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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, 2005
 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 0-24097
 CNL HOTELS & RESORTS, INC.
 (Exact name of registrant as specified in its charter)
 Maryland
    
    59-3396369(State of other jurisdiction
of incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 450 South Orange Avenue
Orlando, Florida
    
    32801(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number(including area code)
    
    (407) 650-1510
  Title of each class:
    
    Name of exchange on which registered:None
    
    Not Applicable
 (Title of class)
 o þ
 o þ
 þ o
 o
  o o þ
 o þ
 Aggregate market value of the voting common stock held by non-affiliates of the registrant:
  DOCUMENTS INCORPORATED BY REFERENCE




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##### 



CONTENTS
 PagePart I.Item 1. Business
    
    
    3Item 1A Risk Factors
    
    
    10Item 2. Properties
    
    
    29Item 3. Legal Proceedings
    
    
    31Item 4. Submission of Matters to a Vote of Security Holders
    
    
    34Part IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    34Item 6. Selected Financial Data
    
    
    38Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    42Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    94Item 8. Financial Statements and Supplementary Data
    
    
    95Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    160Item 9A. Controls and Procedures
    
    
    160Item 9B. Other Information
    
    
    160Part III.Item 10. Directors and Executive Officers of the Registrant
    
    
    161Item 11. Executive Compensation
    
    
    161Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    161Item 13. Certain Relationships and Related Transactions
    
    
    161Item 14. Principal Accountant Fees and Services
    
    
    161Part IVItem 15. Exhibits and Financial Statement Schedules
    
    
    162Signatures
    
    
    210Schedule II  Valuation and Qualifying Accounts
    
    
    212Schedule III  Real Estate and Accumulated Depreciation
    
    
    213Exhibits
    
    
    217EX-10.89: LOAN AND SECURITY AGREEMENTEX-10.90: RENEWAL, AMENDED, RESTATED AND CONSOLIDATED NOTEEX-10.91: MEZZANINE LOAN AND SECURITY AGREEMENTEX-10.92: MEZZANINE NOTEEX-10.93: MEZZANINE LOAN AND SECURITY AGREEMENTEX-10.94: MEZZANINE NOTEEX-10.95: MEZZANINE LOAN AND SECURITY AGREEMENTEX-10.96: MEZZANINE NOTEEX-10.97: MEZZANINE LOAN AND SECURITY AGREEMENTEX-10.98: MEZZANINE NOTEEX-10.99: PURCHASE AND SALE AGREEMENTEX-10.100: PURCHASE AND SALE AGREEMENTEX-10.104: MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND FIXTURE FILINGEX-10.105: PROMISSORY NOTEEX-10.106: LOAN AND SECURITY AGREEMENTEX-10.107: PROMISSORY NOTEEX-10.108: LOAN AND SECURITY AGREEMENTEX-10.109: PROMISSORY NOTEEX-10.110: LOAN AND SECURITY AGREEMENTEX-10.111: PROMISSORY NOTEEX-10.112: LOAN AND SECURITY AGREEMENTEX-10.113: PROMISSORY NOTEEX-21: SUBSIDIARIES OF THE REGISTRANTEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION
  2




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PART I
 
 Item 1. Business
      3




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Leases
  Certain Management Services
  4




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5




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6




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Hotel Management Agreements
  
    
    Marriott International, Inc., including certain of its affiliates (Marriott);
 
    
    Hilton Hotels Corporation, including certain of its affiliates (Hilton);
 
    
    KSL II Management Operations, LLC; (KMO);
 
    
    Interstate Hotels & Resorts, Inc., including certain of its affiliates (Interstate);
 
    
    Hyatt Corporation, including certain of its affiliates (Hyatt); and
 
    
    Hersha Hospitality Management L.P.
     7




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Competition
  Concentration of Risk
  8




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Available Information
 http://www.cnlhotels.com http://www.sec.gov
 Employees
  Seasonality
  9




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Item 1A. Risk Factors
 Risks Related to Our Business and Operations
 A small number of our Properties represent a significant percentage of our revenues and significant
adverse changes at any one of these Properties may adversely affect our results of operations,
financial position, and cash flows, including our ability to service debt and our ability to make
distributions to stockholders.
  Forty-six of our Properties which generate a significant percentage of our revenues are located in
California, Florida, Texas Hawaii and Arizona, which increases our exposure to the risks of adverse
local economic conditions.
  Approximately
67 percent of our Properties are operated through a limited number of third-party
management companies and could be adversely affected if those third-party management companies, or
their brands, experience negative publicity or other adverse developments.
  Decreased funding from credit enhancements may adversely affect our distributions to stockholders.
  10




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We cannot and do not directly operate our Properties and, as a result, our results of operations,
financial position, ability to service debt and our ability to make distributions to stockholders
are dependent on the ability of our third-party management companies and our tenants to operate our
Properties successfully.
    11




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Our TRS structure subjects us to the risk of increased hotel and resort operating expenses.
  
    
    wage and benefit costs;
    
    repair and maintenance expenses;
    
    energy costs;
    
    property taxes;
    
    insurance costs; and
    
    other operating expenses.
   Our inability or that of our third-party management companies or our third-party tenants to
maintain franchise licenses could decrease our revenues.
   12




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We are and may continue to be subject to litigation.
  We are generally subject to risks associated with the employment of hotel or resort personnel,
particularly with Properties that employ unionized labor.
  We may not be able to identify or complete suitable acquisitions that meet our investment criteria,
which may impede our ability to grow externally.
  13




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
    
    we may be unable to acquire a targeted Property because of competition
from other real estate investors with significant capital, including
other affiliated and non-affiliated REITs, institutional pension funds,
private equity investors and owner-operators of hotels and resorts
including some of our third party management companies;
    
    even if we are able to acquire a targeted Property, competition from
other potential acquirers may significantly increase the purchase
price;
    
    we may be unable to finance an acquisition on favorable terms or at all;
    
    we may spend more time and funds than the time and amounts budgeted to
make necessary improvements or renovations to acquired Properties; and
    
    we may acquire Properties subject to liabilities and without any
recourse, or with only limited recourse, with respect to known or
unknown liabilities such as liabilities for clean-up of undisclosed
environmental contamination, claims by persons against former owners of
the Properties and claims for indemnification by general partners,
directors, officers and others indemnified by the former owners of the
Properties.
 We may be unable to integrate acquired Properties into our operations or the third-party management
company we engage may not effectively manage those Properties, which may adversely affect our
operating results.
  We may acquire Properties with limited operating histories that may not achieve desired results.
  14




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Operating costs and capital expenditures for Property development activities including expansion or
renovations may be greater than anticipated and we may be unable to complete and operate developed,
renovated or expanded Properties successfully.
   
    
    we may encounter environmental issues which require remediation;
    
    we may not complete renovation, expansion or development projects
on schedule or within budgeted amounts including due to the impact
of increased building costs resulting from macro-economic factors
outside our control;
    
    we may have a shortage of available cash to fund capital
improvements and the related possibility that financing for these
capital improvements may not be available to us at all or on
favorable terms;
    
    the time it takes for the impacted Properties to reach a
stabilized level of performance may be delayed or take longer than
anticipated;
    
    we may encounter delays or refusals in obtaining all necessary
zoning, land use, building, occupancy, and other required
governmental permits and authorizations; and
    
    our occupancy rates and rents at newly expanded, developed or
renovated Properties may fluctuate depending on a number of
factors, including market demand or a loss of market demand and
economic conditions which may result in our investment not being
profitable.
  Changing brand affiliation, changing third-party management companies and/or expanding or
renovating our hotels and resorts may not improve their financial performance or may subject us to
additional costs and therefore our results of operations, financial condition and cash flows would
be adversely affected.
  15




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We are dependent on key personnel whose continued service is not guaranteed.
  Joint venture investments could be adversely affected by our lack of sole decision-making
authority, our reliance on a co-venturers financial condition and disputes between us and our
co-venturers.
  We may invest in Properties outside of the United States, which will subject us to different legal,
monetary and political risks, as well as currency exchange risks, and may cause unpredictability in
a source of our cash flows.
  
    
    enactment of laws prohibiting or restricting the foreign ownership of
Property;
    
    laws restricting us from repatriating profits earned from activities within
the foreign country, including the payment of distributions;
    
    exchange rate fluctuations;
    
    change in the availability, cost and terms of mortgage funds resulting from
varying national economic policies or changes in interest rates; and
    
    terrorism, war or civil unrest.
 
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The sale of shares by our stockholders could be difficult.
  Risks Related to a Merger with CHC
 Our net income per share will decrease as a result of a Merger with CHC.
  Following a Merger we will be responsible for costs associated with the employment of our own
personnel.
  17




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Risks Related to the Lodging Industry
 The recent economic slowdown, terrorist attacks, military activity in the Middle East, natural
disasters and other world events impacting the global economy had adversely affected the travel and
lodging industries , including our Properties, in the past and these adverse effects may continue or
occur in the future.
   We do not have control over the market and business conditions that affect the value of our
Properties, and adverse changes with respect to such conditions could have an adverse effect on our
results of operations, financial condition and cash flows.
  
    
    increased competition from other hotel and resorts in our markets;
    
    new hotels or resorts in our markets, which may adversely affect occupancy levels
and average daily rates at our hotels and resorts;
    
    dependence on business and leisure travelers and tourism;
    
    dependence on group and meeting/conference business;
    
    increases in energy costs, increased threat of terrorism, terrorist events,
airline strikes or other factors that may affect travel patterns and reduce the
number of business and leisure travelers;
    
    increases in operating costs due to inflation and other factors that may not be
offset by increased room rates;
    
    changes in interest rates and in the availability, cost and terms of debt
financing;
    
    changes in, and the related costs of compliance with, governmental laws and
regulations, fiscal policies and zoning ordinances;
- adverse effects of international, national, regional and local economic and market
conditions; and
    
    risks generally associated with the ownership of hotel and resorts and real
estate, as we discuss in more detail below.
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The lodging industry is intensely competitive, and as a result, if the third-party management
companies and our third-party tenants are unable to compete successfully or if our competitors
marketing strategies are more effective, our results of operations, financial condition, and cash
flows including our ability to service debt and to make distributions to our stockholders, may be
adversely affected.
  The lodging industry is seasonal in nature, and, as a result, our Properties may be adversely
affected.
  The increasing use of internet travel intermediaries by consumers may adversely affect our
profitability.
  19




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Risks Related to Conflicts of Interest
  
    
    Some of the officers and directors of CHC and our officers and
directors currently are engaged, and in the future are expected to
engage, in the management of other business entities and
Properties and in other business activities associated with our
affiliates. Additionally, some of the officers and directors of
CHC and our officers and directors are majority owners of CHC.
These officers and directors may experience conflicts of interest
in allocating management time, services, and functions among us
and the various entities in which any of them are or may become
involved and could take actions that are more favorable to the
other entities than to us.
    
    CHC has been engaged to perform various services for us and will
receive fees and compensation for these services. The Amended
Advisory Agreement pertaining to these services could be deemed as not entirely
the result of arms-length negotiations. The timing and nature of
fees and compensation to CHC could create a conflict between its
interests and those of our stockholders.
    
    A conflict could arise because affiliates may compete with us to
acquire Properties or invest in mortgage loans of a type suitable
for acquisition by us and may be better positioned to make such
acquisitions or investments as a result of their relationships with various operators of hotel and resort brands and
their franchisees.
    
    A conflict also could arise in connection with CHCs determination
as to whether or not to purchase or sell a Property, since the
interests of CHC and our stockholders may differ as a result of
their distinct financial and tax positions and the compensation to
which CHC or its affiliates may be entitled upon the purchase or
sale of a Property.
    
    Although our stockholders approved the Existing Merger on July 30,
2004 at our 2004 annual meeting of stockholders, certain of our
directors and officers may continue to have interests in
connection with the consummation of the Merger that are different
from, and may potentially conflict with, the interests of us and
our stockholders. In particular, certain of the officers and a
majority of the directors of CHC are also our officers and
directors. Conflicts also could arise in connection with any
waiver or amendment of the terms of the Existing Merger Agreement,
or the negotiation of any amended, restated or new agreement.
However, a special committee of our Board comprised of three of
our independent Board members has the authority to waive or amend
provisions of the Existing Merger Agreement on our behalf.
    
    A conflict could arise in connection with the determination of
whether or not to list our shares of common stock on a national
securities exchange or over-the-counter market including because CHC and other
affiliates may receive different amounts of compensation and other
benefits if our shares are listed, and that compensation could be
paid earlier if the listing of our shares occurs. Our Board must
approve the listing of our shares on a national securities
exchange or over-the-counter market.
    
    We have in the past and may in the future invest in joint ventures
or with other programs sponsored by CHC or its affiliates. Potential
situations may arise in which the interests of the co-venturer or
co-venturers may conflict with our interests.
    
    We may acquire Properties from our affiliates, including through
joint ventures, which may give rise to a conflict between us and
the affiliate whereby the interests of the affiliate regarding
their financial position may differ from ours.
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Risks Related to Borrowing
 Inability to obtain funds through borrowings may adversely impact our ability to make
distributions.
  Our current debt level and our obligations to service such debt reduce funds available to
distribute to our stockholders and may expose us to risk of default under our debt obligations.
   
    
    our cash flow may be insufficient to meet our required principal and interest payments;
    
    we may be unable to borrow additional funds as needed or on favorable terms;
    
    we may be unable to refinance our indebtedness at maturity or the refinancing terms may be less
favorable than the terms of our original indebtedness;
    
    because a portion of our debt bears interest at variable rates, increases in interest rates could
increase our interest expense;
    
    we may be forced to dispose of one or more of our Properties, possibly on disadvantageous terms;
    
    we may default on our obligations and the lenders or mortgagees may foreclose on our Properties that
secure their loans and receive an assignment of rents and leases;
    
    our debt level could place us at a competitive disadvantage compared to our competitors with less
debt;
    
    we may experience increased vulnerability to economic and industry downturns, reducing our ability to
respond to changing business and economic conditions;
    
    we may violate restrictive covenants in our loan documents, which would entitle the lenders to
accelerate our debt obligations; and
    
    our default under any one of our loans with cross default or cross collateralization provisions could
result in a default under our other loans.
    
    one or more of our debt agreements may prohibit us or limit us from disposing of assets we would
otherwise sell or impose a payment penalty or a release price upon sale that would adversely impact
the net cash proceeds from the sale.
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Increases in interest rates and/or the failure of our interest rate protection arrangements to
reduce our interest rate volatility including failure of the counter parties to honor their
obligations under such arrangements could increase our interest expense and adversely affect our
cash flow and our ability to service our indebtedness and make distributions to our stockholders.
  General Risks Related to the Real Estate Industry
 Illiquidity of real estate investments could significantly impede our ability to respond to adverse
changes in the lodging industry or specifically the performance of our Properties and harm our
financial condition.
     
    
    Inability to agree on a favorable price;
    
    Inability to agree on favorable terms;
    
    Restrictions imposed by third parties such as inability to transfer franchise or management
agreements;
    
    Lender restrictions;
    
    Environmental issues; and/or
    
    Property condition.
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Natural
disasters; Uninsured
and underinsured losses, the costs of insurance or our ability to renew existing
coverage could adversely affect our operating results, our cash flows and our ability to make
distributions to our stockholders.
    Increases in property taxes would increase our expenses and therefore adversely affect our
profitability and cash flows, thereby impacting our ability to service debt and make distributions
to our stockholders.
  Environmental matters could adversely affect our results of operations, financial positions, and
cash flows including our ability to service debt and make distributions to our stockholders.
  23




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Costs associated with complying with the Americans with Disabilities Act may adversely affect our
results of operations, financial positions, and cash flows including our ability to service debt
and make distributions to our stockholders.
  We have no economic interest in the land underlying certain of our Properties which are subject to
ground leases.
  We may incur significant costs complying with other regulations. We
may incur significant costs complying with other regulations.
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Risks Related to Our Tax Status and Other Tax Related Matters.
 If we fail to qualify as a REIT, our distributions will not be deductible by us, and our income
will be subject to taxation.
  Failure to make required distributions would subject us to tax.
  
    
    85 percent of our ordinary income for that year;
    
    95 percent of our capital gain net earnings for that year; and
    
    100 percent of our undistributed taxable income from prior
years.
  We may have to borrow funds or sell assets to meet our distribution requirements.
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Utilization of TRS lessees increases our overall tax liability.
   A Merger with CHC might cause us to lose our REIT status for tax purposes.
  Our ability to finance external growth and acquisition activities from internal sources is limited.
  Any properties we own outside of the United States are subject to foreign taxes and may contribute
to a failure to meet the REIT requirements.
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Recent changes in taxation of corporate dividends may adversely affect the value of our common
stock.
  Our leases may be recharacterized as financings, which would eliminate depreciation deductions on
hotel and resort Properties.
  We may be required to pay a penalty tax upon the sale of a Property.
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Adverse tax consequences may deter us from selling certain Properties even if we would otherwise
choose to do so.
  We may be subject to other tax liabilities.
  Changes in tax laws may prevent us from qualifying as a REIT.
  Macro-Economic Risks
  28




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Item 2. Properties
      29




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State/Country
    
    Number of PropertiesAlabama
    
    1Arizona *
    
    8California *
    
    17Canada
    
    1Colorado
    
    2Connecticut
    
    2District of Columbia
    
    1Florida
    
    12Georgia
    
    3Hawaii
    
    1Illinois
    
    3Indiana
    
    1Kentucky
    
    1Louisiana
    
    2Maryland
    
    1Massachusetts
    
    1Michigan
    
    4Minnesota
    
    2Mississippi
    
    1Missouri
    
    2Nebraska
    
    1Nevada
    
    1New Jersey
    
    3New York
    
    2Oklahoma
    
    2Oregon
    
    1Pennsylvania
    
    2Tennessee
    
    1Texas
    
    8Virginia
    
    3Washington
    
    2Wisconsin
    
    1Total
    
    93
 
 *
    
    Total number of properties includes one property each that are unconsolidated
entities. 30




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Item 3. Legal Proceedings
    31




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Item 4. Submission of Matters to a Vote of Security Holders
  
 PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
   2005High
    
    
    Low
    
    
    AverageFirst Quarter
    
    $
    19.99
    
    
    $
    15.69
    
    
    $
    18.72Second Quarter
    
    
    20.00
    
    
    
    17.51
    
    
    
    19.13Third Quarter
    
    
    20.00
    
    
    
    14.67
    
    
    
    18.24Fourth Quarter
    
    
    20.00
    
    
    
    13.66
    
    
    
    17.31
 2004High
    
    
    Low
    
    
    AverageFirst Quarter
    
    $
    20.00
    
    
    $
    14.48
    
    
    $
    17.44Second Quarter
    
    
    20.00
    
    
    
    13.34
    
    
    
    16.48Third Quarter
    
    
    17.56
    
    
    
    16.00
    
    
    
    16.33Fourth Quarter
    
    
    20.01
    
    
    
    13.70
    
    
    
    16.79
  34




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First
    
    
    Second
    
    
    Third
    
    
    Fourth2005
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    YearTotal distributions declared
    
    $
    53,510
    
    
    $
    38,204
    
    
    $
    38,196
    
    
    $
    38,222
    
    
    $
    168,132Distributions per share
    
    
    0.350
    
    
    
    0.250
    
    
    
    0.250
    
    
    
    0.250
    
    
    
    1.100
 First
    
    
    Second
    
    
    Third
    
    
    Fourth2004
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    YearTotal distributions declared
    
    $
    50,631
    
    
    $
    58,784
    
    
    $
    55,454
    
    
    $
    53,474
    
    
    $
    218,343Distributions per share
    
    
    0.388
    
    
    
    0.388
    
    
    
    0.362
    
    
    
    0.350
    
    
    
    1.487
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Number ofsecurities
    
    
    
    
    
    
    
    
    
    
    Number ofauthorized to be
    
    
    
    
    
    
    Weighted
    
    
    securitiesissued upon
    
    
    
    
    
    
    average exercise
    
    
    available forexercise of
    
    
    
    
    
    
    price of
    
    
    future issuanceoutstanding
    
    
    
    
    
    
    outstanding
    
    
    under equityoptions, warrants
    
    
    Number of
    
    
    options, warrants
    
    
    compensationand rights
    
    
    securities issued
    
    
    and rights
    
    
    plansLong-term incentive
plan approved by
stockholders
    
    
    1,788.0
    
    
    
    9.5
    
    
    
    n/a
    
    
    
    1,778.5
  Redemption of Shares.
 36




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Issuer Purchases of Equity Securities (after giving effect to the reverse stock split)
 MaximumTotal Number
    
    
    Number ofof Shares
    
    
    shares that MayPurchased as
    
    
    Yet BePart of
    
    
    PurchasedTotal Number
    
    
    Average
    
    
    Publicly-
    
    
    Under theof Shares
    
    
    Price Paid Per
    
    
    Announced
    
    
    RedemptionPurchased
    
    
    Share
    
    
    Plan
    
    
    Plan *October 1, 2005
through October 31,
2005
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    7,645,700November 1, 2005
through November
30, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,645,700December 1, 2005
through December
31, 2005
    
    
    507,921
    
    
    
    19.00
    
    
    
    507,921
    
    
    
    5,365,458Total
    
    
    507,921
    
    
    
    
    
    
    
    507,921
 
  Insufficient Funds.
 Excess Funds.
 Termination of Plan.
 37




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Item 6. Selected Financial Data
  2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Number of hotels and resorts:Consolidated-TRS lessees
    
    
    85
    
    
    
    123
    
    
    
    108
    
    
    
    40
    
    
    
    26Consolidated-triple-net leases
    
    
    6
    
    
    
    6
    
    
    
    19
    
    
    
    12
    
    
    
    12Unconsolidated
    
    
    2
    
    
    
    3
    
    
    
    3
    
    
    
    3
    
    
    
    1Total
    
    
    93
    
    
    
    132
    
    
    
    130
    
    
    
    55
    
    
    
    39Year Ended December 31:Revenues
    
    $
    1,348,514
    
    
    $
    1,061,513
    
    
    $
    448,097
    
    
    $
    178,241
    
    
    $
    68,619(Loss) income from continuing operations
    
    
    (58,087
    )
    
    
    (112,959
    )
    
    
    (16,445
    )
    
    
    4,046
    
    
    
    6,922Income from discontinued operations
    
    
    64,987
    
    
    
    25,846
    
    
    
    22,438
    
    
    
    11,764
    
    
    
    12,406Net income (loss)
    
    
    6,900
    
    
    
    (87,113
    )
    
    
    5,993
    
    
    
    15,810
    
    
    
    19,328Cash flows provided by operating activities
    
    
    169,813
    
    
    
    213,741
    
    
    
    112,887
    
    
    
    76,660
    
    
    
    58,408Cash flows provided by (used in) investing activities
    
    
    525,207
    
    
    
    (1,577,042
    )
    
    
    (1,894,612
    )
    
    
    (551,987
    )
    
    
    (433,026
    )Cash flows (used in) provided by financing activities
    
    
    (714,684
    )
    
    
    1,324,285
    
    
    
    1,876,478
    
    
    
    479,269
    
    
    
    373,419Cash distributions declared (1)
    
    
    168,132
    
    
    
    218,343
    
    
    
    129,961
    
    
    
    74,217
    
    
    
    48,409(Loss) income from continued operations per share
(2):Basic
    
    
    (0.38
    )
    
    
    (0.76
    )
    
    
    (0.19
    )
    
    
    0.08
    
    
    
    0.21Diluted
    
    
    (0.38
    )
    
    
    (0.76
    )
    
    
    (0.19
    )
    
    
    0.08
    
    
    
    0.21Income from discontinued operations per share (2):Basic
    
    
    0.43
    
    
    
    0.17
    
    
    
    0.26
    
    
    
    0.24
    
    
    
    0.39Diluted
    
    
    0.43
    
    
    
    0.17
    
    
    
    0.26
    
    
    
    0.24
    
    
    
    0.39Earnings (loss) per share (2):Basic
    
    
    0.05
    
    
    
    (0.59
    )
    
    
    0.07
    
    
    
    0.32
    
    
    
    0.60Diluted
    
    
    0.05
    
    
    
    (0.59
    )
    
    
    0.07
    
    
    
    0.32
    
    
    
    0.60Cash distributions declared per share (2)
    
    
    1.10
    
    
    
    1.49
    
    
    
    1.55
    
    
    
    1.55
    
    
    
    1.54Weighted average number of shares outstanding (2):Basic
    
    
    152,874
    
    
    
    148,059
    
    
    
    86,225
    
    
    
    48,937
    
    
    
    32,229Diluted
    
    
    152,874
    
    
    
    148,059
    
    
    
    86,225
    
    
    
    48,937
    
    
    
    32,229At December 31:Total assets
    
    $
    5,688,782
    
    
    $
    6,317,045
    
    
    $
    3,876,978
    
    
    $
    1,565,432
    
    
    $
    1,147,676Mortgages payable
    
    
    2,599,454
    
    
    
    2,878,583
    
    
    
    1,255,650
    
    
    
    434,302
    
    
    
    298,520Total stockholders equity
    
    
    2,061,373
    
    
    
    2,209,955
    
    
    
    1,940,741
    
    
    
    1,014,323
    
    
    
    637,876Other data:Funds from operations (3)
    
    
    90,462
    
    
    
    88,416
    
    
    
    90,594
    
    
    
    59,475
    
    
    
    41,871EBITDA (4)
    
    
    314,298
    
    
    
    213,458
    
    
    
    104,975
    
    
    
    53,428
    
    
    
    38,272
 
 (1)
    
    Cash distributions, which are included as a component of cash flows from financing activities, are declared by our Board of
Directors and are paid quarterly. They are generally based on various factors, including cash flow from operations.(2)
    
    Historical share and per share amounts have been adjusted to give effect to the reverse stock split, which was approved by our
stockholders and effected on August 2, 2004. 38




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##### Table of Contents



(3)
    
    Funds From OperationsWe consider funds from operations or, FFO (and FFO per diluted share),
to be an indicative measure of operating performance due to the
significant effect of depreciation of real estate assets on net income
or loss. We calculate FFO in accordance with standards established by
the National Association of Real Estate Investment Trusts, or NAREIT,
which defines FFO as net income or loss determined in accordance with
Generally Accepted Accounting Principles (GAAP), excluding gains or
losses from sales of property plus depreciation and amortization
(excluding amortization of deferred financing costs) of real estate
assets, and after adjustments for the portion of these items related
to our unconsolidated partnerships and joint ventures.In calculating FFO, net income or loss is determined in accordance
with GAAP and includes the noncash effect of scheduled rent increases
throughout the lease terms. This effect is a GAAP convention requiring
real estate companies to report rental revenue based on the average
rent per year over the life of the leases. We believe that by
excluding the effect of depreciation, amortization, and gains or
losses from sales of real estate, all of which are based on historical
costs and which may be of limited relevance in evaluating current
performance, FFO can facilitate comparisons of operating performance
between periods and between other equity REITs. We also believe FFO
captures trends in occupancy rates, rental rates and operating costs.
FFO was developed by NAREIT as a relative measure of performance and
liquidity of an equity REIT in order to recognize that
income-producing real estate historically has not depreciated on the
basis determined under GAAP, which assumes that the value of real
estate diminishes predictably and/or ratably over time. In addition,
we believe FFO is frequently used by securities analysts, investors
and other interested parties in the evaluation of equity REITs,
particularly those competing in the lodging industry. However, FFO (i)
does not represent cash generated from operating activities determined
in accordance with GAAP (which, unlike FFO, generally reflects all
cash effects of transactions and other events that enter into the
determination of net income or loss), (ii) is not necessarily
indicative of cash flow available to fund cash needs and (iii) should
not be considered as an alternative to net income or loss determined
in accordance with GAAP as an indication of our operating performance.
FFO, as presented, may not be comparable to similarly-titled measures
reported by other equity REITs. Accordingly, we believe that in order
to facilitate a clear understanding of our consolidated historical
operating results, FFO should be considered only as supplemental
information and only in conjunction with our net income or loss as
reported in the accompanying consolidated financial statements and
notes thereto.
 39




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YearsEnded December 31,2005 (a) (b)(c)
    
    
    2004 (a) (d)
    
    
    2003
    
    
    2002
    
    
    2001Net (loss) income
    
    $
    6,900
    
    
    $
    (87,113
    )
    
    $
    5,993
    
    
    $
    15,810
    
    
    $
    19,328Adjustments:Effect of depreciation of real
estate assets of unconsolidated
entities
    
    
    12,682
    
    
    
    14,223
    
    
    
    14,117
    
    
    
    6,496
    
    
    
    1,499Effect of depreciation of real
estate assets of minority interests
    
    
    (12,408
    )
    
    
    (12,263
    )
    
    
    (6,230
    )
    
    
    (2,624
    )
    
    
    (774
    )Depreciation of real estate assets
    
    
    197,043
    
    
    
    174,214
    
    
    
    76,714
    
    
    
    36,217
    
    
    
    21,818Gain on sale of real estate assets
    
    
    (113,755
    )
    
    
    (645
    )
    
    
    
    
    
    
    
    
    
    
    Effect of assumption of liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,576
    
    
    
    FFO
    
    $
    90,462
    
    
    $
    88,416
    
    
    $
    90,594
    
    
    $
    59,475
    
    
    $
    41,871FFO per share  basic and diluted (e)
    
    $
    0.59
    
    
    $
    0.60
    
    
    $
    1.05
    
    
    $
    1.22
    
    
    $
    1.30Basic (e)
    
    
    152,874
    
    
    
    148,059
    
    
    
    86,225
    
    
    
    48,937
    
    
    
    32,229Diluted (e)
    
    
    152,874
    
    
    
    148,059
    
    
    
    86,225
    
    
    
    48,937
    
    
    
    32,229
 
 (a)
    
    Results of operations and therefore FFO for the years ended December 31, 2005 and 2004, do not include $15.6
million and $16.6 million, respectively, in net cash flows received for member deposits.(b)
    
    FFO for the year ended December 31, 2005, does not exclude the following revenue and expenses: (i)
    
    Litigation settlement of $34.2 million;(ii)
    
    Loss of $23.6 million from the extinguishment of
debt, including our share of loss from the extinguishment of
debt related to unconsolidated entities of $7.9 million;(iii)
    
    Transaction costs of $5.4 million related
primarily to the expensing of costs related to the activities
in connection with our pursuit of a merger with CNL Hospitality
Corp. (CHC); and(iv)
    
    Loss of $1.1 million on the termination of hedges.
 (c)
    
    Gain on sale of real estate assets includes $46.4 million gain recognized in connection with the sale of the Waikiki
Beach Marriott Resort (the WBR Property).(d)
    
    FFO for the year ended December 31, 2004, does not exclude the following revenue and expenses:
 (i)
    
    Gain of $9.3 million from the sale of common stock;(ii)
    
    Loss of $17.9 million from the extinguishment of debt;(iii)
    
    Transaction costs of $11.5 million related to the write-off of
capitalized costs related to the postponed underwritten
offering of additional shares of common stock and acquisitions
that we are no longer pursuing; and(iv)
    
    Gain of $3.5 million on the termination of hedges.
 (e)
    
    All share and per share amounts reflect the effect of the reverse stock split.
 40




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(4)
    
    EBITDA from continuing operationsEarnings from continuing operations before interest expense, income
taxes, depreciation and amortization or, EBITDA, is defined as income
(losses) from continuing operations excluding: (i) interest expense,
(ii) income tax benefit or expense; and (iii) depreciation and
amortization. We believe EBITDA is useful to us and to an investor as
a supplemental measure in evaluating our financial performance because
it excludes expenses that we believe may not be indicative of our
operating performance. By excluding interest expense, EBITDA measures
our financial performance regardless of how we finance our operations
and our capital structure. By excluding depreciation and amortization
expense, which can vary by property based on factors unrelated to
hotel and resort performance, we and our investors can more accurately
assess the financial operating performance of our hotels and resorts.
Our management also uses EBITDA as one measure in determining the
value of property acquisitions and dispositions. In addition, we
believe EBITDA is frequently used by securities analysts, investors
and other interested parties in the evaluation of equity REITs,
particularly in the lodging industry. However, because EBITDA is
calculated before recurring cash charges such as interest expense and
taxes and is not adjusted for capital expenditures or other recurring
cash requirements of our business, it does not reflect the amount of
capital needed to maintain our Properties, nor does it reflect trends
in interest costs due to interest rate changes or increased borrowings
and the related impact on our costs to service variable indebtedness.
EBITDA should be considered only as a supplement to net income or loss
(computed in accordance with GAAP), as a measure of our operating
performance. Other equity REITs may calculate EBITDA differently than
we do and, accordingly, our calculation of EBITDA may not be
comparable to such other REITs EBITDA.
  Years Ended December 31,2005(a)(b)
    
    
    2004(a)(c)
    
    
    2003
    
    
    2002
    
    
    2001(Loss) income from continuing operations
    
    $
    (58,087
    )
    
    $
    (112,959
    )
    
    $
    (16,445
    )
    
    $
    4,046
    
    
    $
    6,922Adjustments:Interest and loan cost amortization
    
    
    192,355
    
    
    
    153,103
    
    
    
    59,056
    
    
    
    21,867
    
    
    
    16,098Income tax expense (benefit)
    
    
    (2,965
    )
    
    
    27,442
    
    
    
    262
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    182,995
    
    
    
    145,872
    
    
    
    62,102
    
    
    
    27,515
    
    
    
    15,252EBITDA
    
    $
    314,298
    
    
    $
    213,458
    
    
    $
    104,975
    
    
    $
    53,428
    
    
    $
    38,272
 
 (a)
    
    Results of operations and therefore EBITDA for the years ended December 31, 2005 and 2004 do not include
$15.6 million and $16.6 million, respectively, in net cash flows received for member deposits.(b)
    
    EBITDA for the year ended December 31, 2005, does not exclude the following revenues and expenses: (i)
    
    Litigation settlement of $34.2 million;(ii)
    
    Loss of $1.1 million on the termination of hedges;(iii)
    
    Transaction costs of $5.4 million related primarily to the expensing of costs related to the
activities in connection with our pursuit of a merger with CHC;(iv)
    
    Loss of $2.2 million from the extinguishment of debt; and(v)
    
    Equity in earnings of unconsolidated entities of $32.8 million and our interest in income of
minority interests of $5.5 million.
 (c)
    
    EBITDA for the year ended December 31, 2004, does not exclude the following revenues and expenses:
 (i)
    
    Gain of $9.3 million from the sale of common stock;(ii)
    
    Loss of $17.9 million from the extinguishment of debt;(iii)
    
    Transaction costs of $11.5 million related to the
write-off of capitalized costs related to the postponed
underwritten offering of additional shares of common stock and
acquisitions that we are no longer pursuing;(iv)
    
    Equity in losses of unconsolidated entities of $18.5 million
and our interest in income of minority interests of $3.3
million; and(v)
    
    Gain of $3.5 million on the termination of hedges.
 41




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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    42




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Overview
  Strategy
   Recent Events
  43




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44




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45




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Industry Overview and Outlook
  46




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##### Table of Contents



(i)
    
    Economic downturns: Historically, economic downturns have had a
negative effect on corporate travel demand and as a result hotel and
resort profitability.(ii)
    
    Supply increases and competition: A significant increase in the
number of new or refurbished hotel and resort properties could have
a negative impact on hotel and resort occupancy levels, average
daily rates, and profitability.(iii)
    
    Geopolitical instability and terrorism: Global military activity,
terrorism concerns and related domestic security alerts and
health-related epidemics have historically had a negative impact on
lodging demand.(iv)
    
    Decreased pricing control: The pervasiveness of the internet and
related discount-travel sites has had a negative impact on hotel and
resort room rates in recent years. Recently operators have begun
exercising greater control over their distribution channels which
appears to be having a positive impact on rates.
 Elements of Our Operating Results
 Revenues.
 Expenses.
 Critical Accounting Policies
  47




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
    
    Allocation of Purchase Prices to Properties.We generally obtain
third-party Property appraisals as part of our normal
pre-acquisition due diligence procedures. These appraisals are
used by us to assist in the evaluation of the fairness of the
purchase price and to assist in the allocation of the purchase
price between land, buildings, equipment, intangible assets and
goodwill. In circumstances where a specific Property or business
acquired is expected to have significant values assigned to
intangible assets or goodwill, we obtain purchase price allocation
and valuation studies performed by third parties to assist in the
allocation of purchase prices to these assets. Management
believes that these appraisals and purchase price allocation and
valuation studies are carried out by competent third-party experts
and that they result in fair allocations. However, a change in
the allocations could result in an increase or decrease in
depreciation expense and amortization expense, and could result in
different balance sheet classifications between assets, thereby
possibly affecting our ability to comply with REIT qualification
tests.
    
    Determination of Fair Value of Long-lived Assets.Management
reviews our Properties, investments in unconsolidated entities,
intangible assets and goodwill for impairment no less than
annually or whenever events or changes in circumstances indicate
that the carrying amount of the assets may not be recoverable
through operations. Management determines whether an impairment
in the value of a specific Property has occurred by comparing the
estimated future undiscounted cash flows, including the residual
value of the Property, with the carrying cost of the individual
Property. Such an impairment would result in a reduction in the
carrying value of the impaired Property and an expense to us for
the amount of the impairment write-down.In estimating future undiscounted cash flows, we use historical
cash flows, the expected growth rate of revenues and expenses, the
effect of capital expenditures, the remaining useful life of the
Property, holding periods, and future market and economic
conditions. Variability of these and other assumptions could
result in a difference in the estimated undiscounted future cash
flows and, therefore, an increase or decrease in the estimated
fair value of the Property.Management determines whether an intangible asset or goodwill is
impaired by comparing the fair value of the intangible asset (or
fair value of the reporting unit in the case of goodwill) with its
carrying amount. If the carrying amount exceeds the fair value,
an impairment loss is recognized in an amount equal to that
excess. The fair value of an intangible asset or goodwill is the
amount at which that asset (or reporting unit in the case of
goodwill) could be bought or sold in a current transaction between
willing parties.Because quoted market prices are not always available, we estimate
fair value based on the best information available, including
prices for similar assets and the results of other valuation
techniques such as present value techniques. Variability of the
assumptions used in these techniques, or the lack of available
information, could result in a difference in the estimated fair
values of these assets and could effect the ultimate outcome of
the impairment testing process.
    
    Depreciation and Amortization Expense. Depreciation and
amortization expense is based on the estimated useful lives of our
assets and on the method used to calculate depreciation. The
lives of the assets are based on a number of assumptions,
including cost and timing of capital expenditures to maintain and
refurbish the assets, and estimated holding periods. We believe
our estimates are reasonable; however, a change in the estimated
lives of the assets or the method of depreciation could affect
depreciation and amortization expense and therefore net income or
the gain or loss on the sale of any of the assets.
 48




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
    
    Consolidation Policy. The accompanying consolidated financial
statements include our accounts, the accounts of each of our
wholly-owned subsidiaries and the accounts of entities in which we
have a controlling interest in accordance with the provisions of
Statement of Position 78-9 Accounting for Investments in Real
Estate Ventures (SOP 78-9), or are the primary beneficiary as
defined in FASB Interpretation No. 46 (revised December 2003),
Consolidation of Variable Interest Entities (FIN 46). The
application of FIN 46 and SOP 78-9 requires management to make
significant estimates and judgments about our and our venture
partners rights, obligations and economic interests in the
related venture entities. The equity method of accounting is
applied in the consolidated financial statements with respect to
those investments in entities in which we are not the primary
beneficiary under FIN 46 or have less than a controlling interest
due to the significance of rights and obligations held by other
parties under SOP 78-9.
    
