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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D. C. 20549
 FORM 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended: December 31, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from                                         to
 Commission file number 1-32254
 CNL HOTELS & RESORTS, INC.
 (Exact name of registrant as specified in its charter)
 Maryland
    
    59-3396369(State of other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification No.)420 South Orange Avenue, Suite 700
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
    
    
    7Item 2. Properties
    
    
    27Item 3. Legal Proceedings
    
    
    30Item 4. Submission of Matters to a Vote of Security Holders
    
    
    30Part IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    31Item 6. Selected Financial Data
    
    
    35Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    40Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    89Item 8. Financial Statements and Supplementary Data
    
    
    90Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    158Item 9A. Controls and Procedures
    
    
    158Item 9B. Other Information
    
    
    158Part III.Item 10. Directors and Executive Officers of the Registrant
    
    
    159Item 11. Executive Compensation
    
    
    159Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    159Item 13. Certain Relationships and Related Transactions
    
    
    159Item 14. Principal Accountant Fees and Services
    
    
    159Part IVItem 15. Exhibits and Financial Statement Schedules
    
    
    160Signatures
    
    
    190Schedule II  Valuation and Qualifying AccountsSchedule III  Real Estate and Accumulated DepreciationExhibitsEX-21: SUBSIDIARIESEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-31.1: CERTIFICATIONEX-32.2: CERTIFICATION
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PART I
 
 Item 1. Business
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Hotel Management Agreements
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
    
    Marriott International, Inc., including certain of its affiliates (Marriott);
    
    Hilton Hotels Corporation, including certain of its affiliates (Hilton);
    
    Interstate Hotels & Resorts, Inc., including certain of its affiliates (Interstate);
    
    Hyatt Corporation, including certain of its affiliates (Hyatt); and
    
    Hersha Hospitality Management L.P.
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Competition
  Concentration of Risk
  Available Information
 http://www.cnlhotels.com
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Employees
  Seasonality
  
 Item 1A. Risk Factors
 Risks Related to the Proposed CHR Sale Transaction
  The CHR Sale Transaction is subject to a number of conditions which if not satisfied or waived
would adversely impact our ability to complete the CHR Sale Transaction.
  Failure to complete the CHR Sale Transaction could negatively impact our operations and
business and financial results.
   
    
    the requirement that, under certain circumstances, including if we sign a definitive
agreement with respect to a superior proposal from another potential buyer, to pay a
termination fee of $145.0 million to the Buyer Parties;
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
    
    the requirement that, under certain circumstances, including if we breach the Merger
Agreement, to reimburse the Buyer Parties for up to $15.0 million of its costs and expenses
in connection with the CHR Sale Transaction;
    
    the incurrence of certain costs relating to the CHR Sale Transaction that are payable
whether or not the CHR Sale Transaction is completed, including legal, accounting,
financial advisor and printing fees;
    
    activities relating to the Merger and related uncertainties may lead to a loss of
revenue that we may not be able to regain if the Merger does not occur;
    
    the focus of management directed toward the CHR Sale Transaction and integration
planning instead of on our core business and other opportunities that could have been
beneficial to us; and
    
    the loss of executive personnel and other employees integral to the continued operations
of our company whereby our continued management operations may be
adversely impacted. (to date voluntary resignations have been greater
than our historical experience).
   Provisions of the Merger Agreement may deter alternative business combinations and could
negatively impact our business and operations if the Merger Agreement is terminated in certain
circumstances.
  Uncertainty regarding the CHR Sale Transaction may cause third-party management companies,
third-party tenants, vendors and others to delay or defer decisions concerning their business with
our company, which may harm our results of operations in the future if the CHR Sale Transaction is
not completed.
   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.
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Thirty-four
of our Properties (excluding 13 held for sale as of year end) 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.
  As of December 31, 2006, approximately 85 percent of our Properties (excluding 32 held for sale)
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.
  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.
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If the CHR Sale Transaction is not consummated and we do not list our common shares on a national
securities exchange before December 31, 2007, our Charter provides that we will be required to
undertake an orderly liquidation of our assets.
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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.
   We are and may continue to be subject to litigation.
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We are generally subject to risks associated with the employment of hotel or resort personnel,
particularly with Properties that employ unionized labor.
  If the CHR Sale Transaction is not consummated and we continue our operations and seek to acquire
Properties, we may not be able to identify or complete suitable acquisitions that meet our
investment criteria, which may impede our ability to grow externally.
   
    
    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 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.
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If the CHR Sale Transaction is not consummated and we continue our operations and seek to acquire
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.
  If the CHR Sale Transaction is not consummated and we continue our operations and seek to acquire
Properties, we may acquire Properties with limited operating histories that may not achieve desired
results.
  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
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delayed or take longer then
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 Properties 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.
  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.
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If the CHR Sale Transaction is not consummated and we continue our operations and seek to acquire
Properties, 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
    
    epidemics, terrorism, war or civil unrest.
  The sale of shares by our stockholders could be difficult.
  Risks Related to the Advisor Merger with the Former Advisor
 If the CHR Sale Transaction is not consummated and we continue our operations and seek to acquire
Properties, we may acquire properties from or may compete with affiliates of our Former Advisor for
properties
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Our Earnings Per Share decreased as a result of the Advisor Merger.
  We may be exposed to risks to which we have not historically been exposed.
    Costs associated with the Former Advisors personnel after internalization may exceed the fees
previously paid by us to the Former Advisor for such services.
  The Advisor Merger might limit future acquisitions or dispositions of certain types of assets.
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Risks Related to the Lodging Industry
 The economic slowdown in 2001 and thereafter, terrorist attacks, military activity in the Middle
East, natural disasters and other world events impacting the global economy have 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 insurance costs due to, among other things, the
occurrence of natural disasters;-
    increases in operating costs, including labor 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.
  Risks Related to Conflicts of Interest
 If the CHR Sale Transaction is not consummated and we continue our operations and seek to acquire
Properties, we may acquire properties from or may compete with former affiliates of our Former
Advisor for properties
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Our Chairman and Vice-Chairman of the Board have competing demands on their time and
attention.
   -
    We may acquire Properties from our former 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.-
    A conflict could arise in connection with the determination of
whether or not to list our common shares on a national securities
exchange including because the Former Advisor and other former
affiliates may
benefit if our shares are listed and such liquidity could be
received earlier if the listing of our shares occurs. Our Board must
approve the listing of our shares on a national securities
exchange.-
    We have in the past and may in the future invest in joint ventures
or with other programs sponsored by the Former Advisor or its
former affiliates. Potential situations may arise in which the
interests of the co-venturer or co-venturers may conflict with our
interests.
 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
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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 or inhibit a listing or public offering of our securities;-
    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.-
    we may be unable to obtain property insurance at sufficient
limits thereby causing a default under our debt obligations.
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If the CHR Sale Transaction is not consummated and we continue our operations, 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 coverages 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 position, and
cash flows, including our ability to service debt and make distributions to our stockholders.
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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 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.
   Our acquisition of C corporations might cause us to fail to qualify as a REIT.
  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
shares.
  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
  
 Item 2. Properties
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State/Country
    
    Number of PropertiesAlabama
    
    
    1Arizona
    
    
    5California
    
    
    12Canada
    
    
    1Connecticut
    
    
    2District of Columbia
    
    
    1Florida
    
    
    10Georgia
    
    
    2Hawaii
    
    
    1Louisiana
    
    
    1Maryland
    
    
    1Michigan
    
    
    2Missouri
    
    
    1Nevada
    
    
    1New Jersey
    
    
    3New York
    
    
    1Oregon
    
    
    1Pennsylvania
    
    
    2Texas
    
    
    6Virginia
    
    
    3Washington
    
    
    2Total
    
    
    59
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Item 3. Legal Proceedings
   
