other operating departments
    
    
    52,293
    
    
    
    48,431
    
    
    
    46,418Total hotel operating revenues
    
    $
    990,959
    
    
    $
    913,149
    
    
    $
    840,416
 77




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##### Table of Contents



FELCOR LODGING TRUST INCORPORATED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 12. Hotel Operating Revenue, Departmental Expenses and Other Property Operating Costs 
(continued)
    Year Ended December 31,2006
    
    
    2005
    
    
    2004Room
    
    $
    199,283
    
    
    $
    187,872
    
    
    $
    178,146Food and beverage
    
    
    97,012
    
    
    
    93,136
    
    
    
    90,715Other operating departments
    
    
    23,436
    
    
    
    22,446
    
    
    
    21,758Total hotel departmental expenses
    
    $
    319,731
    
    
    $
    303,454
    
    
    $
    290,619
  Year Ended December 31,2006
    
    
    2005
    
    
    2004Hotel general and administrative expense
    
    $
    87,451
    
    
    $
    82,607
    
    
    $
    76,898Marketing
    
    
    81,113
    
    
    
    76,151
    
    
    
    71,099Repair and maintenance
    
    
    52,710
    
    
    
    50,011
    
    
    
    46,063Utilities
    
    
    49,027
    
    
    
    46,857
    
    
    
    41,144Total other property operating costs
    
    $
    270,301
    
    
    $
    255,626
    
    
    $
    235,204
  78




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##### Table of Contents



FELCOR LODGING TRUST INCORPORATED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 13. Taxes, Insurance and Lease Expense
  Year Ended December 31,2006
    
    
    2005
    
    
    2004Operating lease expense (a)
    
    $
    69,221
    
    
    $
    62,176
    
    
    $
    56,716Real estate and other taxes
    
    
    32,790
    
    
    
    32,175
    
    
    
    26,998Property, general liability insurance and other
    
    
    10,041
    
    
    
    10,501
    
    
    
    8,542Total taxes, insurance and lease expense
    
    $
    112,052
    
    
    $
    104,852
    
    
    $
    92,256
 
 (a)
    
    Includes hotel lease expense of $61.1 million, $54.7 million and $49.4 million,
respectively, associated with 13 hotels in 2006 and 2005 and 14 hotels in 2004 owned by
unconsolidated entities and leased to our consolidated lessees. Included in lease
expense is $36.1 million, $28.4 million and $21.9 million in percentage rent for the
year ended December 31, 2006, 2005 and 2004, respectively. 14. Land Leases and Hotel Rent
  Year2007
    
    $
    22,4492008
    
    
    14,3862009
    
    
    14,3612010
    
    
    13,5222011
    
    
    11,5742012 and thereafter
    
    
    94,115$
    170,407
 79




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##### Table of Contents



FELCOR LODGING TRUST INCORPORATED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 15. Earnings Per Share
  2006
    
    
    2005
    
    
    2004Numerator:Income (loss) from continuing operations
    
    $
    8,565
    
    
    $
    (16,916
    )
    
    $
    (78,376
    )Less: Preferred dividends
    
    
    (38,713
    )
    
    
    (39,408
    )
    
    
    (35,130
    )Issuance costs of redeemed preferred stock
    
    
    
    
    
    
    (6,522
    )
    
    
    Loss from continuing operations and applicable to
common stockholders
    
    
    (30,148
    )
    
    
    (62,846
    )
    
    
    (113,506
    )Discontinued operations
    
    
    42,480
    
    
    
    (234,699
    )
    
    
    (21,751
    )Net income (loss) applicable to common stockholders
    
    $
    12,332
    
    
    $
    (297,545
    )
    
    $
    (135,257
    )Denominator:Denominator for basic and diluted earnings
(loss) per share
    
    
    60,734
    
    
    
    59,436
    
    
    
    59,045Earnings (loss) per share data:Basic:Income (loss) from continuing operations
    
    $
    (0.50
    )
    
    $
    (1.06
    )
    
    $
    (1.92
    )Discontinued operations
    
    $
    0.70
    
    
    $
    (3.95
    )
    
    $
    (0.37
    )Net income (loss)
    
    $
    0.20
    
    
    $
    (5.01
    )
    
    $
    (2.29
    )Diluted:Income (loss) from continuing operations
    
    $
    (0.50
    )
    
    $
    (1.06
    )
    
    $
    (1.92
    )Discontinued operations
    
    $
    0.70
    
    
    $
    (3.95
    )
    
    $
    (0.37
    )Net income (loss)
    
    $
    0.20
    
    
    $
    (5.01
    )
    
    $
    (2.29
    )
  2006
    
    2005
    
    2004Restricted shares granted but not vested
    
    
    327
    
    
    
    648
    
    
    
    395Series A convertible preferred shares
    
    
    9,985
    
    
    
    9,985
    
    
    
    9,985
  16. Commitments, Contingencies and Related Party Transactions
  80




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FELCOR LODGING TRUST INCORPORATED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 16. Commitments, Contingencies and Related Party Transactions  (continued)
  .
     81




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##### Table of Contents



FELCOR LODGING TRUST INCORPORATED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 17. Supplemental Cash Flow Disclosure
    For the Year Ended December 31,2006
    
    
    2005
    
    
    2004Depreciation from continuing operations
    
    $
    94,579
    
    
    $
    84,448
    
    
    $
    78,116Depreciation from discontinued operations
    
    
    15,695
    
    
    
    38,087
    
    
    
    44,537Total depreciation expense
    
    $
    110,274
    
    
    $
    122,535
    
    
    $
    122,653
      18. Stock Based Compensation Plans
    82




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##### Table of Contents



FELCOR LODGING TRUST INCORPORATED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 18. Stock Based Compensation Plans  (continued)
 Stock Options
  2006
    
    2005
    
    2004Weighted
    
    
    
    
    
    Weighted
    
    
    
    
    
    WeightedNo. Shares of
    
    Average
    
    No. Shares of
    
    Average
    
    No. Shares of
    
    AverageUnderlying
    
    Exercise
    
    Underlying
    
    Exercise
    
    Underlying
    
    ExerciseOptions
    
    Prices
    
    Options
    
    Prices
    
    Options
    
    PricesOutstanding at beginning of the year
    
    
    1,465,257
    
    
    $
    23.41
    
    
    
    1,478,760
    
    
    $
    24.72
    
    
    
    1,911,544
    
    
    $
    22.72Forfeited
    
    
    (726,891
    )
    
    $
    25.56
    
    
    
    (13,503
    )
    
    $
    22.30
    
    
    
    (432,784
    )
    
    $
    15.91Exercised
    
    
    (140,000
    )
    
    $
    15.63
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at end of year
    
    
    598,366
    
    
    $
    22.62
    
    
    
    1,465,257
    
    
    $
    23.41
    
    
    
    1,478,760
    
    
    $
    24.72Exercisable at end of year
    
    
    598,366
    
    
    $
    22.62
    
    
    
    1,455,257
    
    
    $
    23.46
    
    
    
    1,333,760
    
    
    $
    24.24
 Options Exercisable and Outstanding_Number
    
    Wgtd. Avg.Range of
    
    Outstanding
    
    Remaining
    
    Wgtd Avg.Exercise Prices
    
    at 12/31/06
    
    Life
    
    Exercise Price$15.62 to $22.56
    
    
    534,912
    
    
    
    1.01
    
    
    $
    21.58$24.18 to $36.12
    
    
    63,454
    
    
    
    0.88
    
    
    $
    31.41$15.62 to $36.12
    
    
    598,366
    
    
    
    0.99
    
    
    $
    22.62
  Restricted Stock
  2006
    
    2005
    
    2004Weighted
    
    
    
    
    
    Weighted
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    Average
    
    
    
    
    
    AverageFair Market
    
    
    
    
    
    Fair Market
    
    
    
    
    
    Fair MarketValue
    
    
    
    
    
    Value
    
    
    
    ValueNo. Shares
    
    at Grant
    
    No. Shares
    
    at Grant
    
    No. Shares
    
    at GrantOutstanding at beginning of the year
    
    
    1,549,206
    
    
    $
    13.35
    
    
    
    1,187,606
    
    
    $
    17.54
    
    
    
    731,431
    
    
    $
    22.03Granted(a):With immediate vesting(b)
    
    
    28,500
    
    
    $
    19.78
    
    
    
    22,300
    
    
    $
    13.73
    
    
    
    26,500
    
    
    $
    10.00With 4-year pro rata vesting
    
    
    293,800
    
    
    $
    18.71
    
    
    
    319,300
    
    
    $
    12.52
    
    
    
    295,040
    
    
    $
    10.00Vesting within 12 months of grant
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,000
    
    
    $
    12.47With 5-year pro rata vesting
    
    
    60,000
    
    
    $
    21.64
    
    
    
    20,000
    
    
    $
    13.85
    
    
    
    110,000
    
    
    $
    12.25Forfeited
    
    
    (51,377
    )
    
    $
    13.23
    
    
    
    
    
    
    
    
    
    
    
    (25,365
    )
    
    $
    18.19Outstanding at end of year
    
    
    1,880,129
    
    
    $
    14.56
    
    
    
    1,549,206
    
    
    $
    13.35
    
    
    
    1,187,606
    
    
    $
    17.54Vested at end of year
    
    
    1,108,866
    
    
    $
    17.30
    
    
    
    795,738
    
    
    $
    18.49
    
    
    
    558,151
    
    
    $
    20.52
 
 (a)
    
    All shares granted are issued out of treasury except for 19,200, 5,200 and 6,300
of the restricted shares issued to directors during the years ended December 31, 2006,
2005 and 2004, respectively.(b)
    
    Shares awarded to directors.  83




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##### Table of Contents



FELCOR LODGING TRUST INCORPORATED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 19. Employee Benefits
   20. Segment Information
   Revenue
    
    
    Investment in Hotel Assets2006
    
    
    2005
    
    
    2004
    
    
    2006
    
    
    2005
    
    
    2004California
    
    $
    195,056
    
    
    $
    178,688
    
    
    $
    161,594
    
    
    $
    413,899
    
    
    $
    517,250
    
    
    $
    546,762Texas
    
    
    110,384
    
    
    
    98,870
    
    
    
    91,046
    
    
    
    207,921
    
    
    
    363,221
    
    
    
    517,933Florida
    
    
    150,339
    
    
    
    136,882
    
    
    
    123,816
    
    
    
    344,812
    
    
    
    370,863
    
    
    
    373,468Georgia
    
    
    58,745
    
    
    
    54,993
    
    
    
    50,138
    
    
    
    122,227
    
    
    
    208,665
    
    
    
    272,010Other states
    
    
    447,081
    
    
    
    418,445
    
    
    
    391,238
    
    
    
    905,352
    
    
    
    1,072,222
    
    
    
    1,197,952Canada
    
    
    29,433
    
    
    
    26,777
    
    
    
    24,780
    
    
    
    50,074
    
    
    
    52,158
    
    
    
    47,641Total
    
    $
    991,038
    
    
    $
    914,655
    
    
    $
    842,612
    
    
    $
    2,044,285
    
    
    $
    2,584,379
    
    
    $
    2,955,766
 21. Recently Issued Statements of Financial Accounting Standards
 Accounting for Uncertainty in
Income Taxes, an Interpretation of FASB Statement No. 109 Accounting for Income Taxes Accounting for Contingencies
 Fair Value Measurements
 84




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##### Table of Contents



FELCOR LODGING TRUST INCORPORATED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 22. Quarterly Operating Results (unaudited)
  First
    
    
    Second
    
    
    Third
    
    
    Fourth2006
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    QuarterTotal revenues
    
    $
    251,407
    
    
    $
    259,265
    
    
    $
    247,464
    
    
    $
    232,902Net income (loss) from continuing operations
    
    $
    6,859
    
    
    $
    12,478
    
    
    $
    4,272
    
    
    $
    (15,044
    )Discontinued operations
    
    $
    2,993
    
    
    $
    (2,333
    )
    
    $
    15,790
    
    
    $
    26,030Net income
    
    $
    9,852
    
    
    $
    10,145
    
    
    $
    20,062
    
    
    $
    10,986Net income (loss) applicable to common stockholders
    
    $
    174
    
    
    $
    467
    
    
    $
    10,396
    
    
    $
    1,295Comprehensive income
    
    $
    9,560
    
    
    $
    12,305
    
    
    $
    19,266
    
    
    $
    6,151Basic and diluted per common share data:Net income (loss) from continuing operations
    
    $
    (0.05
    )
    
    $
    0.05
    
    
    $
    (0.10
    )
    
    $
    (0.40
    )Discontinued operations
    
    $
    0.05
    
    
    $
    (0.04
    )
    
    $
    0.27
    
    
    $
    0.42Net income
    
    $
    
    
    
    $
    0.01
    
    
    $
    0.17
    
    
    $
    .02Basic weighted average common shares outstanding
    
    
    59,660
    
    
    
    60,355
    
    
    
    61,148
    
    
    
    61,268Diluted weighted average common shares outstanding
    
    
    59,660
    
    
    
    60,626
    
    
    
    61,148
    
    
    
    61,268
 First
    
    
    Second
    
    
    Third
    
    
    Fourth2005
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    QuarterTotal revenues
    
    $
    216,900
    
    
    $
    240,777
    
    
    $
    234,323
    
    
    $
    222,655Net income (loss) from continuing operations
    
    $
    (4,284
    )
    
    $
    6,208
    
    
    $
    (797
    )
    
    $
    (18,043
    )Discontinued operations
    
    $
    (3,730
    )
    
    $
    4,143
    
    
    $
    12,055
    
    
    $
    (247,167
    )Net income (loss)(a)
    
    $
    (8,014
    )
    
    $
    10,351
    
    
    $
    11,258
    
    
    $
    (265,210
    )Net loss applicable to common stockholders
    
    $
    (18,105
    )
    
    $
    (4,656
    )
    
    $
    105
    
    
    $
    (274,889
    )Comprehensive income (loss)
    
    $
    (6,631
    )
    