    Valuation of Deferred Tax Assets.We account for federal and
state income taxes with respect to our TRS entities using the
asset and liability method. Deferred tax assets and liabilities
are recognized for the future tax consequences attributable to
differences between the consolidated financial statements
carrying amounts of existing assets and liabilities and respective
tax bases and operating losses and tax-credit carry forwards.
Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that
includes the enactment date. In the event that these assumptions
change, the deferred taxes may change.Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized. The
valuation allowance is based on our estimates of future taxable
income and ongoing prudent and feasible tax planning strategies.
Should we determine it would not be likely to realize in full the
deferred tax asset in the future, we would record a valuation
allowance to reduce the deferred tax asset to an amount that is
more likely than not to be realized. An adjustment to the deferred
tax asset would decrease income in the period the determination
was made.In estimating future taxable income, we must estimate future
income using historical data, the expected growth rate of revenues
and expenses, the effect of capital expenditures, and future
market and economic conditions. Variability of these and other
assumptions could result in an inability to recover the carrying
value of the deferred tax assets.
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Impact of Recent Accounting Pronouncements
      50




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Results of Operations
 Factors Affecting Comparability
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Comparison of the year ended December 31, 2005 with the year ended December 31, 2004
 Year Ended December 31,2005
    
    
    2004
    
    
    Change
    
    
    % Change(amounts in thousands)Hotel and Resort RevenuesRoom
    
    $
    795,447
    
    
    $
    630,857
    
    
    $
    164,590
    
    
    
    26.1
    %Food and beverage
    
    
    343,121
    
    
    
    263,517
    
    
    
    79,604
    
    
    
    30.2Other hotel and resort operating
departments
    
    
    190,683
    
    
    
    138,891
    
    
    
    51,792
    
    
    
    37.3Hotel and Resort Revenues
    
    
    1,329,251
    
    
    
    1,033,265
    
    
    
    295,986
    
    
    
    28.6Hotel and Resort Expenses
    
    
    963,972
    
    
    
    778,093
    
    
    
    185,879
    
    
    
    23.9Gross margin
    
    $
    365,279
    
    
    $
    255,172
    
    
    
    110,107
    
    
    
    43.2Gross margin percentage
    
    
    27.5
    %
    
    
    24.7
    %
    
    2.8 ppt
    
    
    11.3Other RevenuesRental income from operating leases
    
    $
    16,741
    
    
    $
    24,650
    
    
    $
    (7,909
    )
    
    
    (32.1
    )%Other income
    
    
    2,522
    
    
    
    3,598
    
    
    
    (1,076
    )
    
    
    (29.9
    )Other Income (Expenses)Interest Income
    
    
    4,077
    
    
    
    2,512
    
    
    
    1,565
    
    
    
    62.3Gain on sale of common stock
    
    
    
    
    
    
    9,268
    
    
    
    (9,268
    )
    
    
    n/a(Loss) gain on termination of hedge
    
    
    (1,139
    )
    
    
    3,511
    
    
    
    (4,650
    )
    
    
    (132.4
    )Interest and loan cost amortization
    
    
    (192,355
    )
    
    
    (153,103
    )
    
    
    39,252
    
    
    
    25.6Impairment of equity method
investment
    
    
    
    
    
    
    (1,275
    )
    
    
    1,275
    
    
    
    n/aCredit enhancement funding
    
    
    2,057
    
    
    
    23,006
    
    
    
    (20,949
    )
    
    
    (91.1
    )General and administrative
    
    
    (26,130
    )
    
    
    (23,668
    )
    
    
    2,462
    
    
    
    10.4State and local taxes
    
    
    (6,700
    )
    
    
    (5,633
    )
    
    
    1,067
    
    
    
    18.9Asset mgmt. fees to related party
    
    
    (27,868
    )
    
    
    (26,505
    )
    
    
    1,363
    
    
    
    5.1Depreciation and amortization
    
    
    (182,995
    )
    
    
    (145,872
    )
    
    
    37,123
    
    
    
    25.4Litigation settlement
    
    
    (34,151
    )
    
    
    
    
    
    
    (34,151
    )
    
    
    n/aTransaction costs
    
    
    (5,458
    )
    
    
    (11,521
    )
    
    
    (6,063
    )
    
    
    (52.6
    )Loss on extinguishment of debt
    
    
    (2,190
    )
    
    
    (17,877
    )
    
    
    (15,687
    )
    
    
    (87.7
    )
 Hotel and Resort Revenues
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Other Revenues
   Hotel and Resort Expenses
 Year Ended December 31,2005 % of
    
    
    
    
    
    
    2004 % ofHotel and
    
    
    
    
    
    
    Hotel andResort
    
    
    
    
    
    
    Resort2005
    
    
    Revenues
    
    
    2004
    
    
    Revenues(amounts in thousands)Hotel and Resort Expenses:Room
    
    $
    188,970
    
    
    
    14.2
    %
    
    $
    153,132
    
    
    
    14.8
    %Food and beverage
    
    
    234,588
    
    
    
    17.7
    
    
    
    191,203
    
    
    
    18.5Other hotel and resort operating departments
    
    
    116,026
    
    
    
    8.7
    
    
    
    88,091
    
    
    
    8.5Property operations
    
    
    246,207
    
    
    
    18.5
    
    
    
    206,353
    
    
    
    20.0Repairs and maintenance
    
    
    57,147
    
    
    
    4.3
    
    
    
    46,365
    
    
    
    4.5Hotel and resort management fees
    
    
    40,282
    
    
    
    3.0
    
    
    
    26,047
    
    
    
    2.5Sales and marketing
    
    
    80,752
    
    
    
    6.1
    
    
    
    66,902
    
    
    
    6.5Total hotel and resort expenses
    
    $
    963,972
    
    
    
    72.5
    %
    
    $
    778,093
    
    
    
    75.3
    %
  Other Income and Expenses
    53




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##### Table of Contents



Litigation Settlement
  Transaction Costs
   Extinguishment of Debt
   54




---



##### Table of Contents



Termination of Hedges
  Gain on Sale of Common Stock
  Impairment of Equity Method Investment
  Earnings from Unconsolidated Entities
   Increase(decrease)Entity
    
    2005
    
    
    2004
    
    
    in earningsWB Resort Partners, LP**
    
    $
    43,053
    
    
    $
    (7,759
    )
    
    $
    50,812Desert Ridge Resort Partners, LLC*
    
    
    (9,070
    )
    
    
    (6,008
    )
    
    
    (3,062
    )CY-SF Hotel Parent, LP
    
    
    (1,246
    )
    
    
    (1,710
    )
    
    
    464Other Joint Ventures***
    
    
    38
    
    
    
    (2,992
    )
    
    
    3,030Total
    
    $
    32,775
    
    
    $
    (18,469
    )
    
    $
    51,244
 
 
 55




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##### Table of Contents



Discontinued Operations and Dispositions
   56




---



##### Table of Contents



YearEnded December 31,2005
    
    
    2004Revenues
    
    $
    222,634
    
    
    $
    288,441Income from lease termination
    
    
    5,982
    
    
    
    Expenses
    
    
    (148,884
    )
    
    
    (190,543
    )Depreciation and amortization
    
    
    (23,904
    )
    
    
    (35,538
    )Write-down of assets
    
    
    (345
    )
    
    
    (5,920
    )Interest and loan cost amortization
    
    
    (38,345
    )
    
    
    (25,051
    )Income from discontinued operations
    
    
    17,138
    
    
    
    31,389Gain on sale of assets
    
    
    67,321
    
    
    
    645Loss on extinguishment of debt
    
    
    (13,469
    )
    
    
    Minority interests
    
    
    (1,681
    )
    
    
    (5,091
    )Income tax (expense) benefit
    
    
    (4,322
    )
    
    
    (1,097
    )$
    64,987
    
    
    $
    25,846
  57




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##### Table of Contents



Income Taxes
   Minority Interests
  Earnings Per Share
  (i)
    
    The net gain (including loss on extinguishment of debt) on the sale
of 38 Properties, in 2005, of approximately $51.7 million, or
$0.34
per share;(ii)
    
    Our share of the gain on the WBR Sale of approximately $46.4
million, or $0.30 per share;(iii)
    
    A reduction in income tax expense due to the recording of a
valuation allowance in 2004 of $25.8 million, or $0.17 per share;
offset by,(iv)
    
    Litigation settlement expense of $34.2 million, or $0.22 per share.
 58




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##### Table of Contents



Comparison of the year ended December 31, 2004 with the year ended December 31, 2003
 Hotel and Resort Revenues
 Year Ended December 31,2004
    
    
    2003
    
    
    Change
    
    
    Change %(amounts in thousands)Hotel and Resort RevenuesRoom
    
    $
    630,857
    
    
    $
    301,593
    
    
    $
    329,264
    
    
    
    109.2
    %Food and beverage
    
    
    263,517
    
    
    
    92,064
    
    
    
    171,453
    
    
    
    186.2Other hotel and resort operating
departments
    
    
    138,891
    
    
    
    25,441
    
    
    
    113,450
    
    
    
    445.9Hotel and Resort Revenues
    
    
    1,033,265
    
    
    
    419,098
    
    
    
    614,167
    
    
    
    146.5Hotel and Resort Expenses
    
    
    778,093
    
    
    
    317,818
    
    
    
    460,275
    
    
    
    144.8Gross margin
    
    $
    255,172
    
    
    $
    101,280
    
    
    $
    153,892
    
    
    
    151.9Gross margin percentage
    
    
    24.7
    %
    
    
    24.2
    %
    
    0.5 ppt
    
    
    2.1Other RevenuesRental income from operating leases
    
    $
    24,650
    
    
    $
    25,024
    
    
    $
    (374
    )
    
    
    (1.5)
    %Other income
    
    
    3,598
    
    
    
    3,975
    
    
    
    (377
    )
    
    
    (9.5
    )Other IncomeInterest income
    
    
    2,512
    
    
    
    1,781
    
    
    
    731
    
    
    
    41.0Gain on sale of common stock
    
    
    9,268
    
    
    
    
    
    
    
    9,268
    
    
    
    n/aGain on termination of hedge
    
    
    3,511
    
    
    
    
    
    
    
    3,511
    
    
    
    n/aOther ExpensesInterest and loan cost amortization
    
    
    153,103
    
    
    
    59,056
    
    
    
    94,047
    
    
    
    159.3Credit enhancement funding
    
    
    (23,006
    )
    
    
    (18,840
    )
    
    
    4,166
    
    
    
    22.1General and administrative
    
    
    23,668
    
    
    
    7,937
    
    
    
    15,731
    
    
    
    198.2State and local taxes
    
    
    5,633
    
    
    
    2,042
    
    
    
    3,591
    
    
    
    175.9Asset mgmt. fees to related party
    
    
    26,505
    
    
    
    12,782
    
    
    
    13,723
    
    
    
    107.4Depreciation and amortization
    
    
    145,872
    
    
    
    62,102
    
    
    
    83,770
    
    
    
    134.9Transaction costs
    
    
    11,521
    
    
    
    154
    
    
    
    11,367
    
    
    
    7,381.2Loss on extinguishment of debt
    
    
    17,877
    
    
    
    
    
    
    
    17,877
    
    
    
    n/aImpairment of equity method investment
    
    
    1,275
    
    
    
    
    
    
    
    1,275
    
    
    
    n/a
   59




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##### Table of Contents



Other Revenues
      Hotel and Resort Expenses
 Year Ended December 31,2004 % of
    
    
    
    
    
    
    2003 % ofHotel and
    
    
    
    
    
    
    Hotel andResort
    
    
    
    
    
    
    Resort2004
    
    
    Revenue
    
    
    2003
    
    
    Revenue(amounts in thousands)Hotel and Resort Expenses:Room
    
    $
    153,132
    
    
    
    14.8
    %
    
    $
    71,676
    
    
    
    17.1
    %Food and beverage
    
    
    191,203
    
    
    
    18.5
    
    
    
    70,801
    
    
    
    16.9Other hotel and resort operating departments
    
    
    88,091
    
    
    
    8.5
    
    
    
    16,429
    
    
    
    3.9Property operations
    
    
    206,353
    
    
    
    20.0
    
    
    
    95,925
    
    
    
    22.9Repairs and maintenance
    
    
    46,365
    
    
    
    4.5
    
    
    
    21,538
    
    
    
    5.2Hotel and resort management fees
    
    
    26,047
    
    
    
    2.5
    
    
    
    11,068
    
    
    
    2.6Sales and marketing
    
    
    66,902
    
    
    
    6.5
    
    
    
    30,381
    
    
    
    7.2Total hotel and resort expenses
    
    $
    778,093
    
    
    
    75.3
    %
    
    $
    317,818
    
    
    
    75.8
    %
  60




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##### Table of Contents



Other Expenses
      Impairment of Equity Method Investment
  Losses from Unconsolidated Entities
  61




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##### Table of Contents



(Increase)/decreaseEntity
    
    2004
    
    
    2003
    
    
    in equity in lossesWB Resort Partners, LP*
    
    $
    (7,759
    )
    
    $
    (10,305
    )
    
    $
    2,546Desert Ridge Resort Partners, LLC*
    
    
    (6,008
    )
    
    
    (9,625
    )
    
    
    3,617CY-SF Hotel Parent, LP
    
    
    (1,710
    )
    
    
    (2,125
    )
    
    
    415Other Joint Ventures
    
    
    (2,992
    )
    
    
    (1,915
    )
    
    
    (1,077
    )Total
    
    $
    (18,469
    )
    
    $
    (23,970
    )
    
    $
    5,501
 
 *
    
    A partner or a member, who owns a significant percentage of ownership
in our unconsolidated subsidiary, is an affiliate of CHC.   Discontinued Operations
    62




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##### Table of Contents



YearEnded December 31,2004
    
    
    2003Revenues
    
    $
    288,441
    
    
    $
    88,198Expenses
    
    
    (190,543
    )
    
    
    (49,948
    )Depreciation and amortization
    
    
    (35,538
    )
    
    
    (14,611
    )Write-down of assets
    
    
    (5,920
    )
    
    
    Interest and loan cost amortization
    
    
    (25,051
    )
    
    
    (2,146
    )Income from discontinued operations
    
    
    31,389
    
    
    
    21,493Gain on sale of assets
    
    
    645
    
    
    
    Loss on extinguishment of debt
    
    
    
    
    
    
    Minority interests
    
    
    (5,091
    )
    
    
    (181
    )Income tax (expense) benefit
    
    
    (1,097
    )
    
    
    1,126$
    25,846
    
    
    $
    22,438
  Income Taxes
  Minority Interests
  
 63




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##### Table of Contents



Earnings Per Share
  (i)
    
    Loss on extinguishment of debt of $17.9 million which reduced
earnings per share by $0.12;(ii)
    
    Write-off of costs totaling $11.5 million related to our postponed
underwritten offering and to two acquisitions that we are no longer
pursuing which reduced earnings per share by $0.08;(iii)
    
    Recording of a full valuation allowance associated with our deferred
tax asset of $24.5 million, or $0.17 per share;(iv)
    
    Increased exposure to the seasonal slowdown of the hotel and resort
industry during the third quarter, the impact of which was magnified
by the performance of three of our larger Properties being located
in the desert southwest region of the United States. The strongest
quarter for these Properties, including certain significant
Properties acquired in the KSL Acquisition, is generally the first
quarter of each calendar year, and because we did not yet own these
Properties during the first quarter of 2004, the seasonally slow
third quarter was not offset by the traditionally strong first
quarter; and(v)
    
    Increased general and administrative expenses of $7.3 million which
reduced earnings per share by $0.05 pertaining to legal costs
incurred in connection with the Action, Sarbanes Oxley compliance,
and sales tax incurred on rent received from our TRS entities.
  64




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Hotel and Resort Operating Statistics
  Industry Segment and Brand Affiliation
    
    Properties
    
    
    RoomsLuxury ResortIndependent
    
    
    4
    
    
    
    2,282Upper UpscaleDoubleTree
    
    
    1
    
    
    
    631Embassy Suites
    
    
    4
    
    
    
    974Hilton Hotels & Resorts
    
    
    9
    
    
    
    3,727Hyatt Hotels & Resorts
    
    
    3
    
    
    
    1,621JW Marriott*
    
    
    2
    
    
    
    1,444Marriott Hotels, Resorts & Suites
    
    
    6
    
    
    
    2,377Renaissance
    
    
    1
    
    
    
    293Sheraton Hotels
    
    
    3
    
    
    
    65929
    
    
    
    11,726UpscaleCourtyard*
    
    
    12
    
    
    
    2,708Homewood Suites
    
    
    1
    
    
    
    83Residence Inn
    
    
    12
    
    
    
    1,797Springhill Suites
    
    
    4
    
    
    
    901Wyndham Hotels
    
    
    2
    
    
    
    39031
    
    
    
    5,879MidscaleFairfield Inn
    
    
    1
    
    
    
    388Four Points by Sheraton
    
    
    2
    
    
    
    412Hampton Inn
    
    
    17
    
    
    
    2,164Holiday Inn
    
    
    4
    
    
    
    779Holiday Inn Express
    
    
    3
    
    
    
    370TownePlace Suites
    
    
    1
    
    
    
    14428
    
    
    
    4,257Total
    
    
    92
    
    
    
    24,144
 
 *
    
    Total number of properties includes one property each that are unconsolidated
entities. 65




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##### Table of Contents



Property Operating DataAll Properties
Continuing Operations (1)
For the Year Ended December 31, 2005
 Hotels
    
    
    Occupancy
    
    
    ADR
    
    
    RevPARConsolidatedLuxury Resort and Upper Upscale
    
    
    32
    
    
    
    72.2
    %
    
    $
    162.70
    
    
    $
    117.49Upscale
    
    
    27
    
    
    
    76.6
    
    
    
    99.39
    
    
    
    76.09Midscale
    
    
    25
    
    
    
    72.3
    
    
    
    83.09
    
    
    
    60.06Total Consolidated
    
    
    84
    
    
    
    73.2
    %
    
    $
    134.79
    
    
    $
    98.64Unconsolidated
    
    
    2
    
    
    
    78.4
    
    
    
    183.40
    
    
    
    143.80Subtotal
    
    
    86
    
    
    
    73.5
    %
    
    $
    137.81
    
    
    $
    101.27Triple Net Lease(2)
    
    
    6
    
    
    
    71.5
    
    
    
    114.17
    
    
    
    81.58Total
    
    
    92
    
    
    
    73.4
    %
    
    $
    136.67
    
    
    $
    100.30
 
 (1)
    
    Excludes one Property held for sale. Properties previously
leased to third parties which were converted to the TRS structure and
are now leased to wholly-owned TRS entities are presented as
consolidated.(2)
    
    Our operating results include only rental revenues received from
third-party lessees of these Properties, as we do not directly
participate in their hotel operating revenues or expenses. 66




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##### Table of Contents



Property Operating DataComparable Properties
Continuing Operations (1)
For the Year Ended December 31, 2005
 Var. (ppt.)
    
    
    
    
    
    
    Var. (%)
    
    
    
    
    
    
    Var. (%)Hotels
    
    
    Occupancy
    
    
    To 2004
    
    
    ADR
    
    
    To 2004
    
    
    RevPAR
    
    
    to 2004ConsolidatedLuxury Resort and Upper Upscale
    
    
    24
    
    
    
    73.2
    %
    
    
    2.5
    
    
    $
    136.47
    
    
    
    6.9
    %
    
    $
    99.83
    
    
    
    10.7
    %Upscale
    
    
    24
    
    
    
    76.2
    
    
    
    1.7
    
    
    
    98.67
    
    
    
    8.3
    
    
    
    75.17
    
    
    
    10.8Midscale
    
    
    25
    
    
    
    72.3
    
    
    
    2.4
    
    
    
    83.09
    
    
    
    8.6
    
    
    
    60.06
    
    
    
    12.4Total Consolidated
    
    
    73
    
    
    
    73.7
    %
    
    
    2.3
    
    
    $
    114.73
    
    
    
    7.5
    %
    
    $
    84.61
    
    
    
    11.0
    %Unconsolidated
    
    
    2
    
    
    
    78.4
    
    
    
    2.4
    
    
    
    183.40
    
    
    
    7.5
    
    
    
    143.80
    
    
    
    10.8Subtotal
    
    
    75
    
    
    
    74.1
    %
    
    
    2.3
    
    
    $
    120.16
    
    
    
    7.5
    %
    
    $
    89.03
    
    
    
    11.8
    %Triple Net Lease(2)
    
    
    6
    
    
    
    71.5
    
    
    
    0.0
    
    
    
    114.17
    
    
    
    13.6
    
    
    
    81.58
    
    
    
    13.6Total
    
    
    81
    
    
    
    73.9
    %
    
    
    2.1
    
    
    $
    119.80
    
    
    
    7.9
    %
    
    $
    88.57
    
    
    
    11.1
    %
 
 (1)
    
    Excludes one Property held for sale. Properties previously
leased to third parties which were converted to the TRS structure
and are now leased to wholly-owned TRS entities are presented as
consolidated.(2)
    
    Our operating results include only rental revenues received from
third-party lessees of these Properties, as we do not directly
participate in their hotel operating revenues or expenses.      67




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Property Operating DataAdjusted Comparable Properties
Continuing Operations (1)
For the Year Ended December 31, 2005
 Var. (ppt.)
    
    
    
    
    
    
    Var. (%)
    
    
    
    
    
    
    Var. (%)Hotels
    
    
    Occupancy
    
    
    To 2004
    
    
    ADR
    
    
    To 2004
    
    
    RevPAR
    
    
    to 2004ConsolidatedLuxury Resort
and Upper
Upscale
    
    
    28
    
    
    
    73.1
    %
    
    
    2.8
    
    
    $
    165.63
    
    
    
    5.4
    %
    
    $
    121.14
    
    
    
    9.5
    %Upscale
    
    
    24
    
    
    
    76.2
    
    
    
    1.7
    
    
    
    98.67
    
    
    
    8.3
    
    
    
    75.17
    
    
    
    10.8Midscale
    
    
    25
    
    
    
    72.3
    
    
    
    2.4
    
    
    
    83.09
    
    
    
    8.6
    
    
    
    60.06
    
    
    
    12.4Total Consolidated
    
    
    77
    
    
    
    73.7
    %
    
    
    2.5
    
    
    $
    134.53
    
    
    
    6.4
    %
    
    $
    99.09
    
    
    
    10.0
    %Unconsolidated
    
    
    2
    
    
    
    78.4
    
    
    
    2.4
    
    
    
    183.40
    
    
    
    7.5
    
    
    
    143.80
    
    
    
    10.8Subtotal
    
    
    79
    
    
    
    74.0
    %
    
    
    2.5
    
    
    $
    137.92
    
    
    
    6.5
    %
    
    $
    102.02
    
    
    
    10.1
    %Triple Net Lease(2)
    
    
    6
    
    
    
    71.5
    
    
    
    0.0
    
    
    
    114.17
    
    
    
    13.6
    
    
    
    81.58
    
    
    
    13.6Total
    
    
    85
    
    
    
    73.8
    %
    
    
    2.3
    
    
    $
    136.66
    
    
    
    6.8
    %
    
    $
    100.89
    
    
    
    10.3
    %
 
 (1)
    
    Excludes one Property held for sale. Properties previously
leased to third parties which were converted to the TRS structure and
are now leased to wholly-owned TRS entities are presented as
consolidated.(2)
    
    Our operating results include only rental revenues received
from third-party lessees of these Properties, as we do not directly
participate in their hotel operating revenues and expenses. 68




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##### Table of Contents



Property
RevPAR Data  Adjusted Comparable Properties  Quarter by Quarter
Continuing Operations (1)
For the Year Ended December 31, 2005
 First
    
    
    Second
    
    
    Third
    
    
    Fourth
    
    
    YearVar.
    
    
    
    
    
    
    Var.
    
    
    
    
    
    
    Var.
    
    
    
    
    
    
    Var.
    
    
    
    
    
    
    Var.(%)
    
    
    
    
    
    
    (%)
    
    
    
    
    
    
    (%)
    
    
    
    
    
    
    (%)
    
    
    
    
    
    
    (%)to
    
    
    
    
    
    
    to
    
    
    
    
    
    
    to
    
    
    
    
    
    
    to
    
    
    
    
    
    
    to2005 Quarter
    
    Hotels
    
    
    RevPAR
    
    
    2004
    
    
    RevPAR
    
    
    2004
    
    
    RevPAR
    
    
    2004
    
    
    RevPAR
    
    
    2004
    
    
    RevPAR
    
    
    2004ConsolidatedLuxury Resort and
Upper Upscale
    
    
    28
    
    
    $
    131.65
    
    
    
    8.4
    %
    
    $
    123.32
    
    
    
    5.8
    %
    
    $
    114.78
    
    
    
    12.7
    %
    
    $
    115.13
    
    
    
    12.0
    %
    
    $
    121.14
    
    
    
    9.5
    %Upscale
    
    
    24
    
    
    
    76.32
    
    
    
    12.6
    
    
    
    77.62
    
    
    
    12.9
    
    
    
    73.01
    
    
    
    8.0
    
    
    
    74.03
    
    
    
    10.0
    
    
    
    75.17
    
    
    
    10.8Midscale
    
    
    25
    
    
    
    56.79
    
    
    
    12.0
    
    
    
    61.02
    
    
    
    10.8
    
    
    
    62.83
    
    
    
    11.4
    
    
    
    59.58
    
    
    
    15.5
    
    
    
    60.06
    
    
    
    12.4Total Consolidated
    
    
    77
    
    
    $
    105.08
    
    
    
    9.3
    %
    
    $
    101.32
    
    
    
    7.4
    %
    
    $
    95.67
    
    
    
    11.7
    %
    
    $
    94.78
    
    
    
    12.0
    %
    
    $
    99.09
    
    
    
    10.0
    %Unconsolidated
    
    
    2
    
    
    
    176.19
    
    
    
    9.9
    
    
    
    154.54
    
    
    
    2.9
    
    
    
    100.10
    
    
    
    6.2
    
    
    
    144.21
    
    
    
    22.1
    
    
    
    143.80
    
    
    
    10.8Subtotal
    
    
    79
    
    
    $
    109.52
    
    
    
    9.4
    %
    
    $
    104.62
    
    
    
    6.9
    %
    
    $
    95.95
    
    
    
    11.4
    %
    
    $
    98.46
    
    
    
    13.0
    %
    
    $
    102.02
    
    
    
    10.1
    %Triple net Leases (2)
    
    
    6
    
    
    
    78.16
    
    
    
    22.5
    
    
    
    85.06
    
    
    
    13.0
    
    
    
    78.54
    
    
    
    10.3
    
    
    
    84.19
    
    
    
    10.2
    
    
    
    81.58
    
    
    
    13.6Total
    
    
    85
    
    
    $
    107.81
    
    
    
    9.9
    %
    
    $
    103.55
    
    
    
    7.2
    %
    
    $
    95.00
    
    
    
    11.3
    %
    
    $
    97.66
    
    
    
    12.9
    %
    
    $
    100.89
    
    
    
    10.3
    %
 
 (1)
    
    Excludes one Property held for sale. Properties previously
leased to third parties which were converted to the TRS structure and
are now leased to wholly-owned TRS entities are presented as
consolidated.(2)
    
    Our operating results include only rental revenues received
from third-party lessees of these Properties, as we do not directly
participate in their hotel operating revenues and expenses. 69




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Other Information
 Credit Enhancements
  ,
  Liquidity and Capital Resources
  70




---



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Sources of Liquidity and Capital Resources
  Common Stock Offerings and Debt Financing
       71




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72




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2005
    
    
    2004Mortgages payable
    
    $
    2,580,079
    
    
    $
    2,829,495Construction loan facilities
    
    
    
    
    
    
    40,305Tax incremental financing note
    
    
    7,783
    
    
    
    7,783Indebtedness collateralized by Properties
    
    
    2,587,862
    
    
    
    2,877,583Unsecured notes
    
    
    11,592
    
    
    
    1,000$
    2,599,454
    
    
    $
    2,878,583
   Credit Enhancements
  Operating Leases
   73




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Investments
   74




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Membership Deposits
  1.
    
    Demand by the member after 30 years in the program;2.
    
    The sale of the members home in the resort community
when the home buyer purchases a new membership;3.
    
    The members withdrawal from the program and a request for a refund
under the Four-for-One program; or4.
    
    In case of a members death, a request for refund by the
surviving spouse.
  Sale of Properties
       75




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Uses of Liquidity and Capital Resources
  
    
    Interest expense and scheduled principal payments on our indebtedness;
    
    Capital expenditures to improve or expand our Properties;
    
    Refunding of membership deposits;
    
    Existing development and/or renovation activities;
    
    Payment of legal fees, settlement payments under the MOU and other costs in
connection with the Action and other proceedings, whether incurred in the
ordinary course of business or otherwise;
    
    Recurring repairs and maintenance expenditures required to maintain our
Properties,
    
    Acquisitions of Properties;
    
    Asset management fees;
    
    Payments on the Promissory Note; and
    
    Distributions paid to our stockholders pursuant to our distribution policy and to
maintain our REIT status.
  
    
    Cash on hand;
    
    Cash provided by operations;
    
    Credit enhancement funding;
    
    Proceeds from other secured and unsecured debt offerings or lines of credit,
including refinancings;
    
    Deposits from our membership programs;
    
    Reserves established for the replacement of furniture, fixtures and equipment;
and
    
    Proceeds from the sale of Properties.
   76




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
    
    Sources described above with respect to our short-term liquidity;
    
    Selective disposition of non-core assets or other assets, which, upon sale, should generate
net positive cash flow after debt repayments;
    
    Selective sale or contribution of hotels or resorts to joint ventures formed with unrelated
investors, which may have the net effect of generating additional capital; and
    
    Issuance of additional equity and/or debt securities (other than in connection with the DRP).
  KSL Acquisition
    Property
    
    Location
    
    # of RoomsGrand Wailea Resort and Spa
    
    Wailea, Hawaii
    
    
    780La Quinta Resort and Club and PGA West
    
    La Quinta, California
    
    
    617Doral Golf Resort and Spa
    
    Miami, Florida
    
    
    692Arizona Biltmore Resort and Spa
    
    Phoenix, Arizona
    
    
    606Claremont Resort and Spa
    
    Berkeley, California
    
    
    279Emerald Pointe Resort
    
    Lake Lanier Islands, Georgia
    
    
    2463,220
 77




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Distributions
   78




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
    
    The postponement of our listing event in
August 2004 delayed our opportunity to raise
capital in the public markets.
    
    Although the lodging industrys current
performance trends are positive, the downturn
was deeper and longer than we or industry
experts anticipated, and a portion of our
Properties were recently constructed,
renovated or repositioned, causing us to
utilize the majority of our minimum return
guarantees and credit enhancements as of the
end of 2004.
    
    Our strategy for generating additional
operating income by reinvesting funds in the
development, renovation and expansion of our
premier Properties.
    
    Our commitment to manage our corporate debt and enhance the flexibility of our balance sheet.
    79




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Stock-Based Compensation
     Cash Flows
    80




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Commitments and Contingencies
    81




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82




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Commitments and ContingenciesCNL Hospitality Corp.
Merger and Other Matters
     83




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84




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Events Subsequent to December 31, 2005
   ®
     85




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86




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Off-Balance Sheet Arrangements
      87




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Contractual Cash Obligations
  Less thanContractual Cash Obligations
    
    1 Year
    
    
    2-3 Years
    
    
    4-5 Years*
    
    
    Thereafter
    
    
    TotalMortgages and other notes
payable (including the
revolving line of credit and
other liabilities)
    
    $
    133,923
    
    
    $
    389,010
    
    
    $
    2,003,692
    
    
    $
    72,829
    
    
    $
    2,599,454Interest expense
    
    
    187,326
    
    
    
    343,214
    
    
    
    172,192
    
    
    
    5,056
    
    
    
    707,788Capital lease obligations
    
    
    2,779
    
    
    
    3,625
    
    
    
    1,883
    
    
    
    
    
    
    
    8,287Capital expenditures
    
    
    178,952
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    178,952Payment Agreement
    
    
    15,000
    
    
    
    12,000
    
    
    
    
    
    
    
    
    
    
    
    27,000Litigation settlement
    
    
    5,500
    **
    
    
    19,350
    
    
    
    15,650
    
    
    
    
    
    
    
    40,500$
    523,480
    
    
    $
    767,199
    
    
    $
    2,193,417
    
    
    $
    77,885
    
    
    $
    3,561,981
 
 *
    
    In March 2006 we refinanced approximately $1.5 billion of the scheduled maturities in
mortgages and other notes payable pursuant to which the long-term borrowing will mature in 2011.**
    
    Estimated timing of payment, although no assurance can be given that payment will occur during
this period. Additional Information
 Related Party Transactions
    2005
    
    
    2004CNL Securities Corp.:Selling commissions (refund), net*
    
    $
    (2,103
    )
    
    $
    47,519Marketing support fee and due
diligence expense reimbursements
(refund), net *
    
    
    (394
    )
    
    
    3,072(2,497
    )
    
    
    50,591CHC and its affiliates:Acquisition fees
    
    
    23,000
    
    
    
    30,235Development fees
    
    
    3,001
    
    
    
    2,224Asset management fees
    
    
    27,868
    
    
    
    26,50553,869
    
    
    
    58,964$
    51,372
    
    
    $
    109,555
 
 *
    
    The majority of the fees and reimbursements incurred in 2004 were paid to unaffiliated broker-dealer
firms. 88




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2005
    
    
    2004Stock issuance costs
    
    $
    
    
    
    $
    8,188General operating and administrative expenses
    
    
    4,515
    
    
    
    4,328$
    4,515
    
    
    $
    12,516
  89




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90




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91




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92




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93




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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
  Expected Maturity Date2006
    
    
    2007
    
    
    2008
    
    
    2009*
    
    
    2010
    
    
    Thereafter
    
    
    Total
    
    
    Fair ValueDebt:Fixed rate
    
    $
    23,284
    
    
    $
    176,004
    
    
    $
    213,006
    
    
    $
    233,153
    
    
    $
    232,787
    
    
    $
    72,829
    
    
    $
    951,063
    
    
    $
    891,006Average interest
    
    
    6.65
    %
    
    
    6.91
    %
    
    
    6.39
    %
    
    
    6.39
    %
    
    
    6.39
    %
    
    
    8.70
    %Variable rate
    
    $
    110,639
    
    
    $
    
    
    
    $
    
    
    
    $
    1,537,752
    
    
    $
    
    
    
    $
    
    
    
    $
    1,648,391
    
    
    $
    1,648,391Average interest
    
    
    6.33
    %
    
    
    n/a
    
    
    
    n/a
    
    
    
    7.18
    %
    
    
    n/a
    
    
    
    n/aTotal debt
    
    $
    133,923
    
    
    $
    176,004
    
    
    $
    213,006
    
    
    $
    1,770,905
    
    
    $
    232,787
    
    
    $
    72,829
    
    
    $
    2,599,454
 
 *
    
    In March 2006, we refinanced approximately $1.5 billion of the variable rate debt scheduled
maturities pursuant to which the long-term borrowing will mature in 2011 and for which $1.0
billion carries a fixed interest rate.    94




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Item 8. Financial Statements and Supplementary Data
 
 CONTENTS
  
 PageReport of Independent Registered Certified Public Accounting Firm
    
    
    96Financial Statements:Consolidated Balance Sheets
    
    
    97Consolidated Statements of Operations
    
    
    98Consolidated Statements of Stockholders Equity and Other
Comprehensive Income (Loss)
    
    
    99Consolidated Statements of Cash Flows
    
    
    102Notes to Consolidated Financial Statements
    
    
    107
 95




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Report of Independent Registered Certified Public Accounting Firm
  
 /s/  PricewaterhouseCoopers LLP
 96




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December 31,2005
    
    
    2004ASSETSHotel and resort properties, net
    
    $
    3,998,822
    
    
    $
    4,079,844Investments in unconsolidated entities
    
    
    
    
    
    
    10,248Assets held for sale
    
    
    425,633
    
    
    
    973,857Cash and cash equivalents
    
    
    83,307
    
    
    
    99,135Restricted cash
    
    
    113,981
    
    
    
    137,161Receivables, net
    
    
    88,625
    
    
    
    76,893Goodwill
    
    
    513,132
    
    
    
    491,791Intangible assets, net
    
    
    336,723
    
    
    
    347,265Prepaid expenses and other assets
    
    
    99,169
    
    
    
    55,783Loan costs, less accumulated amortization of
$38,960 and $17,205, respectively
    
    
    29,390
    
    
    
    45,068Total assets
    
    $
    5,688,782
    
    
    $
    6,317,045LIABILITIES AND STOCKHOLDERS EQUITYMortgages and other notes payable
    
    
    2,599,454
    
    
    
    2,878,583Liabilities associated with assets held for sale
    
    
    418,957
    
    
    
    663,832Accounts payable and accrued expenses
    
    
    175,026
    
    
    
    166,880Accrued litigation settlement
    
    
    34,151
    
    
    
    Other liabilities
    
    
    25,552
    
    
    
    28,839Distributions and losses in excess of investments in
unconsolidated entities
    
    
    2,600
    
    
    
    Due to related parties
    
    
    27,000
    
    
    
    5,885Member deposits
    
    
    229,809
    
    
    
    214,246Total liabilities
    
    
    3,512,549
    
    
    
    3,958,265Commitments and contingenciesMinority interests
    
    
    114,860
    
    
    
    148,825Stockholders equity:Preferred stock, without par value.
Authorized and unissued 1,500 shares
    
    
    
    
    
    
    Excess shares, $.01 par value per share.
Authorized and unissued 31,500 shares
    
    
    
    
    
    
    Common stock, $.01 par value per share.
Authorized 225,000 shares; issued 158,417and 156,167 shares, respectively; outstanding
152,882 and 152,913 shares, respectively
    
    
    1,530
    
    
    
    1,531Capital in excess of par value
    
    
    2,743,073
    
    
    
    2,740,430Accumulated distributions in excess of net income
    
    
    (689,022
    )
    
    
    (527,790
    )Accumulated other comprehensive income (loss)
    
    
    5,792
    
    
    
    (4,216
    )Total stockholders equity
    
    
    2,061,373
    
    
    
    2,209,955Total liabilities and stockholders equity
    
    $
    5,688,782
    
    
    $
    6,317,045
  97




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Year Ended December 31,2005
    
    
    2004
    
    
    2003Revenues:Room
    
    $
    795,447
    
    
    $
    630,857
    
    
    $
    301,593Food and beverage
    
    
    343,121
    
    
    
    263,517
    
    
    
    92,064Other hotel and resort operating departments
    
    
    190,683
    
    
    
    138,891
    
    
    
    25,441Rental income from operating leases
    
    
    16,741
    
    
    
    24,650
    
    
    
    25,024Other income
    
    
    2,522
    
    
    
    3,598
    
    
    
    3,9751,348,514
    
    
    
    1,061,513
    
    
    
    448,097Expenses:Room
    
    
    188,970
    
    
    
    153,132
    
    
    
    71,676Food and beverage
    
    
    234,588
    
    
    
    191,203
    
    
    
    70,801Other hotel and resort operating departments
    
    
    116,026
    
    
    
    88,091
    
    
    
    16,429Property operations
    
    
    246,207
    
    
    
    206,353
    
    
    
    95,925Repairs and maintenance
    
    
    57,147
    
    
    
    46,365
    
    
    
    21,538Hotel and resort management fees
    
    
    40,282
    
    
    
    26,047
    
    
    
    11,068Sales and marketing
    
    
    80,752
    
    
    
    66,902
    
    
    
    30,381Credit enhancement funding
    
    
    (2,057
    )
    
    
    (23,006
    )
    
    
    (18,840
    )General operating and administrative
    
    
    26,130
    
    
    
    23,668
    
    
    
    7,937Litigation settlement
    
    
    34,151
    
    
    
    
    
    
    
    State and local taxes
    
    
    6,700
    
    
    
    5,633
    
    
    
    2,042Asset management fees to related party
    
    
    27,868
    
    
    
    26,505
    
    
    
    12,782Depreciation and amortization
    
    
    182,995
    
    
    
    145,872
    
    
    
    62,1021,239,759
    
    
    
    956,765
    
    
    
    383,841Operating profit
    
    
    108,755
    
    
    
    104,748
    
    
    
    64,256Interest income
    
    
    4,077
    
    
    
    2,512
    
    
    
    1,781Interest and loan cost amortization
    
    
    (192,355
    )
    
    
    (153,103
    )
    
    
    (59,056
    )Gain on sale of common stock
    
    
    
    
    
    
    9,268
    
    
    
    Impairment of equity method investment
    
    
    
    
    
    
    (1,275
    )
    
    
    (Loss) gain on hedge termination
    
    
    (1,139
    )
    
    
    3,511
    
    
    
    Transaction costs
    
    
    (5,458
    )
    
    
    (11,521
    )
    
    
    (154
    )Loss on extinguishment of debt
    
    
    (2,190
    )
    
    
    (17,877
    )
    
    
    (Loss) income before equity in losses of unconsolidated
entities, minority interests and (expense) benefit from
income taxes
    
    
    (88,310
    )
    
    
    (63,737
    )
    
    
    6,827Equity in earnings (losses) of unconsolidated entities
    
    
    32,775
    
    
    
    (18,469
    )
    
    
    (23,970
    )Minority interests
    
    
    (5,517
    )
    
    
    (3,311
    )
    
    
    960Loss from continuing operations before (expense) benefit from
income taxes
    
    
    (61,052
    )
    
    
    (85,517
    )
    
    
    (16,183
    )Benefit (expense) from income taxes
    
    
    2,965
    
    
    
    (27,442
    )
    
    
    (262
    )Loss from continuing operations
    
    
    (58,087
    )
    
    
    (112,959
    )
    
    
    (16,445
    )Income from discontinued operations
    
    
    64,987
    
    
    
    25,846
    
    
    
    22,438Net income (loss)
    
    $
    6,900
    
    
    $
    (87,113
    )
    
    $
    5,993(Loss) earnings per share of common stock (basic and diluted):Continuing operations
    
    $
    (0.38
    )
    
    $
    (0.76
    )
    
    $
    (0.19
    )Discontinued operations
    
    
    0.43
    
    
    
    0.17
    
    
    
    0.26$
    0.05
    
    
    $
    (0.59
    )
    
    $
    0.07Weighted average number of shares of
common stock outstanding:Basic and diluted
    
    
    152,874
    
    
    
    148,059
    
    
    
    86,225
  98




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Accumulated
    
    
    AccumulatedCommon Stock
    
    
    Capital in
    
    
    distributions in
    
    
    otherNumber of
    
    
    
    
    
    
    excess of par
    
    
    excess of net
    
    
    comprehensive
    
    
    
    
    