 Item 4. Submission of Matters to a Vote of Security Holders
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PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
     2006High
    
    Low
    
    AverageFirst Quarter
    
    $
    20.00
    
    
    $
    14.00
    
    
    $
    16.20Second Quarter
    
    
    20.00
    
    
    
    13.33
    
    
    
    15.77Third Quarter
    
    
    17.57
    
    
    
    11.81
    
    
    
    13.61Fourth Quarter
    
    
    20.00
    
    
    
    12.50
    
    
    
    14.50
 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
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First
    
    Second
    
    Third
    
    Fourth2006
    
    Quarter
    
    Quarter
    
    Quarter
    
    Quarter
    
    YearTotal distributions
declared
    
    $
    38,221
    
    
    $
    38,243
    
    
    $
    39,122
    
    
    $
    39,118
    
    
    $
    154,704Distributions per share
    
    
    0.250
    
    
    
    0.250
    
    
    
    0.250
    
    
    
    0.250
    
    
    
    1.000
 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
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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
    
    
    5,000,000
    
    
    
    2,894,243
    
    
    
    n/a
    
    
    
    2,105,757
  Redemption of Shares.
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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
    
    
    
    
    
    Publicly-
    
    Under theof Shares
    
    Average Price
    
    Announced
    
    RedemptionPurchased
    
    Paid Per Share
    
    Plan
    
    Plan *October 1, 2006
through October 31,
2006
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    7,644,153November 1, 2006
through November
30, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,644,153December 1, 2006
through December
31, 2006
    
    
    167,618
    
    
    
    19.00
    
    
    
    167,618
    
    
    
    5,894,258Total
    
    
    167,618
    
    
    
    
    
    
    
    167,618
 
 *
    
    This number represents the maximum number of shares which can be redeemed under the Redemption
Plan without exceeding the five percent limitation in a rolling 12-month period described above and
does not take into account whether there are sufficient proceeds under the DRP. Under the
Redemption Plan, we also can, at our discretion, use up to $100,000 per calendar quarter of the
proceeds of any public offering of our common stock for redemptions. No such amounts are currently
available. Insufficient Funds.
 Excess Funds.
 Suspension of Plan.
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Item 6. Selected Financial Data
 Consideration of
Variable Interest Entities
 2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Number of hotels and resorts:Consolidated-TRS lessees
    
    
    87
    
    
    
    85
    
    
    
    123
    
    
    
    108
    
    
    
    40Consolidated-triple-net leases
    
    
    4
    
    
    
    6
    
    
    
    6
    
    
    
    19
    
    
    
    12Unconsolidated
    
    
    
    
    
    
    2
    
    
    
    3
    
    
    
    3
    
    
    
    3Total
    
    
    91
    
    
    
    93
    
    
    
    132
    
    
    
    130
    
    
    
    55Year Ended December 31:(in thousands expect for per share data)Revenues
    
    $
    1,540,528
    
    
    $
    1,216,789
    
    
    $
    943,945
    
    
    $
    396,452
    
    
    $
    171,041(Loss) income from continuing operations
    
    
    (167,838
    )
    
    
    (69,110
    )
    
    
    (121,412
    )
    
    
    (23,578
    )
    
    
    42Income from discontinued operations
    
    
    164,503
    
    
    
    76,010
    
    
    
    34,299
    
    
    
    29,571
    
    
    
    15,768Net (loss) income
    
    
    (3,335
    )
    
    
    6,900
    
    
    
    (87,113
    )
    
    
    5,993
    
    
    
    15,810Cash flows provided by operating activities
    
    
    213,578
    
    
    
    169,813
    
    
    
    213,741
    
    
    
    112,887
    
    
    
    76,660Cash flows (used in) provided by (used in) investing
activities
    
    
    (708,729
    )
    
    
    525,207
    
    
    
    (1,577,042
    )
    
    
    (1,894,612
    )
    
    
    (551,987
    )Cash flows provided by (used in) financing activities
    
    
    528,600
    
    
    
    (714,684
    )
    
    
    1,324,285
    
    
    
    1,876,478
    
    
    
    479,269Cash distributions declared (1)
    
    
    154,704
    
    
    
    168,132
    
    
    
    218,343
    
    
    
    129,961
    
    
    
    74,217(Loss) income from continuing operations per share
(2):Basic
    
    
    (1.08
    )
    
    
    (0.45
    )
    
    
    (0.82
    )
    
    
    (0.33
    )
    
    
    0.00Diluted
    
    
    (1.08
    )
    
    
    (0.45
    )
    
    
    (0.82
    )
    
    
    (0.33
    )
    
    
    0.00Income from discontinued operations per share (2):Basic
    
    
    1.06
    
    
    
    0.50
    
    
    
    0.23
    
    
    
    0.40
    
    
    
    0.32Diluted
    
    
    1.06
    
    
    
    0.50
    
    
    
    0.23
    
    
    
    0.40
    
    
    
    0.32(Loss) earnings per share (2):Basic
    
    
    (0.02
    )
    
    
    0.05
    
    
    
    (0.59
    )
    
    
    0.07
    
    
    
    0.32Diluted (3)
    
    
    (0.02
    )
    
    
    0.05
    
    
    
    (0.59
    )
    
    
    0.07
    
    
    
    0.32Cash distributions declared per share (2)
    
    
    1.00
    
    
    
    1.10
    
    
    
    1.49
    
    
    
    1.55
    
    
    
    1.55Weighted average number of shares outstanding (2):Basic
    
    
    154,806
    
    
    
    152,874
    
    
    
    148,059
    
    
    
    86,225
    
    
    
    48,937Diluted (3)
    
    
    154,806
    
    
    
    152,874
    
    
    
    148,059
    
    
    
    86,225
    
    
    
    48,937At December 31:Total assets
    
    $
    6,321,748
    
    
    $
    5,688,782
    
    
    $
    6,317,045
    
    
    $
    3,876,978
    
    
    $
    1,565,432Mortgages payable
    
    
    3,661,766
    
    
    
    2,583,734
    
    
    
    2,862,683
    
    
    
    1,255,650
    
    
    
    434,302Total stockholders equity
    
    
    1,987,711
    
    
    
    2,061,373
    
    
    
    2,209,955
    
    
    
    1,940,741
    
    
    
    1,014,323Other data:Funds from operations (4)
    
    
    132,188
    
    
    
    90,462
    
    
    
    88,416
    
    
    
    90,594
    
    
    
    59,475EBITDA (5)
    
    
    258,057
    
    
    
    271,206
    
    
    
    173,582
    
    
    
    84,535
    
    
    
    47,527
 
 (1)
    
    Cash distributions, which are included as a component of cash flows from financing
activities, are declared by 35




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our Board 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.(3)
    
    For the year ended December 31, 2006, the potential dilution from the Companys outstanding
common stock equivalents was anti-dilutive to the loss from continuing operations per share
calculation, and consequently the Company excluded 0.4 million deferred shares from the
computation of diluted earnings per share.(4)
    
    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, except for the add back of the
advisor acquisition expense, which represents the consideration paid to acquire the Former
Advisor, of $84.8 million for the year ended December 31, 2006, 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 revenues 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. 36




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##### Table of Contents



Years Ended December 31,2006
(a)(c)
    
    
    2005 (a) (b) (c)
    
    
    2004 (a) (d)
    
    
    2003
    
    
    2002Net (loss) income
    
    $
    (3,335
    )
    
    $
    6,900
    
    
    $
    (87,113
    )
    
    $
    5,993
    
    
    $
    15,810Adjustments:Effect of depreciation of
real estate assets of
unconsolidated entities
    
    
    3,514
    
    
    
    12,682
    
    
    
    14,223
    
    
    
    14,117
    
    
    