    $
    8,722
    
    
    $
    15,169
    
    
    $
    (265,053
    )Basic and diluted per common share data:Net loss from continuing operations
    
    $
    (0.24
    )
    
    $
    (0.15
    )
    
    $
    (0.20
    )
    
    $
    (0.47
    )Discontinued operations
    
    $
    (0.06
    )
    
    $
    0.07
    
    
    $
    0.20
    
    
    $
    (4.15
    )Net loss
    
    $
    (0.30
    )
    
    $
    (0.08
    )
    
    $
    
    
    
    $
    (4.62
    )Basic weighted average common shares outstanding
    
    
    59,416
    
    
    
    59,404
    
    
    
    59,442
    
    
    
    59,453Diluted weighted average common shares outstanding
    
    
    59,416
    
    
    
    59,404
    
    
    
    59,442
    
    
    
    59,453
 
 (a)
    
    The fourth quarter net loss in 2005 includes an impairment charge of $263
million.  85




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##### Table of Contents



FELCOR
LODGING TRUST INCORPORATED
 
 Schedule III  Real Estate and Accumulated Depreciation
as of December 31, 2006
(in thousands)
 Cost Capitalized
    
    Gross Amounts at WhichInitial Cost
    
    Subsequent to Acquisition
    
    Carried at Close of Period
    
    
    
    
    
    Accumulated
    
    
    
    
    
    
    
    
    
    Life UponBuildings
    
    
    
    
    
    Buildings
    
    
    
    
    
    Buildings
    
    
    
    
    
    Depreciation
    
    
    
    
    
    
    
    
    
    Whichand
    
    
    
    
    
    and
    
    
    
    
    
    and
    
    
    
    
    
    Buildings &
    
    Year
    
    Date
    
    DepreciationLocation
    
    Encumbrances
    
    Land
    
    Improvements
    
    Land
    
    Improvements
    
    Land
    
    Improvements
    
    Total
    
    Improvements
    
    Opened
    
    Acquired
    
    is ComputedBirmingham, AL (1)
    
    $
    15,657
    
    
    $
    2,843
    
    
    $
    29,286
    
    
    $
    0
    
    
    $
    1,210
    
    
    $
    2,843
    
    
    $
    30,496
    
    
    $
    33,339
    
    
    $
    8,176
    
    
    
    1987
    
    
    
    1/3/1996
    
    
    15 - 40 YrsPhoenix  Biltmore, AZ (1)
    
    
    19,517
    
    
    
    0
    
    
    
    38,998
    
    
    
    4,694
    
    
    
    1,973
    
    
    
    4,694
    
    
    
    40,971
    
    
    
    45,665
    
    
    
    10,964
    
    
    
    1985
    
    
    
    1/3/1996
    
    
    15 - 40 YrsPhoenix Crescent Hotel, AZ (3)
    
    
    22,825
    
    
    
    3,608
    
    
    
    29,583
    
    
    
    0
    
    
    
    1,490
    
    
    
    3,608
    
    
    
    31,073
    
    
    
    34,681
    
    
    
    7,274
    
    
    
    1986
    
    
    
    6/30/1997
    
    
    15 - 40 YrsPhoenix Tempe, AZ (1)
    
    
    22,944
    
    
    
    3,951
    
    
    
    34,371
    
    
    
    0
    
    
    
    1,048
    
    
    
    3,951
    
    
    
    35,419
    
    
    
    39,370
    
    
    
    7,657
    
    
    
    1986
    
    
    
    5/4/1998
    
    
    15 - 40 YrsDana Point  Doheny Beach, CA (4)
    
    
    0
    
    
    
    1,787
    
    
    
    15,545
    
    
    
    0
    
    
    
    2,019
    
    
    
    1,787
    
    
    
    17,564
    
    
    
    19,351
    
    
    
    4,150
    
    
    
    1992
    
    
    
    2/21/1997
    
    
    15 - 40 YrsLos Angeles  Anaheim (Located near Disneyland
Park), CA (1)
    
    
    23,595
    
    
    
    2,548
    
    
    
    14,832
    
    
    
    0
    
    
    
    1,308
    
    
    
    2,548
    
    
    
    16,140
    
    
    
    18,688
    
    
    
    4,297
    
    
    
    1987
    
    
    
    1/3/1996
    
    
    15 - 40 YrsLos Angeles International Airport  South, CA (1)
    
    
    0
    
    
    
    2,660
    
    
    
    17,997
    
    
    
    0
    
    
    
    1,307
    
    
    
    2,660
    
    
    
    19,304
    
    
    
    21,964
    
    
    
    5,702
    
    
    
    1985
    
    
    
    3/27/1996
    
    
    15 - 40 YrsMilpitas  Silicon Valley, CA (1)
    
    
    26,965
    
    
    
    4,021
    
    
    
    23,677
    
    
    
    0
    
    
    
    2,063
    
    
    
    4,021
    
    
    
    25,740
    
    
    
    29,761
    
    
    
    6,847
    
    
    
    1987
    
    
    
    1/3/1996
    
    
    15 - 40 YrsNapa Valley, CA (1)
    
    
    14,166
    
    
    
    3,287
    
    
    
    14,205
    
    
    
    0
    
    
    
    1,726
    
    
    
    3,287
    
    
    
    15,931
    
    
    
    19,218
    
    
    
    4,103
    
    
    
    1985
    
    
    
    5/8/1996
    
    
    15 - 40 YrsOxnard  Mandalay Beach Resort & Conference
Center, CA (1)
    
    
    0
    
    
    
    2,930
    
    
    
    22,125
    
    
    
    1
    
    
    
    3,921
    
    
    
    2,931
    
    
    
    26,046
    
    
    
    28,977
    
    
    
    6,500
    
    
    
    1986
    
    
    
    5/8/1996
    
    
    15 - 40 YrsSan Diego  On the Bay, CA (2)
    
    
    0
    
    
    
    0
    
    
    
    68,229
    
    
    
    0
    
    
    
    4,688
    
    
    
    0
    
    
    
    72,917
    
    
    
    72,917
    
    
    
    17,060
    
    
    
    1965
    
    
    
    7/28/1998
    
    
    15 - 40 YrsSan Francisco  Airport  Burlingame, CA (1)
    
    
    0
    
    
    
    0
    
    
    
    39,929
    
    
    
    0
    
    
    
    967
    
    
    
    0
    
    
    
    40,896
    
    
    
    40,896
    
    
    
    11,111
    
    
    
    1986
    
    
    
    11/6/1995
    
    
    15 - 40 YrsSan Francisco  Airport  South San Francisco, CA
(1)
    
    
    23,943
    
    
    
    3,418
    
    
    
    31,737
    
    
    
    0
    
    
    
    2,156
    
    
    
    3,418
    
    
    
    33,893
    
    
    
    37,311
    
    
    
    8,995
    
    
    
    1988
    
    
    
    1/3/1996
    
    
    15 - 40 YrsSan Francisco  Fishermans Wharf, CA (2)
    
    
    0
    
    
    
    0
    
    
    
    61,883
    
    
    
    0
    
    
    
    1,847
    
    
    
    0
    
    
    
    63,730
    
    
    
    63,730
    
    
    
    20,292
    
    
    
    1970
    
    
    
    7/28/1998
    
    
    15 - 40 YrsSan Francisco  Union Square, CA (5)
    
    
    0
    
    
    
    8,466
    
    
    
    73,684
    
    
    
    (434
    )
    
    
    4,282
    
    
    
    8,032
    
    
    
    77,966
    
    
    
    85,998
    
    
    
    16,344
    
    
    
    1970
    
    
    
    7/28/1998
    
    
    15 - 40 YrsSanta Barbara, CA (2)
    
    
    0
    
    
    
    1,683
    
    
    
    14,647
    
    
    
    4
    
    
    
    791
    
    
    
    1,687
    
    
    
    15,438
    
    
    
    17,125
    
    
    
    3,157
    
    
    
    1969
    
    
    
    7/28/1998
    
    
    15 - 40 YrsSanta Monica, CA (2)
    
    
    0
    
    
    
    10,200
    
    
    
    16,580
    
    
    
    0
    
    
    
    376
    
    
    
    10,200
    
    
    
    16,956
    
    
    
    27,156
    
    
    
    1,199
    
    
    
    1967
    
    
    
    3/11/2004
    
    
    15 - 40 YrsToronto  Airport, Canada (7)
    
    
    0
    
    
    
    0
    
    
    
    21,041
    
    
    
    0
    
    
    
    11,140
    
    
    
    0
    
    
    
    32,181
    
    
    
    32,181
    
    
    
    7,496
    
    
    
    1970
    
    
    
    7/28/1998
    
    
    15 - 40 YrsToronto  Yorkdale, Canada (2)
    
    
    0
    
    
    
    1,566
    
    
    
    13,633
    
    
    
    477
    
    
    
    9,933
    
    
    
    2,043
    
    
    
    23,566
    
    
    
    25,609
    
    
    
    6,004
    
    
    
    1970
    
    
    
    7/28/1998
    
    
    15 - 40 YrsWilmington, DE (6)
    
    
    10,047
    
    
    
    1,379
    
    
    
    12,487
    
    
    
    0
    
    
    
    10,061
    
    
    
    1,379
    
    
    
    22,548
    
    
    
    23,927
    
    
    
    4,825
    
    
    
    1972
    
    
    
    3/20/1998
    
    
    15 - 40 YrsBoca Raton, FL (1)
    
    
    5,024
    
    
    
    1,868
    
    
    
    16,253
    
    
    
    0
    
    
    
    896
    
    
    
    1,868
    
    
    
    17,149
    
    
    
    19,017
    
    
    
    4,538
    
    
    
    1989
    
    
    
    2/28/1996
    
    
    15 - 40 YrsCocoa Beach  Oceanfront, FL (2)
    
    
    0
    
    
    
    2,285
    
    
    
    19,892
    
    
    
    7
    
    
    
    13,216
    
    
    
    2,292
    
    
    
    33,108
    
    
    
    35,400
    
    
    
    8,259
    
    
    
    1960
    
    
    
    7/28/1998
    
    
    15 - 40 YrsDeerfield Beach, FL (1)
    
    
    28,420
    
    
    
    4,523
    
    
    
    29,443
    
    
    
    68
    
    
    
    1,479
    
    
    
    4,591
    
    
    
    30,922
    
    
    
    35,513
    
    
    
    8,359
    
    
    
    1987
    
    
    
    1/3/1996
    
    
    15 - 40 YrsFt. Lauderdale  17th Street, FL (1)
    
    
    20,752
    
    
    
    5,329
    
    
    
    47,850
    
    
    
    (163
    )
    
    
    1,919
    
    
    
    5,166
    
    
    
    49,769
    
    
    
    54,935
    
    
    
    13,645
    
    
    
    1986
    
    
    
    1/3/1996
    
    
    15 - 40 YrsFt. Lauderdale (Cypress Creek), FL (8)
    
    
    10,990
    
    
    
    3,009
    
    
    
    26,177
    
    
    
    0
    
    
    
    968
    
    
    
    3,009
    
    
    
    27,145
    
    
    
    30,154
    
    
    
    5,985
    
    
    
    1986
    
    
    
    5/4/1998
    
    
    15 - 40 YrsJacksonville  Baymeadows, FL (1)
    
    
    23,590
    
    
    
    1,130
    
    
    
    9,608
    
    
    
    0
    
    
    
    6,528
    
    
    
    1,130
    
    
    
    16,136
    
    
    
    17,266
    
    
    
    4,390
    
    
    
    1986
    
    
    
    7/28/1994
    
    
    15 - 40 YrsMiami International Airport, FL (1)
    
    
    16,775
    
    
    
    4,135
    
    
    
    24,950
    
    
    
    0
    
    
    
    1,620
    
    
    
    4,135
    
    
    
    26,570
    
    
    
    30,705
    
    
    
    7,099
    
    
    
    1983
    
    
    
    7/28/1998
    
    
    15 - 40 YrsOrlando  International Airport, FL (7)
    
    
    8,949
    
    
    
    2,549
    
    
    
    22,188
    
    
    
    6
    
    
    
    2,081
    
    
    
    2,555
    
    
    
    24,269
    
    
    
    26,824
    
    
    
    5,337
    
    
    
    1984
    
    
    
    7/28/1998
    
    
    15 - 40 YrsOrlando  International Drive  Resort, FL (2)
    
    
    0
    
    
    
    5,108
    
    
    
    44,460
    
    
    
    13
    
    
    
    9,629
    
    
    
    5,121
    
    
    
    54,089
    
    
    
    59,210
    
    
    
    12,147
    
    
    
    1972
    
    
    
    7/28/1998
    
    
    15 - 40 YrsOrlando International Drive/Convention Center,
FL (1)
    
    
    23,319
    
    
    
    1,632
    
    
    
    13,870
    
    
    
    0
    
    
    
    1,864
    
    
    
    1,632
    
    
    
    15,734
    
    
    
    17,366
    
    
    
    4,743
    
    
    
    1985
    
    
    
    7/28/1994
    
    
    15 - 40 YrsOrlando (North), FL (1)
    
    
    0
    
    
    
    1,673
    
    
    
    14,218
    
    
    
    6
    
    
    
    7,202
    
    
    
    1,679
    
    
    
    21,420
    
    
    
    23,099
    
    
    
    6,185
    
    
    
    1985
    
    
    
    7/28/1994
    
    
    15 - 40 YrsOrlando- Walt Disney WorldResort, FL (4)
    
    
    0
    
    
    
    0
    
    
    
    28,092
    
    
    
    0
    
    
    
    665
    
    
    
    0
    
    
    
    28,757
    
    
    
    28,757
    
    
    
    6,313
    
    
    
    1987
    
    
    
    7/28/1997
    
    
    15 - 40 YrsTampa  On Tampa Bay, FL (4)
    
    
    12,950
    
    
    
    2,142
    
    
    
    18,639
    
    
    
    1
    
    
    
    2,132
    
    
    
    2,143
    
    
    
    20,771
    
    
    
    22,914
    
    
    
    4,917
    
    
    
    1986
    
    
    
    7/28/1997
    
    
    15 - 40 YrsAtlanta   Airport, GA (1)
    