    
    Comprehensiveshares
    
    
    Par value
    
    
    value
    
    
    earnings (loss)
    
    
    loss
    
    
    Total
    
    
    income/(loss)Balance at December 31, 2002
    
    
    63,004
    
    
    $
    630
    
    
    $
    1,116,375
    
    
    $
    (98,366
    )
    
    $
    (4,316
    )
    
    $
    1,014,323Subscriptions received for
common stock through public
offerings and distribution
reinvestment plan
    
    
    58,475
    
    
    
    586
    
    
    
    1,168,910
    
    
    
    
    
    
    
    
    
    
    
    1,169,496Retirement of common stock
    
    
    (358
    )
    
    
    (4
    )
    
    
    (6,587
    )
    
    
    
    
    
    
    
    
    
    
    (6,591
    )Stock issuance costs
    
    
    
    
    
    
    
    
    
    
    (113,211
    )
    
    
    
    
    
    
    
    
    
    
    (113,211
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,993
    
    
    
    
    
    
    
    5,993
    
    
    $
    5,993Current period adjustments
to recognize value of cash
flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    554
    
    
    
    554
    
    
    
    554Current period adjustment
to recognize change in
value of foreign operations
investment hedge
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (791
    )
    
    
    (791
    )
    
    
    (791
    )Translation adjustment from
foreign operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    929
    
    
    
    929
    
    
    
    929Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    6,685Distributions declared and
paid ($1.55 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (129,961
    )
    
    
    
    
    
    
    (129,961
    )Balance at December 31, 2003
    
    
    121,121
    
    
    $
    1,212
    
    
    $
    2,165,487
    
    
    $
    (222,334
    )
    
    $
    (3,624
    )
    
    $
    1,940,741
  99




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Accumulated
    
    
    AccumulatedCommon Stock
    
    
    Capital in
    
    
    distributions in
    
    
    otherNumber of
    
    
    
    
    
    
    excess of par
    
    
    excess of net
    
    
    comprehensive
    
    
    
    
    
    
    Comprehensiveshares
    
    
    Par value
    
    
    value
    
    
    earnings (loss)
    
    
    loss
    
    
    Total
    
    
    income/(loss)Balance at December 31, 2003
    
    
    121,121
    
    
    $
    1,212
    
    
    $
    2,165,487
    
    
    $
    (222,334
    )
    
    $
    (3,624
    )
    
    $
    1,940,741Subscriptions received for
common stock through public
offerings and distribution
reinvestment plan
    
    
    33,061
    
    
    
    331
    
    
    
    658,247
    
    
    
    
    
    
    
    
    
    
    
    658,578Issuance of common stock
(to Board of Directors)
    
    
    38
    
    
    
    1
    
    
    
    749
    
    
    
    
    
    
    
    
    
    
    
    750Retirement of common stock
    
    
    (1,307
    )
    
    
    (13
    )
    
    
    (24,623
    )
    
    
    
    
    
    
    
    
    
    
    (24,636
    )Stock issuance costs
    
    
    
    
    
    
    
    
    
    
    (59,430
    )
    
    
    
    
    
    
    
    
    
    
    (59,430
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (87,113
    )
    
    
    
    
    
    
    (87,113
    )
    
    $
    (87,113
    )Current period adjustment
to recognize change in
value of cash flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,864
    )
    
    
    (2,864
    )
    
    
    (2,864
    )Current period adjustment
to recognize change in
value of foreign operations
investment hedge
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    768
    
    
    
    768
    
    
    
    768Translation adjustment from
foreign operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,504
    
    
    
    1,504
    
    
    
    1,504Total
comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (87,705
    )Distributions declared and
paid ($1.49 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (218,343
    )
    
    
    
    
    
    
    (218,343
    )Balance at December 31, 2004
    
    
    152,913
    
    
    $
    1,531
    
    
    $
    2,740,430
    
    
    $
    (527,790
    )
    
    $
    (4,216
    )
    
    $
    2,209,955
  100




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##### Table of Contents



Accumulateddistributions in
    
    
    AccumulatedCommon Stock
    
    
    Capital in
    
    
    excess of
    
    
    otherNumber of
    
    
    Par
    
    
    excess of
    
    
    net earnings
    
    
    comprehensive
    
    
    
    
    
    
    Comprehensiveshares
    
    
    value
    
    
    par value
    
    
    (loss)
    
    
    income (loss)
    
    
    Total
    
    
    income/(loss)Balance at December 31, 2004
    
    
    152,913
    
    
    $
    1,531
    
    
    $
    2,740,430
    
    
    $
    (527,790
    )
    
    $
    (4,216
    )
    
    $
    2,209,955Subscriptions received for
common stock through public
offerings and distribution
reinvestment plan
    
    
    2,243
    
    
    
    22
    
    
    
    43,319
    
    
    
    
    
    
    
    
    
    
    
    43,341Issuance of common stock
(to Board of Directors)
    
    
    7
    
    
    
    
    
    
    
    140
    
    
    
    
    
    
    
    
    
    
    
    140Retirement of common stock
    
    
    (2,281
    )
    
    
    (23
    )
    
    
    (43,313
    )
    
    
    
    
    
    
    
    
    
    
    (43,336
    )Stock issuance cost refund
    
    
    
    
    
    
    
    
    
    
    2,497
    
    
    
    
    
    
    
    
    
    
    
    2,497Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,900
    
    
    
    
    
    
    
    6,900
    
    
    $
    6,900Current period adjustment
to recognize change in
value of cash flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,346
    
    
    
    8,346
    
    
    
    8,346Current period adjustment
to recognize change in
value of foreign operations
investment hedge
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7
    )
    
    
    (7
    )
    
    
    (7
    )Translation adjustment from
foreign operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,669
    
    
    
    1,669
    
    
    
    1,669Total
comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    16,908Distributions declared and
paid ($1.10 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (168,132
    )
    
    
    
    
    
    
    (168,132
    )Balance at December 31, 2005
    
    
    152,882
    
    
    $
    1,530
    
    
    $
    2,743,073
    
    
    $
    (689,022
    )
    
    $
    5,792
    
    
    $
    2,061,373
  101




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##### Table of Contents



Years Ended December 31,2005
    
    
    2004
    
    
    2003Cash flows from operating activities:Net earnings (loss)
    
    $
    6,900
    
    
    $
    (87,113
    )
    
    $
    5,993Adjustments to reconcile net earnings to net
cash provided by operating activities:Depreciation
    
    
    195,607
    
    
    
    174,214
    
    
    
    76,714Amortization
    
    
    27,056
    
    
    
    18,888
    
    
    
    3,337Equity in (income) losses from investments in
unconsolidated entities, net
of distributions
    
    
    (24,925
    )
    
    
    22,552
    
    
    
    33,070Loss on impairments
    
    
    344
    
    
    
    7,193
    
    
    
    Gain on sale of common stock
    
    
    
    
    
    
    (9,268
    )
    
    
    Gain on lease terminations
    
    
    (924
    )
    
    
    
    
    
    
    Gain on hedge termination
    
    
    
    
    
    
    (3,511
    )
    
    
    Gain on sale of hotel properties
    
    
    (67,321
    )
    
    
    (645
    )
    
    
    Loss on extinguishment of debt
    
    
    9,321
    
    
    
    1,707
    
    
    
    Loss on hedge termination
    
    
    1,139
    
    
    
    
    
    
    
    Minority interest
    
    
    7,199
    
    
    
    8,403
    
    
    
    (778
    )Changes in operating assets and liabilities, net of
effects of business acquisitions:Receivables
    
    
    (4,677
    )
    
    
    17,204
    
    
    
    (33,298
    )Prepaid expenses and other assets
    
    
    (14,357
    )
    
    
    11,741
    
    
    
    (1,543
    )Deferred tax asset
    
    
    
    
    
    
    25,828
    
    
    
    (1,321
    )Accounts payable and accrued expenses
    
    
    6,961
    
    
    
    12,749
    
    
    
    17,182Accrued litigation expense
    
    
    34,151
    
    
    
    
    
    
    
    Due to related parties
    
    
    (5,885
    )
    
    
    (5,685
    )
    
    
    9,065Other liabilities
    
    
    (16,340
    )
    
    
    2,910
    
    
    
    4,466Member deposits
    
    
    15,564
    
    
    
    16,574
    
    
    
    Net cash provided by operating activities
    
    
    169,813
    
    
    
    213,741
    
    
    
    112,887Cash flows from investing activities:Cash paid in connection with acquisitions and
capital expenditures
    
    
    (108,559
    )
    
    
    (118,213
    )
    
    
    (1,307,313
    )KSL Acquisition
    
    
    
    
    
    
    (1,426,309
    )
    
    
    RFS Acquisition
    
    
    
    
    
    
    
    
    
    
    (450,350
    )Investment in unconsolidated entities
    
    
    
    
    
    
    (2,192
    )
    
    
    (727
    )Sale of investment in equity securities
    
    
    
    
    
    
    28,295
    
    
    
    Proceeds from sale of hotel and resort Properties
    
    
    595,300
    
    
    
    16,810
    
    
    
    Distribution from unconsolidated entity related
to sales proceeds
    
    
    47,529
    
    
    
    
    
    
    
    Deposit on property and other investments
    
    
    (16,725
    )
    
    
    
    
    
    
    (24,985
    )Decrease (increase) in restricted cash
    
    
    8,062
    
    
    
    (37,778
    )
    
    
    (29,241
    )Increase in other assets
    
    
    (400
    )
    
    
    (37,655
    )
    
    
    (81,996
    )Net cash provided by (used in) investing
activities
    
    
    525,207
    
    
    
    (1,577,042
    )
    
    
    (1,894,612
    )
  102




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##### Table of Contents



Years Ended December 31,2005
    
    
    2004
    
    
    2003Cash flows from financing activities:Net repayments from borrowings
on lines of credit
    
    $
    
    
    
    $
    (24,073
    )
    
    $
    (6
    )Payment of loan costs
    
    
    (8,004
    )
    
    
    (43,979
    )
    
    
    (9,751
    )Proceeds from mortgage loans
    
    
    400,000
    
    
    
    1,922,508
    
    
    
    866,912Net payment to acquire/terminate cash flow hedges
    
    
    (3,020
    )
    
    
    (4,899
    )
    
    
    Principal payments on mortgage loans
    
    
    (903,980
    )
    
    
    (802,812
    )
    
    
    (4,730
    )Proceeds from other notes payable, net of repayments
    
    
    
    
    
    
    (63,593
    )
    
    
    (2,533
    )Payment of capital lease obligation
    
    
    (772
    )
    
    
    (1,823
    )
    
    
    Subscriptions received from stockholders
    
    
    43,481
    
    
    
    658,578
    
    
    
    1,169,496Distributions to stockholders
    
    
    (168,132
    )
    
    
    (218,343
    )
    
    
    (129,961
    )Distributions to minority interest, net of contributions
    
    
    (33,418
    )
    
    
    (13,213
    )
    
    
    106,853Retirement of common stock
    
    
    (43,336
    )
    
    
    (24,636
    )
    
    
    (6,591
    )Refund (payment) of stock issuance costs
    
    
    2,497
    
    
    
    (59,430
    )
    
    
    (113,211
    )Net cash (used in) provided by financing activities
    
    
    (714,684
    )
    
    
    1,324,285
    
    
    
    1,876,478Net (decrease) increase in cash and cash equivalents
    
    
    (19,664
    )
    
    
    (39,016
    )
    
    
    94,753Cash and cash equivalents at beginning of year
    
    
    99,135
    
    
    
    147,694
    
    
    
    52,941Net decrease
in cash and cash equivalents
    
    
    (19,664
    )
    
    
    (39,016
    )
    
    
    94,753Net increase
(decrease) in cash and cash equivalents of assets held for sale
    
    
    3,836
    
    
    
    (9,543
    )
    
    
    Cash and cash equivalents at end of year
    
    $
    83,307
    
    
    $
    99,135
    
    
    $
    147,694
  103




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##### Table of Contents



Years Ended December 31,2005
    
    
    2004
    
    
    2003Supplemental disclosures of cash flow information:Cash paid during the year for interest
    
    $
    214,106
    
    
    $
    160,525
    
    
    $
    54,315Supplemental schedule of non-cash investing activities:RFS AcquisitionPurchase accounting:Assets acquired:Cash and cash equivalents
    
    $
    
    
    
    $
    
    
    
    $
    5,612Restricted cash
    
    
    
    
    
    
    
    
    
    
    9,069Accounts receivable
    
    
    
    
    
    
    
    
    
    
    5,442Loan costs
    
    
    
    
    
    
    
    
    
    
    5,544Prepaid expenses and other assets
    
    
    
    
    
    
    
    
    
    
    8,595Deferred tax asset
    
    
    
    
    
    
    
    
    
    
    24,505Hotel Properties
    
    
    
    
    
    
    
    
    
    
    713,352Total
    
    $
    
    
    
    $
    
    
    
    $
    772,119Liabilities assumed:Accounts payable and accrued expenses
    
    $
    
    
    
    $
    
    
    
    $
    23,207Mortgages payable
    
    
    
    
    
    
    
    
    
    
    160,731Other notes payable
    
    
    
    
    
    
    
    
    
    
    124,021Total
    
    $
    
    
    
    $
    
    
    
    $
    307,959Net assets acquired
    
    $
    
    
    
    $
    
    
    
    $
    464,160Net of cash
    
    $
    
    
    
    $
    
    
    
    $
    458,548Hotel Properties acquired as a result of the RFSAcquisition classified as Real Estate Held for Sale
    
    $
    
    
    
    $
    
    
    
    $
    29,550
  104




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##### Table of Contents



Years Ended December 31,2005
    
    
    2004
    
    
    2003KSL AcquisitionPurchase accounting:Assets acquired:Cash and cash equivalents
    
    $
    
    
    
    $
    18,895
    
    
    $
    Restricted cash
    
    
    
    
    
    
    42,878
    
    
    
    Accounts receivable
    
    
    
    
    
    
    50,816
    
    
    
    Prepaid expenses and other assets
    
    
    
    
    
    
    36,866
    
    
    
    Hotel Properties
    
    
    
    
    
    
    1,650,597
    
    
    
    Goodwill
    
    
    
    
    
    
    491,736
    
    
    
    Intangible assets
    
    
    
    
    
    
    327,771
    
    
    
    Total
    
    $
    
    
    
    $
    2,619,559
    
    
    $
    Liabilities assumed:Accounts payable and accrued expenses
    
    $
    
    
    
    $
    98,551
    
    
    $
    Mortgages payable
    
    
    
    
    
    
    796,048
    
    
    
    Other liabilities
    
    
    
    
    
    
    28,719
    
    
    
    Member deposits
    
    
    
    
    
    
    197,672
    
    
    
    Total
    
    $
    
    
    
    $
    1,120,990
    
    
    $
    Net assets acquired
    
    $
    
    
    
    $
    1,498,569
    
    
    $
    Net of cash
    
    $
    
    
    
    $
    1,479,674
    
    
    $
    Amounts incurred but not paid for construction in progress
    
    $
    
    
    
    $
    6,425
    
    
    $
    6,682Allocation of acquisition fees included in other assets to
investment in hotel Properties and unconsolidated entities
    
    $
    4,067
    
    
    $
    1,481
    
    
    $
    77,014Allocation of deferred acquisition fee payable to investment in
hotel Properties, goodwill, prepaid asset management fee
and unconsolidated entities
    
    $
    23,000
    
    
    $
    
    
    
    $
    Reallocation to properties from goodwill
    
    $
    
    
    
    $
    9,522
    
    
    $
    Assets purchased under capital leases acquired during the period
    
    $
    1,948
    
    
    $
    
    
    
    $
    Distribution of land and construction in progress to joint venture
partners
    
    $
    16,390
    
    
    $
    
    
    
    $
    Contribution to unconsolidated entity of land and construction in
progress
    
    $
    8,195
    
    
    $
    
    
    
    $
    Gain in connection with change in fair value of derivatives
    
    $
    5,524
    
    
    $
    
    
    
    $
    
 105




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##### Table of Contents



Years Ended December 31,2005
    
    
    2004
    
    
    2003Supplemental schedule of non-cash financing activities:Non-cash reduction in TIF Note
    
    $
    
    
    
    $
    315
    
    
    $
    360Distributions declared not paid to minority interest at year end
    
    $
    4,067
    
    
    $
    2,919
    
    
    $
    Loans assumed as a result of the acquisition of Properties
    
    $
    
    
    
    $
    
    
    
    $
    75,571Obligations under capital leases acquired during the period
    
    $
    
    
    
    $
    3,486
    
    
    $
    Capital lease assumed by buyer in connection with sale of
Property
    
    $
    11,695
    
    
    $
    
    
    
    $
    Note payable related to insurance premium financing
    
    $
    14,124
    
    
    $
    
    
    
    $
    Distribution of land and construction in process to minority
interest
    
    $
    8,195
    
    
    $
    
    
    
    $
    
  
 106




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##### Table of Contents



1.
    
    Organization:CNL Hotels & Resorts, Inc., a corporation organized pursuant to the laws of the State of Maryland
on June 12, 1996, operates for federal income tax purposes as a real estate investment trust (a
REIT). The term Company and any reference to CNL Hotels & Resorts, Inc. includes, unless the
context otherwise requires, CNL Hotels & Resorts, Inc., CNL Hospitality Partners, LP, CNL
Hospitality GP Corp., CNL Hospitality LP Corp., RFS Partnership, L.P., CNL Rose Acquisition Corp.,
CNL Rose GP Corp., CNL Resort Hospitality, LP, each of their subsidiaries and several consolidated
partnerships and consolidated joint ventures. Various other wholly or majority owned subsidiaries
may be formed in the future, primarily for purposes of acquiring or developing hotel and resort
properties (Properties).As of December 31, 2005, the Company owned 71 Properties directly and 22 Properties through equity
investments, including two unconsolidated Properties. The Company leases 87 of its Properties,
including the two unconsolidated Properties, to wholly-owned taxable REIT subsidiary (TRS)
entities (the TRS Lessees) which contract with third-party hotel and resort management companies
to operate these Properties. Hotel and resort operating results for these Properties are included
in consolidated results of operations. The remaining six Properties are leased on a triple-net
basis to third-party tenants who operate the Properties or contract with hotel and resort managers
to operate the Properties. Rental income from the operating leases for these Properties is included
in consolidated results of operations. The Company, through its ownership of equity interests in
several partnerships and joint ventures, is subject to certain customary buy/sell provisions
contained within the formation agreements of these entities. Under certain circumstances, the
Company may be required to sell its interests in one or more of these entities.On October 31, 2005, the Company, through certain of its affiliates, entered into a Purchase and
Sale Agreement with affiliates of KSL DC Operating LLC and Kohlberg Kravis Roberts & Co., to sell
all of its interests in CNL KSL Partners, LP, a partnership which owns the Hotel del Coronado in
San Diego, California (the Hotel Del), and in CNL KSL North Beach Development, LP (the North
Beach Partnership), which is developing a piece of property adjacent to the hotel (the Del
Sale). The Del Sale closed on January 9, 2006. For additional information, see Note 24.
Subsequent Events.On December 28, 2005, the Company and THI III GL Investments L.L.C. entered into a Purchase and
Sale Agreement (as amended on December 30, 2005, the GL Purchase Agreement) to acquire the Grande
Lakes Orlando resort. The Grande Lakes Orlando resort includes a 584-room Ritz-Carlton, a 998-room
JW Marriott, a 40,000-square foot spa and an 18-hole Greg Norman-designed championship golf course
(collectively the Grande Lakes Resort) (the GL Purchase). The Purchase was completed on
February 24, 2006, for a purchase price of approximately $753 million. For additional information,
see Note 24. Subsequent Events.2.
    
    Summary of Significant Accounting Policies:Basis of Presentation  The Companys operating results are based on a calendar year ended
December 31 as required by tax laws relating to REITs. However, 31 of the Companys Properties have
managers that have a different quarterly accounting calendar. For these hotels and resorts, the
fiscal year ends on the Friday closest to December 31 and reflects twelve weeks of operations for
the first three quarters of the year and sixteen or seventeen weeks for the fourth quarter of the
year. Therefore, in any given period, period-over-period results may reflect different ending
dates.
 107




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##### Table of Contents



Principles of Consolidation  The accompanying consolidated financial statements include
the accounts of the Company and each of its wholly-owned subsidiaries and entities in which the
Company has a controlling interest in accordance with the provisions of Statement of Position 78-9
Accounting for Investments in Real Estate Ventures (SOP 78-9) or is the primary beneficiary as
defined in FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest
Entities (FIN 46). The application of FIN 46 and SOP 78-9 requires management to make significant
estimates and judgments about the Companys and its venture partners rights, obligations and
economic interests in the related venture entities. The equity method of accounting is applied in
the consolidated financial statements with respect to those investments in entities in which the
Company is not the primary beneficiary under FIN 46 or has less than a controlling interest due to
the significance of rights and obligations held by other parties under SOP 78-9.Reclassification  In accordance with FAS 144, the Company has included the Properties sold
during 2004 and 2005 and the Property identified as held for sale as of December 31, 2005, in
discontinued operations in the consolidated statements of operations for all periods presented. The
December 31, 2005 and 2004 balance sheets have been reclassified to report the assets and
liabilities of these sold Properties as assets held for sale and liabilities associated with assets
held for sale. These reclassifications had no impact on net income (loss) or stockholders equity.Segment Information The Company follows Statement of Financial Accounting Standards No.
131, Disclosures about Segments of an Enterprise and Related Information (FAS 131). FAS 131
requires that a company report financial and descriptive information about its reportable operating
segments. Operating segments are components of an enterprise for which separate financial
information is available and is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing performance. The Companys chief operating
decision maker currently evaluates the Companys operations from a number of different operational
perspectives including but not limited to a Property-by-Property basis, by operator, by chain-scale
classification and by brand. The Company derives all significant revenues from a single reportable
operating segment of business, hotel and resort real estate ownership. Accordingly, the Company
does not report more than one segment; nevertheless, management evaluates, at least quarterly,
whether the Company continues to have one single reportable segment of business.Reverse Stock Split On July 30, 2004, the Companys stockholders approved a reverse stock
split (the Reverse Stock Split) of the Companys common stock, in an exchange ratio of one common
share for every two issued and outstanding common shares which also resulted in the par value being
adjusted to $0.02 per share. The Reverse Stock Split became effective on August 2, 2004, and on
such date the par value was reset at $0.01 per share. All share and per share information in the
accompanying consolidated financial statements has been retroactively adjusted to give effect to
the Reverse Stock Split for all periods presented.Earnings Per Share  Basic earnings per share is calculated based upon the weighted average
number of shares of common stock outstanding during each year, and diluted earnings per share is
calculated based upon weighted average number of common shares outstanding plus potentially
dilutive common shares.Use of Estimates  Company management has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of contingent assets and
liabilities to prepare these consolidated financial statements in conformity with generally
accepted accounting principles (GAAP). Actual results could differ from those estimates.
 108




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Foreign Currency Translation  The results of operations for our one foreign location,
located in Montreal, Quebec, are maintained in the local currency and translated using the average
exchange rates during the period. Assets and liabilities are translated to U.S. dollars using the
exchange rate in effect at the balance sheet date. The resulting translation adjustments are
reflected in stockholders equity as a cumulative foreign currency translation adjustment, a
component of accumulated other comprehensive income (loss). Gains and losses from foreign currency
transactions are included in the accompanying consolidated statements of operations.Hotel and Resort Properties  Hotel and resort Properties are generally comprised of land,
buildings, and equipment and are recorded at historical cost. The cost of improvements and
betterments and any interest incurred during the construction or renovation periods are
capitalized. Costs of repairs and maintenance are expensed as incurred.Buildings and equipment are generally depreciated on the straight-line method over their estimated
useful lives of 40 and five to seven years, respectively. When the Properties or equipment are
sold, the related cost and accumulated depreciation will be removed from the accounts and any gain
or loss from sale will be reflected in our results of operations.Impairment of Long-Lived Assets  In accordance with SFAS No. 144, Accounting for the
Impairment and Disposal of Long-Lived Assets,the Companys long-lived assets are assessed for
impairment at least annually and whenever events or changes in circumstances indicate that the
carrying amounts may not be recoverable. The carrying value of the long-lived asset is considered
impaired when the projected undiscounted pre-tax cash flows are less than the carrying value. The
recoverability of the carrying value of long-lived assets is assessed at the lowest level for which
identifiable cash flows are largely independent of the cash flows of other assets and liabilities.
If cash flows are less than the carrying value of an asset or asset group, an impairment loss is
measured based on the difference between estimated fair value and carrying value. Assets to be
disposed are measured at the lower of their carrying value or fair value less cost to sell. Fair
value is determined through quoted market prices in active markets or, if quoted market prices are
unavailable, through the performance of internal analyses of discounted cash flows or external
appraisals. If an impairment is recognized, the adjusted carrying value of the long-lived asset
represents the new cost basis for the asset.Investment in Unconsolidated Entities  Investments in unconsolidated entities are
accounted for under the equity method of accounting. The difference between the Companys carrying
amount of its investments in unconsolidated entities and the underlying equity in the net assets of
the subsidiaries is due to acquisition fees and expenses which have been allocated to the Companys
investment. These amounts are amortized over 36 years, which is the estimated life of the building
and equipment acquired.Cash and Cash Equivalents  The Company considers all highly liquid investments with an
original maturity of three months or less to be cash equivalents. Cash and cash equivalents consist
of demand deposits at commercial banks and money market funds. Cash accounts maintained on behalf
of the Company in demand deposits at commercial banks and money market funds may exceed federally
insured levels; however, the Company has not experienced any losses in such accounts. Management
believes the Company is not exposed to any significant credit risk on its cash and cash
equivalents.Restricted Cash  Cash is restricted to fund 1) certain of the Companys operating
expenses, 2) expenditures relating to furniture, fixtures and equipment replacement (pursuant to
hotel and resort management agreements), 3) other capital expenditures directly associated with its Properties, and 4) reserves required
pursuant to certain borrowings and has been included in the accompanying consolidated balance
sheets as restricted cash. Certain of the restricted cash identified for renovations has been
designated as such at the discretion of the Company and is not subject to specific contractual
arrangements or obligations. Restricted cash consisted of the following at December 31 (in
thousands):
 109




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2005
    
    
    2004Furniture, fixtures and equipment reserves
    
    $
    50,592
    
    
    $
    61,168Renovations
    
    
    38,240
    
    
    
    14,530Taxes and insurance escrow
    
    
    6,899
    
    
    
    9,635Deposits
    
    
    12,104
    
    
    
    18,855Reserve funds required by lenders
    
    
    5,899
    
    
    
    32,973Deferred compensation
    
    
    247
    
    
    
    $
    113,981
    
    
    $
    137,161
 Stock-Based Compensation
 Fair Value of Financial Instruments
 Goodwill and Intangible Assets
 Loan Costs
 Income Taxes
  110




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Derivative Instruments and Hedging Activities
 Member Deposits
 1.
    
    Demand by the member after 30 years in the program;2.
    
    Sale of the members home in the resort community when the home buyer purchases a new
membership;3.
    
    The members withdrawal from the program and a request for a refund under the Four-for-One
program; or4.
    
    In case of a members death, a request for refund by the surviving spouse.
  Hotel Management Agreements
   111




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Self-Insurance
 Credit Enhancements
 Limited Rent Guarantees
 112




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Threshold Guarantees
 Liquidity Facility Loans
 Senior Loan Guarantees
 Revenue Recognition
 Lease Accounting
 Advertising and Promotional Costs
 113




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Recent Accounting Pronouncements
     114




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##### Table of Contents



3.
    
    Acquisitions Prior to 2005:KSL Acquisition:On April 2, 2004, the Company, through CNL Resort Acquisition Corp., a wholly-owned subsidiary of
the Company, acquired all of the outstanding capital stock of KSL Recreation Corporation (KSL)
for $1.4 billion in cash plus closing costs and transaction related fees of $26.5 million and the
assumption of the outstanding debt of KSL and its subsidiaries of $794.0 million in mortgage loans
(the Existing KSL Loan) (for additional information, see Note 12, Indebtedness), as well as
KSLs other outstanding liabilities (the KSL Acquisition). Pursuant to the stock purchase
agreement, additional consideration of $12.7 million was paid out by the Company in the third
quarter of 2004, relating to the final adjustment of the working capital balance included in the
purchase price.The following Properties were acquired in connection with the KSL Acquisition:
 Property
    
    Location
    
    
    # of RoomsGrand Wailea Resort and Spa
    
    Wailea, Hawaii
    
    
    780La Quinta Resort and Club and PGA West
    
    La Quinta, California
    
    
    617Doral Golf Resort and Spa
    
    Miami, Florida
    
    
    692Arizona Biltmore Resort and Spa
    
    Phoenix, Arizona
    
    
    606Claremont Resort and Spa
    
    Berkeley, California
    
    
    279Emerald Pointe Resort
    
    Lake Lanier Islands, Georgia
    
    
    2463,220
 115




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April 2, 2004ASSETSHotels and resort Properties
    
    $
    1,650,597Cash and cash equivalents
    
    
    18,895Restricted cash
    
    
    42,878Prepaid expenses and other assets
    
    
    36,866Receivables
    
    
    50,816Goodwill
    
    
    491,736Other intangible assets
    
    
    327,771Total assets acquired
    
    
    2,619,559LIABILITIESMortgage payable and accrued interest
    
    
    796,048Accounts payable and accrued expenses
    
    
    98,551Other liabilities
    
    
    28,719Member deposits
    
    
    197,672Total liabilities assumed
    
    
    1,120,990Net assets acquired
    
    $
    1,498,569Net of cash
    
    $
    1,479,674
   116




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RFS Acquisition
   July 10,2003ASSETSInvestment in Properties
    
    $
    683,802Real estate held for sale
    
    
    29,550Cash and cash equivalents
    
    
    5,612Restricted cash
    
    
    9,069Accounts receivable
    
    
    5,442Prepaid expenses and other assets
    
    
    8,595Loan Costs
    
    
    5,544Deferred income taxes
    
    
    24,505Total assets acquired
    
    
    772,119LIABILITIESMortgage notes payable
    
    
    160,731Other notes payable
    
    
    124,021Accounts payable and accrued expenses
    
    
    23,207Total liabilities assumed
    
    
    307,959Net assets acquired
    
    $
    464,160Net of cash
    
    $
    458,548
 117




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Other Property Acquisitions:
  Brand Affiliation
    
    Property Location
    
    Date of Acquisition
    
    Purchase PriceHyatt Regency
    
    Miami, FL
    
    February 20, 2003
    
    $
    35,800JW Marriott
    
    New Orleans, LA
    
    April 21, 2003
    
    
    92,500Marriott Hotel*
    
    Seattle, WA
    
    May 23, 2003
    
    
    88,900Marriott Hotel
    
    Plano, TX
    
    August 15, 2003
    
    
    55,550Marriott Hotel
    
    Baltimore, MD
    
    August 29, 2003
    
    
    69,000Courtyard by Marriott
    
    Arlington, VA
    
    August 29, 2003
    
    
    35,000Hyatt
    
    Montreal, Canada
    
    December 15, 2003
    
    
    51,800
 
 *
    
    Newly constructed  OwnershipBrand Affiliation
    
    Property Location
    
    Interest
    
    Date of Acquisition
    
    Purchase PriceHilton Hotel
    
    Rye, NY
    
    
    75.0
    %
    
    February 20, 2003
    
    $
    75,000Embassy Suites
    
    Orlando, FL
    
    
    75.0
    %
    
    February 20, 2003
    
    
    12,500Embassy Suites
    
    Arlington, VA
    
    
    75.0
    %
    
    February 20, 2003
    
    
    45,500Embassy Suites
    
    Santa Clara, CA
    
    
    75.0
    %
    
    February 20, 2003
    
    
    46,500Hyatt Regency
    
    Dearborn, MI
    
    
    85.0
    %
    
    August 28, 2003
    
    
    65,000Hampton Inn
    
    Manhattan, NY
    
    
    66.7
    %
    
    August 29, 2003
    
    
    28,000Hilton Hotel
    
    La Jolla, CA
    
    
    75.0
    %
    
    December 17, 2003
    
    
    110,000Hilton Hotel
    
    Washington, D.C.
    
    
    75.0
    %
    
    December 17, 2003
    
    
    102,000Hotel del Coronado
    
    Del Coronado, CA
    
    
    70.0
    %
    
    December 18, 2003
    
    
    406,900
   118




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2004
    
    
    
    
    
    2003Revenues
    
    $
    1,489,890
    
    
    
    
    
    
    $
    1,401,064Loss from continuing operations
    
    
    (95,908
    )
    
    
    
    
    
    
    (42,347
    )Net loss
    
    
    (98,728
    )
    
    
    
    
    
    
    (42,347
    )Basic and diluted earnings per share
    
    
    (0.65
    )
    
    
    
    
    
    
    (0.31
    )Weighted average number of common
shares outstanding  basic and diluted
    
    
    152,334
    
    
    
    
    
    
    
    137,165
  4.
    
    Hotel and Resort Properties
  2005
    
    
    2004Land
    
    $
    798,012
    
    
    $
    794,792Buildings
    
    
    3,194,088
    
    
    
    3,126,985Equipment
    
    
    385,105
    
    
    
    348,4424,377,205
    
    
    
    4,270,219Less accumulated depreciation
    
    
    (420,952
    )
    
    
    (256,645
    )Construction in progress
    
    
    42,569
    
    
    
    66,270$
    3,998,822
    
    
    $
    4,079,844
   5.
    
    Rentals Under Operating Leases:
  119




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120




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2006
    
    $
    12,4862007
    
    
    12,3662008
    
    
    11,3652009
    
    
    11,0622010
    
    
    11,0622011 and thereafter
    
    
    50,767$
    109,108
 6.
    
    Investments in Unconsolidated Entities
  Total Amount
    
    Ownership InterestInvested as of
    
    as of December 31,Name
    
    Year of inception
    
    December 31, 2005
    
    2005
    
    DescriptionDesert Ridge
Resort Partners, LLC (i)
    
    
    2000
    
    
    $25.1 million
    
    
    44.00
    %
    
    Owns a resort in Arizona.WB Resort Partners, L.P. (ii)
    
    
    2001
    
    
    
    
    
    
    
    
    
    
    Owned a resort in Hawaii.CTM Partners, LLC (iii)
    
    
    2002
    
    
    
    
    
    
    
    
    
    
    Owned the licensing rights to the Mobil Travel Guide.CY-SF Hotel Parent, L.P.
    
    
    2002
    
    
    $13.0 million
    
    
    48.15
    %
    
    Owns a hotel in California.CNL Plaza, Ltd. and CNL Plaza Venture, Ltd. (iv)
    
    
    2002
    
    
    $0.3 million
    
    
    9.90
    %
    
    Owns an office building in Florida, where the Companys advisor, CNL Hospitality Corp. (CHC) leases office space, and an interest in an adjacent parking garage.CNL KSL North Beach Development, LP (v)
    
    
    2005
    
    
    $8.2 million
    
    
    50.00
    %
    
    Owns property being developed adjacent to the Hotel del Coronado.
 
 The Companys maximum exposure to loss as a result of its involvement with these unconsolidated
entities is limited to its capital contributions in these entities
and a guarantee of $2.3 million relating to a loan of CNL Plaza,
Ltd. The Company has no guarantees
of the obligations of these entities except for recourse liabilities related to one of these
entities including those that arise from fraud, misrepresentation or willful misconduct by the
Company. Otherwise, creditors of these entities have no recourse to the general credit of the
Company, however, the Company is committed to fund its share of obligations related to these
entities. 121




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122




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123




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Desert RidgeResort
    
    
    WB Resort
    
    
    CY-SF Hotel
    
    
    Other JointPartners, LLC
    
    
    Partners, LP
    
    
    Parent, LP
    
    
    Ventures**
    
    
    TotalHotel and resort Properties
    
    $
    236,266
    
    
    $
    
    
    
    $
    72,601
    
    
    $
    16,391
    
    
    $
    325,258Other assets
    
    
    28,654
    
    
    
    1,750
    
    
    
    3,910
    
    
    
    69,820
    
    
    
    104,134Mortgages and other notes
payable
    
    
    300,000
    
    
    
    
    
    
    
    54,853
    
    
    
    74,794
    
    
    
    429,647Other liabilities
    
    
    14,817
    
    
    
    1,024
    
    
    
    15,906
    
    
    
    420
    
    
    
    32,167Partners capital (deficit)
    
    
    (49,897
    )
    
    
    726
    
    
    
    5,752
    
    
    
    10,997
    
    
    
    (32,422
    )Carrying amount of investment
    
    
    (15,672
    )
    
    
    605
    
    
    
    4,545
    
    
    
    7,922
    
    
    
    (2,600
    )Companys ownership
interest at end of period
    
    
    44.00
    %
    
    
    49.00
    %
    
    
    48.15
    %
    
    
    9.90% - 50
    %
  Desert RidgeResort
    
    
    WB Resort
    
    
    CY-SF Hotel
    
    
    Other JointPartners, LLC
    
    
    Partners, LP
    
    
    Parent, LP
    
    
    Ventures**
    
    
    TotalHotel and resort Properties
    
    $
    250,090
    
    
    $
    181,318
    
    
    $
    74,886
    
    
    $
    
    
    
    $
    506,294Other assets
    
    
    18,547
    
    
    
    20,189
    
    
    
    4,937
    
    
    
    72,763
    
    
    
    116,436Mortgages and other notes
Payable
    
    
    277,470
    
    
    
    178,809
    
    
    
    56,018
    
    
    
    76,050
    
    
    
    588,347Other liabilities
    
    
    16,772
    
    
    
    22,530
    
    
    
    12,763
    
    
    
    291
    
    
    
    52,356Partners capital (deficit)
    
    
    (25,605
    )
    
    
    168
    
    
    
    11,042
    
    
    
    (3,578
    )
    
    
    (17,973
    )Carrying amount of investment
    
    
    (5,498
    )
    
    
    8,353
    
    
    
    7,486
    
    
    
    (93
    )
    
    
    10,248Companys ownership
interest at end of period
    
    
    44.00
    %
    
    
    49.00
    %
    
    
    48.15
    %
    
    
    9.90
    %
 124




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Desert Ridge
    
    
    
    
    
    
    CY-SFResort
    
    
    WB Resort
    
    
    Hotel
    
    
    Other JointPartners, LLC
    
    
    Partners, LP
    
    
    Parent, LP
    
    
    Ventures**
    
    
    TotalRevenues
    
    $
    116,442
    
    
    $
    72,510
    
    
    $
    21,706
    
    
    $
    10,760
    
    
    $
    221,418Cost of sales
    
    
    (49,503
    )
    
    
    (25,139
    )
    
    
    (7,673
    )
    
    
    (3,490
    )
    
    
    (85,805
    )Expenses
    
    
    (56,726
    )
    
    
    (43,421
    )
    
    
    (13,582
    )
    
    
    (4,137
    )
    
    
    (117,866
    )Depreciation and amortization
    
    
    (15,143
    )
    
    
    (8,743
    )
    
    
    (3,039
    )
    
    
    (2,743
    )
    
    
    (29,668
    )Loss on extinguishments of
debt
    
    
    (15,684
    )
    
    
    (2,107
    )
    
    
    
    
    
    
    
    
    
    
    (17,791
    )Gain on sale
    
    
    
    
    
    
    103,468
    
    
    
    
    
    
    
    
    
    
    
    103,468Net income (loss)
    
    $
    (20,614
    )
    
    $
    96,568
    
    
    $
    (2,588
    )
    
    $
    390
    
    
    $
    73,756Income (loss) allocable
to the Company
    
    $
    (9,070
    )
    
    $
    43,053
    
    
    $
    (1,246
    )
    
    $
    38
    
    
    $
    32,775Other comprehensive
loss allocable to
the Company
    
    $
    (1,273
    )
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (1,273
    )Companys ownership
interest at end of period
    
    
    44.00
    %
    
    
    49.00
    %
    
    
    48.15
    %
    
    
    9.90
    %
 125




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Desert Ridge
    
    
    
    
    
    
    CY-SFResort
    
    
    WB Resort
    
    
    Hotel
    
    
    Other JointPartners, LLC
    
    
    Partners, LP
    
    
    Parent, LP
    
    
    Ventures**
    
    
    TotalRevenues
    
    $
    103,982
    
    
    $
    68,611
    
    
    $
    18,924
    
    
    $
    12,327
    
    
    $
    203,844Cost of sales
    
    
    (45,649
    )
    
    
    (26,331
    )
    
    
    (7,064
    )
    
    
    (4,486
    )
    
    
    (83,530
    )Depreciation and
amortization
    
    
    (15,064
    )
    
    
    (11,934
    )
    
    
    (3,007
    )
    
    
    (5,644
    )
    
    
    (35,649
    )Expenses
    
    
    (56,925
    )
    
    
    (46,181
    )
    
    
    (12,404
    )
    
    
    (13,192
    )
    
    
    (128,702
    )Minority interest in loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,638
    
    
    
    2,638Net income (loss)
    
    $
    (13,656
    )
    
    $
    (15,835
    )
    
    $
    (3,551
    )
    
    $
    (8,357
    )
    
    $
    (41,399
    )Income (loss) allocable
to the Company
    
    $
    (6,008
    )
    
    $
    (7,759
    )
    
    $
    (1,710
    )
    
    $
    (2,992
    )
    
    $
    (18,469
    )Other comprehensive
loss allocable to
the Company
    
    $
    (5,452
    )
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (5,452
    )Companys ownership
interest at end of period
    
    
    44.00
    %
    
    
    49.00
    %
    
    
    48.15
    %
    
    9.90% to 36.05%
 126




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Desert Ridge
    
    
    
    
    
    
    CY-SFResort
    
    
    WB Resort
    
    
    Hotel
    
    
    Other JointPartners, LLC
    
    
    Partners, LP
    
    
    Parent, LP
    
    
    Ventures**
    
    
    TotalRevenues
    
    $
    90,270
    
    
    $
    55,766
    
    
    $
    15,542
    
    
    $
    12,960
    
    
    $
    174,538Cost of sales
    
    
    (43,471
    )
    
    
    (22,301
    )
    
    
    (5,512
    )
    
    
    (10,789
    )
    
    
    (82,073
    )Depreciation and
amortization
    
    
    (14,680
    )
    
    
    (11,975
    )
    
    
    (2,998
    )
    
    
    (4,041
    )
    
    
    (33,694
    )Expenses
    
    
    (53,993
    )
    
    
    (42,521
    )
    
    
    (11,330
    )
    
    
    (6,011
    )
    
    
    (113,855
    )Minority interest in loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,828
    
    
    
    1,828Net income (loss)
    
    $
    (21,874
    )
    
    $
    (21,031
    )
    
    $
    (4,298
    )
    
    $
    (6,053
    )
    
    $
    (53,256
    )Income (loss) allocable
to the Company
    
    $
    (9,625
    )
    
    $
    (10,305
    )
    
    $
    (2,125
    )
    
    $
    (1,915
    )
    
    $
    (23,970
    )Other comprehensive
income allocable to
the Company
    
    $
    856
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    856Companys ownership
interest at end of period
    
    
    44.00
    %
    
    
    49.00
    %
    
    
    48.15
    %
    
    9.90% to 31.25%
 
 **
    
    For the year ended December 31, 2005, Other Joint Ventures includes the results of operations of
CNL Plaza, Ltd., CNL Plaza Venture, Ltd. and the North Beach Partnership. For the years ended
December 31, 2004 and 2003, Other Joint Ventures includes the results of operations of CNL Plaza,
Ltd., CNL Plaza Venture, Ltd. and CTM, an investment which the Company wrote-off as of December 31,
2004, and was subsequently dissolved.  December 31,2005
    
    
    2004Desert Ridge Resort Partners, LLC
    
    $
    2,883
    
    
    $
    2,899WB Resort Partners, LP
    
    
    50,653
    (1)
    
    
    CY-SF Hotel Parent, LP
    
    
    1,624
    
    
    
    976CNL Plaza, Ltd.
    