    6,496Effect of depreciation of real
estate assets of minority
interests
    
    
    (10,496
    )
    
    
    (12,408
    )
    
    
    (12,263
    )
    
    
    (6,230
    )
    
    
    (2,624
    )Depreciation and amortization of
real estate assets
    
    
    211,254
    
    
    
    197,043
    
    
    
    174,214
    
    
    
    76,714
    
    
    
    36,217Gain on sale of real estate assets
    
    
    (153,523
    )
    
    
    (113,755
    )
    
    
    (645
    )
    
    
    
    
    
    
    Advisor acquisition expense
    
    
    84,774
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Effect of assumption of liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,576FFO
    
    $
    132,188
    
    
    $
    90,462
    
    
    $
    88,416
    
    
    $
    90,594
    
    
    $
    59,475Weighted average shares (e):Basic (e)
    
    
    154,806
    
    
    
    152,874
    
    
    
    148,059
    
    
    
    86,225
    
    
    
    48,937Diluted (e)
    
    
    154,806
    
    
    
    152,874
    
    
    
    148,059
    
    
    
    86,225
    
    
    
    48,937FFO per share (e):Basic (e)
    
    $
    0.85
    
    
    $
    0.59
    
    
    $
    0.60
    
    
    $
    1.05
    
    
    $
    1.22Diluted (e)
    
    $
    0.85
    
    
    $
    0.59
    
    
    $
    0.60
    
    
    $
    1.05
    
    
    $
    1.22
 
 (a)
    
    Results of operations and therefore FFO for the years ended December 31, 2006, 2005 and 2004, do not include
$17.8 million, $15.6 million and $16.6 million, respectively, in net membership cash flows and include approximately
$33.6 million, $15.7 million and $17.9 million of loss on extinguishment of debt, and $0.5 million, $1.4 million and
$11.5 million of transaction costs, respectively.(b)
    
    FFO 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 $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 the Former
Advisor; and(iv)
    
    Loss of $1.1 million on the termination of hedges.
 (c)
    
    Gain on sale of real estate assets includes a $132.4 million gain in 2006 in connection with the sale of our interest in
the Hotel Del Coronado and a $46.4 million gain in 2005 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 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; 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 that occurred on August 2, 2004.
 
 37




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(5)
    
    EBITDAEarnings 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.
  YearsEnded December 31,2006(a) (b)
    
    
    2005(a)(c)
    
    
    2004(a)(d)
    
    
    2003
    
    
    2002(Loss) income from continuing operations
    
    $
    (167,838
    )
    
    $
    (69,110
    )
    
    $
    (121,412
    )
    
    $
    (23,578
    )
    
    $
    42Adjustments:Interest and loan cost amortization
    
    
    220,632
    
    
    
    180,369
    
    
    
    140,876
    
    
    
    53,736
    
    
    
    21,867Income tax expense (benefit)
    
    
    621
    
    
    
    (2,979
    )
    
    
    27,429
    
    
    
    388
    
    
    
    Depreciation and amortization
    
    
    204,642
    
    
    
    162,926
    
    
    
    126,689
    
    
    
    53,989
    
    
    
    25,618EBITDA
    
    $
    258,057
    
    
    $
    271,206
    
    
    $
    173,582
    
    
    $
    84,535
    
    
    $
    47,527
 
 (a)
    
    Results of operations and therefore EBITDA for the years ended December 31, 2006, 2005 and 2004 do not include
$17.8 million, $15.6 million and $16.6 million, respectively, in net membership cash flows.(b)
    
    EBITDA for the year ended December 31, 2006 does not exclude the following revenues and expenses: (i)
    
    Loss of $29.3 million from the extinguishment of debt;(ii)
    
    Transaction costs of $0.4 million; and(iii)
    
    Advisor acquisition expense of $84.8 million, which represents the charge reflective of the value
of all stock consideration paid to acquire the Former Advisor.
 (c)
    
    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 the Former Advisor;(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 $5.2 million.
 (d)
    
    EBITDA for the year ended December 31, 2004 does not exclude the following revenues and expenses:
 38




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(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 $3.0
million; and(v)
    
    Gain of $3.5 million on the termination of hedges.
 39




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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
   40




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Overview
    Strategy
   41




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Industry Overview and Outlook
  42




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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
  43




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##### Table of Contents




    
    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.
 44




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##### Table of Contents




    
    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) a controlling interest in accordance with the provisions of Statement of Position
78-9 Accounting for Investments in Real Estate Ventures (SOP 78-9), (b) is the primary
beneficiary as defined in Financial Accounting Standards Board (FASB) Interpretation No. 46
(revised December 2003), Consolidation of Variable Interest Entities (FIN 46) or (c) satisfies
the requirements of Emerging Issues Task Force (EITF) Issue No. 04-5, Determining Whether a
General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar
Entity When the Limited Partners Have Certain Rights (EITF 04-5). 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, has less than a
controlling interest due to the significance of rights and obligations held by other parties under
SOP 78-9 or the limited partners have the ability to dissolve or liquidate the partnership or
otherwise remove the general partner or have substantive rights under EITF 04-5.
    
    Valuation of Deferred Tax Assets.We account for federal and state income taxes with
respect to our TRS Lessees 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.
 45




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Impact of Recent Accounting Pronouncements
 Employers Accounting for Defined Benefit Pension and Other Postretirement Plans, an
amendment of FASB Statements No. 87, 88, 106, and 132R
 Fair Value Measurements
 Accounting for Uncertainty in
Income Taxes Accounting
for Income Taxes. Accounting for Contingencies.
 Accounting for Certain Hybrid Financial
Instruments  an amendment of FASB Statements No. 133 and 140
 46




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Results of Operations
 Factors Affecting Comparability
         47




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48




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Comparison of the year ended December 31, 2006 with the year ended December 31, 2005
 Year Ended December 31,2006
    
    
    2005
    
    
    Change
    
    
    % Change(dollars in thousands)Hotel and Resort RevenuesRoom
    
    $
    843,866
    
    
    $
    692,355
    
    
    $
    151,511
    
    
    
    21.9
    %Food and beverage
    
    
    453,361
    
    
    
    328,493
    
    
    
    124,868
    
    
    
    38.0Other hotel and resort operating
departments
    
    
    233,870
    
    
    
    186,880
    
    
    
    46,990
    
    
    
    25.1Hotel and Resort Revenues
    
    
    1,531,097
    
    
    
    1,207,728
    
    
    
    323,369
    
    
    
    26.8Hotel and Resort Expenses
    
    
    (1,115,577
    )
    
    
    (875,811
    )
    
    
    239,766
    
    
    
    27.4Gross margin
    
    $
    415,520
    
    
    $
    331,917
    
    
    $
    83,603
    
    
    
    25.2Gross margin percentage
    
    
    27.1
    %
    
    
    27.5
    %
    
    
    (0.4
    ) ppt
    
    
    (1.5
    )Other RevenuesRental income from operating leases
    
    $
    6,500
    
    
    $
    7,074
    
    
    $
    (574
    )
    
    
    (8.1
    )%Other income
    
    
    2,931
    
    
    
    1,987
    
    
    
    944
    
    
    
    47.5Other Income (Expenses)Interest income
    
    
    4,234
    
    
    
    4,077
    
    
    
    157
    
    
    
    3.9Interest and loan cost amortization
    
    
    (220,632
    )
    
    
    (180,369
    )
    
    
    40,263
    
    
    
    22.3Loss on termination of hedge
    
    
    
    
    
    
    (1,139
    )
    
    
    n/a
    
    
    
    n/aTransaction costs
    
    
    (355
    )
    
    
    (1,371
    )
    
    
    (1,016
    )
    
    
    (74.1
    )Advisor acquisition expense
    
    
    (84,774
    )
    