    
    12,331
    
    
    
    0
    
    
    
    22,342
    
    
    
    2,568
    
    
    
    1,854
    
    
    
    2,568
    
    
    
    24,196
    
    
    
    26,764
    
    
    
    5,047
    
    
    
    1989
    
    
    
    5/4/1998
    
    
    15 - 40 Yrs
 86




---



##### Table of Contents



FELCOR LODGING TRUST INCORPORATED
Schedule III  Real Estate and Accumulated Depreciation
as of December 31, 2006
(in thousands)
 Cost Capitalized
    
    Gross Amounts at WhichInitial Cost
    
    Subsequent to Acquisition
    
    Carried at Close of Period
    
    
    
    
    
    Accumulated
    
    
    
    
    
    
    
    Life UponBuildings
    
    
    
    
    
    Buildings
    
    
    
    
    
    Buildings
    
    
    
    
    
    Depreciation
    
    
    
    
    
    
    
    Whichand
    
    
    
    
    
    and
    
    
    
    
    
    and
    
    
    
    
    
    Buildings &
    
    Year
    
    Date
    
    DepreciationLocation
    
    Encumbrances
    
    Land
    
    Improvements
    
    Land
    
    Improvements
    
    Land
    
    Improvements
    
    Total
    
    Improvements
    
    Opened
    
    Acquired
    
    is ComputedAtlanta  Buckhead, GA (1)
    
    
    34,864
    
    
    
    7,303
    
    
    
    38,996
    
    
    
    (300
    )
    
    
    1,907
    
    
    
    7,003
    
    
    
    40,903
    
    
    
    47,906
    
    
    
    10,236
    
    
    
    1988
    
    
    10/17/1996
    
    15  40 YrsAtlanta  Galleria, GA (8)
    
    
    15,217
    
    
    
    5,052
    
    
    
    28,507
    
    
    
    0
    
    
    
    1,505
    
    
    
    5,052
    
    
    
    30,012
    
    
    
    35,064
    
    
    
    7,045
    
    
    
    1990
    
    
    6/30/1997
    
    15  40 YrsAtlanta  Gateway-Atlanta Airport, GA (3)
    
    
    0
    
    
    
    5,113
    
    
    
    22,857
    
    
    
    1
    
    
    
    266
    
    
    
    5,114
    
    
    
    23,123
    
    
    
    28,237
    
    
    
    5,491
    
    
    
    1986
    
    
    6/30/1997
    
    15  40 YrsChicago  Northshore/Deerfield (Northbrook), IL (1)
    
    
    15,108
    
    
    
    2,305
    
    
    
    20,054
    
    
    
    0
    
    
    
    967
    
    
    
    2,305
    
    
    
    21,021
    
    
    
    23,326
    
    
    
    5,418
    
    
    
    1987
    
    
    6/20/1996
    
    15  40 YrsChicago OHare Airport, IL (3)
    
    
    21,134
    
    
    
    8,178
    
    
    
    37,043
    
    
    
    0
    
    
    
    2,297
    
    
    
    8,178
    
    
    
    39,340
    
    
    
    47,518
    
    
    
    9,137
    
    
    
    1994
    
    
    6/30/1997
    
    15  40 YrsIndianapolis North, IN (1)
    
    
    12,861
    
    
    
    0
    
    
    
    0
    
    
    
    5,125
    
    
    
    14,124
    
    
    
    5,125
    
    
    
    14,124
    
    
    
    19,249
    
    
    
    6,990
    
    
    
    1986
    
    
    8/1/1996
    
    15  40 YrsLexington  Lexington Green, KY (9)
    
    
    17,721
    
    
    
    1,955
    
    
    
    13,604
    
    
    
    0
    
    
    
    431
    
    
    
    1,955
    
    
    
    14,035
    
    
    
    15,990
    
    
    
    3,756
    
    
    
    1987
    
    
    1/10/1996
    
    15  40 YrsBaton Rouge, LA (1)
    
    
    10,065
    
    
    
    2,350
    
    
    
    19,092
    
    
    
    0
    
    
    
    1,202
    
    
    
    2,350
    
    
    
    20,294
    
    
    
    22,644
    
    
    
    5,449
    
    
    
    1985
    
    
    1/3/1996
    
    15  40 YrsNew Orleans, LA (1)
    
    
    29,760
    
    
    
    3,647
    
    
    
    31,993
    
    
    
    0
    
    
    
    7,283
    
    
    
    3,647
    
    
    
    39,276
    
    
    
    42,923
    
    
    
    12,295
    
    
    
    1984
    
    
    12/1/1994
    
    15  40 YrsNew Orleans  French Quarter, LA (2)
    
    
    0
    
    
    
    0
    
    
    
    50,732
    
    
    
    14
    
    
    
    8,526
    
    
    
    14
    
    
    
    59,258
    
    
    
    59,272
    
    
    
    12,173
    
    
    
    1969
    
    
    7/28/1998
    
    15  40 YrsBoston  Government Center, MA (7)
    
    
    0
    
    
    
    0
    
    
    
    45,192
    
    
    
    0
    
    
    
    6,166
    
    
    
    0
    
    
    
    51,358
    
    
    
    51,358
    
    
    
    12,929
    
    
    
    1968
    
    
    7/28/1998
    
    15  40 YrsBoston  Marlborough, MA (1)
    
    
    18,685
    
    
    
    948
    
    
    
    8,143
    
    
    
    761
    
    
    
    13,440
    
    
    
    1,709
    
    
    
    21,583
    
    
    
    23,292
    
    
    
    5,414
    
    
    
    1988
    
    
    6/30/1995
    
    15  40 YrsBaltimore  BWI Airport, MD (1)
    
    
    22,031
    
    
    
    2,568
    
    
    
    22,433
    
    
    
    0
    
    
    
    1,842
    
    
    
    2,568
    
    
    
    24,275
    
    
    
    26,843
    
    
    
    5,933
    
    
    
    1987
    
    
    3/20/1997
    
    15  40 YrsMinneapolis  Airport, MN (1)
    
    
    19,882
    
    
    
    5,417
    
    
    
    36,508
    
    
    
    24
    
    
    
    1,652
    
    
    
    5,441
    
    
    
    38,160
    
    
    
    43,601
    
    
    
    10,122
    
    
    
    1986
    
    
    11/6/1995
    
    15  40 YrsMinneapolis  Bloomington, MN (1)
    
    
    18,350
    
    
    
    2,038
    
    
    
    17,731
    
    
    
    0
    
    
    
    982
    
    
    
    2,038
    
    
    
    18,713
    
    
    
    20,751
    
    
    
    4,545
    
    
    
    1980
    
    
    2/1/1997
    
    15  40 YrsSt Paul- Downtown, MN (1)
    
    
    4,452
    
    
    
    1,156
    
    
    
    17,315
    
    
    
    0
    
    
    
    934
    
    
    
    1,156
    
    
    
    18,249
    
    
    
    19,405
    
    
    
    4,802
    
    
    
    1983
    
    
    11/15/1995
    
    15  40 YrsCharlotte SouthPark, NC (4)
    
    
    0
    
    
    
    1,458
    
    
    
    12,681
    
    
    
    0
    
    
    
    2,264
    
    
    
    1,458
    
    
    
    14,945
    
    
    
    16,403
    
    
    
    1,806
    
    
    
    N/A
    
    
    7/12/2002
    
    15  40 YrsRaleigh, NC (4)
    
    
    17,290
    
    
    
    2,124
    
    
    
    18,476
    
    
    
    0
    
    
    
    1,410
    
    
    
    2,124
    
    
    
    19,886
    
    
    
    22,010
    
    
    
    4,612
    
    
    
    1987
    
    
    7/28/1997
    
    15  40 YrsPiscataway-Somerset, NJ (1)
    
    
    18,893
    
    
    
    1,755
    
    
    
    17,563
    
    
    
    0
    
    
    
    1,590
    
    
    
    1,755
    
    
    
    19,153
    
    
    
    20,908
    
    
    
    5,061
    
    
    
    1988
    
    
    1/10/1996
    
    15  40 YrsPhiladelphia Historic District, PA (2)
    
    
    0
    
    
    
    3,164
    
    
    
    27,535
    
    
    
    7
    
    
    
    6,978
    
    
    
    3,171
    
    
    
    34,513
    
    
    
    37,684
    
    
    
    8,120
    
    
    
    1972
    
    
    7/28/1998
    
    15  40 YrsPhiladelphia Society Hill, PA (3)
    
    
    28,742
    
    
    
    4,542
    
    
    
    45,121
    
    
    
    0
    
    
    
    2,568
    
    
    
    4,542
    
    
    
    47,689
    
    
    
    52,231
    
    
    
    11,008
    
    
    
    1986
    
    
    10/1/1997
    
    15  40 YrsPittsburgh at University Center (Oakland), PA (7)
    
    
    15,500
    
    
    
    0
    
    
    
    25,031
    
    
    
    0
    
    
    
    2,504
    
    
    
    0
    
    
    
    27,535
    
    
    
    27,535
    
    
    
    5,934
    
    
    
    1988
    
    
    11/1/1998
    
    15  40 YrsCharleston -Mills House (Historic Downtown), SC (2)
    
    
    25,538
    
    
    
    3,251
    
    
    
    28,295
    
    
    
    7
    
    
    
    2,145
    
    
    
    3,258
    
    
    
    30,440
    
    
    
    33,698
    
    
    
    5,992
    
    
    
    1982
    
    
    7/28/1998
    
    15  40 YrsMyrtle Beach  At Kingston Plantation, SC (1)
    
    
    0
    
    
    
    2,940
    
    
    
    24,988
    
    
    
    0
    
    
    
    2,479
    
    
    
    2,940
    
    
    
    27,467
    
    
    
    30,407
    
    
    
    6,719
    
    
    
    1987
    
    
    12/5/1996
    
    15  40 YrsMyrtle Beach Resort (12)
    
    
    0
    
    
    
    9,000
    
    
    
    17,689
    
    
    
    5
    
    
    
    6,223
    
    
    
    9,005
    
    
    
    23,912
    
    
    
    32,917
    
    
    
    5,846
    
    
    
    1974
    
    
    7/23/2002
    
    15  40 YrsNashville- Airport/Opryland Area, TN (1)
    
    
    0
    
    
    
    1,118
    
    
    
    9,506
    
    
    
    0
    
    
    
    774
    
    
    
    1,118
    
    
    
    10,280
    
    
    
    11,398
    
    
    
    3,747
    
    
    
    1985
    
    
    7/28/1994
    
    15  40 YrsNashville  Opryland/Airport (Briley Parkway),
TN (7)
    
    
    0
    
    
    
    0
    
    
    
    27,734
    
    
    
    0
    
    
    
    2,945
    
    
    
    0
    
    
    
    30,679
    
    
    
    30,679
    
    
    
    7,591
    
    
    
    1981
    
    
    7/28/1998
    
    15  40 YrsAustin, TX (4)
    
    
    8,783
    
    
    
    2,508
    
    
    
    21,908
    
    
    
    0
    
    
    
    2,486
    
    
    
    2,508
    
    
    
    24,394
    
    
    
    26,902
    
    
    
    5,877
    
    
    
    1987
    
    
    3/20/1997
    
    15  40 YrsCorpus Christi, TX (1)
    
    
    4,866
    
    
    
    1,113
    
    
    
    9,618
    
    
    
    51
    
    
    
    3,336
    
    
    
    1,164
    
    
    
    12,954
    
    
    
    14,118
    
    
    
    3,266
    
    
    
    1984
    
    
    7/19/1995
    
    15  40 YrsDallas  DFW International Airport South, TX (1)
    
    
    19,302
    
    
    
    0
    
    
    
    35,156
    
    
    
    4,041
    
    
    
    843
    
    
    
    4,041
    
    
    
    35,999
    
    
    
    40,040
    
    
    
    7,721
    
    
    
    1985
    
    
    7/28/1998
    
    15  40 YrsDallas  Love Field, TX (1)
    
    
    16,500
    
    
    
    1,934
    
    
    
    16,674
    
    
    
    0
    
    
    
    1,647
    
    
    
    1,934
    
    
    
    18,321
    
    
    
    20,255
    
    
    
    5,029
    
    
    
    1986
    
    
    3/29/1995
    
    15  40 YrsDallas  Market Center, TX (1)
    
    
    0
    
    
    
    2,560
    
    
    
    23,751
    
    
    
    0
    
    
    
    744
    
    
    
    2,560
    
    
    
    24,495
    
    
    
    27,055
    
    
    
    5,801
    
    
    
    1980
    
    
    6/30/1997
    
    15  40 YrsDallas  Park Central, TX (11)
    
    
    0
    
    
    
    4,513
    
    
    
    43,125
    
    
    
    762
    
    
    
    5,282
    
    
    
    5,275
    
    
    
    48,407
    
    
    
    53,682
    
    
    
    9,821
    
    
    
    1983
    
    
    6/30/1997
    
    15  40 Yrs
 87




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##### Table of Contents



FELCOR LODGING TRUST INCORPORATED
Schedule III  Real Estate and Accumulated Depreciation
(continued)
as of December 31, 2006
(in thousands)
 Cost Capitalized
    
    
    Gross Amounts at WhichInitial Cost
    
    
    Subsequent to Acquisition
    
    
    Carried at Close of Period
    
    
    
    
    
    
    Accumulated
    
    
    
    
    
    
    
    
    
    
    Life UponBuildings
    
    
    
    
    
    
    Buildings
    
    
    Depreciation
    
    
    Buildings
    
    
    
    
    
    
    Depreciation
    
    
    
    
    
    
    
    
    
    
    Whichand
    
    
    
    
    
    
    and
    
    
    
    
    
    
    and
    
    
    
    
    
    
    Buildings &
    
    
    Year
    
    
    Date
    
    
    DepreciationLocation
    
    Encumbrances
    
    
    Land
    
    
    Improvements
    
    
    Land
    
    
    Improvements
    
    
    Land
    
    
    Improvements
    
    
    Total
    
    
    Improvements
    
    
    Opened
    
    
    Acquired
    
    
    is ComputedHouston  Medical Center, TX (10)
    