    
    218
    
    
    
    208$
    55,378
    
    
    $
    4,083
 
 (1)
    
    Of this distribution, $47.5 million relates to the WBR Sale. 127




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Discontinued Operations:
    ® ® ® ®
   
 128




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##### Table of Contents



Year Ended December 31,2005
    
    
    2004
    
    
    2003Revenues
    
    $
    222,634
    
    
    $
    288,441
    
    
    $
    88,198Income from lease termination
    
    
    5,982
    
    
    
    
    
    
    
    Expenses
    
    
    (148,884
    )
    
    
    (190,543
    )
    
    
    (49,948
    )Depreciation and amortization
    
    
    (23,904
    )
    
    
    (35,538
    )
    
    
    (14,611
    )Write-down of assets
    
    
    (345
    )
    
    
    (5,920
    )
    
    
    Interest and loan cost amortization
    
    
    (38,345
    )
    
    
    (25,051
    )
    
    
    (2,146
    )Income from discontinued operations
    
    
    17,138
    
    
    
    31,389
    
    
    
    21,493Gain on sale of assets
    
    
    67,321
    
    
    
    645
    
    
    
    Loss on extinguishment of debt
    
    
    (13,469
    )
    
    
    
    
    
    
    Minority interests
    
    
    (1,681
    )
    
    
    (5,091
    )
    
    
    (181
    )Income tax (expense) benefit
    
    
    (4,322
    )
    
    
    (1,097
    )
    
    
    1,126$
    64,987
    
    
    $
    25,846
    
    
    $
    22,438
 Prepaid Expenses and Other Assets:
  Investments:
  129




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Goodwill and Intangible Assets:
  2005
    
    
    2004Goodwill
    
    $
    513,132
    
    
    $
    491,791Intangibles
    
    
    336,723
    
    
    
    347,265$
    849,855
    
    
    $
    839,056
  Goodwill and
    
    Weighted
    
    
    Gross Carrying
    
    
    Accumulated
    
    
    NetIntangible Assets
    
    Average Life
    
    
    Amount
    
    
    Amortization
    
    
    Book ValueGoodwill
    
    Indefinite
    
    $
    513,132
    
    
    
    n/a
    
    
    $
    513,132Tradenames
    
    Indefinite
    
    
    199,757
    
    
    
    n/a
    
    
    
    199,757Rental pool operating rights
    
    Indefinite
    
    
    15,900
    
    
    
    n/a
    
    
    
    15,900Goodwill and other intangible
assets with indefinite lives
    
    
    
    
    
    
    728,789
    
    
    
    n/a
    
    
    
    728,789Beneficial operating rights
    
    29.7 years
    
    
    43,900
    
    
    
    (3,032
    )
    
    
    40,868Advanced bookings
    
    7.0  years
    
    
    16,442
    
    
    
    (4,609
    )
    
    
    11,833Membership contracts
    
    13.7 years
    
    
    50,842
    
    
    
    (8,472
    )
    
    
    42,370Favorable ground lease
    
    39.0 years
    
    
    27,431
    
    
    
    (1,436
    )
    
    
    25,995Intangible assets with finite lives
    
    
    
    
    
    
    138,615
    
    
    
    (17,549
    )
    
    
    121,066Total goodwill and intangible assets
    
    
    
    
    
    $
    867,404
    
    
    $
    (17,549
    )
    
    $
    849,855
    2006
    
    $
    9,7002007
    
    
    9,7002008
    
    
    9,7002009
    
    
    9,7002010
    
    
    9,700Thereafter
    
    
    72,566Total
    
    $
    121,066
 130




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Income Taxes:
     2005
    
    
    2004
    
    
    2003Current:Federal
    
    $
    (687
    )
    
    $
    (1,757
    )
    
    $
    (86
    )State
    
    
    458
    
    
    
    (954
    )
    
    
    (371
    )(229
    )
    
    
    (2,711
    )
    
    
    (457
    )Deferred:Federal
    
    
    (897
    )
    
    
    (21,749
    )
    
    
    1,112State
    
    
    (231
    )
    
    
    (4,079
    )
    
    
    209(1,128
    )
    
    
    (25,828
    )
    
    
    1,321Total income tax
(expense) benefit
    
    $
    (1,357
    )
    
    $
    (28,539
    )
    
    $
    864
 131




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2005
    
    
    2004
    
    
    2003Continuing operations
    
    $
    2,965
    
    
    $
    (27,442
    )
    
    $
    (262
    )Discontinued operations
    
    
    (4,322
    )
    
    
    (1,097
    )
    
    
    1,126Total income tax (expense) benefit
    
    $
    (1,357
    )
    
    $
    (28,539
    )
    
    $
    864
  2005
    
    
    2004Deferred tax assets:Net operating loss
    
    $
    87,736
    
    
    $
    60,947Lease termination
    
    
    7,760
    
    
    
    12,462Other
    
    
    (3,094
    )
    
    
    561Valuation allowance
    
    
    (93,530
    )
    
    
    (73,970
    )$
    (1,128
    )
    
    $
    
  2021
    
    $
    8,0002022
    
    
    20,0002023
    
    
    32,0002024
    
    
    99,0002025
    
    
    71,000Total
    
    $
    230,000
 Indebtedness:
  2005
    
    
    2004Mortgages payable
    
    $
    2,580,079
    
    
    $
    2,829,495Construction loan facilities
    
    
    
    
    
    
    40,305Tax incremental financing note
    
    
    7,783
    
    
    
    7,783Indebtedness collateralized by Properties
    
    
    2,587,862
    
    
    
    2,877,583Unsecured notes
    
    
    11,592
    
    
    
    1,000$
    2,599,454
    
    
    $
    2,878,583
 132




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133




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134




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2005
    
    
    2004Collateral (1)
    
    
    Interest Rate (2)
    
    
    
    
    
    
    Maturity Date
    
    
    Balance
    
    
    BalanceFloating rate debt:Term loan
    
    
    
    
    
    LIBOR + 300 bps
    
    
    
    
    
    October 2006
    
    $
    
    
    
    $
    169,790CMBS loan
    
    5 hotels
    
    LIBOR + 332.5 bps
    
    
    (3
    )
    
    September 2009
    
    
    1,500,000
    
    
    
    1,500,000CMBS loan
    
    
    
    
    
    LIBOR + 247 bps
    
    
    (3
    )
    
    December 2008
    
    
    
    
    
    
    66,660Mortgage debt
    
    4 hotels
    
    LIBOR + 230 bps
    
    
    (4
    )
    
    October 2006
    
    
    94,919
    
    
    
    96,688Mortgage debt
    
    1 hotel
    
    CDOR + 375 bps
    
    
    (5
    )
    
    April 2009
    
    
    37,752
    
    
    
    36,533Mortgage debt
    
    1 hotel
    
    LIBOR + 350 bps
    
    
    
    
    
    August 2006
    
    
    15,720
    
    
    
    15,900Secured revolver
    
    25 hotels
    
    LIBOR + 225 bps
    
    
    
    
    
    September 2008
    
    
    
    
    
    
    Construction loan
    
    
    
    
    
    LIBOR + 275 bps
    
    
    (6
    )
    
    December 2005
    
    
    
    
    
    
    40,305Total floating rate debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,648,391
    
    
    
    1,925,876Fixed rate debt:Mortgage debt
    
    8 hotels
    
    
    6.53
    %
    
    
    
    
    
    November  2007
    
    
    88,225
    
    
    
    90,516Mortgage debt
    
    3 hotels
    
    
    8.34
    %
    
    
    
    
    
    December  2007
    
    
    50,000
    
    
    
    50,000Mortgage debt
    
    2 hotels
    
    
    5.67
    %
    
    
    
    
    
    January 2008
    
    
    77,053
    
    
    
    78,650Mortgage debt
    
    1 hotel
    
    
    5.84
    %
    
    
    
    
    
    December  2007
    
    
    30,435
    
    
    
    31,000Mortgage debt
    
    1 hotel
    
    
    4.93
    %
    
    
    
    
    
    July  2008
    
    
    50,000
    
    
    
    50,000Mortgage debt
    
    2 hotels
    
    
    5.50
    %
    
    
    
    
    
    January  2009
    
    
    127,200
    
    
    
    127,200Mortgage debt
    
    10 hotels
    
    
    7.83
    %
    
    
    
    
    
    December  2008
    
    
    48,843
    
    
    
    49,888Mortgage debt
    
    1 hotel
    
    
    5.60
    %
    
    
    
    
    
    April  2009
    
    
    31,504
    
    
    
    32,115Mortgage debt
    
    7 hotels
    
    
    7.67
    %
    
    
    (7
    )
    
    July  2009
    
    
    78,836
    
    
    
    80,727Mortgage debt
    
    5 hotels
    
    
    5.95
    %
    
    
    
    
    
    March  2010
    
    
    145,000
    
    
    
    145,000Mortgage debt
    
    8 hotels
    
    
    8.00
    %
    
    
    
    
    
    August  2010
    
    
    86,371
    
    
    
    88,549Mortgage debt
    
    1 hotel
    
    
    8.08
    %
    
    
    
    
    
    August  2010
    
    
    45,062
    
    
    
    45,717Mortgage debt
    
    1 hotel
    
    
    8.32
    %
    
    
    
    
    
    January  2011
    
    
    6,345
    
    
    
    6,452Mortgage debt
    
    1 hotel
    
    
    8.11
    %
    
    
    
    
    
    February  2011
    
    
    27,355
    
    
    
    27,993Mortgage debt
    
    1 hotel
    
    
    7.78
    %
    
    
    
    
    
    January  2023
    
    
    8,672
    
    
    
    8,888Mortgage debt
    
    1 hotel
    
    
    8.29
    %
    
    
    
    
    
    December  2025
    
    
    30,787
    
    
    
    31,229Tax incremental financing note
    
    1 hotel
    
    
    12.85
    %
    
    
    (8
    )
    
    June 2018
    
    
    7,783
    
    
    
    7,783Insurance financing note
    
    
    n/a
    
    
    
    6.99
    %
    
    
    
    
    
    October 2006
    
    
    10,592
    
    
    
    Publicly-traded term notes
    
    
    n/a
    
    
    
    9.75
    %
    
    
    
    
    
    March 2012
    
    
    1,000
    
    
    
    1,000Total fixed rate debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    951,063
    
    
    
    952,707Total debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2,599,454
    
    
    $
    2,878,583
 
 1.
    
    As of December 31, 2005, 99 percent of the Properties the Company directly owned were
pledged as collateral under the Companys financing arrangements.2.
    
    As of December 31, 2005 and 2004, LIBOR was 4.39 percent and 2.42 percent, respectively,
and CDOR was 3.37 percent and 2.56 percent. 135




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3.
    
    Blended interest rate4.
    
    Interest rate floor of 4.96%5.
    
    Interest rate floor of 6.25%6.
    
    Interest rate floor of 6.75%7.
    
    Average interest rate as the loans bear interest ranging from 7.5% to 7.75%8.
    
    This note is paid down with incremental real estate taxes bearing an interest rate of 12.85%  2006 (i)
    
    $
    133,9232007
    
    
    176,0042008
    
    
    213,0062009 (ii)
    
    
    1,770,9052010
    
    
    232,7872011 and thereafter
    
    
    72,829Total
    
    $
    2,599,454
 
 (i)
    
    As disclosed in Note 24 Subsequent Events
approximately $100 million of the Companys
long-term borrowings
scheduled to mature in 2006 was refinanced in March 2006 and the maturity extended to April
2011.(ii)
    
    As disclosed in Note 24 Subsequent Events approximately $1.5 billion of the Companys
long-term borrowings
scheduled to mature in 2009 was refinanced in January 2006 and the maturity extended to
February 2011. Derivative Instruments and Hedging Activities:
 
  136




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137




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Index at
    
    Index Cap
    
    
    
    
    
    Fair ValueNotional Amount
    
    Index
    
    12/31/05
    
    Strike
    
    Cap Maturity
    
    (in thousands)$900 million *
    
    LIBOR
    
    
    4.39
    %
    
    
    4.25
    %
    
    September 2006
    
    $
    2,750$100 million *
    
    LIBOR
    
    
    4.39
    %
    
    
    4.25
    %
    
    September 2006
    
    
    306$100 million *
    
    LIBOR
    
    
    4.39
    %
    
    
    4.25
    %
    
    September 2006
    
    
    306$100 million *
    
    LIBOR
    
    
    4.39
    %
    
    
    4.25
    %
    
    September 2006
    
    
    306$100 million *
    
    LIBOR
    
    
    4.39
    %
    
    
    4.25
    %
    
    September 2006
    
    
    306$100 million *
    
    LIBOR
    
    
    4.39
    %
    
    
    4.25
    %
    
    September 2006
    
    
    306$100 million *
    
    LIBOR
    
    
    4.39
    %
    
    
    4.25
    %
    
    September 2006
    
    
    306$230 million **
    
    LIBOR
    
    
    4.39
    %
    
    
    4.00
    %
    
    February 2008
    
    
    3,797$90 million **
    
    LIBOR
    
    
    4.39
    %
    
    
    4.00
    %
    
    February 2008
    
    
    1,485$20 million **
    
    LIBOR
    
    
    4.39
    %
    
    
    4.00
    %
    
    February 2008
    
    
    330$60 million **
    
    LIBOR
    
    
    4.39
    %
    
    
    4.00
    %
    
    February 2008
    
    
    990HYT Montreal
    
    CDOR
    
    
    3.32
    %
    
    
    7.00
    %
    
    April 2007
    
    
    0$270 million ***
    
    LIBOR
    
    
    4.39
    %
    
    
    4.50
    %
    
    July 2007
    
    
    1,454$31.5 million ***
    
    LIBOR
    
    
    4.39
    %
    
    
    4.50
    %
    
    July 2007
    
    
    170
 
 *
    
    Represents derivative financial instruments related to the Companys consolidated
Properties.**
    
    Represents derivative financial instruments related to the Companys one Property held for
sale.***
    
    Represents derivative financial instruments related to the Companys unconsolidated Properties
for which the Companys portion is recorded in other comprehensive income. Distributions:
  Related Party Transactions:
 
 138




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2005
    
    
    2004CNL Securities Corp.:Selling commissions (refund), net
    
    $
    (2,103
    )
    
    $
    47,519Marketing support fee and due
diligence expense reimbursements
(refund), net
    
    
    (394
    )
    
    
    3,072(2,497
    )
    
    
    50,591CHC and its affiliates:Acquisition fees
    
    
    23,000
    
    
    
    30,235Development fees
    
    
    3,001
    
    
    
    2,224Asset management fees
    
    
    27,868
    
    
    
    26,50553,869
    
    
    
    58,964$
    51,372
    
    
    $
    109,555
    2005
    
    
    2004Stock issuance costs
    
    $
    
    
    
    $
    8,188General operating and administrative expenses
    
    
    4,515
    
    
    
    4,328$
    4,515
    
    
    $
    12,516
 
 139




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140




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141




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142




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143




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144




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Concentration of Risk:
  Stockholders Equity:
      145




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Stock-Based Compensation:
     146




---



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Commitments and Contingencies:
   147




---



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148




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149




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150




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20.
    
    CNL Hospitality Corp. Merger and Other Matters:
   151




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152




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21.
    
    Credit Enhancements:
 
  Limited
    
    
    
    
    
    
    LiquidityRent
    
    
    Threshold
    
    
    FacilityGuarantees
    
    
    Guarantees
    
    
    LoansAmount available as of January 1, 2004
    
    $
    
    
    
    $
    20,657
    
    
    $
    5,572New credit enhancements obtained
    
    
    18,487
    
    
    
    13,660
    
    
    
    1,830Utilization of credit enhancements
    
    
    
    
    
    
    (28,250
    )
    
    
    (2,199
    )Expiration of credit enhancements
    
    
    
    
    
    
    
    
    
    
    Amount available as of December 31, 2004
    
    
    18,487
    
    
    
    6,067
    
    
    
    5,203New credit enhancements obtained
    
    
    
    
    
    
    
    
    
    
    Utilization of credit enhancements
    
    
    (1,243
    )
    
    
    (2,839
    )
    
    
    Expiration of credit enhancements
    
    
    
    
    
    
    
    
    
    
    (1,249
    )Amount available as of December 31, 2005
    
    $
    17,244
    
    
    $
    3,228
    
    
    $
    3,954
 153




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##### Table of Contents



Liquidity
    
    
    SeniorFacility
    
    
    LoanLoans
    
    
    GuaranteesAmount available as of January 1, 2004
    
    $
    19,256
    
    
    $
    15,000New credit enhancements obtained
    
    
    
    
    
    
    Utilization of credit enhancements
    
    
    (9,241
    )
    
    
    Expiration of credit enhancements
    
    
    
    
    
    
    Amount available as of December 31, 2004
    
    
    10,015
    
    
    
    15,000New credit enhancements obtained
    
    
    7,802
    
    
    
    Utilization of credit enhancements
    
    
    (3,316
    )
    
    
    Expiration of credit enhancements
    
    
    (6,135
    )
    
    
    (15,000
    )Amount available as of December 31, 2005
    
    $
    8,366
    
    
    $
    
   2005
    
    
    2004Threshold guarantees
    
    $
    2,055
    
    
    $
    2,400Liquidity facility loan
    
    
    
    
    
    
    12,046$
    2,055
    
    
    $
    14,446
  2005
    
    
    2004Liquidity facility loan
    
    $
    13,759
    
    
    $
    62,318Senior loan guarantees
    
    
    
    
    
    
    24,551$
    13,759
    
    
    $
    86,869
  154




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##### Table of Contents



Selected Quarterly Financial Data (unaudited):
  2005 Quarter*
    
    First
    
    Second
    
    Third
    
    Fourth
    
    YearContinuing operations:Revenues
    
    $
    361,867
    
    
    $
    340,299
    
    
    $
    297,338
    
    
    $
    349,010
    
    
    $
    1,348,514Income (loss) from
continuing operations
    
    
    10,443
    
    
    
    (26,216
    )
    
    
    (47,150
    )
    
    
    4,836
    
    
    
    (58,087
    )Discontinued operations:Revenues
    
    
    67,759
    
    
    
    80,913
    
    
    
    51,720
    
    
    
    22,242
    
    
    
    222,634Income (loss) from
discontinued
operations
    
    
    (1,477
    )
    
    
    59,090
    
    
    
    28,536
    
    
    
    (21,162
    )
    
    
    64,987Net income (loss)
    
    
    8,966
    
    
    
    32,874
    
    
    
    (18,614
    )
    
    
    (16,326
    )
    
    
    6,900Earnings (loss) per share,basic and diluted:Continuing operations
    
    
    0.07
    
    
    
    (0.17
    )
    
    
    (0.31
    )
    
    
    0.03
    
    
    
    (0.38
    )Discontinued operations
    
    
    (0.01
    )
    
    
    0.39
    
    
    
    0.19
    
    
    
    (0.14
    )
    
    
    0.43Net income (loss)
    
    
    0.06
    
    
    
    0.22
    
    
    
    (0.12
    )
    
    
    (0.11
    )
    
    
    0.05Weighted average number
of shares of common stock
outstanding
basic and diluted
    
    
    152,913
    
    
    
    152,830
    
    
    
    152,876
    
    
    
    152,877
    
    
    
    152,874
 
 *
    
    Each quarter reflects the reclassification of results of operations for the 39 Properties sold,
or identified as held for sale during 2005, from continuing operations to discontinued operations. 155




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2004 Quarter*
    
    First
    
    Second
    
    Third
    
    Fourth
    
    YearContinuing operations:Revenues
    
    
    168,963
    
    
    
    318,228
    
    
    
    260,071
    
    
    
    314,251
    
    
    
    1,061,513Loss from continuing
operations
    
    
    (3,242
    )
    
    
    (9,389
    )
    
    
    (41,324
    )
    
    
    (59,004
    )
    
    
    (112,959
    )Discontinued operations:Revenues
    
    
    57,945
    
    
    
    73,020
    
    
    
    80,150
    
    
    
    77,325
    
    
    
    288,440Income (loss) from
discontinued
operations
    
    
    6,212
    
    
    
    11,583
    
    
    
    7,511
    
    
    
    540
    
    
    
    25,846Net income (loss)
    
    
    2,970
    
    
    
    2,194
    
    
    
    (33,813
    )
    
    
    (58,464
    )
    
    
    (87,113
    )Earnings (loss) per share,Basic and diluted:Continuing operations
    
    
    (0.02
    )
    
    
    (0.12
    )
    
    
    (0.27
    )
    
    
    (0.39
    )
    
    
    (0.76
    )Discontinued operations
    
    
    0.04
    
    
    
    0.15
    
    
    
    0.05
    
    
    
    0.01
    
    
    
    0.17Net earnings (loss)
    
    
    0.02
    
    
    
    0.03
    
    
    
    (0.22
    )
    
    
    (0.38
    )
    
    
    (0.59
    )Weighted average number
of shares of common stock
outstandingBasic and diluted
    
    
    135,707
    
    
    
    75,775
    
    
    
    152,140
    
    
    
    152,799
    
    
    
    148,059
 
 *
    
    Each quarter reflects the reclassification of results of operations for the 39 Properties sold,
or identified as held for sale during 2005, from continuing operations to discontinued operations. 156




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Assets Held For Sale:
  2005
    
    
    2004Assets:Hotel and resort properties, net
    
    $
    307,989
    
    
    $
    865,269Cash and cash equivalents
    
    
    5,707
    
    
    
    9,543Restricted cash
    
    
    18,718
    
    
    
    3,600Receivables, net
    
    
    5,669
    
    
    
    12,722Goodwill
    
    
    23,401
    
    
    
    23,401Intangibles, net
    
    
    49,533
    
    
    
    50,640Prepaid expenses and other assets
    
    
    11,317
    
    
    
    5,932Loan costs, net
    
    
    3,299
    
    
    
    2,750$
    425,633
    
    
    $
    973,857Liabilities:Mortgages payable and accrued interest
    
    $
    400,000
    
    
    $
    610,222Accounts payable and accrued expenses
    
    
    16,794
    
    
    
    24,403Other liabilities
    
    
    2,163
    
    
    
    29,207$
    418,957
    
    
    $
    663,832
  Subsequent Events:
   157




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®
      158




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159




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Item 9. Changes in and Disagreements with Independent Registered Public Accounting Firm on
Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
           
 Item 9B. Other Information
  160




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PART III
 
 Item 10. Directors and Executive Officers of the Registrant
  
 Item 11. Executive Compensation
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management
  
 Item 13. Certain Relationships and Related Transactions
  
 Item 14. Principal Accountant Fees and Services
  161




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PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
 (a)
    
    The following documents are filed as part of this report.
 1.
    
    Report of Independent Registered Certified Public Accounting FirmConsolidated Financial Statements:Consolidated Balance Sheets at December 31, 2005 and 2004Consolidated Statements of Operations for the years ended December 31, 2005, 2004 and 2003Consolidated Statements of Stockholders Equity and Other Comprehensive Income (Loss) for
the years ended December 31, 2005, 2004 and 2003Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003Notes to Consolidated Financial Statements2.
    
    Financial Statement SchedulesSchedule II  Valuation and Qualifying Accounts for the years ended December 31, 2005,
2004 and 2003Schedule III  Real Estate and Accumulated Depreciation at December 31, 2005Notes to Schedule III  Real Estate and Accumulated Depreciation at December 31, 2005All other Schedules are omitted as the required information is inapplicable or is
presented in the financial statements or notes thereto.
 (b)
    
    Exhibits
 2.1
    
    Agreement by and among CNL Hospitality
Properties, Inc., CNL Rose Acquisition
Corp., RFS Hotel Investors, Inc., CNL
Rose Acquisition OP, LP and RFS
Partnership, L.P., dated May 8, 2003
(Previously filed as Exhibit 2.1 to the
Registrants Current Report on Form 8-K
filed May 9, 2003 and incorporated
herein by reference.)2.2
    
    Amendment to Merger Agreement dated May
27, 2003 among the Company, CNL Rose
Acquisition Corp., RFS Hotel Investors,
Inc., CNL Rose Acquisition OP, LP and
RFS Partnership, L.P. (Previously filed
as Exhibit 2.2 to Post-Effective
Amendment No. Two to the Registrants
Registration Statement on Form S-11
filed July 14, 2003 and incorporated
herein by reference.)2.3
    
    RFS Acquisition Agreement, dated as of
July 10, 2003, by and among CNL
Hospitality Partners, LP, CNL Hotel
RI-Orlando, Ltd., CNL Hotel CY-Edison,
LP, RFS Partnership, L.P. and CNL Rose
Acquisition Corp. (Previously filed as
Exhibit 2.1 to RFS Partnership, L.P.s
Current Report onForm 8-Kfiled July
25, 2003 and incorporated herein by
reference).
 162




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2.4
    
    Stock Purchase Agreement, dated as of
February 12, 2004, by and among KKR
Partners II, L.P., KKR 1996 Fund, L.P.,
Resort Associates, L.P., Golf
Associates, L.P., CNL Resort
Acquisition Corp. and KSL Recreation
Corporation (Previously filed as
Exhibit 2.1 to the Registrants Form
8-K filed February 13, 2004 and
incorporated herein by reference.)2.5
    
    Agreement and Plan of Merger by and
among CNL Hospitality Properties, Inc.,
CNL Hospitality Properties Acquisition
Corp., CNL Hospitality Corp., CNL Real
Estate Group, Inc., Five Arrows Realty
Securities II, LLC, the other
stockholders of CNL Hospitality Corp.
listed on the signature page thereto
under the heading Stockholders, and
CNL Financial Group, Inc., dated as of
April 29, 2004 (Included as Appendix A
to the Registrants Definitive Proxy
Statement filed June 21, 2004 and
incorporated herein by reference.)2.6
    
    First Amendment to Agreement and Plan
of Merger by and among CNL Hospitality
Properties, Inc., CNL Hospitality
Properties Acquisition Corp., CNL
Hospitality Corp., Five Arrows Realty
Securities II, LLC, CNL Financial
Group, Inc. and James M. Seneff, Jr.
dated as of June 17, 2004 (Included as
Appendix A-1 to the Registrants
Definitive Proxy Statement filed June
21, 2004 and incorporated herein by
reference.)3.1
    
    Articles of Amendment and Restatement
of CNL Hospitality Properties, Inc.
dated July 21, 2003 (Previously filed
as Exhibit 3.18 to the Registrants
Registration Statement on Form S-11
filed July 23, 2003 and incorporated
herein by reference.)3.2
    
    Articles of Amendment of CNL
Hospitality Properties, Inc. dated
August 2, 2004 (Previously filed as
Exhibit 3.2 to the Registrants
Quarterly Report onForm 10-Qfiled
August 9, 2004 and incorporated herein
by reference.)3.3
    
    Articles of Amendment of CNL Hotels &
Resorts, Inc. dated August 2, 2004
(Previously filed as Exhibit 3.3 to the
Registrants Quarterly Report on Form
10-Q filed August 9, 2004 and
incorporated herein by reference.)3.4
    
    Articles of Amendment of CNL Hotels &
Resorts, Inc. dated August 2, 2004
(Previously filed as Exhibit 3.4 to the
Registrants Quarterly Report on Form
10-Q filed August 9, 2004 and
incorporated herein by reference.)3.5
    
    CNL American Realty Fund, Inc. Bylaws
(Previously filed as Exhibit 3.3 to the
Registrants Registration Statement on
Form S-11 filed August 12, 1996 and
incorporated herein by reference.)3.6
    
    Amendment No. 1 to the Bylaws of CNL
Hospitality Properties, Inc.
(Previously filed as Exhibit 3.7 to
Post-Effective Amendment No. Two to the
Registrants Registration Statement on
Form S-11 filed October 23, 2000 and
incorporated herein by reference.)3.7
    
    Amendment No. 2 to the Bylaws of CNL
Hospitality Properties, Inc.
(Previously filed as Exhibit 3.9 to
Post-Effective Amendment No. Six to the
Registrants Registration Statement on
Form S-11 filed June 11, 2001 and
incorporated herein by reference.)3.8
    
    Amendment No. 3 to the Bylaws of CNL
Hospitality Properties, Inc.
(Previously filed as Exhibit 3.9 to
Post-Effective Amendment No. One to the
Registrants Registration Statement on
Form S-11 filed June 26, 2002 and
incorporated herein by reference.)3.9
    
    Amendment No. 4 to the Bylaws of CNL
Hotels & Resorts, Inc. dated May 13,
2005 (Previously filed as Exhibit 3.9
to the Registrants Quarterly Report on
Form 10-Q filed May 16, 2005 and
incorporated herein by reference).4.1
    
    Amended and Restated Reinvestment Plan
(Previously filed as Exhibit 4.1 to the
Registrants Current Report on Form 8-K
filed June 1, 2004 and incorporated
herein by reference.)
 163




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4.2
    
    Indenture dated February 26, 2002 among
RFS Partnership, L.P., RFS 2002
Financing, Inc., RFS Leasing VII, Inc.,
RFS Hotel Investors, Inc. and U.S. Bank
National Association (Previously filed
as Exhibit 4.1 to RFS Hotel Investors,
Inc.s (RFS) Form S-4 Registration
Statement filed March 15, 2002 and
incorporated herein by reference.)4.3
    
    Form of Global Note evidencing the
9.75% Series B Senior Notes due 2012 of
RFS Partnership, L.P. and RFS 2002
Financing, Inc. (Previously filed as
Exhibit A to Exhibit 4.1 to RFSs Form
S-4 Registration Statement filed March
15, 2002 and incorporated herein by
reference.)4.4
    
    Form of Guaranty by RFS Hotel
Investors, Inc. and RFS Leasing VII,
Inc. (Previously filed as Exhibit A to
Exhibit 4.1 to RFSs Form S-4
Registration Statement filed March 15,
2002 and incorporated herein by
reference.)4.5
    
    Registration Rights Agreement dated
February 26, 2002 among RFS
Partnership, L.P., RFS 2002 Financing,
Inc., RFS Leasing VII, Inc., RFS Hotel
Investors, Inc., Credit Suisse First
Boston Corporation and Banc of America
Securities LLC (Previously filed as
Exhibit 4.4 to RFSs Form S-4
Registration Statement filed March 15,
2002 and incorporated herein by
reference.)4.6
    
    Supplemental Indenture, dated as of
June 9, 1997, among CNL Rose
Acquisition Corp., RFS Partnership,
L.P., RFS 2002 Financing, Inc. and U.S.
Bank National Association (Previously
filed as Exhibit 4.2 to RFS
Partnership, L.P.s Annual Report on
Form 10-K filed March 30, 2004 and
incorporated herein by reference.)4.7
    
    Registrants Amended and Restated
Redemption Plan (Previously filed as
Exhibit 99.1 to the Registrants
Current Report on Form 8-K filed June
25, 2004 and incorporated herein by
reference.)10.1
    
    Form of Escrow Agreement between CNL
Hospitality Properties, Inc. and
SouthTrust Bank (Previously filed as
Exhibit 10.1 to Pre-Effective Amendment
No. One to the Registrants
Registration Statement on Form S-11
filed December 23, 2002 and
incorporated herein by reference.)10.2
    
    Advisory Agreement dated as of April 1,
2004 between CNL Hospitality
Properties, Inc. and CNL Hospitality
Corp. (Previously filed as Exhibit 10.2
to the Registrants Quarterly Report on
Form 10-Q filed August 9, 2004 and
incorporated herein by reference.)10.3
    
    Form of Joint Venture Agreement
(Previously filed as Exhibit 10.3 to
the Registrants Registration Statement
on Form S-11 filed November 23, 1998
and incorporated herein by reference.)10.4
    
    Form of Indemnification and Put
Agreement (Previously filed as Exhibit
10.4 to the Registrants Registration
Statement on Form S-11 filed August 12,
1996 and incorporated herein by
reference.)10.5
    
    Form of Unconditional Guaranty of
Payment and Performance (Previously
filed as Exhibit 10.5 to the
Registrants Registration Statement on
Form S-11 filed August 12, 1996 and
incorporated herein by reference.)10.6
    
    Form of Purchase Agreement (Previously
filed as Exhibit 10.6 to the
Registrants Registration Statement on
Form S-11 filed August 12, 1996 and
incorporated herein by reference.)10.7
    
    Form of Lease Agreement (Previously
filed as Exhibit 10.57 to the
Registrants Registration Statement on
Form S-11 filed August 9, 2001 and
incorporated herein by reference.)10.8
    
    Amended and Restated Reinvestment Plan
(Previously filed as Exhibit 4.1 to the
Registrants Current Report on Form 8-K
filed June 1, 2004 and incorporated
herein by reference.)
 164




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10.9
    
    Indemnification Agreement between CNL
Hospitality Properties, Inc. and
Lawrence A. Dustin dated February 24,
1999. Each of the following former or
current Directors and/or officers has
signed a substantially similar
agreement as follows: James M. Seneff,
Jr., Robert A. Bourne, G. Richard
Hostetter, J. Joseph Kruse, Richard C.
Huseman, Charles A. Muller, Jeanne A.
Wall and Lynn E. Rose, dated July 9,
1997; C. Brian Strickland dated October
31, 1998; John A. Griswold dated
January 7, 1999; Charles E. Adams and
Craig M. McAllaster dated February 10,
1999; Matthew W. Kaplan dated February
24, 1999; Thomas J. Hutchison III dated
May 16, 2000; Tammie A. Quinlan on
January 18, 2002; Robert E. Parsons,
Jr. dated November 3, 2003; and Paul
Henry Williams dated April 13, 2004.
(Previously filed as Exhibit 10.2 to
the Registrants Quarterly Report on
Form 10-Q filed May 17, 1999 and
incorporated herein by reference.)10.10
    
    Agreement of Limited Partnership of CNL
Hospitality Partners, LP (Previously
filed as Exhibit 10.10 to
Post-Effective Amendment No. Five to
the Registrants Registration Statement
on Form S-11 filed September 23, 1998
and incorporated herein by reference.)10.11
    
    Hotel Purchase and Sale Contract
between CNL Real Estate Advisors, Inc.
and Gwinnett Residence Associates, LLC,
relating to the Residence InnGwinnett
Place (Previously filed as Exhibit
10.11 to Post-Effective Amendment No.
Five to the Registrants Registration
Statement on Form S-11 filed September
23, 1998 and incorporated herein by
reference.)10.12
    
    Assignment and Assumption Agreement
between CNL Real Estate Advisors, Inc.
and CNL Hospitality Partners, LP,
relating to the Residence InnGwinnett
Place (Previously filed as Exhibit
10.12 to Post-Effective Amendment No.
Five to the Registrants Registration
Statement on Form S-11 filed September
23, 1998 and incorporated herein by
reference.)10.13
    
    Hotel Purchase and Sale Contract
between CNL Real Estate Advisors, Inc.
and Buckhead Residence Associates, LLC,
relating to the Residence InnBuckhead
(Lenox Park) (Previously filed as
Exhibit 10.13 to Post-Effective
Amendment No. Five to the Registrants
Registration Statement on Form S-11
filed September 23, 1998 and
incorporated herein by reference.)10.14
    
    Assignment and Assumption Agreement
between CNL Real Estate Advisors, Inc.
and CNL Hospitality Partners, LP,
relating to the Residence InnBuckhead
(Lenox Park) (Previously filed as
Exhibit 10.14 to Post-Effective
Amendment No. Five to the Registrants
Registration Statement on Form S-11
filed September 23, 1998 and
incorporated herein by reference.)10.15
    
    Lease Agreement between CNL Hospitality
Partners, LP and STC Leasing
Associates, LLC, dated August 1, 1998,
relating to the Residence InnGwinnett
Place (Previously filed as Exhibit
10.15 to Post-Effective Amendment No.
Five to the Registrants Registration
Statement on Form S-11 filed September
23, 1998 and incorporated herein by
reference.)10.16
    
    Lease Agreement between CNL Hospitality
Partners, LP and STC Leasing
Associates, LLC, dated August 1, 1998,
relating to the Residence InnBuckhead
(Lenox Park) (Previously filed as
Exhibit 10.16 to Post-Effective
Amendment No. Five to the Registrants
Registration Statement on Form S-11
filed September 23, 1998 and
incorporated herein by reference.)10.17
    
    Master Loan Agreement by and between
CNL Hotel Investors, Inc. and
Jefferson-Pilot Life Insurance Company,
dated February 24, 1999 (Previously
filed as Exhibit 10.18 to
Post-Effective Amendment No. Seven to
the Registrants Registration Statement
on Form S-11 filed March 16, 1999 and
incorporated herein by reference.)
 165




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10.18
    
    Securities Purchase Agreement between
CNL Hospitality Properties, Inc. and
Five Arrows Realty Securities II
L.L.C., dated February 24, 1999
(Previously filed as Exhibit 10.19 to
Post-Effective Amendment No. Seven to
the Registrants Registration Statement
on Form S-11 filed March 16, 1999 and
incorporated herein by reference.)10.19
    
    Subscription and Stockholders
Agreement among CNL Hotel Investors,
Inc., Five Arrows Realty Securities II
L.L.C., CNL Hospitality Partners, LP
and CNL Hospitality Properties, Inc.,
dated February 24, 1999 (Previously
filed as Exhibit 10.20 to
Post-Effective Amendment No. Seven to
the Registrants Registration Statement
on Form S-11 filed March 16, 1999 and
incorporated herein by reference.)10.20
    
    Registration Rights Agreement by and
between CNL Hospitality Properties,
Inc. and Five Arrows Realty Securities
II L.L.C., dated February 24, 1999
(Previously filed as Exhibit 10.21 to
Post-Effective Amendment No. Seven to
the Registrants Registration Statement
on Form S-11 filed March 16, 1999 and
incorporated herein by reference.)10.21
    
    Lease Agreement between Courtyard
Annex, L.L.C. and City Center Annex
Tenant Corporation, dated November 15,
1999, relating to the
CourtyardPhiladelphia (Previously
filed as Exhibit 10.22 to
Post-Effective Amendment No. Four to
the Registrants Registration Statement
on Form S-11 filed February 17, 2000
and incorporated herein by reference.)10.22
    
    First Amended and Restated Limited
Liability Company Agreement of
Courtyard Annex, L.L.C., relating to
the CourtyardPhiladelphia (Previously
filed as Exhibit 10.23 to
Post-Effective Amendment No. Four to
the Registrants Registration Statement
on Form S-11 filed February 17, 2000
and incorporated herein by reference.)10.23
    