    
    (4,087
    )
    
    
    80,687
    
    
    
    1,974.2Loss on extinguishment of debt
    
    
    (29,331
    )
    
    
    (2,190
    )
    
    
    27,141
    
    
    
    1,239.3Credit enhancement funding
    
    
    4,190
    
    
    
    2,057
    
    
    
    2,133
    
    
    
    103.7General and administrative
    
    
    (46,023
    )
    
    
    (26,031
    )
    
    
    19,992
    
    
    
    76.8Litigation settlement
    
    
    6,200
    
    
    
    (34,151
    )
    
    
    40,351
    
    
    
    118.2State and local taxes
    
    
    (7,546
    )
    
    
    (6,654
    )
    
    
    892
    
    
    
    13.4Asset mgmt. fees to related party
    
    
    (13,728
    )
    
    
    (27,868
    )
    
    
    (14,140
    )
    
    
    (50.7
    )Depreciation and amortization
    
    
    (204,642
    )
    
    
    (162,926
    )
    
    
    41,716
    
    
    
    25.6
 Hotel and Resort Revenues
   49




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##### Table of Contents



Other Revenues
   Hotel and Resort Expenses
 Year Ended December 31,2006 % of
    
    
    
    
    
    
    2005 % ofHotel and
    
    
    
    
    
    
    Hotel andResort
    
    
    
    
    
    
    Resort2006
    
    
    Revenues
    
    
    2005
    
    
    Revenues(dollars in thousands)Hotel and Resort Expenses:Room
    
    $
    198,072
    
    
    
    12.9
    %
    
    $
    165,049
    
    
    
    13.7
    %Food and beverage
    
    
    299,426
    
    
    
    19.6
    
    
    
    224,129
    
    
    
    18.6Other hotel and resort operating departments
    
    
    133,730
    
    
    
    8.7
    
    
    
    111,949
    
    
    
    9.3Property operations
    
    
    270,227
    
    
    
    17.6
    
    
    
    215,267
    
    
    
    17.8Repairs and maintenance
    
    
    63,982
    
    
    
    4.2
    
    
    
    50,624
    
    
    
    4.2Hotel and resort management fees
    
    
    56,278
    
    
    
    3.7
    
    
    
    37,588
    
    
    
    3.1Sales and marketing
    
    
    93,862
    
    
    
    6.1
    
    
    
    71,205
    
    
    
    5.8Total hotel and resort expenses
    
    $
    1,115,577
    
    
    
    72.8
    %
    
    $
    875,811
    
    
    
    72.5
    %
  Other Income and Expenses
   50




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Litigation Settlement
  51




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##### Table of Contents



Loss on Extinguishment of Debt
  Termination of Hedges
  Equity in Earnings of Unconsolidated Entities
   Increase(decrease)in equity inEntity
    
    2006
    
    
    2005
    
    
    earnings (losses)WB Resort Partners, LP
    
    $
    
    
    
    $
    43,053
    
    
    $
    (43,053
    )Desert Ridge Resort Partners, LLC
    
    
    2,955
    
    
    
    (9,070
    )
    
    
    12,025CY-SF Hotel Parent, LP
    
    
    (639
    )
    
    
    (1,246
    )
    
    
    607Other Joint Ventures
    
    
    4,284
    
    
    
    38
    
    
    
    (109
    )Total
    
    $
    6,600
    
    
    $
    32,775
    
    
    $
    (26,175
    )
 Minority Interests
  Income Taxes
  52




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Discontinued Operations and Dispositions
      53




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##### Table of Contents



YearEnded December 31,2006
    
    
    2005Revenues
    
    $
    135,831
    
    
    $
    354,359Income from lease termination
    
    
    
    
    
    
    5,982Expenses
    
    
    (94,873
    )
    
    
    (237,190
    )Depreciation and amortization
    
    
    (15,544
    )
    
    
    (43,973
    )Write-down of assets
    
    
    
    
    
    
    (345
    )Interest and loan cost amortization
    
    
    (11,737
    )
    
    
    (50,331
    )Income from discontinued operations
    
    
    13,677
    
    
    
    28,502Gain on sale of assets
    
    
    153,523
    
    
    
    67,321Gain on hedge termination
    
    
    946
    
    
    
    Transaction costs
    
    
    (171
    )
    
    
    Loss on extinguishment of debt
    
    
    (4,296
    )
    
    
    (13,469
    )Minority interests
    
    
    570
    
    
    
    (2,008
    )Income tax (expense) benefit
    
    
    254
    
    
    
    (4,336
    )$
    164,503
    
    
    $
    76,010
  (Loss) Earnings Per Share
  54




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##### Table of Contents



Comparison of the year ended December 31, 2005 with the year ended December 31, 2004
 Year Ended December 31,2005
    
    
    2004
    
    
    Change
    
    
    % Change(dollars in thousands)Hotel and Resort Revenues
    
    $
    692,355
    
    
    $
    537,234
    
    
    $
    155,121
    
    
    
    28.9
    %RoomFood and beverage
    
    
    328,493
    
    
    
    252,837
    
    
    
    75,656
    
    
    
    29.9Other hotel and resort operating
departments
    
    
    186,880
    
    
    
    134,854
    
    
    
    52,026
    
    
    
    38.6Hotel and Resort Revenues
    
    
    1,207,728
    
    
    
    924,925
    
    
    
    282,803
    
    
    
    30.6Hotel and Resort Expenses
    
    
    (875,811
    )
    
    
    (700,755
    )
    
    
    175,056
    
    
    
    25.0Gross margin
    
    $
    331,917
    
    
    $
    224,170
    
    
    $
    107,747
    
    
    
    48.1Gross margin percentage
    
    
    27.5
    %
    
    
    24.2
    %
    
    3.3 ppt
    
    
    
    13.6Other Revenues
    
    $
    7,074
    
    
    $
    15,920
    
    
    $
    (8,846
    )
    
    
    (55.6
    )%Rental
income from operating leasesOther income
    
    
    1,987
    
    
    
    3,100
    
    
    
    (1,113
    )
    
    
    (35.9
    )Other Income (Expenses)
    
    
    4,077
    
    
    
    2,512
    
    
    
    1,565
    
    
    
    62.3Interest IncomeInterest and loan cost amortization
    
    
    (180,369
    )
    
    
    (140,876
    )
    
    
    39,493
    
    
    
    28.0Gain on sale of common stock
    
    
    
    
    
    
    9,268
    
    
    
    9,268
    
    
    
    n/aImpairment of equity method investment
    
    
    
    
    
    
    (1,275
    )
    
    
    1,275
    
    
    
    n/a(Loss) gain on termination of hedge
    
    
    (1,139
    )
    
    
    3,511
    
    
    
    4,650
    
    
    
    132.4Transaction costs
    
    
    (1,371
    )
    
    
    (11,521
    )
    
    
    (10,150
    )
    
    
    (88.1
    )Advisor acquisition expense
    
    
    (4,087
    )
    
    
    
    
    
    
    (4,087
    )
    
    
    n/aLoss on extinguishment of debt
    
    
    (2,190
    )
    
    
    (17,877
    )
    
    
    (15,687
    )
    
    
    (87.7
    )Credit enhancement funding
    
    
    2,057
    
    
    
    23,006
    
    
    
    (20,949
    )
    
    
    91.1General and administrative
    
    
    (26,031
    )
    
    
    (23,663
    )
    
    
    2,368
    
    
    
    10.0Litigation settlement
    
    
    (34,151
    )
    
    
    
    
    
    
    (34,151
    )
    
    
    n/aState and local taxes
    
    
    (6,654
    )
    
    
    (5,617
    )
    
    
    1,037
    
    
    
    18.5Asset mgmt. fees to related party
    
    
    (27,868
    )
    