    
    0
    
    
    
    0
    
    
    
    22,027
    
    
    
    5
    
    
    
    2,491
    
    
    
    5
    
    
    
    24,518
    
    
    
    24,523
    
    
    
    4,980
    
    
    
    1984
    
    
    
    7/28/1998
    
    
    15 - 40 YrsSan Antonio  International Airport, TX (7)
    
    
    23,800
    
    
    
    3,351
    
    
    
    29,168
    
    
    
    (185
    )
    
    
    2,740
    
    
    
    3,166
    
    
    
    31,908
    
    
    
    35,074
    
    
    
    6,950
    
    
    
    1981
    
    
    
    7/28/1998
    
    
    15 - 40 YrsBurlington Hotel & Conference Center, VT (3)
    
    
    17,753
    
    
    
    3,136
    
    
    
    27,283
    
    
    
    (2
    )
    
    
    1,251
    
    
    
    3,134
    
    
    
    28,534
    
    
    
    31,668
    
    
    
    6,412
    
    
    
    1967
    
    
    
    12/4/1997
    
    
    15 - 40 Yrs$
    779,856
    
    
    $
    186,227
    
    
    $
    1,825,980
    
    
    $
    17,564
    
    
    $
    232,583
    
    
    $
    203,791
    
    
    $
    2,058,563
    
    
    $
    2,262,354
    
    
    $
    503,145
 
 (1)
    
    Embassy Suites(2)
    
    Holiday Inn(3)
    
    Sheraton(4)
    
    Doubletree Guest Suites(5)
    
    Crowne Plaza(6)
    
    Doubletree(7)
    
    Holiday Inn Select(8)
    
    Sheraton Suites(9)
    
    Hilton Suites(10)
    
    Holiday Inn Hotel & Suites(11)
    
    Westin(12)
    
    Hilton Year Ended December 31,2006
    
    
    2005Reconciliation of Land and Buildings and ImprovementsBalance at beginning of period
    
    $
    3,331,708
    
    
    $
    3,513,950Additions during period:Acquisitions
    
    
    
    
    
    
    18,949Improvements
    
    
    18,434
    
    
    
    21,735Deductions during period:Sale of properties
    
    
    (812,222
    )
    
    
    (140,071
    )Hotels held for sale
    
    
    (275,566
    )
    
    
    Foreclosures
    
    
    
    
    
    
    (82,855
    )Balance at end of period before impairment charges
    
    
    2,262,354
    
    
    
    3,331,708Cumulative impairment charges on real estate assets owned at end of period
    
    
    
    
    
    
    (327,169
    )Balance at end of period
    
    $
    2,262,354
    
    
    $
    3,004,539Reconciliation of Accumulated DepreciationBalance at beginning of period
    
    $
    646,484
    
    
    $
    590,065Additions during period:Depreciation for the period
    
    
    51,318
    
    
    
    79,231Deductions during period:Sale of properties
    
    
    (144,686
    )
    
    
    (22,812
    )Hotels held for sale
    
    
    (49,971
    )
    
    
    Balance at end of period
    
    $
    503,145
    
    
    $
    646,484
 88




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##### Table of Contents



Item 9.
    
    Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure
  
 Item 9A. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures.
  Changes in Internal Control over Financial Reporting.
  Managements Report on Internal Control over Financial Reporting.
    
 Item 9B. Other Information
  89




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##### Table of Contents



PART III.  OTHER INFORMATION
 
 Item 10. Directors and Executive Officers of the Registrant
  
 Item 11. Executive Compensation
  
 Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  
 Item 13. Certain Relationships and Related Transactions
  
 Item 14. Principal Accountant Fees and Services
  90




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##### Table of Contents



PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
 (a)
    
    The following is a list of documents filed as a part of this report:
 (1)
    
    Financial Statements.
  (2)
    
    Financial Statement Schedules.
    (b)
    
    Exhibits.
  ExhibitNumber
    
    Description of Exhibit4.1
    
    Articles of Amendment and Restatement dated June 22, 1995, amending and restating the Charter
of FelCor Lodging Trust Incorporated (FelCor), as amended or supplemented by Articles of
Merger dated June 23, 1995, Articles Supplementary dated April 30, 1996, Articles of Amendment
dated August 8, 1996, Articles of Amendment dated June 16, 1997, Articles of Amendment dated
October 30, 1997, Articles Supplementary filed May 6, 1998, Articles of Merger and Articles of
Amendment dated July 27, 1998, Certificate of Correction dated March 11, 1999, Certificate of
Correction to the Articles of Merger between FelCor and Bristol Hotel Company, dated August
30, 1999, Articles Supplementary, dated April 1, 2002, Certificate of Correction, dated March
29, 2004, to Articles Supplementary filed May 2, 1996, Articles Supplementary filed April 2,
2004, Articles Supplementary filed August 20, 2004, Articles Supplementary filed April 6,
2005, and Articles Supplementary filed August 29, 2005 (filed as Exhibit 4.1 to FelCors
Registration Statement on Form S-3 (Registration No. 333-128862) and incorporated herein by
reference).
 4.2
    
    Bylaws of FelCor, as amended (filed as Exhibit 4.2 to FelCors Registration Statement on Form
S-3 (Registration File No. 333-128862) and incorporated herein by reference).4.3
    
    Form of Share Certificate for Common Stock (filed as Exhibit 4.1 to FelCors Form 10-Q for
the quarter ended June 30, 1996, and incorporated herein by reference).4.4
    
    Form of Share Certificate for $1.95 Series A Cumulative Convertible Preferred Stock (filed as
Exhibit 4.4 to FelCors Form 8-K, dated May 1, 1996, and incorporated herein by reference).4.5
    
    Form of Share Certificate for 8% Series C Cumulative Redeemable Preferred Stock (filed as
Exhibit 4.10.1 to FelCors Form 8-K, dated April 6, 2005, and filed on April 11, 2005, and
incorporated herein by reference).
 91




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##### Table of Contents



ExhibitNumber
    
    Description of Exhibit4.6
    
    Deposit Agreement, dated April 7, 2005, between FelCor and SunTrust Bank, as preferred share
depositary (filed as Exhibit 4.11.1 to FelCors Current Report on Form 8-K dated April 6,
2005, and filed on April 11, 2005, and incorporated herein by reference).4.6.1
    
    Supplement and Amendment to Deposit Agreement, dated August 30, 2005, between the Company
and SunTrust Bank, as depositary(filed as Exhibit 4.11.2 to FelCors Current Report on Form
8-K dated April 6, 2005, and filed on April 11, 2005, and incorporated herein by reference).4.7
    
    Form of Depositary Receipt evidencing the Depositary Shares, which represent the 8% Series C
Cumulative Redeemable Preferred Stock (filed as Exhibit 4.12.1 to FelCors Form 8-K, dated
April 6, 2005, and filed on April 11, 2005, and incorporated herein by reference).4.8
    
    Indenture, dated as of June 4, 2001, by and among FelCor LP, FelCor, the Subsidiary
Guarantors named therein and SunTrust Bank, as Trustee (filed as Exhibit 4.9 to FelCors Form
8-K dated as of June 4, 2001, and filed June 14, 2001, and incorporated herein by reference).4.8.1
    
    First Supplemental Indenture, dated as of July 26, 2001, by and among FelCor LP, FelCor, the
Subsidiary Guarantors named therein and SunTrust Bank, as Trustee (filed as Exhibit 4.4.1 to
the Registration Statement on Form S-4 (Registration File No. 333-63092) of FelCor LP and the
other co-registrants named therein and incorporated herein by reference).4.8.2
    
    Second Supplemental Indenture, dated October 1, 2002, by and among FelCor LP, FelCor, the
Subsidiary Guarantors named therein and SunTrust Bank, as Trustee (filed as Exhibit 4.9.2 to
the 2002 Form 10-K and incorporated herein by reference).4.8.3
    
    Third Supplemental Indenture, dated as of January 25, 2006, by and among FelCor LP, FelCor,
the Subsidiary Guarantors named therein, the New Subsidiary Guarantors named therein and
SunTrust Bank, as trustee (filed as Exhibit 4.9.3 to the 2005 Form 10-K and incorporated
herein by reference).4.8.4*
    
    Fourth Supplemental Indenture, dated as of December 31, 2006, by and among FelCor LP,
FelCor, the Subsidiary Guarantors named therein, the New Subsidiary Guarantor named therein
and U.S. Bank National Association, as successor to SunTrust Bank, as trustee.4.9
    
    Indenture dated October 31, 2006 by and among FelCor LP, FelCor, certain subsidiary
guarantors named therein, FelCor Holdings Trust, as pledgor, and U.S. Bank National
Association, as trustee (filed as Exhibit 4.1 to FelCors Form 8-K dated October 26, 2006, and
filed on November 1, 2006, and incorporated herein by reference).4.9.1*
    
    First Supplemental Indenture, dated as of December 31, 2006, by and among FelCor LP, FelCor,
the Subsidiary Guarantors named therein, the New Subsidiary Guarantor named therein and U.S.
Bank National Association, as trustee.10.1
    
    Second Amended and Restated Agreement of Limited Partnership of FelCor LP, dated as of
December 31, 2001 (filed as Exhibit 10.1 to FelCors Annual Report on Form 10-K for the fiscal
year ended December 31, 2001 (the 2001 Form 10-K), and incorporated herein by reference.)10.1.1
    
    First Amendment to Second Amended and Restated Agreement of Limited Partnership of FelCor
LP, dated April 1, 2002 (filed as Exhibit 10.1.1 to FelCors Form 8-K dated April 1, 2002, and
filed on April 4, 2002, and incorporated herein by reference).10.1.2
    
    Second Amendment to Second Amended and Restated Agreement of Limited Partnership of FelCor
LP, dated August 31, 2002 (filed as Exhibit 10.1.2 to the 2002 Form 10-K and incorporated
herein by reference).
 92




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##### Table of Contents



ExhibitNumber
    
    Description of Exhibit10.1.3
    
    Third Amendment to Second Amended and Restated Agreement of Limited Partnership of FelCor
LP, dated October 1, 2002 (filed as Exhibit 10.1.3 to the 2002 Form 10-K and incorporated
herein by reference).10.1.4
    
    Fourth Amendment to Second Amended and Restated Agreement of Limited Partnership of FelCor
LP, dated as of July 1, 2003 (filed as Exhibit 10.1.4 to FelCors Form 10-Q for the quarter
ended March 31, 2004, and incorporated herein by reference).10.1.5
    
    Fifth Amendment to Second Amended and Restated Agreement of Limited Partnership of FelCor
LP, dated as of April 2, 2004 (filed as Exhibit 10.1.5 to FelCors Form 10-Q for the quarter
ended March 31, 2004, and incorporated herein by reference).10.1.6
    
    Sixth Amendment to Second Amended and Restated Agreement of Limited Partnership of FelCor
LP, dated as of August 23, 2004 (filed as Exhibit 10.1.6 to FelCors Form 8-K dated as of, and
filed on, August 26, 2004, and incorporated herein by reference).10.1.7
    
    Seventh Amendment to Second Amended and Restated Agreement of Limited Partnership of FelCor
LP, dated as of April 7, 2005, which contains Addendum No. 4 to the Second Amended and
Restated Agreement of Limited Partnership of FelCor Lodging Limited Partnership (filed as
Exhibit 10.1.8 to FelCors Form 8-K, dated April 6, 2006, and filed on April 11, 2005, and
incorporated herein by reference).10.1.8
    
    Eighth Amendment to Second Amended and Restated Agreement of Limited Partnership of FelCor
LP, dated as of August 30, 2005 (filed as Exhibit 10.1.9 to FelCors Form 8-K, dated August
29, 2005, and filed September 2, 2005, and incorporated herein by reference).10.2.1
    
    Form of Management Agreement between subsidiaries of FelCor, as owner, and a subsidiary of
InterContinental Hotels, as manager, with respect to FelCors InterContinental Hotels branded
hotels (included as an exhibit to the Leasehold Acquisition Agreement, which was filed as
Exhibit 10.28 to FelCors Form 10-Q for the quarter ended March 31, 2001, and incorporated
herein by reference).10.2.2
    
    Omnibus Agreement between FelCor and all its various subsidiaries, controlled entities and
affiliates, and Six Continents Hotels, Inc. and all its various subsidiaries, controlled
entities and affiliates, with respect to FelCors InterContinental Hotels branded hotels
(filed as Exhibit 10.2.2 to the 2005 Form 10-K and incorporated herein by reference).10.3.1
    
    Form of Management Agreement between subsidiaries of FelCor, as owner, and a subsidiary of
Hilton Hotels Corporation, as manager, with respect to FelCors Embassy Suites Hotels branded
hotels, including the form of Embassy Suites Hotels License Agreement attached as an exhibit
thereto, effective prior to July 28, 2004 (filed as Exhibit 10.5 to the 2001 Form 10-K and
incorporated herein by reference).10.3.2
    
    Form of Management Agreement between subsidiaries of FelCor, as owner, and a subsidiary of
Hilton Hotels Corporation, as manager, with respect to FelCors Embassy Suites Hotels branded
hotels, including the form of Embassy Suites Hotels License Agreement attached as an exhibit
thereto, effective July 28, 2004 (filed as Exhibit 10.3.2 to FelCors Form 10-K for the
fiscal year ended December 31, 2004 (the 2004 Form 10-K) and incorporated herein by
reference).10.4
    
    Form of Management Agreement between subsidiaries of FelCor, as owner, and a subsidiary of
Hilton Hotels Corporation, as manager, with respect to FelCors Doubletree and Doubletree
Guest Suites branded hotels (filed as Exhibit 10.6 to the 2001 Form 10-K and incorporated
herein by reference).
 93




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##### Table of Contents



ExhibitNumber
    
    Description of Exhibit10.5
    
    Form of Management Agreement between subsidiaries of FelCor, as owner, and a subsidiary of
Starwood Hotels & Resorts, Inc., as manager, with respect to FelCors Sheraton and Westin
branded hotels (filed as Exhibit 10.7 to the 2001 Form 10-K and incorporated herein by
reference).10.6
    