    Purchase and Sale Agreement between
Marriott International, Inc., CBM
Annex, Inc., Courtyard Annex, Inc., as
Sellers, and CNL Hospitality Partners,
LP, as Purchaser, dated November 15,
1999, relating to the
CourtyardPhiladelphia (Previously
filed as Exhibit 10.24 to
Post-Effective Amendment No. Four to
the Registrants Registration Statement
on Form S-11 filed February 17, 2000
and incorporated herein by reference.)10.24
    
    First Amendment to Lease Agreement
between CNL Hospitality Partners, LP
and STC Leasing Associates, LLC, dated
August 1, 1998, related to the
Residence InnGwinnett Place, (amends
Exhibit 10.15 above) and the First
Amendment to Agreement of Guaranty,
dated August 1, 1998 (amends Agreement
of Guaranty attached as Exhibit I to
Exhibit 10.15 above) (Previously filed
as Exhibit 10.15 to the Registrants
Quarterly Report on Form 10-Q filed
November 10, 1999 and incorporated
herein by reference.)10.25
    
    First Amendment to Lease Agreement
between CNL Hospitality Partners, LP
and STC Leasing Associates, LLC, dated
August 1, 1998, related to the
Residence InnBuckhead (Lenox Park)
(amends Exhibit 10.16 above) and the
First Amendment to Agreement of
Guaranty, dated August 1, 1998 (amends
Agreement of Guaranty attached as
Exhibit I to 10.16 above) (Previously
filed as Exhibit 10.16 to the
Registrants Quarterly Report on Form
10-Q filed November 10, 1999 and
incorporated herein by reference.)10.26
    
    Lease Agreement between CNL Hospitality
Partners, LP and WYN Orlando Lessee,
LLC, dated May 31, 2000, relating to
the Wyndham Denver Tech Center
(Previously filed as Exhibit 10.29 to
Post-Effective Amendment No. Six to the
Registrants Registration Statement on
Form S-11 filed June 9, 2000 and
incorporated herein by reference.)
10.27 Lease Agreement between CNL Hospitality
Partners, LP and WYN Orlando Lessee,
LLC, dated May 31, 2000, relating to
the Wyndham Billerica (Previously filed
as Exhibit 10.30 to Post-Effective
Amendment No. Six to the Registrants
Registration Statement on Form S-11
filed June 9, 2000 and incorporated
herein by reference.)
 166




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10.28
    
    Purchase and Sale Agreement between CNL
Hospitality Corp. , as Buyer, and WII
Denver Tech, LLC and PAH Billerica
Realty Company, LLC, as Sellers, and
Wyndham International, Inc., relating
to the Wyndham Denver Tech Center and
the Wyndham Billerica (Previously filed
as Exhibit 10.31 to Post-Effective
Amendment No. Six to the Registrants
Registration Statement on Form S-11
filed June 9, 2000 and incorporated
herein by reference.)10.29
    
    Lease Agreement between LLB C-Hotel,
L.L.C. and LLB Tenant Corporation,
dated October 12, 2000, relating to the
CourtyardLittle Lake Bryan
(Previously filed as Exhibit 10.49 to
Post-Effective Amendment No. Three to
the Registrants Registration Statement
on Form S-11 filed December 12, 2000
and incorporated herein by reference.)10.30
    
    Lease Agreement between LLB F-Inn,
L.L.C. and LLB Tenant Corporation,
dated October 12, 2000, relating to the
Fairfield InnLittle Lake Bryan
(Previously filed as Exhibit 10.50 to
Post-Effective Amendment No. Three to
the Registrants Registration Statement
on Form S-11 filed December 12, 2000
and incorporated herein by reference.)10.31
    
    First Amendment to Lease Agreement
between LLB C-Hotel, L.L.C. and LLB
Tenant Corporation, dated November 17,
2000, relating to the CourtyardLittle
Lake Bryan (amends Exhibit 10.49 above)
(Previously filed as Exhibit 10.51 to
Post-Effective Amendment No. Three to
the Registrants Registration Statement
on Form S-11 filed December 12, 2000
and incorporated herein by reference.)10.32
    
    First Amendment to Lease Agreement
between LLB F-Inn, L.L.C. and LLB
Tenant Corporation, dated November 17,
2000, relating to the Fairfield
InnLittle Lake Bryan (amends Exhibit
10.50 above) (Previously filed as
Exhibit 10.52 to Post-Effective
Amendment No. Three to the Registrants
Registration Statement on Form S-11
filed December 12, 2000 and
incorporated herein by reference.)10.33
    
    Purchase and Sale Agreement between
Marriott International, Inc., as
Seller, and CNL Hospitality Partners,
LP, as Purchaser, dated September 17,
1998, relating to the CourtyardLittle
Lake Bryan, the Fairfield InnLittle
Lake Bryan and the SpringHill
SuitesLittle Lake Bryan (Previously
filed as Exhibit 10.53 to
Post-Effective Amendment No. Three to
the Registrants Registration Statement
on Form S-11 filed December 12, 2000
and incorporated herein by reference.)10.34
    
    Second Amendment to Lease Agreement
between CNL LLB C-Hotel Management, LP
(formerly LLB C-Hotel, L.L.C.) and LLB
Tenant Corporation, dated December 15,
2000, relating to the CourtyardLittle
Lake Bryan (amends Exhibits 10.49 and
10.51 above) (Previously filed as
Exhibit 10.54 to Post-Effective
Amendment No. Four to the Registrants
Registration Statement on Form S-11
filed March 12, 2001 and incorporated
herein by reference.)10.35
    
    Second Amendment to Lease Agreement
between CNL LLB F-Inn Management, LP
(formerly LLB F-Inn L.L.C.) and LLB
Tenant Corporation, dated December 15,
2000, relating to the Fairfield
InnLittle Lake Bryan (amends Exhibits
10.50 and 10.52 above) (Previously
filed as Exhibit 10.55 to
Post-Effective Amendment No. Four to
the Registrants Registration Statement
on Form S-11 filed March 12, 2001 and
incorporated herein by reference.)10.36
    
    Sixth Amended and Restated Revolving
Credit Agreement dated October 31, 2002
(Previously filed as Exhibit 10.1 to
RFSs Current Report on Form 8-K filed
January 16, 2003 and incorporated
herein by reference.)10.37
    
    Form of Percentage Lease with TRS
Lessees (Previously filed as Exhibit
10.1 to RFSs Current Report on Form
8-K filed January 16, 2001 and
incorporated herein by reference.)
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10.38
    
    Form of Management Agreement with
Flagstone (Previously filed as Exhibit
10.2 to RFSs Current Report on Form
8-K filed January 16, 2001 and
incorporated herein by reference.)10.39
    
    Loan Agreement dated August 9, 2000 by
and between Bank of America, N.A. (as
lender) and RFS SPE 2000 LLC (as
borrower), a wholly-owned subsidiary of
RFS (Previously filed as Exhibit 10.19
to RFSs Annual Report on Form 10-K
filed March 15, 2001 and incorporated
herein by reference.)10.40
    
    Loan Agreement dated August 9, 2000 by
and between Bank of America, N.A. (as
lender) and RFS SPE 2 2000 LLC (as
borrower), a wholly-owned subsidiary of
RFS (Previously filed as Exhibit 10.20
to RFSs Annual Report on Form 10-K
filed March 15, 2001 and incorporated
herein by reference.)10.41
    
    Agreement of Purchase and Sale of The Hotel del Coronado and Joint Escrow
Instructions among L-O Coronado Holding II, Inc., L-O Coronado Hotel, Inc. and L-O
Coronado IP, Inc. (jointly, Seller) and CNL Hospitality Corp. (Buyer), effective as
of September 23, 2003 (Previously filed as Exhibit 10.82 to PostEffective Amendment
No. Six to the Registrants Registration Statement onForm S-11filed January 26,
2004 and incorporated herein by reference.)10.42
    
    First Amendment to Agreement for Purchase and Sale of Real Property and Joint Escrow
Instructions by and among L-O Coronado Holding II, Inc., L-O Coronado Hotel, Inc. and
L-O Coronado IP, Inc. (collectively, Seller) and CNL Hospitality Corp. (Buyer) dated
as of October 15, 2003 (Previously filed as Exhibit 10.83 to PostEffective
Amendment No. Six to the Registrants Registration Statement on Form S-11 filed
January 26, 2004 and incorporated herein by reference.)10.43
    
    Second Amendment to Agreement for Purchase and Sale of Real Property and Joint Escrow
Instructions by and among L-O Coronado Holding II, Inc., L-O Coronado Hotel, Inc. and
L-O Coronado IP, Inc. (collectively, Seller) and CNL Hospitality Corp. (Buyer) dated
as of October 31, 2003 (Previously filed as Exhibit 10.84 to PostEffective
Amendment No. Six to the Registrants Registration Statement on Form S-11 filed
January 26, 2004 and incorporated herein by reference.)10.44
    
    Assignment and Assumption of Agreement of Purchase and Sale and Joint Escrow
Instructions by and between CNL Hospitality Corp. (Assignor) and CNL Hotel Del
Partners, LP (Assignee) dated as of December 18, 2003 (Previously filed as Exhibit
10.85 to PostEffective Amendment No. Six to the Registrants Registration Statement
on Form S-11 filed January 26, 2004 and incorporated herein by reference.)10.45
    
    Commercial Mortgage Backed Security Facility, dated December 4, 2003, by and between
Bank of America, N.A. (as lender) and Rose SPE 1, L.P. (as borrower), a wholly-owned
subsidiary of RFS Partnership, L.P. (Previously filed as Exhibit 10.20 to RFS
Partnership, L.P.s Annual Report on Form 10-K filed March 30, 2004 and incorporated
herein by reference.)10.46
    
    Mezzanine Loan Agreement, dated December 23, 2003, by and between Fleet National Bank
(as lender) and Rose Mezzanine SPE, L.P. (as borrower), a wholly-owned subsidiary of
RFS Partnership, L.P. (Previously filed as Exhibit 10.21 to RFS Partnership, L.P.s
Annual Report on Form 10-K filed March 30, 2004 and incorporated herein by
reference.)10.47
    
    $1,500,000,000 Loan and Security Agreement by and among CNL Resort Hotel, LP, CNL
Resort Silver Properties, LP, CNL Grand Wailea Resort, LP, CNL Biltmore Resort, LP,
CNL Claremont Resorts, LP, and CNL Desert Resort, LP, as borrowers, and German
American Capital Corporation, as lender, dated August 18, 2004. (Previously filed as
Exhibit 10.84 to the Registrants Quarterly Report on Form 10-Q filed November 9,
2004 and incorporated herein by reference.)
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10.48
    
    $900,000,000 Renewal, Amended, Restated and Consolidated Note by and among CNL Resort
Hotel, LP, CNL Resort Silver Properties, LP, CNL Grand Wailea Resort, LP, CNL
Biltmore Resort, LP, CNL Claremont Resort, LP, and CNL Desert Resort, LP, as
borrowers, and German American Capital Corporation, as Lender, dated August 18, 2004.
(Previously filed as Exhibit 10.86 to the Registrants Quarterly Report on Form 10-Q
filed November 9, 2004 and incorporated herein by reference.)10.49
    
    $100,000,000 Mezzanine Note by and among CNL Resort Senior Mezz, LP, as borrower, and
German American Capital Corporation, as Lender, dated August 18, 2004. (Previously
filed as Exhibit 10.87 to the Registrants Quarterly Report on Form 10-Q filed
November 9, 2004 and incorporated herein by reference.)10.50
    
    $100,000,000 Mezzanine Note by and among CNL Resort Sub Senior Mezz, LP, as borrower,
and German American Capital Corporation, as Lender, dated August 18, 2004.
(Previously filed as Exhibit 10.88 to the Registrants Quarterly Report on Form 10-Q
filed November 9, 2004 and incorporated herein by reference.)10.51
    
    $100,000,000 Mezzanine Note by and among CNL Resort Intermediate Mezz, LP, as
borrower, and German American Capital Corporation, as Lender, dated August 18, 2004.
(Previously filed as Exhibit 10.89 to the Registrants Quarterly Report on Form 10-Q
filed November 9, 2004 and incorporated herein by reference.)10.52
    
    $100,000,000 Mezzanine Note by and among CNL Resort Sub Intermediate Mezz, LP, as
borrower, and German American Capital Corporation, as Lender, dated August 18, 2004.
(Previously filed as Exhibit 10.90 to the Registrants Quarterly Report on Form 10-Q
filed November 9, 2004 and incorporated herein by reference.)10.53
    
    $100,000,000 Mezzanine Note by and among CNL Resort Junior Mezz, LP, as borrower, and
German American Capital Corporation, as Lender, dated August 18, 2004. (Previously
filed as Exhibit 10.91 to the Registrants Quarterly Report on Form 10-Q filed
November 9, 2004 and incorporated herein by reference.)10.54
    
    $100,000,000 Mezzanine Note by and among CNL Resort Sub Junior Mezz, LP, as borrower,
and German American Capital Corporation, as Lender. (Previously filed as Exhibit
10.92 to the Registrants Quarterly Report on Form 10-Q filed November 9, 2004 and
incorporated herein by reference.)10.55
    
    Limited Rent Guaranty by and between CNL Philadelphia Annex, LLC, as Landlord, and
Marriott International, Inc., as Guarantor, dated December 30, 2004. (Previously
filed as Exhibit 10.93 to the Registrants Annual Report on Form 10-K filed March 16,
2005 and incorporated herein by reference.)10.56
    
    $90,000,000 Mezzanine Loan and Security Agreement (Senior Mezzanine) by and between
CNL Hotel Del Senior Mezz Partners, LP, as Mezzanine Borrower, and German American
Capital Corporation, as Mezzanine Lender, dated February 9, 2005. (Previously filed
as Exhibit 10.94 to the Registrants Annual Report on Form 10-K filed March 16, 2005
and incorporated herein by reference.)10.57
    
    $20,000,000 Mezzanine Loan and Security Agreement (Intermediate Mezzanine) by and
between CNL Hotel Del Intermediate Mezz Partners, LP, as Mezzanine Borrower, and
German American Capital Corporation, as Mezzanine Lender, dated February 9, 2005.
(Previously filed as Exhibit 10.95 to the Registrants Annual Report on Form 10-K
filed March 16, 2005 and incorporated herein by reference.)10.58
    
    $230,000,000 Loan and Security Agreement by and between CNL Hotel Del Partners, LP,
as Borrower, and German American Capital Corporation, as Lender, dated as of February
9, 2005 (Previously filed as Exhibit 10.96 to the Registrants Annual Report on Form
10-K filed March 16, 2005 and incorporated herein by reference.)
 169




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10.59
    
    $90,000,000 Mezzanine Note (Senior Mezzanine) by and between CNL Hotel Del Senior
Mezz Partners, LP, as Mezzanine Borrower, and German American Capital Corporation, as
Mezzanine Lender, dated February 9, 2005 (Previously filed as Exhibit 10.97 to the
Registrants Annual Report on Form 10-K filed March 16, 2005 and incorporated herein
by reference.)10.60
    
    $20,000,000 Mezzanine Note (Intermediate Mezzanine) by and between CNL Hotel Del
Intermediate Mezz Partners, LP, as Mezzanine Borrower, and German American Capital
Corporation, as Mezzanine Lender, dated February 9, 2005. (Previously filed as
Exhibit 10.98 to the Registrants Annual Report on Form 10-K filed March 16, 2005 and
incorporated herein by reference.)10.61
    
    $230,000,000 Note by and between CNL Hotel Del Partners, LP, as Borrower, and German
American Capital Corporation, as Lender, dated February 9, 2005. (Previously filed
as Exhibit 10.99 to the Registrants Annual Report on Form 10-K filed March 16, 2005
and incorporated herein by reference.)10.62
    
    Deferred Fee Plan for Directors (Previously filed as Exhibit 10.100 to the
Registrants Annual Report on Form 10-K filed March 16, 2005 and incorporated herein
by reference.)10.63
    
    Second Amendment to Loan and Security Agreement by and among CNL Hospitality
Partners, LP (as Borrower), CNL Hotels and Resorts, Inc., (as Guarantor) and Deutsche
Bank Trust Company Americas, and the institutions from time to time party hereto (as
Lenders) dated February 9, 2005. (Previously filed as Exhibit 10.101 to the
Registrants Annual Report on Form 10-K filed March 16, 2005 and incorporated herein
by reference.)10.64
    
    2004 Omnibus Long-Term Incentive Plan (Previously included as Appendix D to the
Registrants Definitive Proxy Statement filed June 21, 2004 and incorporated herein
by reference.)10.65
    
    2004 Omnibus Long-Term Incentive Plan Stock Award Agreement (Previously filed as
Exhibit 99.1 to the Registrants Form 8-K filed March 22, 2005 and incorporated
herein by reference.)10.66
    
    2004 Omnibus Long-Term Incentive Stock Plan Agreement of Participant Relating to
Stock Award Agreements (Previously filed as Exhibit 99.2 to the Registrants Form 8-K
filed March 22, 2005 and incorporated herein by reference.)10.67
    
    Renewal Agreement dated March 31, 2005 between CNL Hotels & Resorts, Inc. and CNL
Hospitality Corp. (Previously filed as Exhibit 10.2 to the Registrants Current
Report on From 8-K filed April 6, 2005 and incorporated herein by reference.)10.68
    
    Agreement of Purchase and Sale dated April 26, 2005 by and between various
wholly-owned subsidiaries of CNL Hotels & Resorts, Inc. (as Seller) and Ashford
Hospitality Limited Partnership (as Buyer) (Previously filed as Exhibit 10.1 to the
Registrants Current Report on Form 8-K filed April 27, 2005 and incorporated herein
by reference.)10.69
    
    Second Amendment to Mezzanine Note (Intermediate Mezzanine) dated April 7, 2005 by
and between CNL Hotel Del Intermediate Mezz Partners, LP, as Mezzanine Borrower, and
German American Capital Corporation, as Mezzanine Lender (Previously filed as Exhibit
10.107 to the Registrants Quarterly Report on Form 10-Q filed May 16, 2005 and
incorporated herein by reference.)10.70
    
    Amendment to Note dated March 29, 2005 by and between CNL Hotel Del Partners LP, as
Borrower, and German American Capital Corporation, as Lender (Previously filed as
Exhibit 10.108 to the Registrants Quarterly on Form 10-Q filed May 16, 2005 and
incorporated herein by reference.)10.71
    
    Amendment to Mezzanine Note (Senior Mezzanine) dated March 29, 2005 by and between
CNL Hotel Del Senior Mezz Partners, LP, as Mezzanine Borrower, and German American
Capital Corporation, as Mezzanine Lender (Previously filed as Exhibit 10.109 to the
Registrants Quarterly Report on Form 10-Q filed May 16, 2005 and incorporated herein
by reference.)
 170




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10.72
    
    Omnibus Amendment to Loan Documents dated March 29, 2005 by and between CNL Hotel Del
Partners, LP, as Borrower, and German American Capital Corporation, as Lender
(Previously filed as Exhibit 10.110 to the Registrants Quarterly Report on Form 10-Q
filed May 16, 2005 and incorporated herein by reference.)10.73
    
    Amendment to Mezzanine Note (Intermediate Mezzanine) dated March 29, 2005 by and
between CNL Hotel Del Intermediate Mezz Partners, LP, as Mezzanine Borrower, and
German American Capital Corporation, as Mezzanine Lender (Previously filed as Exhibit
10.111 to the Registrants Quarterly Report on Form 10-Q filed May 16, 2005 and
incorporated herein by reference.)10.74
    
    Mezzanine Note (Junior Mezzanine) dated April 7, 2005 by and between CNL Hotel Del
Junior Mezz Partners, LP, as Mezzanine Borrower, and German American Capital
Corporation, as Mezzanine Lender (Previously filed as Exhibit 10.112 to the
Registrants Quarterly Report on Form 10-Q filed May 16, 2005 and incorporated herein
by reference.)10.75
    
    Mezzanine Loan and Security Agreement (Junior Mezzanine) dated April 7, 2005 by and
between CNL Hotel Del Junior Mezz Partners, LP, as Mezzanine Borrower, and German
American Capital Corporation, as Mezzanine Lender (Previously filed as Exhibit 10.113
to the Registrants Quarterly Report on Form 10-Q filed May 16, 2005 and incorporated
herein by reference.)10.76
    
    Indemnification Agreement between CNL Hotels & Resorts, Inc. and C. Brian Strickland
dated May 13, 2005. Each of the following officers has signed a substantially similar
agreement as follows: Mark E. Patten, Barry A. N. Bloom, Marcel Verbaas; Stephanie
Thomas, dated May 13, 2005; and Greerson G. McMullen, dated October 3, 2005.
(Previously filed as Exhibit 10.114 to the Registrants Quarterly Report on Form 10-Q
filed May 16, 2005 and incorporated herein by reference.)10.77
    
    Indemnification Agreement between CNL Hotels & Resorts, Inc. and J. Douglas Holladay
dated May 13, 2005. Each of the following Directors has signed a substantially
similar agreement as follows: Jack F. Kemp and Dianna F. Morgan, dated May 13, 2005.
(Previously filed as Exhibit 10.115 to the Registrants Quarterly Report on Form 10-Q
filed May 16, 2005 and incorporated herein by reference.)10.78
    
    $270,000,000 Promissory Note dated June 15, 2005 by and between Desert Ridge Resort,
LLC, as Borrower, and Barclays Capital Real Estate Inc., as Lender (Previously filed
as Exhibit 10.116 to the Registrants Quarterly Report on Form 10-Q filed August 15,
2005 and incorporated herein by reference.)10.79
    
    Loan Agreement dated June 15, 2005 by and between Desert Ridge Resort, LLC, as
Borrower, and Barclays Capital Real Estate Inc., as Lender (Previously filed as
Exhibit 10.117 to the Registrants Quarterly Report on Form 10-Q filed August 15,
2005 and incorporated herein by reference.)10.80
    
    $31,500,000 Promissory Note dated June 15, 2005 by and between DRR Senior Mezz, LLC,
as Mezzanine Borrower, and Barclays Capital Real Estate Inc., as Mezzanine Lender
(Previously filed as Exhibit 10.118 to the Registrants Quarterly Report on Form 10-Q
filed August 15, 2005 and incorporated herein by reference.)10.81
    
    Mezzanine Loan Agreement dated June 15, 2005 by and between DRR Senior Mezz, LLC, as
Mezzanine Borrower, and Barclays Capital Real Estate Inc., as Mezzanine Lender
(Previously filed as Exhibit 10.119 to the Registrants Quarterly Report on Form
10-Q filed August 15, 2005 and incorporated herein by reference.)10.82
    
    Agreement of Purchase and Sale dated July 5, 2005 by and between certain wholly-owed
subsidiaries of CNL Hotels & Resorts, Inc. (as Seller) and Pyramid Hotel Opportunity
Venture LLC (as Buyer) (Previously filed as Exhibit 10.120 to the Registrants
Quarterly Report on Form 10-Q filed August 15, 2005 and incorporated herein by
reference.)
 171




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10.83
    
    First Amendment to Renewal Agreement dated as of June 30, 2005 between CNL Hotels &
Resorts, Inc. and CNL Hospitality Corp. (Previously filed as Exhibit 10.3 to the
Registrants Form 8-K filed July 7, 2005 and incorporated herein by reference.)10.84
    
    Second Amendment to Renewal Agreement dated as of July 29, 2005 between CNL Hotels &
Resorts, Inc. and CNL Hospitality Corp. (Previously filed as Exhibit 10.4 to the
Registrants Form 8-K filed August 4, 2005 and incorporated by reference.)10.85
    
    Third Amendment to Renewal Agreement dated as of August 30, 2005 between CNL Hotels &
Resorts, Inc. and CNL Hospitality Corp. (Previously filed as Exhibit 10.5 to the
Registrants Form 8-K filed September 1, 2005 and incorporated by reference.)10.86
    
    Fourth Amendment to Renewal Agreement dated as of September 29, 2005 between CNL
Hotels & Resorts, Inc. and CNL Hospitality Corp. (Previously filed as Exhibit 10.6 to
the Registrants Form 8-K filed October 3, 2005 and incorporated by reference.)10.87
    
    Fifth Amendment to Renewal Agreement dated as of October 31, 2005 between CNL Hotels
& Resorts, Inc. and CNL Hospitality Corp. (Previously filed as Exhibit 10.7 to the
Registrants Form 8-K filed November 4, 2005 and incorporated by reference.)10.88
    
    $200,000,000 Credit Agreement dated as of September 30, 2005 between CNL Hospitality
Partners, LP, as Borrower, CNL Hotels and Resorts, Inc., as Parent, Bank of America,
N.A., as Administrative Agent and L/C Issuer, and the Other Lenders Party Hereto,
Wachovia Bank N.A. and Deutsche Bank Trust Company Americas, as Co-Syndication
Agents, Calyon New York Branch and Citibank North America, Inc., as Co-Documentation
Agents, and Banc of America Securities LLC, as Sole Lead Arranger and Sole Book
Manager (Previously filed as Exhibit 10.126 to the Registrants Quarterly Report on
Form 10-Q filed November 14, 2005 and incorporated herein by
reference.)10.89
    
    $1,000,000,000 Loan and Security Agreement dated as of January 9, 2006 between CNL
Resort Hotel, LP, CNL Resort Silver Properties, LP, CNL Grand Wailea Resort, LP, CNL
Biltmore Resort, LP, CNL Claremont Resort, LP, and CNL Desert Resort, LP,
as Borrower, and German American Capital Corporation as Lender (Filed herewith.)10.90
    
    $1,000,000,000 Renewal, Amended, Restated and Consolidated Note dated as of January
9, 2006 between CNL Resort Hotel, LP, CNL Resort Silver Properties, LP, CNL Grand
Wailea Resort, LP, CNL Biltmore Resort, LP, CNL Claremont Resort, LP, and CNL Desert
Resort, LP, as Borrower, and German American Capital Corporation as Lender (Filed
herewith.)
10.91 $115,000,000 Mezzanine Loan and Security Agreement (First Mezzanine) dated as of
January 9, 2006 between CNL Resort Senior Mezz, LP, as Mezzanine Borrower and German
American Capital Corporation, as Mezzanine Lender (Filed herewith.)10.92
    
    $115,000,000 Mezzanine Note (First Mezzanine) dated as of January 9, 2006 between CNL
Resort Senior Mezz, LP, as Mezzanine Borrower and German American Capital
Corporation, as Mezzanine Lender (Filed herewith.)10.93
    
    $110,000,000 Mezzanine Loan and Security Agreement (Second Mezzanine) dated as of
January 9, 2006 between CNL Resort Sub Senior Mezz. LP, as Mezzanine Borrower and
German American Capital Corporation, as Mezzanine Lender (Filed herewith.)10.94
    
    $110,000,000 Mezzanine Note (Second Mezzanine) dated as of January 9, 2006 between
CNL Resort Sub Senior Mezz. LP, as Mezzanine Borrower and German American Capital
Corporation, as Mezzanine Lender (Filed herewith.)10.95
    
    $250,000,000 Mezzanine Loan and Security Agreement (Third Mezzanine) dated as of
January 9, 2006 between CNL Resort Intermediate Mezz, LP, as Mezzanine Borrower and
German American Capital Corporation, as Mezzanine Lender (Filed herewith.)10.96
    
    $250,000,000 Mezzanine Note (Third Mezzanine) dated as of January 9, 2006 between CNL
Resort Intermediate Mezz, LP, as Mezzanine Borrower and German American Capital
Corporation, as Mezzanine Lender (Filed herewith.)
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10.97
    
    $50,000,000 Mezzanine Loan and Security Agreement (Fourth Mezzanine) dated as of
January 9, 2006 between CNL Resort Sub Intermediate Mezz, LP, as Mezzanine Borrower
and German American Capital Corporation, as Mezzanine Lender (Filed herewith.)10.98
    
    $50,000,000 Mezzanine Note (Fourth Mezzanine) dated as of January 9, 2006 between CNL
Resort Sub Intermediate Mezz, LP, as Mezzanine Borrower and German American Capital
Corporation, as Mezzanine Lender (Filed herewith.)10.99
    
    Purchase and Sale Agreement dated as of October 31, 2005 by and among CNL Hospitality
Partners LP, CNL KSL Partners GP, LLC, CNL Rose SPE Tenant Corp., RFS Leasing VII,
Inc, as Sellers, and KSL Recreation Holdings I, LLC, KSL Recreation Management
Operations, LLC, as Purchaser (Filed herewith.)10.100
    
    Purchase and Sale Agreement by and between THI III GL Investments, L.L.C., as Seller,
and CNL Hotels & Resorts, Inc., as Purchaser (Filed herewith)10.101
    
    Sixth Amendment to Renewal Agreement dated as of November 30, 2005 between CNL Hotels
& Resorts, Inc. and CNL Hospitality Corp. (Previously filed as Exhibit 10.8 to the
Registrants Form 8-K filed December 5, 2005 and incorporated herein by reference.)10.102
    
    Amended and Restated Renewal Agreement dated as of December 30, 2005 between CNL
Hotels & Resorts, Inc. and CNL Hospitality Corp. (Previously filed as Exhibit 10.9 to
the Registrants Form 8-K filed December 30, 2005 and incorporated herein by
reference.)10.103
    
    Payment Agreement dated December 30, 2005 by and between CNL Hotels & Resorts, Inc.
and CNL Hospitality Corp. (Previously filed as Exhibit 10.10 to the Registrants Form
8-K filed December 30, 2005 and incorporated herein by reference.)10.104
    
    $335,000,000 Mortgage, Security Agreement, Assignment of Rents and Fixture Filing
dated February 24, 2006 by and between CNL GL Resort, LP, as Borrower, and Wachovia
Bank, National Association, as Lender (Filed herewith.)10.105
    
    $335,000,000 Promissory Note dated February 24, 2006 by and between CNL GL Resort,
LP, as Borrower, and Wachovia Bank, National Association, as Lender (Filed herewith.)10.106
    
    $85,000,000 Loan and Security Agreement (First Mezzanine Loan) dated February 24,
2006 by and between CNL GL Senior Mezz, LP, as Borrower, and Wachovia Bank, National
Association, as Lender (Filed herewith.)10.107
    
    $85,000,000 Promissory Note (First Mezzanine) dated February 24, 2006 by and between
CNL GL Senior Mezz, LP, as Borrower, and Wachovia Bank, National Association, as
Lender (Filed herewith.)10.108
    
    $50,000,000 Loan and Security Agreement (Second Mezzanine Loan) dated February 24,
2006 by and between CNL GL Sub Senior Mezz, LP, as Borrower, and Wachovia Bank,
National Association, as Lender (Filed herewith.)10.109
    
    $50,000,000 Promissory Note (Second Mezzanine) dated February 24, 2006 by and between
CNL GL Sub Senior Mezz, LP, as Borrower, and Wachovia Bank, National Association, as
Lender (Filed herewith.)10.110
    
    $50,000,000 Loan and Security Agreement (Third Mezzanine Loan) dated February 24,
2006 by and between CNL GL Junior Mezz, LP, as Borrower, and Wachovia Bank, National
Association, as Lender (Filed herewith.)10.111
    
    $50,000,000 Promissory Note (Third Mezzanine) dated February 24, 2006 by and between
CNL GL Junior Mezz, LP, as Borrower, and Wachovia Bank, National Association, as
Lender (Filed herewith.)10.112
    
    $50,000,000 Loan and Security Agreement (Fourth Mezzanine Loan) dated February 24,
2006 by and between CNL GL Junior Mezz, LP, as Borrower, and Wachovia Bank, National
Association, as Lender (Filed herewith.)10.113
    
    $50,000,000 Promissory Note (Fourth Mezzanine) dated February 24, 2006 by and between
CNL GL Junior Mezz, LP, as Borrower, and Wachovia Bank, National Association, as
Lender (Filed herewith.)
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21
    
    Subsidiaries of the Registrant (Filed herewith.)31.1
    
    Certification of Chief Executive Officer, Pursuant to Rule
13a-14(a), as Adopted Pursuant to Section 302 of the
SarbanesOxley Act of 2002 (Filed herewith.)31.2
    
    Certification of Principal Financial Officer, Pursuant to Rule
13a-14(a), as Adopted Pursuant to Section 302 of the
SarbanesOxley Act of 2002 (Filed herewith.)32.1
    
    Certification of Chief Executive Officer, Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the
SarbanesOxley Act of 2002 (Furnished herewith.)32.2
    
    Certification of Principal Financial Officer, Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
SarbanesOxley Act of 2002 (Furnished herewith.)
 (c)
    
    Other Financial Information
  174




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Desert Ridge Resort Partners, LLC
and Subsidiaries
Consolidated Financial Statements
As of December 31, 2005 and 2004, and for the years ended
December 31, 2005, 2004 and 2003
 175




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##### Table of Contents



Report of Independent Registered Certified Public Accounting Firm
   
 176




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##### Table of Contents



Desert Ridge Resort Partners, LLC and
Consolidated Balance Sheets
As of December 31, 2005 and 2004
 December 31,
    
    
    December 31,2005
    
    
    2004AssetsCash and cash equivalents
    
    $
    8,639,798
    
    
    $
    2,810,953Restricted cash
    
    
    5,679,713
    
    
    
    1,765,084Accounts receivable, net of allowance for doubtful
accounts of $225,279 and $157,069
    
    
    6,620,479
    
    
    
    6,728,054Due from affiliate
    
    
    835,685
    
    
    
    1,059,273Prepaid expenses and other current assets
    
    
    945,883
    
    
    
    1,008,279Property and equipment, net
    
    
    236,265,609
    
    
    
    250,090,197Loan costs, net of accumulated amortization
of $1,063,134 and $4,923,232
    
    
    2,752,129
    
    
    
    3,619,260Fair value of cash flow hedge
    
    
    1,624,206
    
    
    
    Goodwill
    
    
    1,556,115
    
    
    
    1,556,115Total assets
    
    $
    264,919,617
    
    
    $
    268,637,215Liabilities and Members DeficitAccounts payable and accrued expenses
    
    $
    9,909,261
    
    
    $
    7,202,674Obligation under cash flow hedge
    
    
    
    
    
    
    4,900,957Mortgage note payable
    
    
    300,000,000
    
    
    
    179,000,000Other notes payable
    
    
    
    
    
    
    98,469,552Distributions payable
    
    
    1,656,103
    
    
    
    1,638,102Accrued rent under operating leases
    
    
    2,908,824
    
    
    
    2,447,151Obligations under capital leases
    
    
    342,698
    
    
    
    584,149Total liabilities
    
    
    314,816,886
    
    
    
    294,242,585CommitmentsMembers deficit
    
    
    (49,897,269
    )
    
    
    (25,605,370
    )Total liabilities and members capital deficit
    
    $
    264,919,617
    
    
    $
    268,637,215




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##### Table of Contents



Desert Ridge Resort Partners, LLC and
Consolidated Statements of Operations
For the years ended December 31, 2005, 2004 and 2003
 December 31,
    
    
    December 31,
    
    
    December 31,2005
    
    
    2004
    
    
    2003Revenues:Room
    
    $
    52,862,776
    
    
    $
    48,115,944
    
    
    $
    41,027,026Food and beverage
    
    
    46,051,980
    
    
    
    40,273,542
    
    
    
    35,661,081Other operating department
    
    
    17,527,355
    
    
    
    15,592,334
    
    
    
    13,567,716Total revenue
    
    
    116,442,111
    
    
    
    103,981,820
    
    
    
    90,255,823Costs and expenses:Room
    
    
    10,998,627
    
    
    
    10,385,524
    
    
    
    10,392,949Food and beverage
    
    
    28,005,592
    
    
    
    24,764,302
    
    
    
    23,293,158Other operating departments
    
    
    10,498,883
    
    
    
    10,498,603
    
    
    
    9,785,030Property operations
    
    
    10,470,784
    
    
    
    9,409,613
    
    
    
    9,239,013Repairs and maintenance
    
    
    4,192,335
    
    
    
    3,992,476
    
    
    
    3,583,499Management fees
    
    
    3,493,264
    
    
    
    3,119,455
    
    
    
    2,707,665Sales and marketing
    
    
    6,533,418
    
    
    
    6,636,754
    
    
    
    6,234,005General and administrative
    
    
    7,520,241
    
    
    
    7,418,431
    
    
    
    7,645,167Depreciation
    
    
    15,142,718
    
    
    
    15,064,287
    
    
    
    14,679,757Total costs and expenses
    
    
    96,855,862
    
    
    
    91,289,445
    
    
    
    87,560,243Operating profit
    
    
    19,586,249
    
    
    
    12,692,375
    
    
    
    2,695,580Interest income
    
    
    6,075
    
    
    
    18,721
    
    
    
    Interest expense and loan cost amortization
    
    
    (24,522,302
    )
    
    
    (26,366,702
    )
    
    
    (24,569,385
    )Loss on extinguishment of debt
    
    
    (15,684,112
    )
    
    
    
    
    
    
    Net loss
    
    $
    (20,614,090
    )
    
    $
    (13,655,606
    )
    
    $
    (21,873,805
    )




---



##### Table of Contents



Desert Ridge Resort Partners, LLC and
Consolidated Statements of Partners Capitals
For the years ended December 31, 2005, 2004 and 2003
 Accumulated Other
    
    
    
    
    
    
    ComprehensiveClass A Members
    
    
    Class B Members
    
    
    Comprehensive Loss
    
    
    Total
    
    
    LossBalance at December 31, 2002
    
    $
    24,933,773
    
    
    $
    3,032,045
    
    
    $
    (9,724,228
    )
    
    $
    18,241,590Distributions
    
    
    (5,902,951
    )
    
    
    (667,459
    )
    
    
    
    
    
    
    (6,570,410
    )Net loss
    
    
    (19,651,427
    )
    
    
    (2,222,378
    )
    
    
    
    
    
    
    (21,873,805
    )
    
    $
    (21,873,805
    )Current period adjustment to recognize
fair value of cash flow hedges
    
    
    
    
    
    
    
    
    
    
    1,944,905
    
    
    
    1,944,905
    
    
    
    1,944,905Balance at December 31, 2003
    
    $
    (620,605
    )
    
    $
    142,208
    
    
    $
    (7,779,323
    )
    
    $
    (8,257,720
    )
    
    $
    (19,928,900
    )Distributions
    
    
    (5,902,951
    )
    
    
    (667,459
    )
    
    
    
    
    
    
    (6,570,410
    )Net loss
    
    
    (12,268,196
    )
    
    
    (1,387,410
    )
    
    
    
    
    
    
    (13,655,606
    )
    
    $
    (13,655,606
    )Current period adjustment to recognize
fair value of cash flow hedges
    
    
    
    
    
    
    
    
    
    
    2,878,366
    
    
    
    2,878,366
    
    
    
    2,878,366Balance at December 31, 2004
    
    $
    (18,791,752
    )
    
    $
    (1,912,661
    )
    
    $
    (4,900,957
    )
    
    $
    (25,605,370
    )
    
    $
    (10,777,240
    )Distributions
    
    
    (5,902,951
    )
    
    
    (667,459
    )
    
    
    
    
    
    
    (6,570,410
    )Net loss
    
    
    (18,519,698
    )
    
    
    (2,094,392
    )
    
    
    
    
    
    
    (20,614,090
    )
    
    $
    (20,614,090
    )Amortization of loss on termination of
cash flow hedges
    
    
    
    
    
    
    
    
    
    
    732,438
    
    
    
    732,438
    
    
    
    732,438Current period adjustment to recognize
fair value of cash flow hedges
    
    
    
    
    
    
    
    
    
    
    2,160,163
    
    
    
    2,160,163
    
    
    
    2,160,163Balance at December 31, 2005
    
    $
    (43,214,401
    )
    
    $
    (4,674,512
    )
    
    $
    (2,008,356
    )
    
    $
    (49,897,269
    )
    
    $
    (17,721,489
    )




---



##### Table of Contents



December 31,
    
    
    December 31,
    
    
    December 31,2005
    
    
    2004
    
    
    2003Cash flows from operating activities:Net loss
    
    $
    (20,614,090
    )
    
    $
    (13,655,606
    )
    
    $
    (21,873,805
    )Adjustments to reconcile net loss to cash provided by (used in)
operating activities:Depreciation
    
    
    15,142,718
    
    
    
    15,064,287
    
    
    
    14,679,757Amortization of loan costs
    
    
    1,634,085
    
    
    
    1,245,229
    
    
    
    1,224,819Bad debt expense
    
    
    120,756
    
    
    
    104,486
    
    
    
    235,793Amortization of loss on termination of cash flow hedge
    
    
    732,438
    
    
    
    
    
    
    
    Loss on extinguishment of debt
    
    
    15,684,112
    
    
    
    
    
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    (13,181
    )
    
    
    (1,447,718
    )
    
    
    (3,597,575
    )Due from affiliate
    
    
    223,588
    
    
    
    1,123,982
    
    
    
    1,137,645Prepaid expenses and other current assets
    
    
    62,396
    
    
    
    (7,397
    )
    
    
    (268,918
    )Accrued rent under operating leases
    
    
    461,673
    
    
    
    461,673
    
    
    
    438,452Accounts payable and accrued expenses
    
    
    2,706,587
    
    
    
    (438,494
    )
    
    
    312,830Due to affiliate
    
    
    
    
    
    
    (237,160
    )
    
    
    (4,922,567
    )Net cash provided by (used in) operating activities
    
    
    16,141,082
    
    
    
    2,213,282
    
    
    
    (12,633,569
    )Cash flows from investing activities:Additions to property and equipment
    
    
    (1,318,130
    )
    
    
    (2,691,829
    )
    
    
    (26,266,258
    )Marriott Vacation Club payment of office build-out
    
    
    
    
    
    
    
    
    
    
    2,690,000Increase in restricted cash
    
    
    (3,914,629
    )
    
    
    (848,864
    )
    
    
    (864,823
    )Net cash used in investing activities
    
    
    (5,232,759
    )
    
    
    (3,540,693
    )
    
    
    (24,441,081
    )Cash flows from financing activities:Proceeds from mortgage note payable
    
    
    301,500,000
    
    
    
    
    
    
    
    Principal (payments) borrowings on mortgages
    
    
    (180,500,000
    )
    
    
    8,753,681
    
    
    
    38,554,587Principal payments on notes payable
    
    
    (98,469,552
    )
    
    
    
    
    
    
    (203,663
    )Principal payments on capital lease obligations
    
    
    (241,451
    )
    
    
    (198,280
    )
    
    
    (6,519,230
    )Payment of prepayment penalties on mortgage note
    
    
    (12,630,804
    )
    
    
    
    
    
    
    (129,850
    )Cash paid to acquire/terminate cash flow hedges
    
    
    (4,365,000
    )
    
    
    
    
    
    
    Distributions to members
    
    
    (6,552,409
    )
    
    
    (6,588,411
    )
    
    
    Payment of loan costs
    
    
    (3,820,262
    )
    
    
    (20,215
    )
    
    
    Net cash (used in) provided by financing activities
    
    
    (5,079,478
    )
    
    
    1,946,775
    
    
    
    31,701,844Net increase (decrease) in cash and cash equivalents
    
    
    5,828,845
    
    
    
    619,364
    
    
    
    (5,372,806
    )Cash and cash equivalents, beginning of period
    
    
    2,810,953
    
    
    
    2,191,589
    
    
    
    7,564,395Cash and cash equivalents, end of period
    
    $
    8,639,798
    
    
    $
    2,810,953
    
    
    $
    2,191,589Supplemental disclosure of cash flow information:Cash paid during the period for:Interest
    
    $
    21,655,634
    
    
    $
    24,092,376
    
    
    $
    24,369,166Supplemental disclosure of non-cash investing and financing activitiesAssets acquired through capital lease obligation
    
    $
    
    
    
    $
    
    
    
    $
    813,176Distributions declared but not paid to Partners
    
    $
    1,656,103
    
    
    $
    1,638,102
    
    
    $
    1,656,103Construction costs payable included in construction in progress
    
    $
    
    
    
    $
    
    
    
    $
    294,614




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##### Table of Contents



Desert Ridge Resort Partners, LLC and
Notes to the Consolidated Financial Statements
For the years ended December 31, 2005, 2004 and 2003
 1.
    