    
    (26,505
    )
    
    
    1,363
    
    
    
    5.1Depreciation and amortization
    
    
    (162,926
    )
    
    
    (126,689
    )
    
    
    36,237
    
    
    
    28.6
 Hotel and Resort Revenues
   55




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Other Revenues
   `
 56




---



##### Table of Contents



Hotel and Resort Expenses
 Year Ended December 31,2005 % of
    
    
    
    
    
    
    2004 % ofHotel and
    
    
    
    
    
    
    Hotel andResort
    
    
    
    
    
    
    Resort2005
    
    
    Revenues
    
    
    2004
    
    
    Revenues(dollars in thousands)Hotel and Resort Expenses:Room
    
    $
    165,049
    
    
    
    13.7
    %
    
    $
    130,891
    
    
    
    14.2
    %Food and beverage
    
    
    224,129
    
    
    
    18.6
    
    
    
    183,859
    
    
    
    19.9Other hotel and resort operating departments
    
    
    111,949
    
    
    
    9.3
    
    
    
    84,279
    
    
    
    9.1Property operations
    
    
    215,267
    
    
    
    17.8
    
    
    
    178,894
    
    
    
    19.3Repairs and maintenance
    
    
    50,624
    
    
    
    4.2
    
    
    
    40,561
    
    
    
    4.4Hotel and resort management fees
    
    
    37,588
    
    
    
    3.1
    
    
    
    23,742
    
    
    
    2.6Sales and marketing
    
    
    71,205
    
    
    
    5.8
    
    
    
    58,529
    
    
    
    6.3Total hotel and resort expenses
    
    $
    875,811
    
    
    
    72.5
    %
    
    $
    700,755
    
    
    
    75.8
    %
  Other Income and Expenses
    57




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##### Table of Contents



Litigation Settlement
  Transaction Costs
   Extinguishment of Debt
   Termination of Hedges
  58




---



##### Table of Contents



Gain on Sale of Common Stock
  Impairment of Equity Method Investment
  Equity in Earnings (Losses) of Unconsolidated Entities
  59




---



##### Table of Contents



Increase(decrease)in equity inEntity
    
    2005
    
    
    2004
    
    
    earnings (losses)WB 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
 Minority Interests
  Income Taxes
   Discontinued Operations
    60




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##### Table of Contents



YearEnded December 31,2005
    
    
    2004Revenues
    
    $
    354,359
    
    
    $
    406,007Income from lease termination
    
    
    5,982
    
    
    
    Expenses
    
    
    (237,190
    )
    
    
    (267,902
    )Depreciation and amortization
    
    
    (43,973
    )
    
    
    (54,720
    )Write-down of assets
    
    
    (345
    )
    
    
    (5,920
    )Interest and loan cost amortization
    
    
    (50,331
    )
    
    
    (37,277
    )Income from discontinued operations
    
    
    28,502
    
    
    
    40,188Gain on sale of assets
    
    
    67,321
    
    
    
    645Loss on extinguishment of debt
    
    
    (13,469
    )
    
    
    Minority interests
    
    
    (2,008
    )
    
    
    (5,424
    )Income tax expense
    
    
    (4,336
    )
    
    
    (1,110
    )$
    76,010
    
    
    $
    34,299
  61




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##### Table of Contents



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.
 Hotel and Resort Operating Statistics
  Industry Segment and Brand Affiliation
    
    Properties
    
    RoomsLuxuryIndependent
    
    
    1
    
    
    
    279The Ritz-Carlton
    
    
    1
    
    
    
    584The Waldorf=Astoria Collection
    
    
    3
    
    
    
    2,0035
    
    
    
    2,866Upper UpscaleDoubleTree
    
    
    1
    
    
    
    631Embassy Suites
    
    
    4
    
    
    
    974Hilton
    
    
    9
    
    
    
    3,727Hyatt
    
    
    3
    
    
    
    1,621JW Marriott
    
    
    3
    
    
    
    2,442Marriott
    
    
    6
    
    
    
    2,377Renaissance
    
    
    1
    
    
    
    29327
    
    
    
    12,065UpscaleCourtyard
    
    
    11
    
    
    
    2,606Residence Inn
    
    
    9
    
    
    
    1,467SpringHill Suites
    
    
    4
    
    
    
    89924
    
    
    
    4,972MidscaleFairfield Inn
    
    
    1
    
    
    
    388Hampton Inn
    
    
    1
    
    
    
    176TownePlace Suites
    
    
    1
    
    
    
    1443
    
    
    
    708Total
    
    
    59
    
    
    
    20,611
 62




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##### Table of Contents



Property Operating DataAll Properties
Continuing Operations (1)
For the Year Ended December 31, 2006
 Hotels
    
    
    Occupancy
    
    
    ADR
    
    
    RevPARConsolidated TRS (1)Luxury and Upper Upscale
    
    
    32
    
    
    
    71.2
    %
    
    $
    186.03
    
    
    $
    132.50Upscale
    
    
    23
    
    
    
    75.3
    
    
    
    118.56
    
    
    
    89.33Midscale
    
    
    3
    
    
    
    78.4
    
    
    
    86.91
    
    
    
    68.10Total Consolidated TRS
    
    
    58
    
    
    
    72.4
    %
    
    $
    166.72
    
    
    $
    120.68Triple Net Lease (2)
    
    
    1
    
    
    
    77.2
    
    
    
    140.92
    
    
    
    108.72Total
    
    
    59
    
    
    
    72.5
    %
    
    $
    166.06
    
    
    $
    120.39
 
 (1)
    
    The operating results for three of the Consolidated TRS
properties in the luxury and upper upscale classification are now
reported utilizing Hiltons classification as a result of the change
in management and brand to The Waldorf=Astoria Collection, resulting
in slight variances in reporting formats.(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. 63




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##### Table of Contents



Property Operating DataComparable Properties
Continuing Operations
For the Year Ended December 31, 2006
 Var. (ppt.)
    
    
    
    
    
    
    Var. (%)
    
    
    
    
    
    
    Var. (%)Hotels
    
    
    Occupancy
    
    
    To 2005
    
    
    ADR
    
    
    To 2005
    
    
    RevPAR
    
    
    to 2005Consolidated TRS (1)Luxury and Upper Upscale
    
    
    28
    
    
    
    72.2
    %
    
    
    (0.4
    )
    
    $
    185.63
    
    
    
    8.1
    %
    
    $
    134.05
    
    
    
    7.6
    %Upscale
    
    
    23
    
    
    
    75.3
    
    
    
    (2.3
    )
    
    
    118.56
    
    
    
    11.9
    
    
    
    89.33
    
    
    
    8.6Midscale
    
    
    3
    
    
    
    78.4
    
    
    
    (0.3
    )
    
    
    86.91
    
    
    
    10.4
    
    
    
    68.10
    
    
    
    10.0Total Consolidated
    
    
    54
    
    
    
    73.2
    %
    
    
    (0.8
    )
    
    $
    164.05
    
    
    
    9.0
    %
    
    $
    120.16
    
    
    
    7.8
    %Triple Net Lease (2)
    
    
    1
    
    
    
    77.2
    
    
    
    1.8
    
    
    
    140.92
    
    
    
    5.5
    
    
    
    108.72
    
    
    
    8.0Total
    
    
    55
    
    
    
    73.4
    %
    
    
    (0.8
    )
    
    $
    163.38
    
    
    
    8.9
    %
    
    $
    119.85
    
    
    
    7.8
    %
 
 (1)
    
    The operating results for three of the Consolidated TRS
properties in the luxury and upper upscale classification are now
reported utilizing Hiltons classification as a result of the
change in management and brand to The Waldorf=Astoria Collection,
resulting in slight variances in reporting formats.(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.      64




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##### Table of Contents



Property Operating DataAdjusted Comparable Properties
Continuing Operations
For the Year Ended December 31, 2006
 Var. (ppt.)
    