    Executive Employment Agreement, dated effective as of February 1, 2006, between FelCor and
Thomas J. Corcoran, Jr. (filed as Exhibit 10.36 to FelCors Form 8-K, dated February 7, 2006,
and filed on February 13, 2006 and incorporated herein by reference).10.7
    
    Executive Employment Agreement, dated effective as of February 1, 2006, between FelCor and
Richard A. Smith (filed as Exhibit 10.37 to FelCors Form 8-K, dated February 7, 2006, and
filed on February 13, 2006 and incorporated herein by reference).10.8*
    
    Form of Amended and Restated Change in Control and Severance Agreement for executive
officers of FelCor.10.9
    
    Savings and Investment Plan of FelCor (filed as Exhibit 10.10 to the 2001 Form 10-K and
incorporated herein by reference).10.10
    
    1995 Restricted Stock and Stock Option Plan of FelCor (filed as Exhibit 10.9.2 to FelCors
Annual Report on Form 10-K for the fiscal year ended December 31, 1995, and incorporated
herein by reference).10.11*
    
    Non-Qualified Deferred Compensation Plan, as amended and restated effective January 1, 2005.10.12
    
    1998 Restricted Stock and Stock Option Plan (filed as Exhibit 4.2 to FelCors Registration
Statement on Form S-8 (Registration File No. 333-66041) and incorporated herein by reference).10.13
    
    2001 Restricted Stock and Stock Option Plan of FelCor (filed as Exhibit 10.14 to the 2002
Form 10-K and incorporated herein by reference).10.14
    
    Second Amended and Restated 1995 Equity Incentive Plan (filed as Exhibit 99.1 to FelCors
Post-Effective Amendment on Form S-3 to Form S-4 Registration Statement (Registration File No.
333-50509) and incorporated herein by reference).10.15
    
    Amended and Restated Stock Option Plan for Non-Employee Directors (filed as Exhibit 99.2 to
FelCors Post-Effective Amendment on Form S-3 to Form S-4 Registration Statement (Registration
File No. 333-50509) and incorporated herein by reference).10.16
    
    Form of Nonstatutory Stock Option Contract under Restricted Stock and Stock Option Plans of
FelCor (filed as Exhibit 10.16 to the 2004 Form 10-K and incorporated herein by reference).10.17
    
    Form of Employee Stock Grant Contract under Restricted Stock and Stock Option Plans of
FelCor (filed as Exhibit 10.17 to the 2004 Form 10-K and incorporated herein by reference).10.18
    
    FelCor Lodging Trust Incorporated 2005 Restricted Stock and Stock Option Plan (filed as
Exhibit 4.4 to FelCors Registration Statement on Form S-8 (Registration File No. 333-126228)
and incorporated herein by reference).10.19
    
    Form of Employee Stock Grant Contract under Restricted Stock and Stock Option Plans of
FelCor applicable to grants in 2005 and thereafter (filed as Exhibit 10.33 to FelCors Form
8-K dated April 26, 2005, and filed on May 2, 2005, and incorporated herein by reference).
 94




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##### Table of Contents



ExhibitNumber
    
    Description of Exhibit10.20
    
    Summary of Annual Compensation Program for Directors of FelCor (filed as Exhibit 10.18 to
the 2004 Form 10-K and incorporated herein by reference).10.21
    
    Summary of 2006 Performance Criteria for Annual Incentive Bonus Award Program (filed as
Exhibit 10.38 to FelCors Form 8-K, dated February 17, 2006, and filed on February 22, 2006
and incorporated herein by reference).10.22
    
    Employment Separation, Consulting and Release Agreement between FelCor and June C. McCutchen
dated as of September 7, 2006 (filed as Exhibit 99.1 to FelCors Form 8-K, dated November 13,
2006, and filed on November 17, 2006 and incorporated herein by reference).10.23
    
    Summary of verbal arrangement for retirement benefits for Lawrence D. Robinson (filed as
Exhibit 99.1 to FelCors Form 8-K, dated January 1, 2007, and filed on January 5, 2007 and
incorporated herein by reference).10.24.1
    
    Form of Mortgage, Security Agreement and Fixture Filing by and between FelCor/CSS Holdings,
L.P., as Mortgagor, and The Prudential Insurance Company of America, as Mortgagee (filed as
Exhibit 10.23 to the March 1999 10-Q and incorporated herein by reference).10.24.2
    
    Promissory Note, dated April 1, 1999, in the original principal amount of $100,000,000,
made by FelCor/CSS Holdings, Ltd., 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).10.25.1
    
    Form Deed of Trust and Security Agreement and Fixture Filing with Assignment of Leases and
Rents, each dated as of April 20, 2000, from FelCor/MM S-7 Holdings, L.P., as Mortgagor, in
favor of Massachusetts Mutual Life Insurance Company and Teachers Insurance and Annuity
Association of America, as Mortgagee, each covering a separate hotel and securing one of the
separate Promissory Notes described in Exhibit 10.22.3 (filed as Exhibit 10.24 to FelCors
Form 10-Q for the quarter ended June 30, 2000 (the June 2000 10-Q) and incorporated herein
by reference).10.25.2
    
    Form of Accommodation Cross-Collateralization Mortgage and Security Agreement, each dated
as of April 20, 2000, executed by FelCor/MM S-7 Holdings, L.P., in favor of Massachusetts
Mutual Life Insurance Company and Teachers Insurance and Annuity Association of America (filed
as Exhibit 10.24.1 to the June 2000 10-Q and incorporated herein by reference).10.25.3
    
    Form of fourteen separate Promissory Notes, each dated April 20, 2000, each made by
FelCor/MM S-7 Holdings, L.P., each separately payable to the order of Massachusetts Mutual
Life Insurance Company and Teachers Insurance and Annuity Association of America,
respectively, in the respective original principal amounts of $13,500,000 (Phoenix (Crescent),
Arizona), $13,500,000 (Phoenix (Crescent), Arizona), $6,500,000 (Cypress Creek/Ft. Lauderdale,
Florida), $6,500,000 (Cypress Creek/Ft. Lauderdale, Florida), $9,000,000 (Atlanta Galleria,
Georgia), $9,000,000 (Atlanta Galleria, Georgia), $12,500,000 (Chicago OHare Airport,
Illinois), $12,500,000 (Chicago OHare Airport, Illinois), $3,500,000 (Lexington, Kentucky),
$3,500,000 (Lexington, Kentucky), $17,000,000 (Philadelphia Society Hill, Philadelphia),
$17,000,000 (Philadelphia Society Hill, Philadelphia), $10,500,000 (South Burlington, Vermont)
and $10,500,000 (South Burlington, Vermont) (filed as Exhibit 10.24.2 to the June 2000 10-Q
and incorporated herein by reference).10.26.1
    
    Form Deed of Trust and Security Agreement, each dated as of May 2, 2000, from each of
FelCor/CMB Buckhead Hotel, L.L.C., FelCor/CMB Marlborough Hotel, L.L.C., FelCor/CMB Deerfield
Hotel, L.L.C., FelCor/CMB Corpus Holdings, L.P., FelCor/CMB Orsouth Holdings, L.P., FelCor/CMB
New Orleans Hotel, L.L.C., FelCor/CMB Piscataway Hotel, L.L.C., and FelCor/CMB SSF Holdings,
L.P., each as Borrower, in favor of The Chase Manhattan Bank, as
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ExhibitNumber
    
    Description of ExhibitBeneficiary, each covering a separate hotel and securing one of the separate
Promissory Notes described in Exhibit 10.23.2 (filed as Exhibit 10.25 to the June
2000 10-Q and incorporated herein by reference).10.26.2
    
    Form of eight separate Promissory Notes, each dated May 2, 2000, made by FelCor/CMB
Buckhead Hotel, L.L.C., FelCor/CMB Marlborough Hotel, L.L.C., FelCor/CMB Deerfield Hotel,
L.L.C., FelCor/CMB Corpus Holdings, L.P., FelCor/CMB Orsouth Holdings, L.P., FelCor/CMB New
Orleans Hotel, L.L.C., FelCor/CMB Piscataway Hotel, L.L.C. and FelCor/CMB SSF Holdings, L.P.,
each separately payable to the order of The Chase Manhattan Bank in the respective original
principal amounts of $38,250,000 (Atlanta Buckhead, Georgia), $20,500,000 (Boston Marlborough,
Massachusetts), $16,575,000 (Chicago Deerfield, Illinois), $5,338,000 (Corpus Christi, Texas),
$25,583,000 (Orlando South, Florida), $32,650,000 (New Orleans, Louisiana), $20,728,000
(Piscataway, New Jersey) and $26,268,000 (South San Francisco, California) (filed as Exhibit
10.25.1 to the June 2000 10-Q and incorporated herein by reference).10.27.1
    
    Form of Loan Agreement, each dated either May 26, 2004, June 10, 2004 or July 19, 2004,
between JPMorgan Chase Bank, as lender, and each of FelCor/JPM Boca Raton Hotel, L.L.C.,
FelCor/JPM Phoenix Hotel, L.L.C., FelCor/JPM Wilmington Hotel, L.L.C., FelCor/JPM Atlanta ES
Hotel, L.L.C., FelCor/JPM Austin Holdings, L.P., FelCor/JPM Orlando Hotel, L.L.C., and
FelCor/JPM BWI Hotel, L.L.C. and FCH/DT BWI Hotel, L.L.C., as borrowers, and acknowledged and
agreed by FelCor LP (filed as Exhibit 10.34 to FelCors Form 10-Q for the quarter ended June
30, 2004, and incorporated herein by reference).10.27.2
    
    Form of Mortgage, Renewal Mortgage, Deed of Trust, Deed to Secure Debt, Indemnity Deed of
Trust and Assignment of Leases and Rents, Security Agreement and Fixture Filing, each dated
either May 26, 2004, June 10, 2004 or July 19, 2004, from FelCor/JPM Wilmington Hotel, L.L.C.,
DJONT/JPM Wilmington Leasing, L.L.C., FelCor/JPM Phoenix Hotel, L.L.C., DJONT/JPM Phoenix
Leasing, L.L.C., FelCor/JPM Boca Raton Hotel, L.L.C., DJONT/JPM Boca Raton Leasing, L.L.C.,
FelCor/JPM Atlanta ES Hotel, L.L.C., DJONT/JPM Atlanta ES Leasing, L.L.C., FelCor/JPM Austin
Holdings, L.P., DJONT/JPM Austin Leasing, L.P., FelCor/JPM Orlando Hotel, L.L.C., DJONT/JPM
Orlando Leasing, L.L.C., FCH/DT BWI Holdings, L.P., FCH/DT BWI Hotel, L.L.C. and DJONT/JPM BWI
Leasing, L.L.C., to, and for the benefit of, JPMorgan Chase Bank, as mortgagee or beneficiary
(filed as Exhibit 10.34.1 to FelCors Form 10-Q for the quarter ended June 30, 2004, and
incorporated herein by reference).10.27.3
    
    Form of seven separate Promissory Notes, each dated either May 26, 2004, June 10, 2004 or
July 19, 2004, made by FelCor/JPM Wilmington Hotel, L.L.C., FelCor/JPM Phoenix Hotel, L.L.C.,
FelCor/JPM Boca Raton Hotel, L.L.C., FelCor/JPM Atlanta ES Hotel, L.L.C., FelCor/JPM Austin
Holdings, L.P., FelCor/JPM Orlando Hotel, L.L.C., and FelCor/JPM BWI Hotel, L.L.C., each
separately payable to the order of JPMorgan Chase Bank in the respective original principal
amounts of $11,000,000 (Wilmington, Delaware), $21,368,000 (Phoenix, Arizona), $5,500,000
(Boca Raton, Florida), $13,500,000 (Atlanta, Georgia), $9,616,000 (Austin, Texas), $9,798,000
(Orlando, Florida), and $24,120,000 (Linthicum, Maryland) (filed as Exhibit 10.34.2 to
FelCors Form 10-Q for the quarter ended June 30, 2004, and incorporated herein by reference).10.27.4
    
    Form of Guaranty of Recourse Obligations of Borrower, each dated either May 26, 2004, June
10, 2004 or July 19, 2004, made by FelCor LP in favor of JPMorgan Chase Bank (filed as Exhibit
10.34.3 to FelCors Form 10-Q for the quarter ended June 30, 2004, and incorporated herein by
reference).10.28.1
    
    Construction Loan Agreement, dated April 27, 2005, among Grande Palms, L.L.C. and Bank of
America, N.A., as Administrative Agent, and the other financial institutions party thereto,
and Bank of America Securities, as Lead Arranger, for a maximum principal loan amount of $69.8
million (filed as Exhibit 10.34.1 of FelCors Form 10-Q for the quarter ended June 30, 2005,
and incorporated herein by reference).
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ExhibitNumber
    
    Description of Exhibit10.28.2
    
    Guaranty Agreement, dated April 27, 2005, by FelCor Lodging Limited Partnership in favor of
Bank of America, N.A. on behalf of the lenders(filed as Exhibit 10.34.2 of FelCors Form 10-Q
for the quarter ended June 30, 2005, and incorporated herein by reference).10.28.3
    
    Form of Promissory Note, each dated April 27, 2005, made by Grande Palms, L.L.C., each
separately payable to the order of Bank of America, N.A. ($25 million), Bank of Montreal ($20
million) and The Bank of Nova Scotia ($24.8 million)(filed as Exhibit 10.34.3 of FelCors Form
10-Q for the quarter ended June 30, 2005, and incorporated herein by reference).10.28.4
    
    Mortgage, Assignment of Rents and Leases, Security Agreement and Fixture Filing, dated
April 27, 2005, made by Grande Palms, L.L.C. for the benefit of Bank of America, N.A., as
Administrative Agent under the Construction Loan Agreement referenced in Exhibit 10.34.1
(filed as Exhibit 10.34.4 of FelCors Form 10-Q for the quarter ended June 30, 2005, and
incorporated herein by reference).10.29.1
    