    Business
 Organization




---



##### Table of Contents



Desert Ridge Resort Partners, LLC and
Notes to the Consolidated Financial Statements
For the years ended December 31, 2005, 2004 and 2003
 Allocations and Distributions
    2.
    
    Summary of Significant Accounting Policies
  Basis of Financial Statement Presentation




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##### Table of Contents



Desert Ridge Resort Partners, LLC and
Notes to the Consolidated Financial Statements
For the years ended December 31, 2005, 2004 and 2003
 Principles of Consolidation
 Cash and Cash Equivalents
   Inventory
 Property and Equipment
  Deferred Loan Costs
 Leases




---



##### Table of Contents



Desert Ridge Resort Partners, LLC and
Notes to the Consolidated Financial Statements
For the years ended December 31, 2005, 2004 and 2003
  Income Taxes
  Revenue Recognition
 Advertising and Promotion Costs
 Derivative Financial Instruments  Accounting for
Derivative Instruments and Hedging Activities




---



##### Table of Contents



Desert Ridge Resort Partners, LLC and
Notes to the Consolidated Financial Statements
For the years ended December 31, 2005, 2004 and 2003
  Impairment of Long-Lived Assets and Goodwill  Accounting for the
Impairment or Disposal of Long-Lived Assets
 Goodwill and Other
Intangible Assets
 Concentration of Credit Risk
 Reclassification




---



##### Table of Contents



Desert Ridge Resort Partners, LLC and
Notes to the Consolidated Financial Statements
For the years ended December 31, 2005, 2004 and 2003
 3.
    
    Property and Equipment
  December 30,
    
    
    December 31,2005
    
    
    2004Land and land improvements
    
    $
    63,777,646
    
    
    $
    63,498,310Buildings
    
    
    168,562,583
    
    
    
    168,381,962Furniture, fixtures and equipment
    
    
    50,785,885
    
    
    
    49,713,609Equipment under capital leases
    
    
    813,176
    
    
    
    1,027,280283,939,290
    
    
    
    282,621,161Less: accumulated depreciation
    
    
    (47,673,681
    )
    
    
    (32,530,964
    )$
    236,265,609
    
    
    $
    250,090,197
  4.
    
    Mortgage Note Payable




---



##### Table of Contents



Desert Ridge Resort Partners, LLC and
Notes to the Consolidated Financial Statements
For the years ended December 31, 2005, 2004 and 2003
    5.
    
    Other Notes Payable




---



##### Table of Contents



Desert Ridge Resort Partners, LLC and
Notes to the Consolidated Financial Statements
For the years ended December 31, 2005, 2004 and 2003
  6. Leases
   2006
    
    $
    212,4472007
    
    
    187,867Total future minimum lease payments
    
    
    400,314Less: interest
    
    
    (57,616
    )Present value of net
minimum lease payments
    
    $
    342,698




---



##### Table of Contents



Desert Ridge Resort Partners, LLC and
Notes to the Consolidated Financial Statements
For the years ended December 31, 2005, 2004 and 2003
  2006
    
    $
    651,4022007
    
    
    440,7932008
    
    
    486,0032009
    
    
    486,0032010
    
    
    486,003Thereafter
    
    
    75,867,005Total
    
    $
    78,417,209
 7.
    
    Transactions with Related Parties
 Hotel Management Agreement
 Other




---



##### Table of Contents



Desert Ridge Resort Partners, LLC and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2005, 2004 and 2003
 The LLC has entered into various other agreements with Marriott, or subsidiaries
thereof, to provide services such as marketing support, reservation services, and other
services customary to the operation of a national brand hotel concept. The Company incurred
approximately $5.8 million, $5.7 million and $5.0 million, respectively, for such services,
for the years ended December 30, 2005, December 31, 2004 and January 2, 2004, which have been
included in cost of sales for rooms, food and beverage, and other operating departments in
the accompanying consolidated statements of operations. The following table summarizes these
expenses by major category:
 December 30,
    
    December 31,
    
    January 2,2005
    
    2004
    
    2004Advertising
    
    $
    1,289,189
    
    
    $
    1,236,965
    
    
    $
    1,133,045Marriott Rewards
    
    
    1,234,339
    
    
    
    1,283,828
    
    
    
    951,257Insurance
    
    
    1,492,653
    
    
    
    1,307,975
    
    
    
    1,006,730Reservations
    
    
    417,943
    
    
    
    446,668
    
    
    
    430,204Accounting Services
    
    
    1,294,390
    
    
    
    1,377,110
    
    
    
    1,413,645Other
    
    
    29,155
    
    
    
    28,987
    
    
    
    28,359Total
    
    $
    5,757,669
    
    
    $
    5,681,533
    
    
    $
    4,963,240
 The LLC has bonus plans, based on profitability formulas, which provide incentive
compensation for key officers and employees. Amounts charged to expense for bonuses to
property management totaled approximately $1.2 million, $1.2 million and $0.9 million for the
years ended December 30, 2005, December 31, 2004 and January 2, 2004, respectively. These
amounts are allocated between various hotel cost of sales for rooms, food and beverage, and
other operating departments in the accompanying consolidated statements of operations.As of December 30, 2005 and December 31, 2004, amounts due from Marriott were approximately
$0.8 million and $1.1 million, respectively, for receivables collected by Marriott on behalf
of the LLC, and are included in due from affiliates in the accompanying consolidated balance
sheets.
 190




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##### Table of Contents



Desert Ridge Resort Partners, LLC and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2005, 2004 and 2003
 8.
    
    Income TaxesThe components of the deferred taxes recognized in the accompanying consolidated balance
sheets are as follows:
 December 30,
    
    
    December 31,2005
    
    
    2004Deferred tax asset:Net operating loss
    
    $
    10,350,746
    
    
    $
    10,138,104Bad debt expense
    
    
    86,958
    
    
    
    60,629Deferred tax liability:Accelerated depreciation
    
    
    (3,736,025
    )
    
    
    (3,603,040
    )Net deferred tax asset
    
    
    6,701,679
    
    
    
    6,595,693Valuation allowance
    
    
    (6,701,679
    )
    
    
    (6,595,693
    )$
    
    
    
    $
    
 The types of temporary differences between the tax bases of assets and liabilities and
their financial statement reporting amounts are attributable principally to depreciation and
net operating losses. The TRS tenant has net operating loss carry-forwards for federal and
state purposes of approximately $26.8 million and $36.9 million as of December 30, 2005 and
December 31, 2004, respectively, which is available to offset future taxable income. The
estimated net operating loss carry-forward expiration dates are as follows as of December 30,
2005:
 2020
    
    $
    6262021
    
    
    532,8642022
    
    
    5,991,7342023
    
    
    14,597,2502024
    
    
    5,142,0422025
    
    
    550,887$
    26,815,403
 The Company has not recorded this potential future benefit because its TRS subsidiaries
do not have sufficient historical earnings on which to base a potential future benefit.
 9.
    
    Commitments and ContingenciesFrom time to time the Company may be exposed to litigation arising from operations of its
business in the ordinary course of business. Management does not believe that resolution of
these matters will have a material adverse impact on the Companys financial condition or
results of operations.
  191




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##### Table of Contents



WB Resort Partners, L.P. and Subsidiaries
Consolidated Financial Statements
As of December 31, 2005 and 2004, and for the years ended December 31, 2005, 2004 and 2003
 192




---



##### Table of Contents



Report of Independent Registered Certified Public Accounting Firm
    /s/
 
 193




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##### Table of Contents



WB Resort Partners, L.P. and Subsidiaries
Consolidated Balance Sheets
As of December 31, 2005 and 2004
 2005
    
    
    2004AssetsCash and cash equivalents
    
    $
    1,696,177
    
    
    $
    1,626,242Accounts receivable, net of allowance for doubtful
accounts of $0 and $145,514
    
    
    53,334
    
    
    
    6,100,465Restricted cash
    
    
    
    
    
    
    10,428,284Due from affiliates
    
    
    
    
    
    
    87,576Prepaid expenses and other current assets
    
    
    
    
    
    
    934,878Property, construction in progress and equipment, net
    
    
    
    
    
    
    181,317,714Loan costs, less accumulated amortization of $0
and $2,120,679
    
    
    
    
    
    
    1,011,860Total assets
    
    $
    1,749,511
    
    
    $
    201,507,019Liabilities and Partners CapitalAccounts payable and accrued expenses
    
    $
    1,023,513
    
    
    $
    12,407,940Construction costs payable, including retainage payable
    
    
    
    
    
    
    1,143Due to affiliates
    
    
    
    
    
    
    173,341Distribution payable
    
    
    
    
    
    
    7,364,726Current portion of capital lease obligations
    
    
    
    
    
    
    55,716Mortgage note payable
    
    
    
    
    
    
    130,000,000Other note payable
    
    
    
    
    
    
    48,809,159Capital lease obligations
    
    
    
    
    
    
    111,315Accrued rent from operating leases
    
    
    
    
    
    
    2,415,571Total liabilities
    
    
    1,023,513
    
    
    
    201,338,911Commitments (Note 9)Partners capital
    
    
    725,998
    
    
    
    168,108Total liabilities and partners capital
    
    $
    1,749,511
    
    
    $
    201,507,019
  194




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##### Table of Contents



WB Resort Partners, L.P. and Subsidiaries
Consolidated Statements of Discontinued Operations
For the years ended December 31, 2005, 2004 and 2003
 2005
    
    
    2004
    
    
    2003Revenues:Rooms
    
    $
    55,896,384
    
    
    $
    51,874,416
    
    
    $
    42,211,855Food and beverage
    
    
    10,157,658
    
    
    
    10,976,899
    
    
    
    8,851,845Other operating departments
    
    
    6,455,776
    
    
    
    5,760,208
    
    
    
    4,702,101Total revenue
    
    
    72,509,818
    
    
    
    68,611,523
    
    
    
    55,765,801Costs and expenses:Rooms
    
    
    15,196,197
    
    
    
    15,611,607
    
    
    
    12,859,657Food and beverage
    
    
    9,077,863
    
    
    
    9,885,121
    
    
    
    8,478,072Other operating departments
    
    
    864,999
    
    
    
    834,484
    
    
    
    962,904Property operations
    
    
    12,008,232
    
    
    
    12,728,317
    
    
    
    12,330,038Repairs and maintenance
    
    
    2,993,740
    
    
    
    3,186,921
    
    
    
    2,959,039Management fees
    
    
    2,120,446
    
    
    
    2,098,681
    
    
    
    1,660,663Sales and marketing
    
    
    5,882,681
    
    
    
    6,403,496
    
    
    
    5,486,112General and administrative
    
    
    6,016,740
    
    
    
    5,905,271
    
    
    
    4,960,771Depreciation
    
    
    8,742,938
    
    
    
    11,933,788
    
    
    
    11,975,475Total costs and expenses
    
    
    62,903,836
    
    
    
    68,587,686
    
    
    
    61,672,731Operating profit (loss)
    
    
    9,605,982
    
    
    
    23,837
    
    
    
    (5,906,930
    )Interest and loan cost amortization
    
    
    (14,425,973
    )
    
    
    (15,859,148
    )
    
    
    (15,124,872
    )Gain on sale of assets
    
    
    103,468,262
    
    
    
    
    
    
    
    Loss on extinguishment of debt
    
    
    (2,107,467
    )
    
    
    
    
    
    
    Income (loss) before benefit from
income taxes
    
    
    96,540,804
    
    
    
    (15,835,311
    )
    
    
    (21,031,802
    )Benefit from income taxes
    
    
    26,570
    
    
    
    
    
    
    
    Net income (loss)
    
    $
    96,567,374
    
    
    $
    (15,835,311
    )
    
    $
    (21,031,802
    )
  195




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##### Table of Contents



WB Resort Partners, L.P. and Subsidiaries
Consolidated Statements of Partners Capital
For the years ended December 31, 2005, 2004 and 2003
 General
    
    
    LimitedPartner
    
    
    Partners
    
    
    TotalBalance, December 31, 2002
    
    $
    46,601
    
    
    $
    46,552,728
    
    
    $
    46,599,329Distributions
    
    
    (9,775
    )
    
    
    (9,765,223
    )
    
    
    (9,774,998
    )Net loss
    
    
    (21,032
    )
    
    
    (21,010,770
    )
    
    
    (21,031,802
    )Balance, December 31, 2003
    
    $
    15,794
    
    
    $
    15,776,735
    
    
    $
    15,792,529Contributions
    
    
    211
    
    
    
    210,679
    
    
    
    210,890Net loss
    
    
    (15,835
    )
    
    
    (15,819,476
    )
    
    
    (15,835,311
    )Balance, December 31, 2004
    
    $
    170
    
    
    $
    167,938
    
    
    $
    168,108Distributions
    
    
    (96,009
    )
    
    
    (95,913,475
    )
    
    
    (96,009,484
    )Net income
    
    
    96,567
    
    
    
    96,470,807
    
    
    
    96,567,374Balance, December 31, 2005
    
    $
    728
    
    
    $
    725,270
    
    
    $
    725,9988
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WB Resort Partners, L.P. and Subsidiaries
Consolidated Statements of Cash Flows
For the years ended December 31, 2005, 2004 and 2003
 2005
    
    
    2004
    
    
    2003Cash flows from operating activities:Net income (loss)
    
    $
    96,567,374
    
    
    $
    (15,835,311
    )
    
    $
    (21,031,802
    )Adjustments to reconcile net income (loss) to cash
provided by operating activities:Depreciation
    
    
    8,742,938
    
    
    
    11,933,788
    
    
    
    11,975,475Amortization of loan costs
    
    
    531,890
    
    
    
    627,819
    
    
    
    632,291Provision for bad debt expense
    
    
    231,403
    
    
    
    50,169
    
    
    
    107,386Gain on sale of hotel and resort property
    
    
    (103,468,262
    )
    
    
    
    
    
    
    Loss on extinguishment of debt
    
    
    479,970
    
    
    
    
    
    
    
    Changes in assets and liabilities:Accounts receivable
    
    
    5,815,728
    
    
    
    (612,792
    )
    
    
    (1,658,952
    )Prepaid expenses and other current assets
    
    
    934,878
    
    
    
    446,348
    
    
    
    (565,129
    )Due from affiliates
    
    
    87,576
    
    
    
    (39,364
    )
    
    
    (2,938
    )Accrued rent from operating leases
    
    
    (2,415,571
    )
    
    
    (31,785
    )
    
    
    2,056,284Accounts payable and accrued expenses
    
    
    (11,384,427
    )
    
    
    1,272,678
    
    
    
    1,720,620Due to affiliates
    
    
    (173,341
    )
    
    
    71,980
    
    
    
    92,991Net cash used in operating activities
    
    
    (4,049,844
    )
    
    
    (2,116,470
    )
    
    
    (6,673,774
    )Cash flows from investing activities:Proceeds from sale of hotel and resort property
    
    
    276,041,895
    
    
    
    (2,932,015
    )
    
    
    (5,869,922
    )Decrease (increase) in restricted cash
    
    
    10,428,284
    
    
    
    (589,585
    )
    
    
    1,823,319Net cash (used in) provided by investing activities
    
    
    286,470,179
    
    
    
    (3,521,600
    )
    
    
    (4,046,603
    )Cash flows from financing activities:Repayment of mortgage note payable
    
    
    (130,000,000
    )
    
    
    
    
    
    
    Repayment of (proceeds from) other notes payable
    
    
    (48,809,159
    )
    
    
    4,729,551
    
    
    
    16,281,419Principal payments on capital lease obligations
    
    
    (167,031
    )
    
    
    (622,442
    )
    
    
    (1,050,177
    )Capital contributions from partners
    
    
    
    
    
    
    210,890
    
    
    
    Distributions to partners
    
    
    (103,374,210
    )
    
    
    
    
    
    
    (4,874,110
    )
 197




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##### Table of Contents



2005
    
    
    2004
    
    
    2003Net cash (used in) provided by financing activities
    
    
    (282,350,400
    )
    
    
    4,317,999
    
    
    
    10,357,132Net increase (decrease) in cash and cash equivalents
    
    
    69,935
    
    
    
    (1,320,071
    )
    
    
    (363,245
    )Cash and cash equivalents, beginning of period
    
    
    1,626,242
    
    
    
    2,946,313
    
    
    
    3,309,558Cash and cash equivalents, end of period
    
    $
    1,696,177
    
    
    $
    1,626,242
    
    
    $
    2,946,313Supplemental disclosure of cash flow information:Cash paid during the period for:Interest
    
    $
    14,417,730
    
    
    $
    15,859,148
    
    
    $
    14,461,778Supplemental disclosure of non-cash investing and financing activities:Distributions declared but not paid to partners
    
    $
    
    
    
    $
    
    
    
    $
    7,364,726Construction costs payable included in construction in progress
    
    $
    
    
    
    $
    1,143
    
    
    $
    636,388
  198




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WB Resort Partners, L.P. and Subsidiaries
Notes to Consolidated Financial Statements
For the years ended December 31, 2005, 2004 and 2003
 1.
    
    BusinessOrganization

WB Resort Partners, L.P. (the Partnership) was organized pursuant to the laws of the State
of Delaware on July 27, 2001. WBM Resort, L.P., WBR Parent, LLC and WBR Tenant Corporation
are wholly owned subsidiaries of the Partnership. The Partnerships general partner is CNL
WBR GP Corp. (the General Partner) and the limited partners are CNL WBR Investor, L.P.,
Marriott International, Inc. (Marriott) and Waikiki Beach Resort, Ltd. (collectively, the
Limited Partners).The Partnership was formed to own and operate a resort located in Honolulu, Hawaii (the
Property). On September 9, 2005, the Partnership entered into an Agreement of Purchase and
Sale (the Sale Agreement), with W2005 WKI Realty, LLC, an affiliate of Whitehall Street
Global Real Estate Limited Partnership 2005 (the Purchaser), which is an affiliate of
Goldman Sachs. The Sale Agreement provided for the sale of all of the Partnerships interest
in the Property (the Sale) for a purchase price of $279 million in cash, subject to closing
proration adjustments as provided in the Sale Agreement. The Sale closed on November 7, 2005.
Dissolution of the Partnership is expected to occur in the first quarter of 2006.The structure of the Partnership and its subsidiaries was designed to allow the parent of its
majority owner to continue to qualify as a real estate investment trust, which is generally
not subject to federal income taxes. In keeping with this objective, the Partnership
operates its Property through a taxable REIT subsidiary (TRS), as permitted by the REIT
Modernization Act of 1999.The General Partner and Limited Partners hold a 0.1% and 99.9% interest, respectively, as a
result of capital contributions totaling approximately $0.1 million and $85.1 million in the
Partnership in order to obtain the following percentage interests:
 PercentagePartner
    
    InterestGeneral Partner
    
    
    0.1
    %CNL WBR Investor, L.P.
    
    
    48.9
    %Waikiki Beach Resort, Ltd.
    
    
    36.0
    %Marriott
    
    
    15.0
    %
 The Partnership relied on capital contributions from the General Partner and Limited Partners
and borrowings under loans to fund capital expenditures, operating losses and negative cash
flows. For the years ended December 31, 2005, 2004 and 2003, the Partnership reported net
income of approximately $96.6 million, including a gain on the sale of the Property of $103.5
million, net loss of approximately $15.8 million, and net loss of approximately $21.0
million, respectively. The General Partner and Limited Partners are required by the limited
partnership agreement to make their pro-rata share of capital contributions required to fund
operating shortfalls of the Partnership. If any partner fails to make such required capital
contribution, they will be in default. In accordance with the partnership agreement,
non-defaulting partners may elect to cure such default by making the defaulting partners
capital contribution, which will be considered a loan from the non-defaulting partner to the
defaulting partner.Allocations and Distributions

Net operating profits and net operating losses are allocated to the General and Limited
Partners in accordance with their respective ownership interests.
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WB Resort Partners, L.P. and Subsidiaries
Notes to Consolidated Financial Statements
For the years ended December 31, 2005, 2004 and 2003
 In addition, the General Partner and Limited Partners are entitled to a return of 11.5% per
annum (the 11.5% Preferred Return). The cumulative 11.5% Preferred Return is to be paid
quarterly to each partner based on the capital accounts of each partner during the quarter.
As of December 31, 2005 and 2004, the Partnership had distributions payable totaling $0 and
$7.4 million, respectively.As a result of the closing of the Sale, the Partnership distributed the net proceeds among the
partners according to the partnership agreement. The General Partner received approximately
$0.1 million, CNL WBR Investor, L.P. received approximately $50.0 million, Waikiki Beach
Resort, Ltd. received approximately $36.8 million, and Marriott received approximately $15.3
million in distributions. Waikiki Beach Resort, Ltd. utilized approximately $32.7 million of
the distributions received to repay the outstanding balance of two loans to Marriott in full
(see Note 5).2.
    
    Summary of Significant Accounting PoliciesA summary of significant accounting principles and practices used in the preparation of the
financial statements follows:Basis of Financial Statement Presentation

The Partnership prepares its financial statements in conformity with accounting principles
generally accepted in the United States of America. These principles require management to
make estimates and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The Property was sold on
November 7, 2005, accordingly, the Partnership has presented a statement of discontinued
operations for all periods presented.Principles of Consolidation

The accompanying consolidated financial statements include the accounts of WB Resort
Partners, L.P. and its wholly owned subsidiaries. All significant inter-company balances and
transactions have been eliminated in consolidation.Cash and Cash Equivalents

The Partnership considers all amounts held in highly liquid instruments with original
maturities of three months or less to be cash equivalents. Cash and cash equivalents consist
primarily of demand deposit accounts. Management of the Partnership believes the credit risk
associated with cash and cash equivalents to be low due to the quality of the financial
institutions in which these assets are held.Certain amounts of cash are restricted for maintenance and replacement of furniture,
fixtures, and equipment in accordance with the hotel management agreement. Escrows for the
payment of property taxes and insurance is also included in restricted cash in the
accompanying consolidated balance sheet as of December 31, 2004.Revenue Recognition

The Propertys revenues are derived from its operations and include revenues from the rental
of rooms, food and beverage sales, golf course and spa operations, telephone usage and other
service revenue. Revenue is recognized when rooms are occupied and services have been
performed. Cash received from customers for events occurring after each year end have been
recorded as deposits in the accompanying consolidated balance sheets. Advanced deposits of
approximately $0 million and $0.7 million are included in accounts
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payable and accrued expenses in the accompanying consolidated balance sheets as of December
31, 2005 and
 201




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WB Resort Partners, L.P. and Subsidiaries
Notes to Consolidated Financial Statements  Continued
For the years ended December 31, 2005, 2004 and 2003
 2004, respectively. See also Note 7 for a description of reimbursements related to
the Propertys Marriott Rewards program.Advertising and Promotion Costs

The costs of advertising, promotional and marketing programs are charged to operations in the
year incurred and are included as sales and marketing expenses in the accompanying statements
of operations. Advertising, promotional and marketing costs totaled approximately $1.3
million, $1.5 million, and $3.4 million for the years ended December 31, 2005, 2004 and 2003,
respectively.Reclassification

Certain items in the prior years consolidated financial statements have been reclassified to
conform with the 2005 presentation. These reclassifications had no effect on partners
equity or net income or loss.Leases

The Partnership entered into capital and operating leases for land and equipment used at the
Property. Equipment leased under capital leases was recorded as equipment on the
accompanying consolidated balance sheets with a liability for the corresponding obligation
under the lease agreement. Equipment under capital leases were depreciated over the useful
life of the equipment and the obligation is reduced as monthly lease payments are made.
Payments under operating leases were generally recorded as rent expense as lease payments are
made. Rent expense under leases with escalating minimum rents was straight-lined over the
term of the lease.Income Taxes

Under the provisions of the Internal Revenue Code and applicable state laws, the Partnership
is only subject to taxation of income on the profits and losses from the TRS tenant
operations. The tax consequences of other Partnership revenues and expenses, unrelated to
the operation of the Property, will accrue to the partners. Certain of these other revenues
and expenses may be treated differently in the Partnerships income tax return than in the
accompanying consolidated financial statements. Therefore, amounts reported in the
consolidated financial statements may not be the same as those reported in the Partners
income tax returns.The Partnership accounts for federal and state income taxes on its TRS tenant using the asset
and liability method. Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the consolidated financial statements
carrying amounts of existing assets and liabilities and respective tax bases and operating
losses and tax-credit carry forwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that includes the
enactment date. Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized.
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WB Resort Partners, L.P. and Subsidiaries
Notes to Consolidated Financial Statements  Continued
For the years ended December 31, 2005, 2004 and 2003
 3.
    
    Property, Construction in Progress and Equipment, NetProperty, construction in progress and equipment consisted of the following at December 31,
2005 and 2004:
 2005
    
    
    2004Building
    
    $
    
    
    
    $
    121,436,927Leasehold improvements
    
    
    
    
    
    
    36,606,498Land improvements
    
    
    
    
    
    
    7,145,528Furniture, fixtures and equipment
    
    
    
    
    
    
    47,277,329Equipment under capital leases
    
    
    
    
    
    
    3,398,408
    
    
    
    215,864,690Less: accumulated depreciation
    
    
    
    
    
    
    (35,814,664
    )Construction in progress
    
    
    
    
    
    
    1,267,688$
    
    
    
    $
    181,317,714
 Accumulated depreciation for equipment under capital leases was approximately $0 and
$3.2 million as of December 31, 2005 and 2004, respectively.
 4.
    
    Mortgage Note PayableIn July 2001, the Partnership entered into a $130.0 million mortgage loan with an
institutional lender to finance a portion of the Property acquired and future renovation
costs. The mortgage was collateralized by a first mortgage and lien on the building and all
other assets. The loan bore interest at 8.53% per annum and had a maturity date of August
15, 2006. Interest-only payments were due monthly through maturity. For the years ended
December 31, 2005, 2004 and 2003, the Partnership incurred approximately $9.5 million, $11.3
million and $11.2 million, respectively, in interest expense from this loan. The entire
outstanding balance on the mortgage, including accrued interest, was repaid with proceeds
from the Sale (See Note 1). In connection with the repayment of the mortgage, the Partnership
recorded a loss on extinguishment of debt of $2.1 million, consisting of $1.3 million of loss
on the termination of a hedge, $0.3 million related to interest expense and $0.5 million
related to the write-off of deferred loan costs.5.
    
    Other Notes PayableOn July 27, 2001, the Partnership and Marriott entered into a loan agreement whereby Marriott
agreed to provide three loans to the Partnership: a liquidity facility loan (Mezz Loan A);
a senior loan guaranty (Mezz Loan B); and a cost overrun loan (Mezz Loan C).
 203




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WB Resort Partners, L.P. and Subsidiaries
Notes to Consolidated Financial Statements  Continued
For the years ended December 31, 2005, 2004 and 2003
 A description of each loan is as follows:
 MaximumLoan
    
    Purpose of Loan
    
    Funding
    
    Maturity
    
    Interest RateMezz Loan A
    
    Fund priority
    
    $20,000,000
    
    07/2006
    
    LIBOR plus 700shortfalls from the
    
    
    
    
    
    basis points (notoperations of the
    
    
    
    
    
    to exceed 13.5%)PropertyMezz Loan B
    
    Fund any deficiency
    
    $20,000,000
    
    07/2006
    
    LIBOR plus 700in the payment of
    
    
    
    
    
    basis points (notmonthly debt
    
    
    
    
    
    to exceed 13.5%)service paymentsunder the MortgageLoanMezz Loan C
    
    Fund renovation
    
    $10,000,000
    
    07/2006
    
    LIBOR plus 700costs in excess of
    
    
    
    
    
    basis points (notproject budget
    
    
    
    
    
    to exceed 13.5%)
 At December 31, 2005, no amounts were outstanding under Mezz Loan A, Mezz Loan B and Mezz
Loan C, respectively. At December 31, 2004, including interest accrued on the funded
amounts, approximately $24.3 million, $24.6 million and $0 were outstanding under Mezz Loan
A, Mezz Loan B and Mezz Loan C, respectively. The interest rate on the Mezz Loan A and Mezz
Loan B was 0 percent and 9.40 percent at December 31, 2005 and 2004, respectively. The
Partnership incurred interest expense of approximately $4.3 million, $3.9 million and $3.1
million, respectively, from these loans during the years ended December 31, 2005, 2004 and
2003, respectively. As a result of the Sale (see Note 1), the entire outstanding balance on
Mezz Loan A and Mezz Loan B were repaid with distributions received from the Sale.6.
    
    LeasesDuring the years ending December 31, 2005, 2004 and 2003, the Partnership was a lessee of
various types of equipment used in operating the Property. Leases were categorized as
operating or capital leases based upon the terms in the lease agreements.
 204




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WB Resort Partners, L.P. and Subsidiaries
Notes to Consolidated Financial Statements  Continued
For the years ended December 31, 2005, 2004 and 2003
 The Partnership leased two parcels of land under ground leases, on which the Property is
located. These operating leases were transferred to the Purchaser in connection with the Sale
of the Property. One of the land leases had escalating base rents from 2001 to 2004. The
minimum annual rent has been straight-lined over the life of these leases. Both leases
contained percentage rent calculations based on percentages of gross revenues, as defined.
Rent expense, including accrued rental expense and lease taxes for the years ended December
31, 2005, 2004 and 2003, was approximately $5.6 million, $5.3 million and $5.1 million,
respectively. Percentage rent for the years ended December 31, 2005, 2004 and 2003 was $0.8
million, $0.5 million and $0.4 million, respectively. These amounts have been included in
property operations and maintenance in the accompanying consolidated statements of operations
for the years ended December 31, 2005, 2004 and 2003, respectively.7.
    
    Transactions with Related PartiesHotel Management AgreementThe Partnership entered into an agreement with an affiliate of Marriott International, Inc.
(the Manager) to manage the Property. Under the terms of the agreement, the Manager
operates the Property in return for a fixed management fee of 3 percent of gross revenues.
The Manager also earns an incentive management fee equal up to 50 percent of operating
profits in excess of certain payment thresholds. The Partnership incurred fixed management
fees of approximately $2.1 million, $2.1 million and $1.7 million during the years ended
December 31, 2005, 2004 and 2003, respectively. The management agreement was assumed by the
Purchaser in connection with the Sale of the Property.OtherThe Partnership entered into various other agreements with Marriott, or subsidiaries thereof,
to provide services such as marketing support, reservation services, and other services
customary to the operation of a national brand hotel concept. The Partnership incurred
approximately $6.1 million, $6.3 million and $5.7 million, respectively, for the years ended
December 31, 2005, 2004 and 2003, which have been included in cost of sales for rooms, food
and beverage, and other operating departments in the accompanying consolidated statements of
operations. The following table summarizes these expenses by major category:
 2005
    
    
    2004
    
    
    2003Advertising
    
    $
    1,874,021
    
    
    $
    2,358,963
    
    
    $
    2,042,291Marriott Rewards
    
    
    938,549
    
    
    
    771,180
    
    
    
    608,301Insurance
    
    
    954,617
    
    
    
    838,837
    
    
    
    947,964Reservations
    
    
    1,925,585
    
    
    
    1,996,495
    
    
    
    1,794,918Accounting Services
    
    
    263,436
    
    
    
    209,949
    
    
    
    210,351Other
    
    
    125,999
    
    
    
    90,804
    
    
    
    117,471Total
    
    $
    6,082,207
    
    
    $
    6,266,228
    
    
    $
    5,721,296
 The Partnership receives rental income under an arrangement with Marriott Vacation Club.
Revenues recognized from this arrangement in 2005, 2004 and 2003 were approximately $0.4
million, $0.4 million and $ 0.4 million, respectively. These amounts are included in other
operating departments revenue in the accompanying consolidated statements of operations.
 205




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WB Resort Partners, L.P. and Subsidiaries
Notes to Consolidated Financial Statements  Continued
For the years ended December 31, 2005, 2004 and 2003
 As of December 31, 2005 and 2004, amounts due from Marriott and affiliates were approximately
$0 and $0.1 million, respectively, for miscellaneous receivables collected by Marriott on
behalf of the Partnership.As of December 31, 2005 and 2004, amounts due to Marriott and affiliates were approximately
$0 and $0.2 million, respectively, for payroll and other costs paid by Marriott on behalf of
the Partnership.Marriott Rewards ReimbursementThe Property participated in the Marriott Rewards guest loyalty program. Marriott charges
the cost of operating this program to its participating hotels based on members qualifying
expenditures. The Partnership recorded its share of program costs and pays to Marriott based
upon contractual amounts when qualified members stayed at the Property. When members
redeemed rewards at the Property, the Partnership received reimbursements from Marriott based
on a standard reimbursement rate and recorded these as room revenues. During the years ended
December 31, 2005, 2004 and 2003, the Partnership received Marriott Rewards reimbursements of
$3.9 million, $3.1 million and $3.0 million, respectively. Additionally, during the year
ended December 31, 2004, Marriott performed a review of Marriott Rewards reimbursements for
the period of December 2000 through December 2003 and assessed a retroactive adjustment in
the reimbursed rate through December 2003. This assessment resulted in the recording of an
adjustment to room revenues of $1.7 million during the year ended December 31, 2004. This
change in accounting estimate reduced revenues and increased the Partnerships net loss in
2004 by $1.7 million. A portion of the reimbursement was paid during 2004 and the remaining
$0.9 million due was paid during the year ended December 31, 2005.8.
    
    Income TaxesThe components of the deferred taxes recognized in the accompanying consolidated balance
sheets at December 31, 2005 and 2004 are as follows:
 2005
    
    
    2004Deferred tax assets:Net operating loss
    
    $
    
    
    
    $
    16,688,775Accrued rent
    
    
    
    
    
    
    923,000Deferred tax liabilities:Accelerated depreciation
    
    
    
    
    
    
    (3,589,320
    )Net deferred tax asset
    
    
    
    
    
    
    14,022,455Valuation allowance
    
    
    
    
    
    
    (14,022,455
    )$
    
    
    
    $
    
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WB Resort Partners, L.P. and Subsidiaries
Notes to Consolidated Financial Statements  Continued
For the years ended December 31, 2005, 2004 and 2003
 The types of temporary differences between the tax bases of assets and liabilities and their
financial statement reporting amounts are attributable principally to depreciation and net
operating losses. The TRS tenant has net operating loss carryforwards for federal and state
purposes of approximately $0 and $36.9 million as of December 31, 2005 and 2004,
respectively.9.
    
    Commitments and ContingenciesFrom time to time the Partnership may be exposed to litigation arising from operations of its
business in the ordinary course of business. Management does not believe that resolution of
these matters will have a material adverse impact on the Partnerships financial condition or
results of operations.
  207




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##### Table of Contents



The following summarized financial information is filed as part of this report as a result of
Marriott providing credit enhancements that guarantee minimum returns and/or guarantee lease
payments for several of the Companys tenants. The aggregate carrying value of the Properties
covered by these credit enhancements and guarantees represents more
than twelve percent of the
Companys total assets for the year ended December 31, 2005. The summarized financial information
presented for Marriott as of December 31, 2005, December 31, 2004 and January 2, 2004, and for each
of the years ended December 31, 2005, December 31, 2004 and January 2, 2004, was obtained from the
Form 10-K filed by Marriott with the Commission for the year ended December 31, 2005.
 
  December 31,
    
    December 31,
    
    January 2,2005
    
    2004
    
    2004Current Assets
    
    $
    2,010
    
    
    $
    1,946
    
    
    $
    1,347Noncurrent Assets
    
    
    6,520
    
    
    
    6,722
    
    
    
    6,830Current Liabilities
    
    
    1,992
    
    
    
    2,356
    
    
    
    1,770Noncurrent Liabilities
    
    
    3,286
    
    
    
    2,231
    
    
    
    2,569Stockholders Equity
    
    
    3,252
    
    
    
    4,081
    
    
    
    3,838
  Fiscal Year
    
    
    Fiscal Year
    
    
    Fiscal YearEnded,
    
    
    Ended,
    
    
    Ended,December 31,
    
    
    December 31,
    
    
    January 2,2005
    
    
    2004
    
    
    2004Gross revenues
    
    $
    11,550
    
    
    $
    10,099
    
    
    $
    9,014Costs and expenses (including income tax expense)
    
    
    10,881
    
    
    
    9,503
    
    
    
    8,512Net income
    
    $
    669
    
    
    $
    596
    
    
    $
    502Basic earnings per share
    
    $
    3.09
    
    
    $
    2.63
    
    
    $
    2.16Diluted earnings per share
    
    $
    2.89
    
    
    $
    2.48
    
    
    $
    2.05
 208




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SIGNATURES
  CNL HOTELS & RESORTS, INC.By:
    /s/ Thomas J. Hutchison IIITHOMAS J. HUTCHISON IIIChief Executive Officer and Director
(Principal Executive Officer) By:
    /s/ C. Brian StricklandC. BRIAN STRICKLANDExecutive Vice President, Chief Financial Officer and
Treasurer
(Principal Financial Officer) By:
    /s/ Mark E. PattenMARK E. PATTENSenior Vice President and Chief Accounting Officer
(Principal Accounting Officer)




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##### Table of Contents



Signature
    
    Title
    
    Date/s/ James M. Seneff, Jr.
James M. Seneff, Jr.
    
    Chairman of the Board
    
    March 31, 2006/s/ Robert A. Bourne
Robert A. Bourne
    
    Vice Chairman of the Board
    
    March 31, 2006/s/ John A. Griswold
John A. Griswold
    
    President, Chief Operating
Officer and Director
    
    March 31, 2006/s/ Craig M. McAllaster
Craig M. McAllaster
    
    Director
    
    March 31, 2006/s/ Robert E. Parsons, Jr.
Robert E. Parsons, Jr.
    