    
    
    
    
    
    Var. (%)
    
    
    
    
    
    
    Var. (%)Hotels
    
    
    Occupancy
    
    
    To 2005
    
    
    ADR
    
    
    To 2005
    
    
    RevPAR
    
    
    to 2005Consolidated TRS (1)Luxury and Upper Upscale
    
    
    30
    
    
    
    71.8
    %
    
    
    (0.4
    )
    
    $
    190.27
    
    
    
    7.5
    %
    
    $
    136.56
    
    
    
    6.9
    %Upscale
    
    
    23
    
    
    
    75.3
    
    
    
    (2.3
    )
    
    
    118.56
    
    
    
    11.9
    
    
    
    89.33
    
    
    
    8.6Midscale
    
    
    3
    
    
    
    78.4
    
    
    
    (0.3
    )
    
    
    86.91
    
    
    
    10.4
    
    
    
    68.10
    
    
    
    10.0Total Consolidated
    
    
    56
    
    
    
    72.8
    %
    
    
    (0.8
    )
    
    $
    169.04
    
    
    
    8.5
    %
    
    $
    123.13
    
    
    
    7.3
    %Triple Net Lease (2)
    
    
    1
    
    
    
    77.2
    
    
    
    1.8
    
    
    
    140.92
    
    
    
    5.5
    
    
    
    108.72
    
    
    
    8.0Total
    
    
    57
    
    
    
    72.9
    %
    
    
    (0.7
    )
    
    $
    168.29
    
    
    
    8.4
    %
    
    $
    122.76
    
    
    
    7.3
    %
 
 (1)
    
    The operating results for three of the Consolidated TRS
properties in the luxury and upper upscale classification are now
reported utilizing Hiltons classification as a result of the change
in management and brand to The Waldorf=Astoria Collection, resulting
in slight variances in reporting formats.(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. 65




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##### Table of Contents



Property RevPAR Data  Adjusted Comparable Properties  Quarter by Quarter
Continuing Operations
For the Year Ended December 31, 2006
 First
    
    
    Second
    
    
    Third
    
    
    Fourth
    
    
    YearVar.
    
    
    
    
    
    
    Var.
    
    
    
    
    
    
    Var.
    
    
    
    
    
    
    Var.
    
    
    
    
    
    
    Var.(%)
    
    
    
    
    
    
    (%)
    
    
    
    
    
    
    (%)
    
    
    
    
    
    
    (%)
    
    
    
    
    
    
    (%)Hotels
    
    
    RevPAR
    
    
    To 2005
    
    
    RevPAR
    
    
    to 2005
    
    
    RevPAR
    
    
    to 2005
    
    
    RevPAR
    
    
    to 2005
    
    
    RevPAR
    
    
    to 2005Consolidated TRS (1)Luxury and Upper Upscale
    
    
    30
    
    
    $
    158.04
    
    
    
    5.9
    %
    
    $
    145.74
    
    
    
    10.9
    %
    
    $
    116.48
    
    
    
    5.3
    %
    
    $
    127.39
    
    
    
    5.5
    %
    
    $
    136.56
    
    
    
    6.9
    %Upscale
    
    
    23
    
    
    
    92.05
    
    
    
    13.3
    
    
    
    93.87
    
    
    
    10.6
    
    
    
    87.49
    
    
    
    7.9
    
    
    
    85.16
    
    
    
    4.0
    
    
    
    89.33
    
    
    
    8.6Midscale
    
    
    3
    
    
    
    74.47
    
    
    
    7.1
    
    
    
    75.03
    
    
    
    25.0
    
    
    
    68.12
    
    
    
    13.0
    
    
    
    57.43
    
    
    
    (2.1
    )
    
    
    68.10
    
    
    
    10.0Total Consolidated
    
    
    56
    
    
    $
    140.17
    
    
    
    7.0
    %
    
    $
    131.56
    
    
    
    11.1
    %
    
    $
    108.27
    
    
    
    5.9
    %
    
    $
    114.17
    
    
    
    5.1
    %
    
    $
    123.13
    
    
    
    7.3
    %Triple Net Lease (2)
    
    
    1
    
    
    
    90.75
    
    
    
    11.4
    
    
    
    118.07
    
    
    
    3.6
    
    
    
    108.05
    
    
    
    8.5
    
    
    
    115.69
    
    
    
    9.4
    
    
    
    108.72
    
    
    
    8.0Total
    
    
    57
    
    
    $
    138.97
    
    
    
    7.0
    %
    
    $
    131.24
    
    
    
    10.9
    %
    
    $
    108.27
    
    
    
    6.0
    %
    
    $
    114.21
    
    
    
    5.2
    %
    
    $
    122.76
    
    
    
    7.3
    %
 
 (1)
    
    The operating results for three of the Consolidated TRS
properties in the luxury and upper upscale classification are now
reported utilizing Hiltons classification as a result of the change
in management and brand to The Waldorf=Astoria Collection, resulting
in slight variances in reporting formats.(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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Other Information
 Credit Enhancements
  ,
  Liquidity and Capital Resources
   67




---



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Sources of Liquidity and Capital Resources
  Common Stock Offerings and Debt Financing
       68




---



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69




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##### Table of Contents



2006
    
    
    2005Mortgages payable
    
    $
    3,632,007
    
    
    $
    2,564,359Tax incremental financing note
    
    
    7,783
    
    
    
    7,783Indebtedness collateralized by Properties
    
    
    3,639,790
    
    
    
    2,572,142Unsecured notes
    
    
    21,976
    
    
    
    11,592$
    3,661,766
    
    
    $
    2,583,734
    Credit Enhancements
  70




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##### Table of Contents



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
     71




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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;
    
    Existing development and/or renovation activities;
    
    Recurring repairs and maintenance expenditures required to maintain our
Properties;
    
    Refunding membership deposits;
    
    Payment of legal fees, settlement payments under the Stipulation (as defined and
described in the section, Commitments and Contingencies) and other costs in
connection with the Class Action Lawsuit and D&O insurance carriers litigation
(see Commitments and Contingencies) and other proceedings, whether incurred in
the ordinary course of business or otherwise;
    
    Acquisitions of Properties (if the CHR Sale Transaction is not completed);
    
    Other Property related costs, including property insurance and taxes;
    
    Payments on the Promissory Note (see Additional Information  Related Party
Transactions); and
    
    Distributions paid to our stockholders pursuant to our distribution policy, which
have been suspended pending completion of the CHR Sale Transaction, 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;
    
    Proceeds from the sale of Properties;
    
    Proceeds from insurance providers; and
    
    Tax refunds.
   72




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
    
    Selective disposition of non-core assets or other assets, which, upon sale, generate net
positive cash flow after debt repayments;
    
    Selective sale or contribution of hotels or resorts to joint ventures, which have the net
effect of generating additional capital; and
    
    Issuance of additional equity and/or debt securities (other than in connection with the DRP).
  2006 Acquisitions
 Grande Lakes
  73




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ASSETSHotel and resort properties
    
    $
    762,154Cash and cash equivalents
    
    
    6,657Restricted cash
    
    
    5,504Prepaid expenses and other assets
    
    
    2,974Receivables
    
    
    5,211Total assets acquired
    
    
    782,500LIABILITIESAccounts payable and accrued expenses
    
    
    14,329Total liabilities assumed
    
    
    14,329Net assets acquired
    
    $
    768,171Net of cash
    
    $
    761,514
 CNL Hospitality Corp. Merger 
 ASSETSProperty, plant and equipment
    