    Term Credit Agreement, dated as of October 18, 2005, among FelCor TRS Borrower 1, L.P., as
Initial Borrower; FelCor TRS Guarantor, L.P., FelCor LP and the other guarantors named therein
as Guarantors; Citigroup North America, Inc., as Initial Lender, as Administrative Agent, and
as Collateral Agent, and Citigroup Global Markets, Inc., as Sole Lead Arranger and Sole Book
Running Manager, for a maximum principal loan amount of $175 million (filed as Exhibit 10.35
to FelCors Form 10-Q for the quarter ended September 30, 2005, and incorporated herein by
reference).10.29.2
    
    First Amendment to Term Credit Agreement, dated as of December 9, 2005, among FelCor TRS
Borrower 1, L.P. and FelCor TRS Borrower 2, L.P., as borrowers; FelCor TRS Guarantor, L.P.,
FelCor LP, FelCor Lodging Company, L.L.C., FelCor Philadelphia Center, L.L.C., FelCor Marshall
Motels, L.L.C. and Center City Hotel Associates, as guarantors; Citicorp North America, Inc.,
as the initial Lender, the administrative agent for the lenders and the collateral agent for
the secured parties; and Citigroup Global Markets Inc., as sole lead arranger and sole book
running manager (filed as Exhibit 10.33.1 to the 2005 Form 10-K and incorporated herein by
reference).10.29.3
    
    Second Amendment to Term Credit Agreement, dated as of January 9, 2006, among FelCor TRS
Borrower 1, L.P. and FelCor TRS Borrower 2, L.P., as borrowers and certain other borrowers
named therein; FelCor TRS Guarantor, L.P., FelCor LP, FelCor Lodging Company, L.L.C., FelCor
Philadelphia Center, L.L.C., FelCor Marshall Motels, L.L.C. and Center City Hotel Associates,
as guarantors; Citicorp North America, Inc., as the initial Lender, the administrative agent
for the lenders and the collateral agent for the secured parties; and Citigroup Global Markets
Inc., as sole lead arranger and sole book running manager (filed as Exhibit 10.33.2 to the
2005 Form 10-K and incorporated herein by reference).10.30.1
    
    Credit Agreement, dated as of December 12, 2005, by and among FelCor, FelCor LP, the
lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent and J.P. Morgan
Securities, Inc. and Citigroup Global Markets Inc. as joint runners and joint lead arrangers
for an initial aggregate amount of $125,000,000 (filed as Exhibit 10.34.1 to the 2005 Form
10-K and incorporated herein by reference).10.30.1.1
    
    First Amendment to Credit Agreement, dated as of January 12, 2006, by and among FelCor,
FelCor LP, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent
and J.P. Morgan Securities, Inc. and Citigroup Global Markets Inc. as joint runners and joint
lead arrangers (filed as Exhibit 10.34.1.1 to the 2005 Form 10-K and incorporated herein by
reference).
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##### Table of Contents



ExhibitNumber
    
    Description of Exhibit10.30.1.2
    
    Second Amendment to Credit Agreement, dated as of January 27, 2006, by and among FelCor,
FelCor LP, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent
and J.P. Morgan Securities, Inc. and Citigroup Global Markets Inc. as joint runners and joint
lead arrangers (filed as Exhibit 10.34.1.2 to the 2005 Form 10-K and incorporated herein by
reference).10.30.1.3
    
    Amendment No. 3 to Credit Agreement, dated as of March 31, 2006, by and among FelCor,
FelCor LP, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent
(filed as Exhibit 10.34.1.3 to FelCors Form 10-Q for the quarter ended March 31, 2006, and
incorporated herein by reference).10.30.1.4
    
    Amendment No. 4 to Credit Agreement, dated October 26, 2006, by and among FelCor, FelCor
LP, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (filed as
Exhibit 10.3 to FelCors Form 8-K dated October 26, 2006, and filed on November 1, 2006, and
incorporated herein by reference).10.30.2
    
    Subsidiary Guaranty, dated as of January 27, 2006, made by FelCor/CSS Holdings, L.P.,
FelCor Hotel Asset Company, L.L.C., FelCor Pennsylvania Company, L.L.C., FelCor Lodging
Holding Company, L.L.C., FHAC Texas Holdings, L.P., FelCor Canada Co., FelCor Omaha Hotel
Company, L.L.C., FelCor TRS Holdings, L.P., Myrtle Beach Hotels, L.L.C., FelCor TRS Borrower
I, L.P., FelCor TRS Guarantor, L.P., Center City Hotel Associates, FelCor Lodging Company,
L.L.C., FelCor TRS Borrower 3, L.P. and FelCor TRS Borrower 4, L.L.C. (filed as Exhibit
10.34.2 to the 2005 Form 10-K and incorporated herein by reference).10.30.3*
    
    Joinder Agreement to Subsidiary Guaranty, dated as of December 31, 2006, made by
FelCor/St. Paul Holdings, L.P.10.31
    
    Purchase and Sale Agreement, dated effective as of January 20, 2006, by and between FelCor
and Hospitality Properties Trust (filed as Exhibit 10.35 to the 2005 Form 10-K and
incorporated herein by reference).10.32.1
    
    Pledge Agreement dated October 31, 2006 by FelCor Holdings Trust in favor of JPMorgan Chase
Bank, N.A., as Collateral Agent (filed as Exhibit 10.1 to FelCors Form 8-K dated October 26,
2006, and filed on November 1, 2006, and incorporated herein by reference).10.32.2
    
    Collateral Agency Agreement dated October 31, 2006 by and among FelCor, FelCor LP, JPMorgan
Chase Bank, N.A., as Collateral Agent and/or Administrative Agent, FelCor Holdings Trust and
U.S. Bank National Association, as trustee under several indentures (filed as Exhibit 10.2 to
FelCors Form 8-K dated October 26, 2006, and filed on November 1, 2006, and incorporated
herein by reference).10.33
    
    Registration Rights Agreement dated October 31, 2006 by and among FelCor, FelCor LP, Merrill
Lynch & Co. and Merrill Lynch, Pierce, Fenner & Smith Incorporated (filed as Exhibit 4.4 to
FelCors Form 8-K dated October 26, 2006, and filed on November 1, 2006, and incorporated
herein by reference).10.34
    
    Form of Indemnification Agreement (filed as Exhibit 10.1 to FelCors Form 8-K dated November
9, 2006, and filed on November 13, 2006, and incorporated herein by reference).10.35.1*
    
    Loan Agreement, dated as of November 10, 2006, by and among FelCor/JPM Hotels, L.L.C. and
DJONT/JPM Leasing, L.L.C., as borrowers, and Bank of America, N.A., as lender, relating to a
$250 million loan from lender to borrower.10.35.1.1*
    
    First Amendment to Loan Agreement and Other Loan Documents, dated as of January 31,
2007, by and among FelCor/JPM Hotels, L.L.C. and DJONT/JPM Leasing, L.L.C., as borrowers, and
Bank of America, N.A., as lender.
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##### Table of Contents



ExhibitNumber
    
    Description of Exhibit10.35.2*
    
    Form of Mortgage, Deed of Trust and Security Agreement, each dated as of November 10,
2006, from FelCor/JPM Hotels, L.L.C. and DJONT/JPM Leasing, L.L.C. , as borrowers, in favor of
Bank of America, N.A., as lender, each covering a separate hotel and securing the Mortgage
Loan.10.35.3*
    
    Form of Amended and Restated Promissory Note, each dated as of January 31, 2007, made by
FelCor/JPM Hotels, L.L.C. and DJONT/JPM Leasing, L.L.C. payable to the order of either Bank of
America, N.A. or JPMorgan Chase Bank, N.A., as lender, in the original aggregate principal
amount of $250 million.10.35.4*
    
    Guaranty of Recourse Obligations of Borrower, dated as of November 10, 2006, made by
FelCor LP in favor of Bank of America, N.A.21*
    
    List of Subsidiaries of FelCor.23*
    
    Consent of PricewaterhouseCoopers LLP.31.1*
    
    Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.31.2*
    
    Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002).32.1*
    
    Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 (18 U.S.C. 1350).32.2*
    
    Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 (18 U.S.C. 1350).
 
 *
    
    Filed herewith 99




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SIGNATURES
  FELCOR LODGING TRUST INCORPORATEDBy:
    
    /s/ Jonathan H. YellenJonathan H. YellenExecutive Vice President
   Date
    
    SignatureFebruary 28, 2007
    
    /s/ Richard A. SmithRichard A. SmithPresident and Director (Chief Executive Officer)February 28, 2007
    
    /s/ Andrew J. WelchAndrew J. WelchExecutive Vice President and Chief Financial Officer(Principal Financial Officer)February 28, 2007
    
    /s/ Lester C. JohnsonLester C. JohnsonSenior Vice President and Controller(Principal Accounting Officer)February 27, 2007
    
    /s/ Thomas J. Corcoran, Jr.Thomas J. Corcoran, Jr.Chairman of the Board and DirectorFebruary 27, 2007
    
    /s/ Melinda J. BushMelinda J. Bush, DirectorFebruary 27, 2007
    
    /s/ Robert F. CotterRobert F. Cotter, DirectorFebruary 27, 2007
    
    /s/ Richard S. EllwoodRichard S. Ellwood, DirectorFebruary 27, 2007
    
    /s/ Thomas C. HendrickThomas C. Hendrick, DirectorFebruary 27, 2007
    
    /s/ David C. KloeppelDavid C. Kloeppel, DirectorFebruary 27, 2007
    
    /s/ Charles A. Ledsinger, Jr.Charles A. Ledsinger, Jr., DirectorFebruary 27, 2007
    
    /s/ Robert H. Lutz, Jr.Robert H. Lutz, Jr., DirectorFebruary 27, 2007
    
    /s/ Robert A. MathewsonRobert A. Mathewson, Director
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##### Table of Contents



INDEX TO EXHIBITS
 ExhibitNumber
    
    Description of Exhibit4.1
    
    Articles of Amendment and Restatement dated June 22, 1995, amending and restating the Charter
of FelCor Lodging Trust Incorporated (FelCor), as amended or supplemented by Articles of
Merger dated June 23, 1995, Articles Supplementary dated April 30, 1996, Articles of Amendment
dated August 8, 1996, Articles of Amendment dated June 16, 1997, Articles of Amendment dated
October 30, 1997, Articles Supplementary filed May 6, 1998, Articles of Merger and Articles of
Amendment dated July 27, 1998, Certificate of Correction dated March 11, 1999, Certificate of
Correction to the Articles of Merger between FelCor and Bristol Hotel Company, dated August
30, 1999, Articles Supplementary, dated April 1, 2002, Certificate of Correction, dated March
29, 2004, to Articles Supplementary filed May 2, 1996, Articles Supplementary filed April 2,
2004, Articles Supplementary filed August 20, 2004, Articles Supplementary filed April 6,
2005, and Articles Supplementary filed August 29, 2005 (filed as Exhibit 4.1 to FelCors
Registration Statement on Form S-3 (Registration No. 333-128862) and incorporated herein by
reference).4.2
    
    Bylaws of FelCor, as amended (filed as Exhibit 4.2 to FelCors Registration Statement on Form
S-3 (Registration File No. 333-128862) and incorporated herein by reference).4.3
    
    Form of Share Certificate for Common Stock (filed as Exhibit 4.1 to FelCors Form 10-Q for
the quarter ended June 30, 1996, and incorporated herein by reference).4.4
    
    Form of Share Certificate for $1.95 Series A Cumulative Convertible Preferred Stock (filed as
Exhibit 4.4 to FelCors Form 8-K, dated May 1, 1996, and incorporated herein by reference).4.5
    
    Form of Share Certificate for 8% Series C Cumulative Redeemable Preferred Stock (filed as
Exhibit 4.10.1 to FelCors Form 8-K, dated April 6, 2005, and filed on April 11, 2005, and
incorporated herein by reference).4.6
    
    Deposit Agreement, dated April 7, 2005, between FelCor and SunTrust Bank, as preferred share
depositary (filed as Exhibit 4.11.1 to FelCors Current Report on Form 8-K dated April 6,
2005, and filed on April 11, 2005, and incorporated herein by reference).4.6.1
    
    Supplement and Amendment to Deposit Agreement, dated August 30, 2005, between the Company
and SunTrust Bank, as depositary(filed as Exhibit 4.11.2 to FelCors Current Report on Form
8-K dated April 6, 2005, and filed on April 11, 2005, and incorporated herein by reference).4.7
    
    Form of Depositary Receipt evidencing the Depositary Shares, which represent the 8% Series C
Cumulative Redeemable Preferred Stock (filed as Exhibit 4.12.1 to FelCors Form 8-K, dated
April 6, 2005, and filed on April 11, 2005, and incorporated herein by reference).4.8
    
    Indenture, dated as of June 4, 2001, by and among FelCor LP, FelCor, the Subsidiary
Guarantors named therein and SunTrust Bank, as Trustee (filed as Exhibit 4.9 to FelCors Form
8-K dated as of June 4, 2001, and filed June 14, 2001, and incorporated herein by reference).4.8.1
    
    First Supplemental Indenture, dated as of July 26, 2001, by and among FelCor LP, FelCor, the
Subsidiary Guarantors named therein and SunTrust Bank, as Trustee (filed as Exhibit 4.4.1 to
the Registration Statement on Form S-4 (Registration File No. 333-63092) of FelCor LP and the
other co-registrants named therein and incorporated herein by reference).