    Director
    
    March 31, 2006/s/ James Douglas Holladay
James Douglas Holladay
    
    Director
    
    March 31, 2006/s/ Jack Kemp
Jack Kemp
    
    Director
    
    March 31, 2006/s/ Dianna F. Morgan
Dianna F. Morgan
    
    Director
    
    March 31, 2006/s/ Thomas J. Hutchison III
Thomas J. Hutchison III
    
    Chief Executive Officer and Director
    
    March 31, 2006/s/ C. Brian Strickland
C. Brian Strickland
    
    Executive Vice President, Chief
Financial Officer,
and Treasurer
    
    March 31, 2006/s/ Mark E. Patten
Mark E. Patten
    
    Senior Vice President and Chief
Accounting Officer
    
    March 31, 2006




---



##### Table of Contents



Additions
    
    DeductionsChargedBalance
    
    to
    
    Chargedat
    
    Costs
    
    to
    
    
    
    
    
    BalanceBeginning
    
    and
    
    Other
    
    
    
    
    
    at EndYear
    
    Description
    
    of Year
    
    Expenses
    
    Accounts
    
    Utilized
    
    of Year2003
    
    
    Deferred tax
asset valuation
allowance
    
    $
    4,314
    
    
    $
    
    
    
    $
    5,784
    
    
    $
    
    
    
    $
    10,0982004
    
    
    Deferred tax
asset valuation
allowance
    
    $
    10,098
    
    
    $
    
    
    
    $
    63,872
    
    
    $
    
    
    
    $
    73,9702005
    
    
    Deferred tax asset
valuation allowance
    
    $
    73,970
    
    
    $
    
    
    
    $
    19,560
    
    
    $
    
    
    
    $
    93,530




---



##### Table of Contents



Costs CapitalizedSubsequent
    
    
    Gross Amount at Which CarriedInitial Costs
    
    
    To Acquisition
    
    
    at Close of PeriodCarrying
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulated
    
    
    Date of
    
    
    DateLand
    
    
    Buildings
    
    
    Equipment
    
    
    Improvements
    
    
    Costs
    
    
    Land
    
    
    Buildings
    
    
    Equipment
    
    
    Total
    
    
    Depreciation
    
    
    Construction
    
    
    AcquiredGrand Wailea Resort Hotel
and Spa Maui, HI
    
    $
    81,343
    
    
    $
    515,080
    
    
    $
    19,916
    
    
    $
    9,883
    
    
    $
    
    
    
    $
    81,383
    
    
    $
    517,935
    
    
    $
    26,908
    
    
    $
    626,222
    
    
    $
    32,931
    
    
    
    1991
    
    
    
    4/2004La Quinta Resort & Club
LaQuinta, CA
    
    
    239,309
    
    
    
    171,993
    
    
    
    15,694
    
    
    
    4,727
    
    
    
    
    
    
    
    239,420
    
    
    
    172,596
    
    
    
    19,707
    
    
    
    431,723
    
    
    
    30,202
    
    
    
    1926
    
    
    
    4/2004Arizona Biltmore Resort & Spa
Phoenix, AZ
    
    
    53,341
    
    
    
    191,583
    
    
    
    11,802
    
    
    
    5,295
    
    
    
    
    
    
    
    53,507
    
    
    
    194,154
    
    
    
    14,358
    
    
    
    262,020
    
    
    
    16,712
    
    
    
    1929
    
    
    
    4/2004Doral Golf
Resort & Spa
Miami, Florida
    
    
    109,669
    
    
    
    122,723
    
    
    
    17,344
    
    
    
    6,312
    
    
    
    
    
    
    
    111,946
    
    
    
    129,229
    
    
    
    14,873
    
    
    
    256,048
    
    
    
    23,672
    
    
    
    1962
    
    
    
    4/2004Capital Hilton
Washington, DC
    
    
    11,808
    
    
    
    83,488
    
    
    
    9,934
    
    
    
    8,860
    
    
    
    
    
    
    
    11,811
    
    
    
    90,279
    
    
    
    11,999
    
    
    
    114,089
    
    
    
    7,659
    
    
    
    1943
    
    
    
    12/2004JW Marriott
 Le Meridien
New Orleans, LA
    
    
    
    
    
    
    78,607
    
    
    
    13,893
    
    
    
    17,764
    
    
    
    
    
    
    
    
    
    
    
    90,385
    
    
    
    19,879
    
    
    
    110,264
    
    
    
    11,882
    
    
    
    1984
    
    
    
    4/2003Marriott  Seattle Waterfront
Seattle, WA
    
    
    12,039
    
    
    
    74,016
    
    
    
    7,242
    
    
    
    252
    
    
    
    
    
    
    
    12,051
    
    
    
    74,032
    
    
    
    7,466
    
    
    
    93,549
    
    
    
    7,642
    
    
    
    2003
    
    
    
    5/2003Hilton
Miami, FL
    
    
    12,309
    
    
    
    58,797
    
    
    
    7,395
    
    
    
    11,082
    
    
    
    
    
    
    
    12,217
    
    
    
    66,156
    
    
    
    11,209
    
    
    
    89,582
    
    
    
    12,632
    
    
    
    1987
    
    
    
    9/2001Doubletree Inn
Crystal City, VA
    
    
    7,854
    
    
    
    57,979
    
    
    
    4,509
    
    
    
    16,594
    
    
    
    
    
    
    
    7,880
    
    
    
    69,179
    
    
    
    9,877
    
    
    
    86,936
    
    
    
    6,990
    
    
    
    1973
    
    
    
    12/2002Hilton Torrey Pines
La Jolla, CA
    
    
    
    
    
    
    71,667
    
    
    
    9,193
    
    
    
    4,887
    
    
    
    
    
    
    
    25
    
    
    
    75,386
    
    
    
    10,336
    
    
    
    85,747
    
    
    
    6,643
    
    
    
    1989
    
    
    
    12/2003Hilton
Rye Town, NY
    
    
    7,429
    
    
    
    58,659
    
    
    
    7,912
    
    
    
    7,523
    
    
    
    
    
    
    
    7,555
    
    
    
    62,310
    
    
    
    11,658
    
    
    
    81,253
    
    
    
    8,165
    
    
    
    1973
    
    
    
    2/2003El Conquistador
Tucson, AZ
    
    
    3,713
    
    
    
    57,705
    
    
    
    7,583
    
    
    
    11,261
    
    
    
    
    
    
    
    4,969
    
    
    
    63,954
    
    
    
    11,338
    
    
    
    80,261
    
    
    
    8,918
    
    
    
    1982
    
    
    
    12/2002Marriott BWI
Airport
Baltimore, MD
    
    
    3,893
    
    
    
    63,689
    
    
    
    6,200
    
    
    
    6,008
    
    
    
    
    
    
    
    3,897
    
    
    
    67,658
    
    
    
    8,235
    
    
    
    79,790
    
    
    
    6,200
    
    
    
    1988
    
    
    
    8/2003Hyatt
Montreal, Quebec, Canada
    
    
    6,083
    
    
    
    39,163
    
    
    
    6,554
    
    
    
    26,129
    
    
    
    
    
    
    
    7,470
    
    
    
    55,445
    
    
    
    15,009
    
    
    
    77,929
    
    
    
    6,605
    
    
    
    1976
    
    
    
    12/2003Hilton
Costa Mesa, CA
    
    
    7,671
    
    
    
    43,558
    
    
    
    6,880
    
    
    
    18,374
    
    
    
    
    
    
    
    7,876
    
    
    
    54,356
    
    
    
    14,250
    
    
    
    76,482
    
    
    
    12,186
    
    
    
    1983
    
    
    
    9/2001Hyatt
Dearborn, MI
    
    
    3,353
    
    
    
    43,150
    
    
    
    5,748
    
    
    
    18,693
    
    
    
    
    
    
    
    4,562
    
    
    
    57,853
    
    
    
    8,528
    
    
    
    70,943
    
    
    
    8,108
    
    
    
    1976
    
    
    
    8/2003Claremont Resort & Spa
Berkeley, CA
    
    
    15,119
    
    
    
    47,408
    
    
    
    7,177
    
    
    
    687
    
    
    
    
    
    
    
    15,117
    
    
    
    47,514
    
    
    
    7,760
    
    
    
    70,391
    
    
    
    6,664
    
    
    
    1915
    
    
    
    4/2004Courtyard
Philadelphia, PA
    
    
    7,409
    
    
    
    55,820
    
    
    
    5,160
    
    
    
    704
    
    
    
    
    
    
    
    7,479
    
    
    
    56,103
    
    
    
    5,511
    
    
    
    69,093
    
    
    
    13,731
    
    
    
    1999
    
    
    
    11/1999Marriott
Bridgewater, NJ
    
    
    3,821
    
    
    
    55,247
    
    
    
    5,207
    
    
    
    1,227
    
    
    
    
    
    
    
    3,881
    
    
    
    55,573
    
    
    
    6,048
    
    
    
    65,502
    
    
    
    7,858
    
    
    
    2002
    
    
    
    6/2002Marriott
Plano, TX
    
    
    5,927
    
    
    
    45,567
    
    
    
    7,272
    
    
    
    1,666
    
    
    
    
    
    
    
    5,954
    
    
    
    45,834
    
    
    
    8,644
    
    
    
    60,432
    
    
    
    5,546
    
    
    
    2001
    
    
    
    8/2003Hilton Lincoln Center
Dallas, TX
    
    
    5,483
    
    
    
    41,137
    
    
    
    5,380
    
    
    
    7,181
    
    
    
    
    
    
    
    5,445
    
    
    
    45,950
    
    
    
    7,786
    
    
    
    59,181
    
    
    
    6,123
    
    
    
    1976
    
    
    
    12/2002Embassy Suites
Crystal City, VA
    
    
    5,348
    
    
    
    35,664
    
    
    
    4,488
    
    
    
    6,177
    
    
    
    
    
    
    
    5,426
    
    
    
    39,632
    
    
    
    6,619
    
    
    
    51,677
    
    
    
    4,951
    
    
    
    1985
    
    
    
    2/2003Embassy Suites
Santa Clara, CA
    
    
    6,800
    
    
    
    35,118
    
    
    
    4,582
    
    
    
    4,018
    
    
    
    
    
    
    
    6,945
    
    
    
    38,102
    
    
    
    5,471
    
    
    
    50,518
    
    
    
    4,829
    
    
    
    1985
    
    
    
    2/2003Embassy Suites
Portland, OR
    
    
    7,957
    
    
    
    33,757
    
    
    
    4,707
    
    
    
    3,583
    
    
    
    
    
    
    
    8,038
    
    
    
    35,446
    
    
    
    6,520
    
    
    
    50,004
    
    
    
    7,261
    
    
    
    1997
    
    
    
    9/2001Courtyard
Seattle, WA
    
    
    7,552
    
    
    
    27,621
    
    
    
    1,145
    
    
    
    6,302
    
    
    
    
    
    
    
    11,928
    
    
    
    28,472
    
    
    
    2,220
    
    
    
    42,620
    
    
    
    6,311
    
    
    
    1999
    
    
    
    6/1999Renaissance
Tampa. FL
    
    
    
    
    
    
    34,557
    
    
    
    6,206
    
    
    
    924
    
    
    
    
    
    
    
    
    
    
    
    35,081
    
    
    
    6,606
    
    
    
    41,687
    
    
    
    2,696
    
    
    
    2004
    
    
    
    8/2004Hyatt
Coral Gables, FL
    
    
    4,843
    
    
    
    27,619
    
    
    
    3,338
    
    
    
    5,177
    
    
    
    
    
    
    
    5,190
    
    
    
    30,488
    
    
    
    5,299
    
    
    
    40,977
    
    
    
    4,131
    
    
    
    1987
    
    
    
    2/2003SpringHill Suites
Orlando, FL
    
    
    8,750
    
    
    
    26,381
    
    
    
    3,717
    
    
    
    476
    
    
    
    
    
    
    
    8,750
    
    
    
    26,384
    
    
    
    4,190
    
    
    
    39,324
    
    
    
    6,043
    
    
    
    2000
    
    
    
    12/2000Residence Inn
Las Vegas, NV
    
    
    3,784
    
    
    
    27,651
    
    
    
    954
    
    
    
    6,922
    
    
    
    
    
    
    
    7,965
    
    
    
    29,091
    
    
    
    2,255
    
    
    
    39,311
    
    
    
    6,544
    
    
    
    1998
    
    
    
    2/1999Marriott Suites
Dallas, TX
    
    
    2,778
    
    
    
    27,739
    
    
    
    1,404
    
    
    
    6,547
    
    
    
    
    
    
    
    6,911
    
    
    
    28,130
    
    
    
    3,427
    
    
    
    34,468
    
    
    
    7,989
    
    
    
    1998
    
    
    
    2/1999Courtyard
Orlando, FL
    
    
    9,025
    
    
    
    24,583
    
    
    
    4,285
    
    
    
    511
    
    
    
    
    
    
    
    9,025
    
    
    
    24,588
    
    
    
    4,791
    
    
    
    38,404
    
    
    
    6,383
    
    
    
    2000
    
    
    
    11/2000




---



##### Table of Contents



Costs CapitalizedSubsequent
    
    
    Gross Amount at Which CarriedInitial Costs
    
    
    To Acquisition
    
    
    at Close of PeriodCarrying
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulated
    
    
    Date of
    
    
    DateLand
    
    
    Buildings
    
    
    Equipment
    
    
    Improvements
    
    
    Costs
    
    
    Land
    
    
    Buildings
    
    
    Equipment
    
    
    Total
    
    
    Depreciation
    
    
    Construction
    
    
    AcquiredCourtyard
Basking Ridge, NJ
    
    $
    3,946
    
    
    $
    31,987
    
    
    $
    1,892
    
    
    $
    354
    
    
    $
    
    
    
    $
    3,959
    
    
    $
    32,091
    
    
    $
    2,129
    
    
    $
    38,179
    
    
    $
    4,136
    
    
    
    2001
    
    
    
    3/2002Residence Inn
Torrance, CA
    
    
    3,189
    
    
    
    28,701
    
    
    
    898
    
    
    
    1,761
    
    
    
    
    
    
    
    3,307
    
    
    
    30,078
    
    
    
    1,165
    
    
    
    34,550
    
    
    
    2,621
    
    
    
    1984
    
    
    
    7/2003Hilton
Auburn Hills, MI
    
    
    3,846
    
    
    
    25,513
    
    
    
    2,612
    
    
    
    2,356
    
    
    
    
    
    
    
    3,928
    
    
    
    26,701
    
    
    
    3,698
    
    
    
    34,327
    
    
    
    4,874
    
    
    
    1991
    
    
    
    9/2001Fairfield Inn
Orlando, FL
    
    
    9,077
    
    
    
    20,318
    
    
    
    3,366
    
    
    
    288
    
    
    
    
    
    
    
    9,077
    
    
    
    20,404
    
    
    
    3,568
    
    
    
    33,049
    
    
    
    5,109
    
    
    
    2000
    
    
    
    11,2000Sheraton
Milpitas, CA
    
    
    5,343
    
    
    
    21,373
    
    
    
    1,749
    
    
    
    1,000
    
    
    
    
    
    
    
    5,474
    
    
    
    21,948
    
    
    
    2,043
    
    
    
    29,465
    
    
    
    2,841
    
    
    
    1988
    
    
    
    7/2003Hampton Inn
Chelsea, NY
    
    
    3,154
    
    
    
    22,162
    
    
    
    2,684
    
    
    
    1,305
    
    
    
    
    
    
    
    3,000
    
    
    
    23,013
    
    
    
    3,292
    
    
    
    29,305
    
    
    
    2,426
    
    
    
    2003
    
    
    
    8/2003SpringHill Suites
Plymouth, VA
    
    
    3,606
    
    
    
    23,874
    
    
    
    1,237
    
    
    
    204
    
    
    
    
    
    
    
    3,620
    
    
    
    23,878
    
    
    
    1,423
    
    
    
    28,921
    
    
    
    3,054
    
    
    
    2001
    
    
    
    1/2002Residence Inn
Newark, CA
    
    
    3,871
    
    
    
    23,883
    
    
    
    1,034
    
    
    
    124
    
    
    
    
    
    
    
    3,871
    
    
    
    23,897
    
    
    
    1,144
    
    
    
    28,912
    
    
    
    2,331
    
    
    
    2002
    
    
    
    11/2002Courtyard
Newark, CA
    
    
    3,787
    
    
    
    21,273
    
    
    
    1,878
    
    
    
    216
    
    
    
    
    
    
    
    3,787
    
    
    
    21,283
    
    
    
    2,084
    
    
    
    27,154
    
    
    
    2,549
    
    
    
    2002
    
    
    
    10/2002Wyndham
Billerica, MA
    
    
    3,838
    
    
    
    20,471
    
    
    
    2,255
    
    
    
    255
    
    
    
    
    
    
    
    3,838
    
    
    
    20,502
    
    
    
    2,479
    
    
    
    26,819
    
    
    
    4,685
    
    
    
    1999
    
    
    
    5/2000Residence Inn
Phoenix, AZ
    
    
    2,215
    
    
    
    18,061
    
    
    
    852
    
    
    
    3,586
    
    
    
    
    
    
    
    4,851
    
    
    
    18,480
    
    
    
    1,383
    
    
    
    24,714
    
    
    
    4,029
    
    
    
    1999
    
    
    
    6/1999Hilton
Birmingham, AL
    
    
    1,887
    
    
    
    16,985
    
    
    
    2,998
    
    
    
    2,746
    
    
    
    
    
    
    
    1,942
    
    
    
    18,291
    
    
    
    4,383
    
    
    
    24,616
    
    
    
    3,552
    
    
    
    1984
    
    
    
    7/2003Holiday Inn
Lafayette, LA
    
    
    1,165
    
    
    
    19,463
    
    
    
    1,385
    
    
    
    701
    
    
    
    
    
    
    
    1,194
    
    
    
    19,939
    
    
    
    1,580
    
    
    
    22,713
    
    
    
    2,411
    
    
    
    1983
    
    
    
    7/2003Courtyard
Scottsdale, AZ
    
    
    2,869
    
    
    
    15,936
    
    
    
    745
    
    
    
    2,923
    
    
    
    
    
    
    
    5,227
    
    
    
    15,894
    
    
    
    1,352
    
    
    
    22,473
    
    
    
    3,988
    
    
    
    1999
    
    
    
    6/1999Courtyard
Oakland, CA
    
    
    3,239
    
    
    
    17,471
    
    
    
    1,125
    
    
    
    216
    
    
    
    
    
    
    
    3,245
    
    
    
    17,485
    
    
    
    1,321
    
    
    
    22,051
    
    
    
    2,442
    
    
    
    2001
    
    
    
    12/2001Sheraton
Pleasanton, CA
    
    
    1,933
    
    
    
    17,398
    
    
    
    1,852
    
    
    
    749
    
    
    
    
    
    
    
    1,982
    
    
    
    17,879
    
    
    
    2,071
    
    
    
    21,932
    
    
    
    2,584
    
    
    
    1985
    
    
    
    7/2003SpringHill
Suites
Manhattan Beach, CA
    
    
    3,889
    
    
    
    16,288
    
    
    
    998
    
    
    
    279
    
    
    
    
    
    
    
    3,889
    
    
    
    16,309
    
    
    
    1,256
    
    
    
    21,454
    
    
    
    2,175
    
    
    
    2001
    
    
    
    1/2002Holiday Inn
Crystal Lake, IL
    
    
    2,859
    
    
    
    15,246
    
    
    
    1,727
    
    
    
    1,512
    
    
    
    
    
    
    
    2,931
    
    
    
    16,340
    
    
    
    2,074
    
    
    
    21,345
    
    
    
    2,528
    
    
    
    1988
    
    
    
    7/2003Sheraton
Clayton, MD
    
    
    2,470
    
    
    
    13,999
    
    
    
    3,619
    
    
    
    999
    
    
    
    
    
    
    
    2,540
    
    
    
    15,978
    
    
    
    2,570
    
    
    
    21,088
    
    
    
    2,834
    
    
    
    1965
    
    
    
    7/2003Sheraton
Sunnyvale, CA
    
    
    1,724
    
    
    
    15,514
    
    
    
    2,103
    
    
    
    636
    
    
    
    
    
    
    
    1,768
    
    
    
    15,937
    
    
    
    2,272
    
    
    
    19,977
    
    
    
    2,746
    
    
    
    1980
    
    
    
    7/2003Residence Inn
Buckhead, GA
    
    
    1,907
    
    
    
    13,459
    
    
    
    1,270
    
    
    
    3,005
    
    
    
    
    
    
    
    1,914
    
    
    
    15,754
    
    
    
    1,973
    
    
    
    19,641
    
    
    
    4,000
    
    
    
    1997
    
    
    
    7/1998Wyndham
Denver, CO
    
    
    3,883
    
    
    
    13,436
    
    
    
    2,094
    
    
    
    119
    
    
    
    
    
    
    
    3,900
    
    
    
    13,436
    
    
    
    2,196
    
    
    
    19,532
    
    
    
    3,565
    
    
    
    1999
    
    
    
    5/2000Courtyard
Edison, NJ
    
    
    2,770
    
    
    
    
    
    
    
    
    
    
    
    14,845
    
    
    
    
    
    
    
    3,977
    
    
    
    11,941
    
    
    
    1,697
    
    
    
    17,615
    
    
    
    1,904
    
    
    
    2002
    
    
    
    11/2002Hampton Inn
Houston, TX
    
    
    2,382
    
    
    
    10,569
    
    
    
    1,348
    
    
    
    1,955
    
    
    
    
    
    
    
    2,439
    
    
    
    11,824
    
    
    
    1,992
    
    
    
    16,255
    
    
    
    1,785
    
    
    
    1995
    
    
    
    9/2002TownePlace Suites
Manhattan Beach, CA
    
    
    3,399
    
    
    
    11,831
    
    
    
    621
    
    
    
    169
    
    
    
    
    
    
    
    3,399
    
    
    
    11,838
    
    
    
    783
    
    
    
    16,020
    
    
    
    1,517
    
    
    
    2001
    
    
    
    1/2002Holiday Inn
Flint, MI
    
    
    1,363
    
    
    
    12,271
    
    
    
    672
    
    
    
    1,254
    
    
    
    
    
    
    
    1,464
    
    
    
    12,625
    
    
    
    1,471
    
    
    
    15,560
    
    
    
    1,532
    
    
    
    1990
    
    
    
    7/2003Residence Inn
Plano, TX
    
    
    1,409
    
    
    
    9,478
    
    
    
    494
    
    
    
    2,391
    
    
    
    
    
    
    
    2,870
    
    
    
    9,977
    
    
    
    925
    
    
    
    13,772
    
    
    
    2,418
    
    
    
    1998
    
    
    
    2/1999Holiday Inn
Louisville, KY
    
    
    884
    
    
    
    10,677
    
    
    
    1,184
    
    
    
    820
    
    
    
    
    
    
    
    906
    
    
    
    11,399
    
    
    
    1,260
    
    
    
    13,565
    
    
    
    1,690
    
    
    
    1970
    
    
    
    7/2003Embassy Suites Lee Vista
Orlando, FL
    
    
    1,341
    
    
    
    9,930
    
    
    
    1,228
    
    
    
    1,015
    
    
    
    
    
    
    
    1,385
    
    
    
    10,638
    
    
    
    1,492
    
    
    
    13,515
    
    
    
    1,348
    
    
    
    1999
    
    
    
    2/2003Residence Inn
Gwinnett, GA
    
    
    1,019
    
    
    
    10,017
    
    
    
    1,141
    
    
    
    323
    
    
    
    
    
    
    
    1,023
    
    
    
    10,067
    
    
    
    1,410
    
    
    
    12,500
    
    
    
    3,118
    
    
    
    1997
    
    
    
    7/1998




---



##### Table of Contents



Costs CapitalizedSubsequent
    
    
    Gross Amount at Which CarriedInitial Costs
    
    
    To Acquisition
    
    
    at Close of PeriodCarrying
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulated
    
    
    Date of
    
    
    DateLand
    
    
    Buildings
    
    
    Equipment
    
    
    Improvements
    
    
    Costs
    
    
    Land
    
    
    Buildings
    
    
    Equipment
    
    
    Total
    
    
    Depreciation
    
    
    Construction
    
    
    AcquiredCourtyard
Plano, TX
    
    $
    1,687
    
    
    $
    10,088
    
    
    $
    552
    
    
    $
    2,691
    
    
    $
    
    
    
    $
    3,273
    
    
    $
    10,660
    
    
    $
    1,085
    
    
    $
    15,018
    
    
    $
    2,514
    
    
    
    1998
    
    
    
    2/1999Hampton Inn
Lakewood, CO
    
    
    748
    
    
    
    9,479
    
    
    
    471
    
    
    
    1,474
    
    
    
    
    
    
    
    767
    
    
    
    10,202
    
    
    
    1,204
    
    
    
    12,173
    
    
    
    1,198
    
    
    
    1987
    
    
    
    7/2003Hampton Inn
Hattiesburg, MS
    
    
    469
    
    
    
    10,249
    
    
    
    560
    
    
    
    644
    
    
    
    
    
    
    
    480
    
    
    
    10,794
    
    
    
    647
    
    
    
    11,921
    
    
    
    1,140
    
    
    
    1986
    
    
    
    7/2003Sheraton
Bakersfield, CA
    
    
    1,000
    
    
    
    9,002
    
    
    
    1,241
    
    
    
    422
    
    
    
    
    
    
    
    1,026
    
    
    
    9,287
    
    
    
    1,353
    
    
    
    11,666
    
    
    
    1,609
    
    
    
    1983
    
    
    
    7/2003Residence Inn
Manchester, CT
    
    
    1,187
    
    
    
    8,980
    
    
    
    482
    
    
    
    995
    
    
    
    
    
    
    
    1,248
    
    
    
    9,805
    
    
    
    592
    
    
    
    11,645
    
    
    
    1,322
    
    
    
    2000
    
    
    
    11/2001Hampton Inn
Tulsa, OK
    
    
    591
    
    
    
    9,018
    
    
    
    370
    
    
    
    1,513
    
    
    
    
    
    
    
    607
    
    
    
    9,569
    
    
    
    1,316
    
    
    
    11,492
    
    
    
    1,198
    
    
    
    1984
    
    
    
    7/2003Residence Inn
Jacksonville, FL
    
    
    1,000
    
    
    
    9,001
    
    
    
    347
    
    
    
    1,055
    
    
    
    
    
    
    
    1,031
    
    
    
    9,643
    
    
    
    728
    
    
    
    11,402
    
    
    
    910
    
    
    
    1997
    
    
    
    7/2003SpringHill Suites
Richmond, VA
    
    
    845
    
    
    
    9,368
    
    
    
    831
    
    
    
    104
    
    
    
    
    
    
    
    845
    
    
    
    9,332
    
    
    
    971
    
    
    
    11,148
    
    
    
    1,424
    
    
    
    2001
    
    
    
    12/2001Hampton Inn
Oklahoma City, OK
    
    
    849
    
    
    
    8,641
    
    
    
    750
    
    
    
    787
    
    
    
    
    
    
    
    870
    
    
    
    9,299
    
    
    
    859
    
    
    
    11,028
    
    
    
    1,207
    
    
    
    1986
    
    
    
    7/2003Hampton Inn
Minnetonka, MN
    
    
    961
    
    
    
    7,961
    
    
    
    274
    
    
    
    1,811
    
    
    
    
    
    
    
    986
    
    
    
    8,673
    
    
    
    1,349
    
    
    
    11,008
    
    
    
    972
    
    
    
    1990
    
    
    
    7/2003Hampton Inn
Fort Lauderdale, FL
    
    
    933
    
    
    
    8,401
    
    
    
    725
    
    
    
    737
    
    
    
    
    
    
    
    956
    
    
    
    9,018
    
    
    
    823
    
    
    
    10,797
    
    
    
    1,157
    
    
    
    1986
    
    
    
    7/2003Courtyard
Manchester, CT
    
    
    1,103
    
    
    
    8,316
    
    
    
    281
    
    
    
    1,082
    
    
    
    
    
    
    
    1,118
    
    
    
    9,020
    
    
    
    644
    
    
    
    10,782
    
    
    
    1,109
    
    
    
    1999
    
    
    
    11/2001Hampton Inn
Indianapolis, IN
    
    
    898
    
    
    
    8,084
    
    
    
    392
    
    
    
    1,356
    
    
    
    
    
    
    
    926
    
    
    
    8,510
    
    
    
    1,294
    
    
    
    10,730
    
    
    
    1,087
    
    
    
    1988
    
    
    
    7/2003Hampton Inn
Bloomington, MN
    
    
    930
    
    
    
    8,372
    
    
    
    778
    
    
    
    376
    
    
    
    
    
    
    
    953
    
    
    
    8,599
    
    
    
    904
    
    
    
    10,456
    
    
    
    1,191
    
    
    
    1985
    
    
    
    7/2003Courtyard
Flint, MI
    
    
    966
    
    
    
    8,666
    
    
    
    160
    
    
    
    477
    
    
    
    
    
    
    
    988
    
    
    
    9,116
    
    
    
    165
    
    
    
    10,269
    
    
    
    693
    
    
    
    1996
    
    
    
    7/2003Hampton Inn
Laredo, TX
    
    
    534
    
    
    
    8,426
    
    
    
    355
    
    
    
    870
    
    
    
    
    
    
    
    547
    
    
    
    9,054
    
    
    
    584
    
    
    
    10,185
    
    
    
    859
    
    
    
    1995
    
    
    
    7/2003Residence Inn
Atlanta, GA
    
    
    788
    
    
    
    7,091
    
    
    
    554
    
    
    
    1,665
    
    
    
    
    
    
    
    817
    
    
    
    7,776
    
    
    
    1,505
    
    
    
    10,098
    
    
    
    1,037
    
    
    
    1987
    
    
    
    7/2003Holiday Inn
Express
Wauwatosa, MN
    
    
    905
    
    
    
    8,147
    
    
    
    423
    
    
    
    381
    
    
    
    
    
    
    
    927
    
    
    
    8,465
    
    
    
    464
    
    
    
    9,856
    
    
    
    873
    
    
    
    1984
    
    
    
    7/2003Hampton Inn
Jacksonville, FL
    
    
    899
    
    
    
    8,093
    
    
    
    312
    
    
    
    358
    
    
    
    
    
    
    
    927
    
    
    
    8,302
    
    
    
    433
    
    
    
    9,662
    
    
    
    774
    
    
    
    1998
    
    
    
    7/2003Residence
Inn
West Palm Beach, FL
    
    
    786
    
    
    
    7,075
    
    
    
    295
    
    
    
    770
    
    
    
    
    
    
    
    805
    
    
    
    7,496
    
    
    
    625
    
    
    
    8,926
    
    
    
    726
    
    
    
    1998
    
    
    
    7/2003Hampton Inn
Lincoln, NE
    
    
    611
    
    
    
    6,913
    
    
    
    204
    
    
    
    1,164
    
    
    
    
    
    
    
    627
    
    
    
    7,406
    
    
    
    860
    
    
    
    8,893
    
    
    
    828
    
    
    
    1983
    
    
    
    7/2003Homewood Suites
Chandler, AZ
    
    
    908
    
    
    
    6,780
    
    
    
    536
    
    
    
    390
    
    
    
    
    
    
    
    930
    
    
    
    7,148
    
    
    
    536
    
    
    
    8,614
    
    
    
    878
    
    
    
    1998
    
    
    
    7/2003Hampton Inn
Chandler, AZ
    
    
    740
    
    
    
    6,835
    
    
    
    214
    
    
    
    589
    
    
    
    
    
    
    
    757
    
    
    
    7,340
    
    
    
    280
    
    
    
    8,377
    
    
    
    637
    
    
    
    1997
    
    
    
    7/2003Holiday Inn
Express
Downers Grove, IL
    
    
    612
    
    
    
    5,510
    
    
    
    398
    
    
    
    1,340
    
    
    
    
    
    
    
    632
    
    
    
    6,275
    
    
    
    952
    
    
    
    7,859
    
    
    
    731
    
    
    
    1984
    
    
    
    7/2003Residence Inn
Kansas City, MO
    
    
    623
    
    
    
    5,607
    
    
    
    450
    
    
    
    240
    
    
    
    
    
    
    
    639
    
    
    
    5,763
    
    
    
    518
    
    
    
    6,920
    
    
    
    750
    
    
    
    1987
    
    
    
    7/2003Hampton Inn
Houston, TX
    
    
    591
    
    
    
    5,316
    
    
    
    348
    
    
    
    474
    
    
    
    
    
    
    
    607
    
    
    
    5,542
    
    
    
    579
    
    
    
    6,728
    
    
    
    653
    
    
    
    1996
    
    
    
    7/2003Hampton Inn
Sedona, AZ
    
    
    1,473
    
    
    
    4,418
    
    
    
    152
    
    
    
    656
    
    
    
    
    
    
    
    1,507
    
    
    
    4,824
    
    
    
    367
    
    
    
    6,698
    
    
    
    457
    
    
    
    1997
    
    
    
    7/2003Hampton Inn
Memphis, TN
    
    
    473
    
    
    
    4,258
    
    
    
    407
    
    
    
    276
    
    
    
    
    
    
    
    485
    
    
    
    4,382
    
    
    
    548
    
    
    
    5,415
    
    
    
    644
    
    
    
    1991
    
    
    
    7/2003Holiday Inn
Express
Arlington, VA
    
    
    371
    
    
    
    3,342
    
    
    
    286
    
    
    
    1,110
    
    
    
    
    
    
    
    401
    
    
    
    3,906
    
    
    
    807
    
    
    
    5,109
    
    
    
    496
    
    
    
    1989
    
    
    
    7/2003Miscellaneous
corporate assets
    
    
    
    
    
    
    
    
    
    
    4,850
    
    
    
    15,761
    
    
    
    
    
    
    
    
    
    
    
    15,761
    
    
    
    4,850
    
    
    
    20,611
    
    
    
    879
    
    
    Various
    
    VariousTotals
    
    $
    767,155
    
    
    $
    3,006,745
    
    
    $
    287,880
    
    
    $
    315,420
    
    
    $
    
    
    
    $
    798,012
    
    
    $
    3,194,088
    
    
    $
    385,105
    
    
    $
    4,377,200
    
    
    $
    420,952




---



##### Table of Contents



(1)
    
    Transactions in real estate and accumulated depreciation during 2005,
2004 and 2003 are summarized as follows: AccumulatedCost (2)(4)
    
    
    DepreciationHotel and Resort PropertiesBalance, December 31, 2002
    
    $
    1,446,836
    
    
    $
    67,248Acquisitions
    
    
    2,082,287
    
    
    
    Depreciation expense (3)
    
    
    
    
    
    
    74,949Balance, December 31, 2003
    
    $
    3,529,123
    
    
    $
    142,197Acquisitions
    
    
    1,785,341
    
    
    
    Dispositions
    
    
    (19,652
    )
    
    
    Depreciation expense (3)
    
    
    
    
    
    
    180,071Balance, December 31, 2004
    
    $
    5,294,812
    
    
    $
    322,268Dispositions
    
    
    (547,978
    )
    
    
    Depreciation Expense (3)
    
    
    
    
    
    
    117,136Balance, December 31, 2005
    
    $
    4,746,834
    
    
    $
    439,404
 
 (2)
    
    As of December 31, 2005, 2004 and 2003, the aggregate cost of the
Properties owned by the Company and its subsidiaries for federal
income tax purposes was $4.7 billion, $5.3 billion, and $3.5 billion,
respectively. All of the leases are treated as operating leases for
federal income tax purposes.(3)
    
    Depreciation expense is generally computed for buildings and equipment
based upon estimated lives of 40 and seven years, respectively.(4)
    
    During the years ended December 31, 2005, 2004 and 2003, the Company
incurred acquisition fees totaling $23 million, $30.2 million, and $20.3
million, respectively, paid to CHC. Acquisition fees are included in
land and buildings at December 31, 2005, 2004 and 2003.




---



##### Table of Contents



EXHIBIT INDEX
 2.1
    
    Agreement by and among CNL Hospitality
Properties, Inc., CNL Rose Acquisition
Corp., RFS Hotel Investors, Inc., CNL
Rose Acquisition OP, LP and RFS
Partnership, L.P., dated May 8, 2003
(Previously filed as Exhibit 2.1 to the Registrants
Current Report on Form 8-K filed May 9, 2003 and incorporated
herein by reference.)2.2
    
    Amendment to Merger Agreement dated May
27, 2003 among the Company, CNL Rose
Acquisition Corp., RFS Hotel Investors,
Inc., CNL Rose Acquisition OP, LP and
RFS Partnership, L.P. (Previously filed
as Exhibit 2.2 to Post-Effective
Amendment No. Two to the Registrants
Registration Statement on Form S-11
filed July 14, 2003 and incorporated
herein by reference.)2.3
    
    RFS Acquisition Agreement, dated as of
July 10, 2003, by and among CNL
Hospitality Partners, LP, CNL Hotel
RI-Orlando, Ltd., CNL Hotel CY-Edison,
LP, RFS Partnership, L.P. and CNL Rose
Acquisition Corp. (Previously filed as
Exhibit 2.1 to RFS Partnership, L.P.s
Current Report onForm 8-Kfiled July
25, 2003 and incorporated herein by
reference).2.4
    
    Stock Purchase Agreement, dated as of
February 12, 2004, by and among KKR
Partners II, L.P., KKR 1996 Fund, L.P.,
Resort Associates, L.P., Golf
Associates, L.P., CNL Resort
Acquisition Corp. and KSL Recreation
Corporation (Previously filed as
Exhibit 2.1 to the Registrants Form
8-K filed February 13, 2004 and
incorporated herein by reference.)2.5
    
    Agreement and Plan of Merger by and
among CNL Hospitality Properties, Inc.,
CNL Hospitality Properties Acquisition
Corp., CNL Hospitality Corp., CNL Real
Estate Group, Inc., Five Arrows Realty
Securities II, LLC, the other
stockholders of CNL Hospitality Corp.
listed on the signature page thereto
under the heading Stockholders, and
CNL Financial Group, Inc., dated as of
April 29, 2004 (Included as Appendix A
to the Registrants Definitive Proxy
Statement filed June 21, 2004 and
incorporated herein by reference.)2.6
    
    First Amendment to Agreement and Plan
of Merger by and among CNL Hospitality
Properties, Inc., CNL Hospitality
Properties Acquisition Corp., CNL
Hospitality Corp., Five Arrows Realty
Securities II, LLC, CNL Financial
Group, Inc. and James M. Seneff, Jr.
dated as of June 17, 2004 (Included as
Appendix A-1 to the Registrants
Definitive Proxy Statement filed June
21, 2004 and incorporated herein by
reference.)3.1
    
    Articles of Amendment and Restatement
of CNL Hospitality Properties, Inc.
dated July 21, 2003 (Previously filed
as Exhibit 3.18 to the Registrants
Registration Statement on Form S-11
filed July 23, 2003 and incorporated
herein by reference.)3.2
    
    Articles of Amendment of CNL
Hospitality Properties, Inc. dated
August 2, 2004 (Previously filed as
Exhibit 3.2 to the Registrants
Quarterly Report onForm 10-Qfiled
August 9, 2004 and incorporated herein
by reference.)3.3
    
    Articles of Amendment of CNL Hotels &
Resorts, Inc. dated August 2, 2004
(Previously filed as Exhibit 3.3 to the
Registrants Quarterly Report on Form
10-Q filed August 9, 2004 and
incorporated herein by reference.)3.4
    
    Articles of Amendment of CNL Hotels &
Resorts, Inc. dated August 2, 2004
(Previously filed as Exhibit 3.4 to the
Registrants Quarterly Report on Form
10-Q filed August 9, 2004 and
incorporated herein by reference.)3.5
    
    CNL American Realty Fund, Inc. Bylaws
(Previously filed as Exhibit 3.3 to the
Registrants Registration Statement on
Form S-11 filed August 12, 1996 and
incorporated herein by reference.)3.6
    
    Amendment No. 1 to the Bylaws of CNL
Hospitality Properties, Inc.
(Previously filed as Exhibit 3.7 to
Post-Effective Amendment No. Two to the
Registrants Registration Statement on
Form S-11 filed October 23, 2000 and
incorporated herein by reference.)3.7
    
    Amendment No. 2 to the Bylaws of CNL
Hospitality Properties, Inc.
(Previously filed as Exhibit 3.9 to
Post-Effective Amendment No. Six to the
Registrants Registration Statement on
Form S-11 filed June 11, 2001 and
incorporated herein by reference.)