    $
    4,866Prepaid expenses and other assets
    
    
    415Total assets acquired
    
    
    5,281LIABILITIESAccrued expenses
    
    
    3,245Other liabilities
    
    
    37Note payable
    
    
    7,625Total liabilities assumed
    
    
    10,907Net liabilities assumed
    
    $
    5,626
  Other acquisitions
  74




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2004 KSL Acquisition
   Distributions
     Cash Flows
    75




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Commitments and Contingencies
     76




---



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77




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th th
      78




---



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CNL Hospitality Corp. Merger and Other Matters
  Amended and Restated Advisor Merger Agreement
   79




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##### Table of Contents



Transition Services Agreement
  Brand License Agreement
  
    
    Mr. Seneff is involuntarily removed as a member of our Board by our stockholders
or the Board;
    
    we terminate the Tower II Lease (as defined below), provided that, if our
termination of the Tower II Lease is the result of a material breach by the other
party, and CFG or its affiliates terminate the Brand License Agreement, CFG is
obligated to pay us a $2 million termination fee;
    
    we are involved in certain extraordinary corporate transactions, such as a
merger, a dissolution, or sale of all or substantially all of our assets; or
    
    a majority of the Board are persons other than persons for whose election
proxies have been solicited by the Board.
 Registration Rights Agreement; Lock-Up Letters
  80




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Pledge and Security Agreement
  Tower II Lease
  Five Arrows Note
  CHP Note
  81




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Employment Agreements
   82




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Deferred Share Grants
  Number ofName
    
    Deferred SharesThomas J. Hutchison III
    
    
    850,500John A. Griswold
    
    
    662,900C. Brian Strickland
    
    
    465,000Barry A. N. Bloom
    
    
    175,000Greerson G. McMullen
    
    
    131,250
  Bonus Payments
  Events Subsequent to December 31, 2006
     83




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Off-Balance Sheet Arrangements
   Contractual Cash Obligations
  Less thanContractual Cash Obligations
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years*
    
    
    Thereafter
    
    
    TotalMortgages and other notes
payable (including the
revolving line of credit
and other liabilities)*
    
    $
    253,520
    
    
    $
    596,763
    
    
    $
    2,768,758
    
    
    $
    42,725
    
    
    $
    3,661,766Interest expense
    
    
    177,633
    
    
    
    422,719
    
    
    
    258,856
    
    
    
    2,594
    
    
    
    861,802Capital lease obligations
    
    
    1,535
    
    
    
    1,979
    
    
    
    467
    
    
    
    14
    
    
    
    3,995Capital expenditures
    
    
    118,318
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    118,318Payment Agreement**
    
    
    12,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,000Litigation settlement
    
    
    3,700
    
    
    
    31,300
    
    
    
    
    
    
    
    
    
    
    
    35,000$
    566,706
    
    
    $
    1,052,761
    
    
    $
    3,028,081
    
    
    $
    45,333
    
    
    $
    4,692,881
 
 *
    
    In January 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.**
    
    Remaining balance paid in January 2007. Additional Information
 Related Party Transactions
   84




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##### Table of Contents



2006
    
    
    2005CNL Securities Corp.:Selling commissions refund, net
    
    $
    (290
    )
    
    $
    (2,103
    )Marketing support fee and due diligence expense refund, net
    
    
    
    
    
    
    (394
    )(290
    )
    
    
    (2,497
    )The Former Advisor and its affiliates:Acquisition fees
    
    
    
    
    
    
    23,000Development fees
    
    
    856
    
    
    
    3,001Asset management fees
    
    
    13,728
    
    
    
    27,86814,584
    
    
    
    53,869$
    14,294
    
    
    $
    51,372
    2006
    
    
    2005
    
    
    2004Stock issuance costs
    
    $
    
    
    
    $
    
    
    
    $
    8,188General operating and administrative expenses
    
    
    2,504
    
    
    
    4,515
    
    
    
    4,328$
    2,504
    
    
    $
    4,515
    
    
    $
    12,516
   85




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86




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87




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##### Table of Contents



88




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##### Table of Contents



Item 7A. Quantitative and Qualitative Disclosures About Market Risk
  Expected Maturity Date2007
    
    2008
    
    2009*
    
    2010
    
    2011
    
    Thereafter
    
    Total
    
    Fair ValueDebt:Fixed rate
    
    $
    199,354
    
    
    $
    215,206
    
    
    $
    235,800
    
    
    $
    236,034
    
    
    $
    1,472,724
    
    
    $
    42,725
    
    
    $
    2,401,843
    
    
    $
    2,286,035Average interest
    
    
    6.96
    %
    
    
    6.38
    %
    
    
    6.21
    %
    
    
    6.72
    %
    
    
    5.65
    %
    
    
    9.07
    %Variable rate
    
    $
    54,166
    
    
    $
    108,000
    
    
    $
    37,757
    
    
    $
    300,000
    
    
    $
    760,000
    
    
    $
    
    
    
    $
    1,259,923
    
    
    $
    1,259,923Average interest
    
    
    9.57
    %
    
    
    7.57
    %
    
    
    7.00
    %
    
    
    6.75
    %
    
    
    7.57
    %
    
    
    n/aTotal debt
    
    $
    253,520
    
    
    $
    323,206
    
    
    $
    273,557
    
    
    $
    536,034
    
    
    $
    2,232,724
    
    
    $
    42,725
    
    
    $
    3,661,766
 
 *
    
    In January 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.    89




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Item 8. Financial Statements and Supplementary Data
 
 CONTENTS
 PageReport of Independent Registered Certified Public Accounting Firm
    
    
    91Financial Statements:Consolidated Balance Sheets
    
    
    92Consolidated Statements of Operations
    
    
    93Consolidated Statements of Stockholders Equity and Other Comprehensive Income (Loss)
    
    
    94Consolidated Statements of Cash Flows
    
    
    97Notes to Consolidated Financial Statements
    
    
    102
 90




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Report of Independent Registered Certified Public Accounting Firm
  
 /s/ PricewaterhouseCoopers LLP
 91




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##### Table of Contents



December 31,2006
    
    
    2005ASSETSHotel and resort properties, net
    
    $
    4,662,837
    
    
    $
    3,571,733Assets held for sale
    
    
    369,936
    
    
    
    855,214Cash and cash equivalents
    
    
    122,463
    
    
    
    81,656Restricted cash
    
    
    97,316
    
    
    
    113,923Receivables, less allowance for doubtful accounts of $2,908 and $1,919, respectively
    
    
    133,511
    
    
    
    88,334Goodwill
    
    
    511,004
    
    
    
    509,174Intangible assets, less accumulated amortization of $27,185 and $17,449, respectively
    
    
    327,087
    
    
    
    336,723Prepaid expenses and other assets
    
    
    78,592
    
    
    
    102,773Loan costs, less accumulated amortization of $32,361 and $38,951, respectively
    
    
    19,002
    
    
    
    29,252Total assets
    
    $
    6,321,748
    
    
    $
    5,688,782LIABILITIES AND STOCKHOLDERS EQUITYMortgages and other notes payable
    
    $
    3,661,766
    
    
    $
    2,583,734Liabilities associated with assets held for sale
    
    
    
    
    
    
    436,557Accounts payable and accrued expenses
    
    
    232,858
    
    
    
    174,529Accrued litigation settlement
    
    
    31,230
    
    
    
    34,151Other liabilities
    
    
    28,667
    
    
    
    24,169Distributions and losses in excess of investments in unconsolidated entities
    
    
    
    
    
    
    2,600Due to related parties
    
    
    12,660
    
    
    
    27,000Membership deposits
    
    
    247,264
    
    
    
    229,809Total liabilities
    
    
    4,214,445
    
    
    
    3,512,549Commitments and contingenciesMinority interests
    
    
    119,592
    
    
    