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##### Table of Contents



ExhibitNumber
    
    Description of Exhibit4.8.2
    
    Second Supplemental Indenture, dated October 1, 2002, by and among FelCor LP, FelCor, the
Subsidiary Guarantors named therein and SunTrust Bank, as Trustee (filed as Exhibit 4.9.2 to
the 2002 Form 10-K and incorporated herein by reference).4.8.3
    
    Third Supplemental Indenture, dated as of January 25, 2006, by and among FelCor LP, FelCor,
the Subsidiary Guarantors named therein, the New Subsidiary Guarantors named therein and
SunTrust Bank, as trustee (filed as Exhibit 4.9.3 to the 2005 Form 10-K and incorporated
herein by reference).4.8.4*
    
    Fourth Supplemental Indenture, dated as of December 31, 2006, by and among FelCor LP,
FelCor, the Subsidiary Guarantors named therein, the New Subsidiary Guarantor named therein
and U.S. Bank National Association, as successor to SunTrust Bank, as trustee.4.9
    
    Indenture dated October 31, 2006 by and among FelCor LP, FelCor, certain subsidiary
guarantors named therein, FelCor Holdings Trust, as pledgor, and U.S. Bank National
Association, as trustee (filed as Exhibit 4.1 to FelCors Form 8-K dated October 26, 2006, and
filed on November 1, 2006, and incorporated herein by reference).4.9.1*
    
    First Supplemental Indenture, dated as of December 31, 2006, by and among FelCor LP, FelCor,
the Subsidiary Guarantors named therein, the New Subsidiary Guarantor named therein and U.S.
Bank National Association, as trustee.10.1
    
    Second Amended and Restated Agreement of Limited Partnership of FelCor LP, dated as of
December 31, 2001 (filed as Exhibit 10.1 to FelCors Annual Report on Form 10-K for the fiscal
year ended December 31, 2001 (the 2001 Form 10-K), and incorporated herein by reference.)10.1.1
    
    First Amendment to Second Amended and Restated Agreement of Limited Partnership of FelCor
LP, dated April 1, 2002 (filed as Exhibit 10.1.1 to FelCors Form 8-K dated April 1, 2002, and
filed on April 4, 2002, and incorporated herein by reference).10.1.2
    
    Second Amendment to Second Amended and Restated Agreement of Limited Partnership of FelCor
LP, dated August 31, 2002 (filed as Exhibit 10.1.2 to the 2002 Form 10-K and incorporated
herein by reference).10.1.3
    
    Third Amendment to Second Amended and Restated Agreement of Limited Partnership of FelCor
LP, dated October 1, 2002 (filed as Exhibit 10.1.3 to the 2002 Form 10-K and incorporated
herein by reference).10.1.4
    
    Fourth Amendment to Second Amended and Restated Agreement of Limited Partnership of FelCor
LP, dated as of July 1, 2003 (filed as Exhibit 10.1.4 to FelCors Form 10-Q for the quarter
ended March 31, 2004, and incorporated herein by reference).10.1.5
    
    Fifth Amendment to Second Amended and Restated Agreement of Limited Partnership of FelCor
LP, dated as of April 2, 2004 (filed as Exhibit 10.1.5 to FelCors Form 10-Q for the quarter
ended March 31, 2004, and incorporated herein by reference).10.1.6
    
    Sixth Amendment to Second Amended and Restated Agreement of Limited Partnership of FelCor
LP, dated as of August 23, 2004 (filed as Exhibit 10.1.6 to FelCors Form 8-K dated as of, and
filed on, August 26, 2004, and incorporated herein by reference).10.1.7
    
    Seventh Amendment to Second Amended and Restated Agreement of Limited Partnership of FelCor
LP, dated as of April 7, 2005, which contains Addendum No. 4 to the Second Amended and
Restated Agreement of Limited Partnership of FelCor Lodging Limited Partnership (filed




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##### Table of Contents



ExhibitNumber
    
    Description of Exhibitas Exhibit 10.1.8 to FelCors Form 8-K, dated April 6, 2006, and filed on April 11,
2005, and incorporated herein by reference).10.1.8
    
    Eighth Amendment to Second Amended and Restated Agreement of Limited Partnership of FelCor
LP, dated as of August 30, 2005 (filed as Exhibit 10.1.9 to FelCors Form 8-K, dated August
29, 2005, and filed September 2, 2005, and incorporated herein by reference).10.2.1
    
    Form of Management Agreement between subsidiaries of FelCor, as owner, and a subsidiary of
InterContinental Hotels, as manager, with respect to FelCors InterContinental Hotels branded
hotels (included as an exhibit to the Leasehold Acquisition Agreement, which was filed as
Exhibit 10.28 to FelCors Form 10-Q for the quarter ended March 31, 2001, and incorporated
herein by reference).10.2.2
    
    Omnibus Agreement between FelCor and all its various subsidiaries, controlled entities and
affiliates, and Six Continents Hotels, Inc. and all its various subsidiaries, controlled
entities and affiliates, with respect to FelCors InterContinental Hotels branded hotels
(filed as Exhibit 10.2.2 to the 2005 Form 10-K and incorporated herein by reference).10.3.1
    
    Form of Management Agreement between subsidiaries of FelCor, as owner, and a subsidiary of
Hilton Hotels Corporation, as manager, with respect to FelCors Embassy Suites Hotels branded
hotels, including the form of Embassy Suites Hotels License Agreement attached as an exhibit
thereto, effective prior to July 28, 2004 (filed as Exhibit 10.5 to the 2001 Form 10-K and
incorporated herein by reference).10.3.2
    
    Form of Management Agreement between subsidiaries of FelCor, as owner, and a subsidiary of
Hilton Hotels Corporation, as manager, with respect to FelCors Embassy Suites Hotels branded
hotels, including the form of Embassy Suites Hotels License Agreement attached as an exhibit
thereto, effective July 28, 2004 (filed as Exhibit 10.3.2 to FelCors Form 10-K for the
fiscal year ended December 31, 2004 (the 2004 Form 10-K) and incorporated herein by
reference).10.4
    
    Form of Management Agreement between subsidiaries of FelCor, as owner, and a subsidiary of
Hilton Hotels Corporation, as manager, with respect to FelCors Doubletree and Doubletree
Guest Suites branded hotels (filed as Exhibit 10.6 to the 2001 Form 10-K and incorporated
herein by reference).10.5
    
    Form of Management Agreement between subsidiaries of FelCor, as owner, and a subsidiary of
Starwood Hotels & Resorts, Inc., as manager, with respect to FelCors Sheraton and Westin
branded hotels (filed as Exhibit 10.7 to the 2001 Form 10-K and incorporated herein by
reference).10.6
    
    Executive Employment Agreement, dated effective as of February 1, 2006, between FelCor and
Thomas J. Corcoran, Jr. (filed as Exhibit 10.36 to FelCors Form 8-K, dated February 7, 2006,
and filed on February 13, 2006 and incorporated herein by reference).10.7
    
    Executive Employment Agreement, dated effective as of February 1, 2006, between FelCor and
Richard A. Smith (filed as Exhibit 10.37 to FelCors Form 8-K, dated February 7, 2006, and
filed on February 13, 2006 and incorporated herein by reference).10.8*
    
    Form of Amended and Restated Change in Control and Severance Agreement for executive
officers of FelCor.10.9
    
    Savings and Investment Plan of FelCor (filed as Exhibit 10.10 to the 2001 Form 10-K and
incorporated herein by reference).




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##### Table of Contents



ExhibitNumber
    
    Description of Exhibit10.10
    
    1995 Restricted Stock and Stock Option Plan of FelCor (filed as Exhibit 10.9.2 to FelCors
Annual Report on Form 10-K for the fiscal year ended December 31, 1995, and incorporated
herein by reference).10.11*
    
    Non-Qualified Deferred Compensation Plan, as amended and restated effective January 1, 2005.10.12
    
    1998 Restricted Stock and Stock Option Plan (filed as Exhibit 4.2 to FelCors Registration
Statement on Form S-8 (Registration File No. 333-66041) and incorporated herein by reference).10.13
    
    2001 Restricted Stock and Stock Option Plan of FelCor (filed as Exhibit 10.14 to the 2002
Form 10-K and incorporated herein by reference).10.14
    
    Second Amended and Restated 1995 Equity Incentive Plan (filed as Exhibit 99.1 to FelCors
Post-Effective Amendment on Form S-3 to Form S-4 Registration Statement (Registration File No.
333-50509) and incorporated herein by reference).10.15
    
    Amended and Restated Stock Option Plan for Non-Employee Directors (filed as Exhibit 99.2 to
FelCors Post-Effective Amendment on Form S-3 to Form S-4 Registration Statement (Registration
File No. 333-50509) and incorporated herein by reference).10.16
    
    Form of Nonstatutory Stock Option Contract under Restricted Stock and Stock Option Plans of
FelCor (filed as Exhibit 10.16 to the 2004 Form 10-K and incorporated herein by reference).10.17
    
    Form of Employee Stock Grant Contract under Restricted Stock and Stock Option Plans of
FelCor (filed as Exhibit 10.17 to the 2004 Form 10-K and incorporated herein by reference).10.18
    
    FelCor Lodging Trust Incorporated 2005 Restricted Stock and Stock Option Plan (filed as
Exhibit 4.4 to FelCors Registration Statement on Form S-8 (Registration File No. 333-126228)
and incorporated herein by reference).10.19
    
    Form of Employee Stock Grant Contract under Restricted Stock and Stock Option Plans of
FelCor applicable to grants in 2005 and thereafter (filed as Exhibit 10.33 to FelCors Form
8-K dated April 26, 2005, and filed on May 2, 2005, and incorporated herein by reference).10.20
    
    Summary of Annual Compensation Program for Directors of FelCor (filed as Exhibit 10.18 to
the 2004 Form 10-K and incorporated herein by reference).10.21
    
    Summary of 2006 Performance Criteria for Annual Incentive Bonus Award Program (filed as
Exhibit 10.38 to FelCors Form 8-K, dated February 17, 2006, and filed on February 22, 2006
and incorporated herein by reference).10.22
    
    Employment Separation, Consulting and Release Agreement between FelCor and June C. McCutchen
dated as of September 7, 2006 (filed as Exhibit 99.1 to FelCors Form 8-K, dated November 13,
2006, and filed on November 17, 2006 and incorporated herein by reference).10.23
    
    Summary of verbal arrangement for retirement benefits for Lawrence D. Robinson (filed as
Exhibit 99.1 to FelCors Form 8-K, dated January 1, 2007, and filed on January 5, 2007 and
incorporated herein by reference).10.24.1
    
    Form of Mortgage, Security Agreement and Fixture Filing by and between FelCor/CSS Holdings,
L.P., as Mortgagor, and The Prudential Insurance Company of America, as Mortgagee (filed as
Exhibit 10.23 to the March 1999 10-Q and incorporated herein by reference).




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##### Table of Contents



ExhibitNumber
    
    Description of Exhibit10.24.2
    
    Promissory Note, dated April 1, 1999, in the original principal amount of $100,000,000,
made by FelCor/CSS Holdings, Ltd., 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).10.25.1
    
    Form Deed of Trust and Security Agreement and Fixture Filing with Assignment of Leases and
Rents, each dated as of April 20, 2000, from FelCor/MM S-7 Holdings, L.P., as Mortgagor, in
favor of Massachusetts Mutual Life Insurance Company and Teachers Insurance and Annuity
Association of America, as Mortgagee, each covering a separate hotel and securing one of the
separate Promissory Notes described in Exhibit 10.22.3 (filed as Exhibit 10.24 to FelCors
Form 10-Q for the quarter ended June 30, 2000 (the June 2000 10-Q) and incorporated herein
by reference).10.25.2
    
    Form of Accommodation Cross-Collateralization Mortgage and Security Agreement, each dated
as of April 20, 2000, executed by FelCor/MM S-7 Holdings, L.P., in favor of Massachusetts
Mutual Life Insurance Company and Teachers Insurance and Annuity Association of America (filed
as Exhibit 10.24.1 to the June 2000 10-Q and incorporated herein by reference).10.25.3
    
    Form of fourteen separate Promissory Notes, each dated April 20, 2000, each made by
FelCor/MM S-7 Holdings, L.P., each separately payable to the order of Massachusetts Mutual
Life Insurance Company and Teachers Insurance and Annuity Association of America,
respectively, in the respective original principal amounts of $13,500,000 (Phoenix (Crescent),
Arizona), $13,500,000 (Phoenix (Crescent), Arizona), $6,500,000 (Cypress Creek/Ft. Lauderdale,
Florida), $6,500,000 (Cypress Creek/Ft. Lauderdale, Florida), $9,000,000 (Atlanta Galleria,
Georgia), $9,000,000 (Atlanta Galleria, Georgia), $12,500,000 (Chicago OHare Airport,
Illinois), $12,500,000 (Chicago OHare Airport, Illinois), $3,500,000 (Lexington, Kentucky),
$3,500,000 (Lexington, Kentucky), $17,000,000 (Philadelphia Society Hill, Philadelphia),
$17,000,000 (Philadelphia Society Hill, Philadelphia), $10,500,000 (South Burlington, Vermont)
and $10,500,000 (South Burlington, Vermont) (filed as Exhibit 10.24.2 to the June 2000 10-Q
and incorporated herein by reference).10.26.1
    
    Form Deed of Trust and Security Agreement, each dated as of May 2, 2000, from each of
FelCor/CMB Buckhead Hotel, L.L.C., FelCor/CMB Marlborough Hotel, L.L.C., FelCor/CMB Deerfield
Hotel, L.L.C., FelCor/CMB Corpus Holdings, L.P., FelCor/CMB Orsouth Holdings, L.P., FelCor/CMB
New Orleans Hotel, L.L.C., FelCor/CMB Piscataway Hotel, L.L.C., and FelCor/CMB SSF Holdings,
L.P., each as Borrower, in favor of The Chase Manhattan Bank, as Beneficiary, each covering a
separate hotel and securing one of the separate Promissory Notes described in Exhibit 10.23.2
(filed as Exhibit 10.25 to the June 2000 10-Q and incorporated herein by reference).10.26.2
    
    Form of eight separate Promissory Notes, each dated May 2, 2000, made by FelCor/CMB
Buckhead Hotel, L.L.C., FelCor/CMB Marlborough Hotel, L.L.C., FelCor/CMB Deerfield Hotel,
L.L.C., FelCor/CMB Corpus Holdings, L.P., FelCor/CMB Orsouth Holdings, L.P., FelCor/CMB New
Orleans Hotel, L.L.C., FelCor/CMB Piscataway Hotel, L.L.C. and FelCor/CMB SSF Holdings, L.P.,
each separately payable to the order of The Chase Manhattan Bank in the respective original
principal amounts of $38,250,000 (Atlanta Buckhead, Georgia), $20,500,000 (Boston Marlborough,
Massachusetts), $16,575,000 (Chicago Deerfield, Illinois), $5,338,000 (Corpus Christi, Texas),
$25,583,000 (Orlando South, Florida), $32,650,000 (New Orleans, Louisiana), $20,728,000
(Piscataway, New Jersey) and $26,268,000 (South San Francisco, California) (filed as Exhibit
10.25.1 to the June 2000 10-Q and incorporated herein by reference).