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3.8
    
    Amendment No. 3 to the Bylaws of CNL
Hospitality Properties, Inc.
(Previously filed as Exhibit 3.9 to
Post-Effective Amendment No. One to the
Registrants Registration Statement on
Form S-11 filed June 26, 2002 and
incorporated herein by reference.)3.9
    
    Amendment No. 4 to the Bylaws of CNL
Hotels & Resorts, Inc. dated May 13,
2005 (Previously filed as Exhibit 3.9
to the Registrants Quarterly Report on
Form 10-Q filed May 16, 2005 and
incorporated herein by reference).4.1
    
    Amended and Restated Reinvestment Plan
(Previously filed as Exhibit 4.1 to the
Registrants Current Report on Form 8-K
filed June 1, 2004 and incorporated
herein by reference.)4.2
    
    Indenture dated February 26, 2002 among
RFS Partnership, L.P., RFS 2002
Financing, Inc., RFS Leasing VII, Inc.,
RFS Hotel Investors, Inc. and U.S. Bank
National Association (Previously filed
as Exhibit 4.1 to RFS Hotel Investors,
Inc.s (RFS) Form S-4 Registration
Statement filed March 15, 2002 and
incorporated herein by reference.)4.3
    
    Form of Global Note evidencing the
9.75% Series B Senior Notes due 2012 of
RFS Partnership, L.P. and RFS 2002
Financing, Inc. (Previously filed as
Exhibit A to Exhibit 4.1 to RFSs Form
S-4 Registration Statement filed March
15, 2002 and incorporated herein by
reference.)4.4
    
    Form of Guaranty by RFS Hotel
Investors, Inc. and RFS Leasing VII,
Inc. (Previously filed as Exhibit A to
Exhibit 4.1 to RFSs Form S-4
Registration Statement filed March 15,
2002 and incorporated herein by
reference.)4.5
    
    Registration Rights Agreement dated
February 26, 2002 among RFS
Partnership, L.P., RFS 2002 Financing,
Inc., RFS Leasing VII, Inc., RFS Hotel
Investors, Inc., Credit Suisse First
Boston Corporation and Banc of America
Securities LLC (Previously filed as
Exhibit 4.4 to RFSs Form S-4
Registration Statement filed March 15,
2002 and incorporated herein by
reference.)4.6
    
    Supplemental Indenture, dated as of
June 9, 1997, among CNL Rose
Acquisition Corp., RFS Partnership,
L.P., RFS 2002 Financing, Inc. and U.S.
Bank National Association (Previously
filed as Exhibit 4.2 to RFS
Partnership, L.P.s Annual Report on
Form 10-K filed March 30, 2004 and
incorporated herein by reference.)4.7
    
    Registrants Amended and Restated
Redemption Plan (Previously filed as
Exhibit 99.1 to the Registrants
Current Report on Form 8-K filed June
25, 2004 and incorporated herein by
reference.)10.1
    
    Form of Escrow Agreement between CNL
Hospitality Properties, Inc. and
SouthTrust Bank (Previously filed as
Exhibit 10.1 to Pre-Effective Amendment
No. One to the Registrants
Registration Statement on Form S-11
filed December 23, 2002 and
incorporated herein by reference.)10.2
    
    Advisory Agreement dated as of April 1,
2004 between CNL Hospitality
Properties, Inc. and CNL Hospitality
Corp. (Previously filed as Exhibit 10.2
to the Registrants Quarterly Report on
Form 10-Q filed August 9, 2004 and
incorporated herein by reference.)10.3
    
    Form of Joint Venture Agreement
(Previously filed as Exhibit 10.3 to
the Registrants Registration Statement
on Form S-11 filed November 23, 1998
and incorporated herein by reference.)10.4
    
    Form of Indemnification and Put
Agreement (Previously filed as Exhibit
10.4 to the Registrants Registration
Statement on Form S-11 filed August 12,
1996 and incorporated herein by
reference.)10.5
    
    Form of Unconditional Guaranty of
Payment and Performance (Previously
filed as Exhibit 10.5 to the
Registrants Registration Statement on
Form S-11 filed August 12, 1996 and
incorporated herein by reference.)10.6
    
    Form of Purchase Agreement (Previously
filed as Exhibit 10.6 to the
Registrants Registration Statement on
Form S-11 filed August 12, 1996 and
incorporated herein by reference.)10.7
    
    Form of Lease Agreement (Previously
filed as Exhibit 10.57 to the
Registrants Registration Statement on
Form S-11 filed August 9, 2001 and
incorporated herein by reference.)10.8
    
    Amended and Restated Reinvestment Plan
(Previously filed as Exhibit 4.1 to the
Registrants Current Report on Form 8-K
filed June 1, 2004 and incorporated
herein by reference.)




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##### Table of Contents



10.9
    
    Indemnification Agreement between CNL
Hospitality Properties, Inc. and
Lawrence A. Dustin dated February 24,
1999. Each of the following former or
current Directors and/or officers has
signed a substantially similar
agreement as follows: James M. Seneff,
Jr., Robert A. Bourne, G. Richard
Hostetter, J. Joseph Kruse, Richard C.
Huseman, Charles A. Muller, Jeanne A.
Wall and Lynn E. Rose, dated July 9,
1997; C. Brian Strickland dated October
31, 1998; John A. Griswold dated
January 7, 1999; Charles E. Adams and
Craig M. McAllaster dated February 10,
1999; Matthew W. Kaplan dated February
24, 1999; Thomas J. Hutchison III dated
May 16, 2000; Tammie A. Quinlan on
January 18, 2002; Robert E. Parsons,
Jr. dated November 3, 2003; and Paul
Henry Williams dated April 13, 2004.
(Previously filed as Exhibit 10.2 to
the Registrants Quarterly Report on
Form 10-Q filed May 17, 1999 and
incorporated herein by reference.)10.10
    
    Agreement of Limited Partnership of CNL
Hospitality Partners, LP (Previously
filed as Exhibit 10.10 to
Post-Effective Amendment No. Five to
the Registrants Registration Statement
on Form S-11 filed September 23, 1998
and incorporated herein by reference.)10.11
    
    Hotel Purchase and Sale Contract
between CNL Real Estate Advisors, Inc.
and Gwinnett Residence Associates, LLC,
relating to the Residence InnGwinnett
Place (Previously filed as Exhibit
10.11 to Post-Effective Amendment No.
Five to the Registrants Registration
Statement on Form S-11 filed September
23, 1998 and incorporated herein by
reference.)10.12
    
    Assignment and Assumption Agreement
between CNL Real Estate Advisors, Inc.
and CNL Hospitality Partners, LP,
relating to the Residence InnGwinnett
Place (Previously filed as Exhibit
10.12 to Post-Effective Amendment No.
Five to the Registrants Registration
Statement on Form S-11 filed September
23, 1998 and incorporated herein by
reference.)10.13
    
    Hotel Purchase and Sale Contract
between CNL Real Estate Advisors, Inc.
and Buckhead Residence Associates, LLC,
relating to the Residence InnBuckhead
(Lenox Park) (Previously filed as
Exhibit 10.13 to Post-Effective
Amendment No. Five to the Registrants
Registration Statement on Form S-11
filed September 23, 1998 and
incorporated herein by reference.)10.14
    
    Assignment and Assumption Agreement
between CNL Real Estate Advisors, Inc.
and CNL Hospitality Partners, LP,
relating to the Residence InnBuckhead
(Lenox Park) (Previously filed as
Exhibit 10.14 to Post-Effective
Amendment No. Five to the Registrants
Registration Statement on Form S-11
filed September 23, 1998 and
incorporated herein by reference.)10.15
    
    Lease Agreement between CNL Hospitality
Partners, LP and STC Leasing
Associates, LLC, dated August 1, 1998,
relating to the Residence InnGwinnett
Place (Previously filed as Exhibit
10.15 to Post-Effective Amendment No.
Five to the Registrants Registration
Statement on Form S-11 filed September
23, 1998 and incorporated herein by
reference.)10.16
    
    Lease Agreement between CNL Hospitality
Partners, LP and STC Leasing
Associates, LLC, dated August 1, 1998,
relating to the Residence InnBuckhead
(Lenox Park) (Previously filed as
Exhibit 10.16 to Post-Effective
Amendment No. Five to the Registrants
Registration Statement on Form S-11
filed September 23, 1998 and
incorporated herein by reference.)10.17
    
    Master Loan Agreement by and between
CNL Hotel Investors, Inc. and
Jefferson-Pilot Life Insurance Company,
dated February 24, 1999 (Previously
filed as Exhibit 10.18 to
Post-Effective Amendment No. Seven to
the Registrants Registration Statement
on Form S-11 filed March 16, 1999 and
incorporated herein by reference.)10.18
    
    Securities Purchase Agreement between
CNL Hospitality Properties, Inc. and
Five Arrows Realty Securities II
L.L.C., dated February 24, 1999
(Previously filed as Exhibit 10.19 to
Post-Effective Amendment No. Seven to
the Registrants Registration Statement
on Form S-11 filed March 16, 1999 and
incorporated herein by reference.)10.19
    
    Subscription and Stockholders
Agreement among CNL Hotel Investors,
Inc., Five Arrows Realty Securities II
L.L.C., CNL Hospitality Partners, LP
and CNL Hospitality Properties, Inc.,
dated February 24, 1999 (Previously
filed as Exhibit 10.20 to
Post-Effective Amendment No. Seven to
the Registrants Registration Statement
on Form S-11 filed March 16, 1999 and
incorporated herein by reference.)




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##### Table of Contents



10.20
    
    Registration Rights Agreement by and
between CNL Hospitality Properties,
Inc. and Five Arrows Realty Securities
II L.L.C., dated February 24, 1999
(Previously filed as Exhibit 10.21 to
Post-Effective Amendment No. Seven to
the Registrants Registration Statement
on Form S-11 filed March 16, 1999 and
incorporated herein by reference.)10.21
    
    Lease Agreement between Courtyard
Annex, L.L.C. and City Center Annex
Tenant Corporation, dated November 15,
1999, relating to the
CourtyardPhiladelphia (Previously
filed as Exhibit 10.22 to
Post-Effective Amendment No. Four to
the Registrants Registration Statement
on Form S-11 filed February 17, 2000
and incorporated herein by reference.)10.22
    
    First Amended and Restated Limited
Liability Company Agreement of
Courtyard Annex, L.L.C., relating to
the CourtyardPhiladelphia (Previously
filed as Exhibit 10.23 to
Post-Effective Amendment No. Four to
the Registrants Registration Statement
on Form S-11 filed February 17, 2000
and incorporated herein by reference.)10.23
    
    Purchase and Sale Agreement between
Marriott International, Inc., CBM
Annex, Inc., Courtyard Annex, Inc., as
Sellers, and CNL Hospitality Partners,
LP, as Purchaser, dated November 15,
1999, relating to the
CourtyardPhiladelphia (Previously
filed as Exhibit 10.24 to
Post-Effective Amendment No. Four to
the Registrants Registration Statement
on Form S-11 filed February 17, 2000
and incorporated herein by reference.)10.24
    
    First Amendment to Lease Agreement
between CNL Hospitality Partners, LP
and STC Leasing Associates, LLC, dated
August 1, 1998, related to the
Residence InnGwinnett Place, (amends
Exhibit 10.15 above) and the First
Amendment to Agreement of Guaranty,
dated August 1, 1998 (amends Agreement
of Guaranty attached as Exhibit I to
Exhibit 10.15 above) (Previously filed
as Exhibit 10.15 to the Registrants
Quarterly Report on Form 10-Q filed
November 10, 1999 and incorporated
herein by reference.)10.25
    
    First Amendment to Lease Agreement
between CNL Hospitality Partners, LP
and STC Leasing Associates, LLC, dated
August 1, 1998, related to the
Residence InnBuckhead (Lenox Park)
(amends Exhibit 10.16 above) and the
First Amendment to Agreement of
Guaranty, dated August 1, 1998 (amends
Agreement of Guaranty attached as
Exhibit I to 10.16 above) (Previously
filed as Exhibit 10.16 to the
Registrants Quarterly Report on Form
10-Q filed November 10, 1999 and
incorporated herein by reference.)10.26
    
    Lease Agreement between CNL Hospitality
Partners, LP and WYN Orlando Lessee,
LLC, dated May 31, 2000, relating to
the Wyndham Denver Tech Center
(Previously filed as Exhibit 10.29 to
Post-Effective Amendment No. Six to the
Registrants Registration Statement on
Form S-11 filed June 9, 2000 and
incorporated herein by reference.)10.27
    
    Lease Agreement between CNL Hospitality
Partners, LP and WYN Orlando Lessee,
LLC, dated May 31, 2000, relating to
the Wyndham Billerica (Previously filed
as Exhibit 10.30 to Post-Effective
Amendment No. Six to the Registrants
Registration Statement on Form S-11
filed June 9, 2000 and incorporated
herein by reference.)10.28
    
    Purchase and Sale Agreement between CNL
Hospitality Corp. , as Buyer, and WII
Denver Tech, LLC and PAH Billerica
Realty Company, LLC, as Sellers, and
Wyndham International, Inc., relating
to the Wyndham Denver Tech Center and
the Wyndham Billerica (Previously filed
as Exhibit 10.31 to Post-Effective
Amendment No. Six to the Registrants
Registration Statement on Form S-11
filed June 9, 2000 and incorporated
herein by reference.)10.29
    
    Lease Agreement between LLB C-Hotel,
L.L.C. and LLB Tenant Corporation,
dated October 12, 2000, relating to the
CourtyardLittle Lake Bryan (Previously
filed as Exhibit 10.49 to
Post-Effective Amendment No. Three to
the Registrants Registration Statement
on Form S-11 filed December 12, 2000
and incorporated herein by reference.)10.30
    
    Lease Agreement between LLB F-Inn,
L.L.C. and LLB Tenant Corporation,
dated October 12, 2000, relating to the
Fairfield InnLittle Lake Bryan
(Previously filed as Exhibit 10.50 to
Post-Effective Amendment No. Three to
the Registrants Registration Statement
on Form S-11 filed December 12, 2000
and incorporated herein by reference.)10.31
    
    First Amendment to Lease Agreement
between LLB C-Hotel, L.L.C. and LLB
Tenant Corporation, dated November 17,
2000, relating to the CourtyardLittle
Lake Bryan (amends Exhibit 10.49 above)
(Previously filed as Exhibit 10.51 to
Post-Effective Amendment No. Three to
the Registrants Registration Statement
on Form S-11 filed December 12, 2000
and incorporated herein by reference.)




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##### Table of Contents



10.32
    
    First Amendment to Lease Agreement between LLB F-Inn, L.L.C. and LLB Tenant
Corporation, dated November 17, 2000, relating to the Fairfield InnLittle Lake Bryan
(amends Exhibit 10.50 above) (Previously filed as Exhibit 10.52 to Post-Effective
Amendment No. Three to the Registrants Registration Statement on Form S-11 filed
December 12, 2000 and incorporated herein by reference.)10.33
    
    Purchase and Sale Agreement between Marriott International, Inc., as Seller, and CNL
Hospitality Partners, LP, as Purchaser, dated September 17, 1998, relating to the
CourtyardLittle Lake Bryan, the Fairfield InnLittle Lake Bryan and the SpringHill
SuitesLittle Lake Bryan (Previously filed as Exhibit 10.53 to Post-Effective
Amendment No. Three to the Registrants Registration Statement on Form S-11 filed
December 12, 2000 and incorporated herein by reference.)10.34
    
    Second Amendment to Lease Agreement between CNL LLB C-Hotel Management, LP (formerly
LLB C-Hotel, L.L.C.) and LLB Tenant Corporation, dated December 15, 2000, relating to
the CourtyardLittle Lake Bryan (amends Exhibits 10.49 and 10.51 above) (Previously
filed as Exhibit 10.54 to Post-Effective Amendment No. Four to the Registrants
Registration Statement on Form S-11 filed March 12, 2001 and incorporated herein by
reference.)10.35
    
    Second Amendment to Lease Agreement between CNL LLB F-Inn Management, LP (formerly
LLB F-Inn L.L.C.) and LLB Tenant Corporation, dated December 15, 2000, relating to
the Fairfield InnLittle Lake Bryan (amends Exhibits 10.50 and 10.52 above)
(Previously filed as Exhibit 10.55 to Post-Effective Amendment No. Four to the
Registrants Registration Statement on Form S-11 filed March 12, 2001 and
incorporated herein by reference.)10.36
    
    Sixth Amended and Restated Revolving Credit Agreement dated October 31, 2002
(Previously filed as Exhibit 10.1 to RFSs Current Report onForm 8-Kfiled January
16, 2003 and incorporated herein by reference.)10.37
    
    Form of Percentage Lease with TRS Lessees (Previously filed as Exhibit 10.1 to RFSs
Current Report onForm 8-Kfiled January 16, 2001 and incorporated herein by
reference.)10.38
    
    Form of Management Agreement with Flagstone (Previously filed as Exhibit 10.2 to
RFSs Current Report onForm 8-Kfiled January 16, 2001 and incorporated herein by
reference.)10.39
    
    Loan Agreement dated August 9, 2000 by and between Bank of America, N.A. (as lender)
and RFS SPE 2000 LLC (as borrower), a wholly-owned subsidiary of RFS (Previously
filed as Exhibit 10.19 to RFSs Annual Report onForm 10-Kfiled March 15, 2001 and
incorporated herein by reference.)10.40
    
    Loan Agreement dated August 9, 2000 by and between Bank of America, N.A. (as lender)
and RFS SPE 2 2000 LLC (as borrower), a wholly-owned subsidiary of RFS (Previously
filed as Exhibit 10.20 to RFSs Annual Report onForm 10-Kfiled March 15, 2001 and
incorporated herein by reference.)10.41
    
    Agreement of Purchase and Sale of The Hotel del Coronado and Joint Escrow
Instructions among L-O Coronado Holding II, Inc., L-O Coronado Hotel, Inc. and L-O
Coronado IP, Inc. (jointly, Seller) and CNL Hospitality Corp. (Buyer), effective as
of September 23, 2003 (Previously filed as Exhibit 10.82 to PostEffective Amendment
No. Six to the Registrants Registration Statement onForm S-11filed January 26,
2004 and incorporated herein by reference.)10.42
    
    First Amendment to Agreement for Purchase and Sale of Real Property and Joint Escrow
Instructions by and among L-O Coronado Holding II, Inc., L-O Coronado Hotel, Inc. and
L-O Coronado IP, Inc. (collectively, Seller) and CNL Hospitality Corp. (Buyer) dated
as of October 15, 2003 (Previously filed as Exhibit 10.83 to PostEffective Amendment
No. Six to the Registrants Registration Statement on Form S-11 filed January 26,
2004 and incorporated herein by reference.)




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##### Table of Contents



10.43
    
    Second Amendment to Agreement for Purchase and Sale of Real Property and Joint Escrow
Instructions by and among L-O Coronado Holding II, Inc., L-O Coronado Hotel, Inc. and
L-O Coronado IP, Inc. (collectively, Seller) and CNL Hospitality Corp. (Buyer) dated
as of October 31, 2003 (Previously filed as Exhibit 10.84 to PostEffective Amendment
No. Six to the Registrants Registration Statement on Form S-11 filed January 26,
2004 and incorporated herein by reference.)10.44
    
    Assignment and Assumption of Agreement of Purchase and Sale and Joint Escrow
Instructions by and between CNL Hospitality Corp. (Assignor) and CNL Hotel Del
Partners, LP (Assignee) dated as of December 18, 2003 (Previously filed as Exhibit
10.85 to PostEffective Amendment No. Six to the Registrants Registration Statement
on Form S-11 filed January 26, 2004 and incorporated herein by reference.)10.45
    
    Commercial Mortgage Backed Security Facility, dated December 4, 2003, by and between
Bank of America, N.A. (as lender) and Rose SPE 1, L.P. (as borrower), a wholly-owned
subsidiary of RFS Partnership, L.P. (Previously filed as Exhibit 10.20 to RFS
Partnership, L.P.s Annual Report on Form 10-K filed March 30, 2004 and incorporated
herein by reference.)10.46
    
    Mezzanine Loan Agreement, dated December 23, 2003, by and between Fleet National Bank
(as lender) and Rose Mezzanine SPE, L.P. (as borrower), a wholly-owned subsidiary of
RFS Partnership, L.P. (Previously filed as Exhibit 10.21 to RFS Partnership, L.P.s
Annual Report on Form 10-K filed March 30, 2004 and incorporated herein by
reference.)10.47
    
    $1,500,000,000 Loan and Security Agreement by and among CNL Resort Hotel, LP, CNL
Resort Silver Properties, LP, CNL Grand Wailea Resort, LP, CNL Biltmore Resort, LP,
CNL Claremont Resorts, LP, and CNL Desert Resort, LP, as borrowers, and German
American Capital Corporation, as lender, dated August 18, 2004. (Previously filed as
Exhibit 10.84 to the Registrants Quarterly Report on Form 10-Q filed November 9,
2004 and incorporated herein by reference.)10.48
    
    $900,000,000 Renewal, Amended, Restated and Consolidated Note by and among CNL Resort
Hotel, LP, CNL Resort Silver Properties, LP, CNL Grand Wailea Resort, LP, CNL
Biltmore Resort, LP, CNL Claremont Resort, LP, and CNL Desert Resort, LP, as
borrowers, and German American Capital Corporation, as Lender, dated August 18, 2004.
(Previously filed as Exhibit 10.86 to the Registrants Quarterly Report on Form 10-Q
filed November 9, 2004 and incorporated herein by reference.)10.49
    
    $100,000,000 Mezzanine Note by and among CNL Resort Senior Mezz, LP, as borrower, and
German American Capital Corporation, as Lender, dated August 18, 2004. (Previously
filed as Exhibit 10.87 to the Registrants Quarterly Report on Form 10-Q filed
November 9, 2004 and incorporated herein by reference.)10.50
    
    $100,000,000 Mezzanine Note by and among CNL Resort Sub Senior Mezz, LP, as borrower,
and German American Capital Corporation, as Lender, dated August 18, 2004.
(Previously filed as Exhibit 10.88 to the Registrants Quarterly Report on Form 10-Q
filed November 9, 2004 and incorporated herein by reference.)10.51
    
    $100,000,000 Mezzanine Note by and among CNL Resort Intermediate Mezz, LP, as
borrower, and German American Capital Corporation, as Lender, dated August 18, 2004.
(Previously filed as Exhibit 10.89 to the Registrants Quarterly Report on Form 10-Q
filed November 9, 2004 and incorporated herein by reference.)10.52
    
    $100,000,000 Mezzanine Note by and among CNL Resort Sub Intermediate Mezz, LP, as
borrower, and German American Capital Corporation, as Lender, dated August 18, 2004.
(Previously filed as Exhibit 10.90 to the Registrants Quarterly Report on Form 10-Q
filed November 9, 2004 and incorporated herein by reference.)10.53
    
    $100,000,000 Mezzanine Note by and among CNL Resort Junior Mezz, LP, as borrower, and
German American Capital Corporation, as Lender, dated August 18, 2004. (Previously
filed as Exhibit 10.91 to the Registrants Quarterly Report on Form 10-Q filed
November 9, 2004 and incorporated herein by reference.)10.54
    
    $100,000,000 Mezzanine Note by and among CNL Resort Sub Junior Mezz, LP, as borrower,
and German American Capital Corporation, as Lender. (Previously filed as Exhibit
10.92 to the Registrants Quarterly Report on Form 10-Q filed November 9, 2004 and
incorporated herein by reference.)




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##### Table of Contents



10.55
    
    Limited Rent Guaranty by and between CNL Philadelphia Annex, LLC, as Landlord, and
Marriott International, Inc., as Guarantor, dated December 30, 2004. (Previously
filed as Exhibit 10.93 to the Registrants Annual Report on Form 10-K filed March 16,
2005 and incorporated herein by reference.)10.56
    
    $90,000,000 Mezzanine Loan and Security Agreement (Senior Mezzanine) by and between
CNL Hotel Del Senior Mezz Partners, LP, as Mezzanine Borrower, and German American
Capital Corporation, as Mezzanine Lender, dated February 9, 2005. (Previously filed
as Exhibit 10.94 to the Registrants Annual Report on Form 10-K filed March 16, 2005
and incorporated herein by reference.)10.57
    
    $20,000,000 Mezzanine Loan and Security Agreement (Intermediate Mezzanine) by and
between CNL Hotel Del Intermediate Mezz Partners, LP, as Mezzanine Borrower, and
German American Capital Corporation, as Mezzanine Lender, dated February 9, 2005.
(Previously filed as Exhibit 10.95 to the Registrants Annual Report on Form 10-K
filed March 16, 2005 and incorporated herein by reference.)10.58
    
    $230,000,000 Loan and Security Agreement by and between CNL Hotel Del Partners, LP,
as Borrower, and German American Capital Corporation, as Lender, dated as of February
9, 2005 (Previously filed as Exhibit 10.96 to the Registrants Annual Report on Form
10-K filed March 16, 2005 and incorporated herein by reference.)10.59
    
    $90,000,000 Mezzanine Note (Senior Mezzanine) by and between CNL Hotel Del Senior
Mezz Partners, LP, as Mezzanine Borrower, and German American Capital Corporation, as
Mezzanine Lender, dated February 9, 2005 (Previously filed as Exhibit 10.97 to the
Registrants Annual Report on Form 10-K filed March 16, 2005 and incorporated herein
by reference.)10.60
    
    $20,000,000 Mezzanine Note (Intermediate Mezzanine) by and between CNL Hotel Del
Intermediate Mezz Partners, LP, as Mezzanine Borrower, and German American Capital
Corporation, as Mezzanine Lender, dated February 9, 2005. (Previously filed as
Exhibit 10.98 to the Registrants Annual Report on Form 10-K filed March 16, 2005 and
incorporated herein by reference.)10.61
    
    $230,000,000 Note by and between CNL Hotel Del Partners, LP, as Borrower, and German
American Capital Corporation, as Lender, dated February 9, 2005. (Previously filed
as Exhibit 10.99 to the Registrants Annual Report on Form 10-K filed March 16, 2005
and incorporated herein by reference.)10.62
    
    Deferred Fee Plan for Directors (Previously filed as Exhibit 10.100 to the
Registrants Annual Report on Form 10-K filed March 16, 2005 and incorporated herein
by reference.)10.63
    
    Second Amendment to Loan and Security Agreement by and among CNL Hospitality
Partners, LP (as Borrower), CNL Hotels and Resorts, Inc., (as Guarantor) and Deutsche
Bank Trust Company Americas, and the institutions from time to time party hereto (as
Lenders) dated February 9, 2005. (Previously filed as Exhibit 10.101 to the
Registrants Annual Report on Form 10-K filed March 16, 2005 and incorporated herein
by reference.)10.64
    
    2004 Omnibus Long-Term Incentive Plan (Previously included as Appendix D to the
Registrants Definitive Proxy Statement filed June 21, 2004 and incorporated herein
by reference.)10.65
    
    2004 Omnibus Long-Term Incentive Plan Stock Award Agreement (Previously filed as
Exhibit 99.1 to the Registrants Form 8-K filed March 22, 2005 and incorporated
herein by reference.)10.66
    
    2004 Omnibus Long-Term Incentive Stock Plan Agreement of Participant Relating to
Stock Award Agreements (Previously filed as Exhibit 99.2 to the Registrants Form 8-K
filed March 22, 2005 and incorporated herein by reference.)10.67
    
    Renewal Agreement dated March 31, 2005 between CNL Hotels & Resorts, Inc. and CNL
Hospitality Corp. (Previously filed as Exhibit 10.2 to the Registrants Current
Report on From 8-K filed April 6, 2005 and incorporated herein by reference.)10.68
    
    Agreement of Purchase and Sale dated April 26, 2005 by and between various
wholly-owned subsidiaries of CNL Hotels & Resorts, Inc. (as Seller) and Ashford
Hospitality Limited Partnership (as Buyer) (Previously filed as Exhibit 10.1 to the
Registrants Current Report on Form 8-K filed April 27, 2005 and incorporated herein
by reference.)




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##### Table of Contents



10.69
    
    Second Amendment to Mezzanine Note (Intermediate Mezzanine) dated April 7, 2005 by
and between CNL Hotel Del Intermediate Mezz Partners, LP, as Mezzanine Borrower, and
German American Capital Corporation, as Mezzanine Lender (Previously filed as Exhibit
10.107 to the Registrants Quarterly Report on Form 10-Q filed May 16, 2005 and
incorporated herein by reference.)10.70
    
    Amendment to Note dated March 29, 2005 by and between CNL Hotel Del Partners LP, as
Borrower, and German American Capital Corporation, as Lender (Previously filed as
Exhibit 10.108 to the Registrants Quarterly on Form 10-Q filed May 16, 2005 and
incorporated herein by reference.)10.71
    
    Amendment to Mezzanine Note (Senior Mezzanine) dated March 29, 2005 by and between
CNL Hotel Del Senior Mezz Partners, LP, as Mezzanine Borrower, and German American
Capital Corporation, as Mezzanine Lender (Previously filed as Exhibit 10.109 to the
Registrants Quarterly Report on Form 10-Q filed May 16, 2005 and incorporated herein
by reference.)10.72
    
    Omnibus Amendment to Loan Documents dated March 29, 2005 by and between CNL Hotel Del
Partners, LP, as Borrower, and German American Capital Corporation, as Lender
(Previously filed as Exhibit 10.110 to the Registrants Quarterly Report on Form 10-Q
filed May 16, 2005 and incorporated herein by reference.)10.73
    
    Amendment to Mezzanine Note (Intermediate Mezzanine) dated March 29, 2005 by and
between CNL Hotel Del Intermediate Mezz Partners, LP, as Mezzanine Borrower, and
German American Capital Corporation, as Mezzanine Lender (Previously filed as Exhibit
10.111 to the Registrants Quarterly Report on Form 10-Q filed May 16, 2005 and
incorporated herein by reference.)10.74
    
    Mezzanine Note (Junior Mezzanine) dated April 7, 2005 by and between CNL Hotel Del
Junior Mezz Partners, LP, as Mezzanine Borrower, and German American Capital
Corporation, as Mezzanine Lender (Previously filed as Exhibit 10.112 to the
Registrants Quarterly Report on Form 10-Q filed May 16, 2005 and incorporated herein
by reference.)10.75
    
    Mezzanine Loan and Security Agreement (Junior Mezzanine) dated April 7, 2005 by and
between CNL Hotel Del Junior Mezz Partners, LP, as Mezzanine Borrower, and German
American Capital Corporation, as Mezzanine Lender (Previously filed as Exhibit 10.113
to the Registrants Quarterly Report on Form 10-Q filed May 16, 2005 and incorporated
herein by reference.)10.76
    
    Indemnification Agreement between CNL Hotels & Resorts, Inc. and C. Brian Strickland
dated May 13, 2005. Each of the following officers has signed a substantially similar
agreement as follows: Mark E. Patten, Barry A. N. Bloom, Marcel Verbaas; Stephanie
Thomas, dated May 13, 2005; and Greerson G. McMullen, dated October 3, 2005.
(Previously filed as Exhibit 10.114 to the Registrants Quarterly Report on Form 10-Q
filed May 16, 2005 and incorporated herein by reference.)10.77
    
    Indemnification Agreement between CNL Hotels & Resorts, Inc. and J. Douglas Holladay
dated May 13, 2005. Each of the following Directors has signed a substantially
similar agreement as follows: Jack F. Kemp and Dianna F. Morgan, dated May 13, 2005.
(Previously filed as Exhibit 10.115 to the Registrants Quarterly Report on Form 10-Q
filed May 16, 2005 and incorporated herein by reference.)10.78
    
    $270,000,000 Promissory Note dated June 15, 2005 by and between Desert Ridge Resort,
LLC, as Borrower, and Barclays Capital Real Estate Inc., as Lender (Previously filed
as Exhibit 10.116 to the Registrants Quarterly Report on Form 10-Q filed August 15,
2005 and incorporated herein by reference.)10.79
    
    Loan Agreement dated June 15, 2005 by and between Desert Ridge Resort, LLC, as
Borrower, and Barclays Capital Real Estate Inc., as Lender (Previously filed as
Exhibit 10.117 to the Registrants Quarterly Report on Form 10-Q filed August 15,
2005 and incorporated herein by reference.)10.80
    
    $31,500,000 Promissory Note dated June 15, 2005 by and between DRR Senior Mezz, LLC,
as Mezzanine Borrower, and Barclays Capital Real Estate Inc., as Mezzanine Lender
(Previously filed as Exhibit 10.118 to the Registrants Quarterly Report on Form 10-Q
filed August 15, 2005 and incorporated herein by reference.)10.81
    
    Mezzanine Loan Agreement dated June 15, 2005 by and between DRR Senior Mezz, LLC, as
Mezzanine Borrower, and Barclays Capital Real Estate Inc., as Mezzanine Lender
(Previously filed as Exhibit 10.119 to the Registrants Quarterly Report on Form
10-Q filed August 15, 2005 and incorporated herein by reference.)




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10.82
    
    Agreement of Purchase and Sale dated July 5, 2005 by and between certain wholly-owed
subsidiaries of CNL Hotels & Resorts, Inc. (as Seller) and Pyramid Hotel Opportunity
Venture LLC (as Buyer) (Previously filed as Exhibit 10.120 to the Registrants
Quarterly Report on Form 10-Q filed August 15, 2005 and incorporated herein by
reference.)10.83
    
    First Amendment to Renewal Agreement dated as of June 30, 2005 between CNL Hotels &
Resorts, Inc. and CNL Hospitality Corp. (Previously filed as Exhibit 10.3 to the
Registrants Form 8-K filed July 7, 2005 and incorporated herein by reference.)10.84
    
    Second Amendment to Renewal Agreement dated as of July 29, 2005 between CNL Hotels &
Resorts, Inc. and CNL Hospitality Corp. (Previously filed as Exhibit 10.4 to the
Registrants Form 8-K filed August 4, 2005 and incorporated by reference.)10.85
    
    Third Amendment to Renewal Agreement dated as of August 30, 2005 between CNL Hotels &
Resorts, Inc. and CNL Hospitality Corp. (Previously filed as Exhibit 10.5 to the
Registrants Form 8-K filed September 1, 2005 and incorporated by reference.)10.86
    
    Fourth Amendment to Renewal Agreement dated as of September 29, 2005 between CNL
Hotels & Resorts, Inc. and CNL Hospitality Corp. (Previously filed as Exhibit 10.6 to
the Registrants Form 8-K filed October 3, 2005 and incorporated by reference.)10.87
    
    Fifth Amendment to Renewal Agreement dated as of October 31, 2005 between CNL Hotels
& Resorts, Inc. and CNL Hospitality Corp. (Previously filed as Exhibit 10.7 to the
Registrants Form 8-K filed November 4, 2005 and incorporated by reference.)10.88
    
    $200,000,000 Credit Agreement dated as of September 30, 2005 between CNL Hospitality
Partners, LP, as Borrower, CNL Hotels and Resorts, Inc., as Parent, Bank of America,
N.A., as Administrative Agent and L/C Issuer, and the Other Lenders Party Hereto,
Wachovia Bank N.A. and Deutsche Bank Trust Company Americas, as Co-Syndication
Agents, Calyon New York Branch and Citibank North America, Inc., as Co-Documentation
Agents, and Banc of America Securities LLC, as Sole Lead Arranger and Sole Book
Manager (Previously filed as Exhibit 10.126 to the Registrants Quarterly Report on
Form 10-Q filed November 14, 2005 and incorporated herein by reference.)10.89
    
    $1,000,000,000 Loan and Security Agreement dated as of January 9, 2006 between CNL
Resort Hotel, LP, CNL Resort Silver Properties, LP, CNL Grand Wailea Resort, LP, CNL
Biltmore Resort, LP, CNL Claremont Resort, LP, and CNL Desert Resort, LP,
as Borrower, and German American Capital Corporation as Lender (Filed herewith.)10.90
    
    $1,000,000,000 Renewal, Amended, Restated and Consolidated Note dated as of January
9, 2006 between CNL Resort Hotel, LP, CNL Resort Silver Properties, LP, CNL Grand
Wailea Resort, LP, CNL Biltmore Resort, LP, CNL Claremont Resort, LP, and CNL Desert
Resort, LP, as Borrower, and German American Capital Corporation as Lender (Filed
herewith.)10.91
    
    $115,000,000 Mezzanine Loan and Security Agreement (First Mezzanine) dated as of
January 9, 2006 between CNL Resort Senior Mezz, LP, as Mezzanine Borrower and German
American Capital Corporation, as Mezzanine Lender (Filed herewith.)10.92
    
    $115,000,000 Mezzanine Note (First Mezzanine) dated as of January 9, 2006 between CNL
Resort Senior Mezz, LP, as Mezzanine Borrower and German American Capital
Corporation, as Mezzanine Lender (Filed herewith.)10.93
    
    $110,000,000 Mezzanine Loan and Security Agreement (Second Mezzanine) dated as of
January 9, 2006 between CNL Resort Sub Senior Mezz. LP, as Mezzanine Borrower and
German American Capital Corporation, as Mezzanine Lender (Filed herewith.)10.94
    
    $110,000,000 Mezzanine Note (Second Mezzanine) dated as of January 9, 2006 between
CNL Resort Sub Senior Mezz. LP, as Mezzanine Borrower and German American Capital
Corporation, as Mezzanine Lender (Filed herewith.)10.95
    
    $250,000,000 Mezzanine Loan and Security Agreement (Third Mezzanine) dated as of
January 9, 2006 between CNL Resort Intermediate Mezz, LP, as Mezzanine Borrower and
German American Capital Corporation, as Mezzanine Lender (Filed herewith.)10.96
    
    $250,000,000 Mezzanine Note (Third Mezzanine) dated as of January 9, 2006 between CNL
Resort Intermediate Mezz, LP, as Mezzanine Borrower and German American Capital
Corporation, as Mezzanine Lender (Filed herewith.)10.97
    
    $50,000,000 Mezzanine Loan and Security Agreement (Fourth Mezzanine) dated as of
January 9, 2006 between CNL Resort Sub Intermediate Mezz, LP, as Mezzanine Borrower
and German American Capital Corporation, as Mezzanine Lender (Filed herewith.)




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10.98
    
    $50,000,000 Mezzanine Note (Fourth Mezzanine) dated as of January 9, 2006 between CNL
Resort Sub Intermediate Mezz, LP, as Mezzanine Borrower and German American Capital
Corporation, as Mezzanine Lender (Filed herewith.)10.99
    
    Purchase and Sale Agreement dated as of October 31, 2005 by and among CNL Hospitality
Partners LP, CNL KSL Partners GP, LLC, CNL Rose SPE Tenant Corp., RFS Leasing VII,
Inc, as Sellers, and KSL Recreation Holdings I, LLC, KSL Recreation Management
Operations, LLC, as Purchaser (Filed herewith.)10.100
    
    Purchase and Sale Agreement by and between THI III GL Investments, L.L.C., as Seller,
and CNL Hotels & Resorts, Inc., as Purchaser (Filed herewith)10.101
    
    Sixth Amendment to Renewal Agreement dated as of November 30, 2005 between CNL Hotels
& Resorts, Inc. and CNL Hospitality Corp. (Previously filed as Exhibit 10.8 to the
Registrants Form 8-K filed December 5, 2005 and incorporated herein by reference.)10.102
    
    Amended and Restated Renewal Agreement dated as of December 30, 2005 between CNL
Hotels & Resorts, Inc. and CNL Hospitality Corp. (Previously filed as Exhibit 10.9 to
the Registrants Form 8-K filed December 30, 2005 and incorporated herein by
reference.)10.103
    
    Payment Agreement dated December 30, 2005 by and between CNL Hotels & Resorts, Inc.
and CNL Hospitality Corp. (Previously filed as Exhibit 10.10 to the Registrants Form
8-K filed December 30, 2005 and incorporated herein by reference.)10.104
    
    $335,000,000 Mortgage, Security Agreement, Assignment of Rents and Fixture Filing dated February 24, 2006
by and between CNL GL Resort, LP, as Borrower, and Wachovia Bank, National Association, as Lender (Filed
herewith.)10.105
    
    $335,000,000 Promissory Note dated February 24, 2006 by and between CNL GL Resort, LP, as Borrower, and
Wachovia Bank, National Association, as Lender (Filed herewith.)10.106
    
    $85,000,000 Loan and Security Agreement (First Mezzanine Loan) dated February 24, 2006 by and between CNL
GL Senior Mezz, LP, as Borrower, and Wachovia Bank, National Association, as Lender (Filed herewith.)10.107
    
    $85,000,000 Promissory Note (First Mezzanine) dated February 24, 2006 by and between CNL GL Senior Mezz,
LP, as Borrower, and Wachovia Bank, National Association, as Lender (Filed herewith.)10.108
    
    $50,000,000 Loan and Security Agreement (Second Mezzanine Loan) dated February 24, 2006 by and between CNL
GL Sub Senior Mezz, LP, as Borrower, and Wachovia Bank, National Association, as Lender (Filed herewith.)10.109
    
    $50,000,000 Promissory Note (Second Mezzanine) dated February 24, 2006 by and between CNL GL Sub Senior
Mezz, LP, as Borrower, and Wachovia Bank, National Association, as Lender (Filed herewith.)10.110
    
    $50,000,000 Loan and Security Agreement (Third Mezzanine Loan) dated February 24, 2006 by and between CNL
GL Junior Mezz, LP, as Borrower, and Wachovia Bank, National Association, as Lender (Filed herewith.)10.111
    
    $50,000,000 Promissory Note (Third Mezzanine) dated February 24, 2006 by and between CNL GL Junior Mezz,
LP, as Borrower, and Wachovia Bank, National Association, as Lender (Filed herewith.)10.112
    
    $50,000,000 Loan and Security Agreement (Fourth Mezzanine Loan) dated February 24, 2006 by and between CNL
GL Junior Mezz, LP, as Borrower, and Wachovia Bank, National Association, as Lender (Filed herewith.)10.113
    
    $50,000,000 Promissory Note (Fourth Mezzanine) dated February 24, 2006 by and between CNL GL Junior Mezz,
LP, as Borrower, and Wachovia Bank, National Association, as Lender (Filed herewith.)21
    
    Subsidiaries of the Registrant (Filed herewith.)31.1
    
    Certification of Chief Executive Officer, Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section 302 of
the SarbanesOxley Act of 2002 (Filed herewith.)31.2
    
    Certification of Principal Financial Officer, Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section
302 of the SarbanesOxley Act of 2002 (Filed herewith.)32.1
    
    Certification of Chief Executive Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the SarbanesOxley Act of 2002 (Furnished herewith.)32.2
    
    Certification of Principal Financial Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the SarbanesOxley Act of 2002 (Furnished herewith.)