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##### Table of Contents



ExhibitNumber
    
    Description of Exhibit10.27.1
    
    Form of Loan Agreement, each dated either May 26, 2004, June 10, 2004 or July 19, 2004,
between JPMorgan Chase Bank, as lender, and each of FelCor/JPM Boca Raton Hotel, L.L.C.,
FelCor/JPM Phoenix Hotel, L.L.C., FelCor/JPM Wilmington Hotel, L.L.C., FelCor/JPM Atlanta ES
Hotel, L.L.C., FelCor/JPM Austin Holdings, L.P., FelCor/JPM Orlando Hotel, L.L.C., and
FelCor/JPM BWI Hotel, L.L.C. and FCH/DT BWI Hotel, L.L.C., as borrowers, and acknowledged and
agreed by FelCor LP (filed as Exhibit 10.34 to FelCors Form 10-Q for the quarter ended June
30, 2004, and incorporated herein by reference).10.27.2
    
    Form of Mortgage, Renewal Mortgage, Deed of Trust, Deed to Secure Debt, Indemnity Deed of
Trust and Assignment of Leases and Rents, Security Agreement and Fixture Filing, each dated
either May 26, 2004, June 10, 2004 or July 19, 2004, from FelCor/JPM Wilmington Hotel, L.L.C.,
DJONT/JPM Wilmington Leasing, L.L.C., FelCor/JPM Phoenix Hotel, L.L.C., DJONT/JPM Phoenix
Leasing, L.L.C., FelCor/JPM Boca Raton Hotel, L.L.C., DJONT/JPM Boca Raton Leasing, L.L.C.,
FelCor/JPM Atlanta ES Hotel, L.L.C., DJONT/JPM Atlanta ES Leasing, L.L.C., FelCor/JPM Austin
Holdings, L.P., DJONT/JPM Austin Leasing, L.P., FelCor/JPM Orlando Hotel, L.L.C., DJONT/JPM
Orlando Leasing, L.L.C., FCH/DT BWI Holdings, L.P., FCH/DT BWI Hotel, L.L.C. and DJONT/JPM BWI
Leasing, L.L.C., to, and for the benefit of, JPMorgan Chase Bank, as mortgagee or beneficiary
(filed as Exhibit 10.34.1 to FelCors Form 10-Q for the quarter ended June 30, 2004, and
incorporated herein by reference).10.27.3
    
    Form of seven separate Promissory Notes, each dated either May 26, 2004, June 10, 2004 or
July 19, 2004, made by FelCor/JPM Wilmington Hotel, L.L.C., FelCor/JPM Phoenix Hotel, L.L.C.,
FelCor/JPM Boca Raton Hotel, L.L.C., FelCor/JPM Atlanta ES Hotel, L.L.C., FelCor/JPM Austin
Holdings, L.P., FelCor/JPM Orlando Hotel, L.L.C., and FelCor/JPM BWI Hotel, L.L.C., each
separately payable to the order of JPMorgan Chase Bank in the respective original principal
amounts of $11,000,000 (Wilmington, Delaware), $21,368,000 (Phoenix, Arizona), $5,500,000
(Boca Raton, Florida), $13,500,000 (Atlanta, Georgia), $9,616,000 (Austin, Texas), $9,798,000
(Orlando, Florida), and $24,120,000 (Linthicum, Maryland) (filed as Exhibit 10.34.2 to
FelCors Form 10-Q for the quarter ended June 30, 2004, and incorporated herein by reference).10.27.4
    
    Form of Guaranty of Recourse Obligations of Borrower, each dated either May 26, 2004, June
10, 2004 or July 19, 2004, made by FelCor LP in favor of JPMorgan Chase Bank (filed as Exhibit
10.34.3 to FelCors Form 10-Q for the quarter ended June 30, 2004, and incorporated herein by
reference).10.28.1
    
    Construction Loan Agreement, dated April 27, 2005, among Grande Palms, L.L.C. and Bank of
America, N.A., as Administrative Agent, and the other financial institutions party thereto,
and Bank of America Securities, as Lead Arranger, for a maximum principal loan amount of $69.8
million (filed as Exhibit 10.34.1 of FelCors Form 10-Q for the quarter ended June 30, 2005,
and incorporated herein by reference).10.28.2
    
    Guaranty Agreement, dated April 27, 2005, by FelCor Lodging Limited Partnership in favor of
Bank of America, N.A. on behalf of the lenders(filed as Exhibit 10.34.2 of FelCors Form 10-Q
for the quarter ended June 30, 2005, and incorporated herein by reference).10.28.3
    
    Form of Promissory Note, each dated April 27, 2005, made by Grande Palms, L.L.C., each
separately payable to the order of Bank of America, N.A. ($25 million), Bank of Montreal ($20
million) and The Bank of Nova Scotia ($24.8 million)(filed as Exhibit 10.34.3 of FelCors Form
10-Q for the quarter ended June 30, 2005, and incorporated herein by reference).




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##### Table of Contents



ExhibitNumber
    
    Description of Exhibit10.28.4
    
    Mortgage, Assignment of Rents and Leases, Security Agreement and Fixture Filing, dated
April 27, 2005, made by Grande Palms, L.L.C. for the benefit of Bank of America, N.A., as
Administrative Agent under the Construction Loan Agreement referenced in Exhibit 10.34.1
(filed as Exhibit 10.34.4 of FelCors Form 10-Q for the quarter ended June 30, 2005, and
incorporated herein by reference).10.29.1
    
    Term Credit Agreement, dated as of October 18, 2005, among FelCor TRS Borrower 1, L.P., as
Initial Borrower; FelCor TRS Guarantor, L.P., FelCor LP and the other guarantors named therein
as Guarantors; Citigroup North America, Inc., as Initial Lender, as Administrative Agent, and
as Collateral Agent, and Citigroup Global Markets, Inc., as Sole Lead Arranger and Sole Book
Running Manager, for a maximum principal loan amount of $175 million (filed as Exhibit 10.35
to FelCors Form 10-Q for the quarter ended September 30, 2005, and incorporated herein by
reference).10.29.2
    
    First Amendment to Term Credit Agreement, dated as of December 9, 2005, among FelCor TRS
Borrower 1, L.P. and FelCor TRS Borrower 2, L.P., as borrowers; FelCor TRS Guarantor, L.P.,
FelCor LP, FelCor Lodging Company, L.L.C., FelCor Philadelphia Center, L.L.C., FelCor Marshall
Motels, L.L.C. and Center City Hotel Associates, as guarantors; Citicorp North America, Inc.,
as the initial Lender, the administrative agent for the lenders and the collateral agent for
the secured parties; and Citigroup Global Markets Inc., as sole lead arranger and sole book
running manager (filed as Exhibit 10.33.1 to the 2005 Form 10-K and incorporated herein by
reference).10.29.3
    
    Second Amendment to Term Credit Agreement, dated as of January 9, 2006, among FelCor TRS
Borrower 1, L.P. and FelCor TRS Borrower 2, L.P., as borrowers and certain other borrowers
named therein; FelCor TRS Guarantor, L.P., FelCor LP, FelCor Lodging Company, L.L.C., FelCor
Philadelphia Center, L.L.C., FelCor Marshall Motels, L.L.C. and Center City Hotel Associates,
as guarantors; Citicorp North America, Inc., as the initial Lender, the administrative agent
for the lenders and the collateral agent for the secured parties; and Citigroup Global Markets
Inc., as sole lead arranger and sole book running manager (filed as Exhibit 10.33.2 to the
2005 Form 10-K and incorporated herein by reference).10.30.1
    
    Credit Agreement, dated as of December 12, 2005, by and among FelCor, FelCor LP, the
lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent and J.P. Morgan
Securities, Inc. and Citigroup Global Markets Inc. as joint runners and joint lead arrangers
for an initial aggregate amount of $125,000,000 (filed as Exhibit 10.34.1 to the 2005 Form
10-K and incorporated herein by reference).10.30.1.1
    
    First Amendment to Credit Agreement, dated as of January 12, 2006, by and among FelCor,
FelCor LP, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent
and J.P. Morgan Securities, Inc. and Citigroup Global Markets Inc. as joint runners and joint
lead arrangers (filed as Exhibit 10.34.1.1 to the 2005 Form 10-K and incorporated herein by
reference).10.30.1.2
    
    Second Amendment to Credit Agreement, dated as of January 27, 2006, by and among FelCor,
FelCor LP, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent
and J.P. Morgan Securities, Inc. and Citigroup Global Markets Inc. as joint runners and joint
lead arrangers (filed as Exhibit 10.34.1.2 to the 2005 Form 10-K and incorporated herein by
reference).10.30.1.3
    
    Amendment No. 3 to Credit Agreement, dated as of March 31, 2006, by and among FelCor,
FelCor LP, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent
(filed as Exhibit 10.34.1.3 to FelCors Form 10-Q for the quarter ended March 31, 2006, and
incorporated herein by reference).




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##### Table of Contents



ExhibitNumber
    
    Description of Exhibit10.30.1.4
    
    Amendment No. 4 to Credit Agreement, dated October 26, 2006, by and among FelCor, FelCor
LP, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (filed as
Exhibit 10.3 to FelCors Form 8-K dated October 26, 2006, and filed on November 1, 2006, and
incorporated herein by reference).10.30.2
    
    Subsidiary Guaranty, dated as of January 27, 2006, made by FelCor/CSS Holdings, L.P.,
FelCor Hotel Asset Company, L.L.C., FelCor Pennsylvania Company, L.L.C., FelCor Lodging
Holding Company, L.L.C., FHAC Texas Holdings, L.P., FelCor Canada Co., FelCor Omaha Hotel
Company, L.L.C., FelCor TRS Holdings, L.P., Myrtle Beach Hotels, L.L.C., FelCor TRS Borrower
I, L.P., FelCor TRS Guarantor, L.P., Center City Hotel Associates, FelCor Lodging Company,
L.L.C., FelCor TRS Borrower 3, L.P. and FelCor TRS Borrower 4, L.L.C. (filed as Exhibit
10.34.2 to the 2005 Form 10-K and incorporated herein by reference).10.30.3*
    
    Joinder Agreement to Subsidiary Guaranty, dated as of December 31, 2006, made by
FelCor/St. Paul Holdings, L.P.10.31
    
    Purchase and Sale Agreement, dated effective as of January 20, 2006, by and between FelCor
and Hospitality Properties Trust (filed as Exhibit 10.35 to the 2005 Form 10-K and
incorporated herein by reference).10.32.1
    
    Pledge Agreement dated October 31, 2006 by FelCor Holdings Trust in favor of JPMorgan Chase
Bank, N.A., as Collateral Agent (filed as Exhibit 10.1 to FelCors Form 8-K dated October 26,
2006, and filed on November 1, 2006, and incorporated herein by reference).10.32.2
    
    Collateral Agency Agreement dated October 31, 2006 by and among FelCor, FelCor LP, JPMorgan
Chase Bank, N.A., as Collateral Agent and/or Administrative Agent, FelCor Holdings Trust and
U.S. Bank National Association, as trustee under several indentures (filed as Exhibit 10.2 to
FelCors Form 8-K dated October 26, 2006, and filed on November 1, 2006, and incorporated
herein by reference).10.33
    
    Registration Rights Agreement dated October 31, 2006 by and among FelCor, FelCor LP, Merrill
Lynch & Co. and Merrill Lynch, Pierce, Fenner & Smith Incorporated (filed as Exhibit 4.4 to
FelCors Form 8-K dated October 26, 2006, and filed on November 1, 2006, and incorporated
herein by reference).10.34
    
    Form of Indemnification Agreement (filed as Exhibit 10.1 to FelCors Form 8-K dated November
9, 2006, and filed on November 13, 2006, and incorporated herein by reference).10.35.1*
    
    Loan Agreement, dated as of November 10, 2006, by and among FelCor/JPM Hotels, L.L.C. and
DJONT/JPM Leasing, L.L.C., as borrowers, and Bank of America, N.A., as lender, relating to a
$250 million loan from lender to borrower.10.35.1.1*
    
    First Amendment to Loan Agreement and Other Loan Documents, dated as of January 31,
2007, by and among FelCor/JPM Hotels, L.L.C. and DJONT/JPM Leasing, L.L.C., as borrowers, and
Bank of America, N.A., as lender.10.35.2*
    
    Form of Mortgage, Deed of Trust and Security Agreement, each dated as of November 10,
2006, from FelCor/JPM Hotels, L.L.C. and DJONT/JPM Leasing, L.L.C. , as borrowers, in favor of
Bank of America, N.A., as lender, each covering a separate hotel and securing the Mortgage
Loan.10.35.3*
    
    Form of Amended and Restated Promissory Note, each dated as of January 31, 2007, made by
FelCor/JPM Hotels, L.L.C. and DJONT/JPM Leasing, L.L.C. payable to the order of either Bank of
America, N.A. or JPMorgan Chase Bank, N.A., as lender, in the original aggregate principal
amount of $250 million.




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##### Table of Contents



ExhibitNumber
    
    Description of Exhibit10.35.4*
    
    Guaranty of Recourse Obligations of Borrower, dated as of November 10, 2006, made by
FelCor LP in favor of Bank of America, N.A.21*
    
    List of Subsidiaries of FelCor.23*
    
    Consent of PricewaterhouseCoopers LLP.31.1*
    
    Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.31.2*
    
    Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002).32.1*
    
    Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 (18 U.S.C. 1350).32.2*
    
    Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 (18 U.S.C. 1350).