    114,860Stockholders equity:Preferred stock, without par value.Authorized and unissued 75,000 shares
    
    
    
    
    
    
    Excess shares, $.01 par value per share.Authorized and unissued 600,000 shares
    
    
    
    
    
    
    Common stock, $.01 par value per share.Authorized
3,000,000 shares; issued 164,311
And 158,417 shares, respectively; outstanding
157,116 and 152,882 shares, respectively
    
    
    1,572
    
    
    
    1,530Capital in excess of par value
    
    
    2,829,304
    
    
    
    2,743,073Accumulated distributions in excess of net income
    
    
    (847,061
    )
    
    
    (689,022
    )Accumulated other comprehensive income
    
    
    3,896
    
    
    
    5,792Total stockholders equity
    
    
    1,987,711
    
    
    
    2,061,373Total liabilities and stockholders equity
    
    $
    6,321,748
    
    
    $
    5,688,782
  92




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##### Table of Contents



Year Ended December 31,2006
    
    
    2005
    
    
    2004Revenues:Room
    
    $
    843,866
    
    
    $
    692,355
    
    
    $
    537,234Food and beverage
    
    
    453,361
    
    
    
    328,493
    
    
    
    252,837Other hotel and resort operating departments
    
    
    233,870
    
    
    
    186,880
    
    
    
    134,854Rental income from operating leases
    
    
    6,500
    
    
    
    7,074
    
    
    
    15,920Other income
    
    
    2,931
    
    
    
    1,987
    
    
    
    3,1001,540,528
    
    
    
    1,216,789
    
    
    
    943,945Expenses:Room
    
    
    198,072
    
    
    
    165,049
    
    
    
    130,891Food and beverage
    
    
    299,426
    
    
    
    224,129
    
    
    
    183,859Other hotel and resort operating departments
    
    
    133,730
    
    
    
    111,949
    
    
    
    84,279Property operations
    
    
    270,227
    
    
    
    215,267
    
    
    
    178,894Repairs and maintenance
    
    
    63,982
    
    
    
    50,624
    
    
    
    40,561Hotel and resort management fees
    
    
    56,278
    
    
    
    37,588
    
    
    
    23,742Sales and marketing
    
    
    93,862
    
    
    
    71,205
    
    
    
    58,529Credit enhancement funding
    
    
    (4,190
    )
    
    
    (2,057
    )
    
    
    (23,006
    )General operating and administrative
    
    
    46,023
    
    
    
    26,031
    
    
    
    23,663Litigation settlement
    
    
    (6,200
    )
    
    
    34,151
    
    
    
    State and local taxes
    
    
    7,546
    
    
    
    6,654
    
    
    
    5,617Asset management fees to related party
    
    
    13,728
    
    
    
    27,868
    
    
    
    26,505Depreciation and amortization
    
    
    204,642
    
    
    
    162,926
    
    
    
    126,6891,377,126
    
    
    
    1,131,384
    
    
    
    860,223Operating profit
    
    
    163,402
    
    
    
    85,405
    
    
    
    83,722Interest income
    
    
    4,234
    
    
    
    4,077
    
    
    
    2,512Interest and loan cost amortization
    
    
    (220,632
    )
    
    
    (180,369
    )
    
    
    (140,876
    )Gain on sale of common stock
    
    
    
    
    
    
    
    
    
    
    9,268Impairment of equity method investment
    
    
    
    
    
    
    
    
    
    
    (1,275
    )(Loss) gain on hedge termination
    
    
    
    
    
    
    (1,139
    )
    
    
    3,511Transaction costs
    
    
    (355
    )
    
    
    (1,371
    )
    
    
    (11,521
    )Advisor acquisition expense
    
    
    (84,774
    )
    
    
    (4,087
    )
    
    
    Loss on extinguishment of debt
    
    
    (29,331
    )
    
    
    (2,190
    )
    
    
    (17,877
    )Loss before equity in losses of unconsolidated entities, minority
interests and (expense) benefit from income taxes
    
    
    (167,456
    )
    
    
    (99,674
    )
    
    
    (72,536
    )Equity in earnings (losses) of unconsolidated entities
    
    
    6,600
    
    
    
    32,775
    
    
    
    (18,469
    )Minority interests
    
    
    (6,361
    )
    
    
    (5,190
    )
    
    
    (2,978
    )Loss from continuing operations before (expense) benefit from income taxes
    
    
    (167,217
    )
    
    
    (72,089
    )
    
    
    (93,983
    )(Expense) benefit from income taxes
    
    
    (621
    )
    
    
    2,979
    
    
    
    (27,429
    )Loss from continuing operations
    
    
    (167,838
    )
    
    
    (69,110
    )
    
    
    (121,412
    )Income from discontinued operations
    
    
    164,503
    
    
    
    76,010
    
    
    
    34,299Net (loss) income
    
    $
    (3,335
    )
    
    $
    6,900
    
    
    $
    (87,113
    )(Loss) earnings per share of common stock:BasicContinuing operations
    
    $
    (1.08
    )
    
    $
    (0.45
    )
    
    $
    (0.82
    )Discontinued operations
    
    
    1.06
    
    
    
    0.50
    
    
    
    0.23$
    (0.02
    )
    
    $
    0.05
    
    
    $
    (0.59
    )DilutedContinuing operations
    
    $
    (1.08
    )
    
    $
    (0.45
    )
    
    $
    (0.82
    )Discontinued operations
    
    
    1.06
    
    
    
    0.50
    
    
    
    0.23$
    (0.02
    )
    
    $
    0.05
    
    
    $
    (0.59
    )Weighted average number of shares of common stock outstanding:Basic
    
    
    154,806
    
    
    
    152,874
    
    
    
    148,059Diluted
    
    
    154,806
    
    
    
    152,874
    
    
    
    148,059
  93




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Accumulated
    
    
    AccumulatedCommon Stock
    
    
    Capital in
    
    
    distributions in
    
    
    otherNumber
    
    
    
    
    
    
    excess of par
    
    
    excess of net
    
    
    comprehensive
    
    
    
    
    
    
    Comprehensiveof shares
    
    
    Par value
    
    
    value
    
    
    earnings (loss)
    
    
    income (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
  94




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Accumulated
    
    
    AccumulatedCommon Stock
    
    
    Capital in
    
    
    distributions in
    
    
    otherNumber
    
    
    
    
    
    
    excess of par
    
    
    excess of net
    
    
    comprehensive
    
    
    
    
    
    
    Comprehensiveof shares
    
    
    Par value
    
    
    value
    
    
    earnings (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
    
    
    $
    6,900
    )Current 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
  95




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##### Table of Contents



Accumulated
    
    
    AccumulatedCommon Stock
    
    
    Capital in
    
    
    distributions in
    
    
    otherNumber
    
    
    
    
    
    
    excess of par
    
    
    excess of net
    
    
    comprehensive
    
    
    
    
    
    
    Comprehensiveof shares
    
    
    Par value
    
    
    value
    
    
    earnings (loss)
    
    
    income (loss)
    
    
    Total
    
    
    income/(loss)Balance at December 31, 2005
    
    
    152,882
    
    
    $
    1,530
    
    
    $
    2,743,073
    
    
    $
    (689,022
    )
    
    $
    5,792
    
    
    $
    2,061,373Subscriptions received for common stock through
distribution reinvestment plan
    
    
    1,982
    
    
    
    20
    
    
    
    37,645
    
    
    
    
    
    
    
    
    
    
    
    37,665Issuance of common stock
(to Board of Directors)
    
    
    5
    
    
    
    
    
    
    
    80
    
    
    
    
    
    
    
    
    
    
    
    80Retirement of common stock
    
    
    (1,670
    )
    
    
    (17
    )
    
    
    (31,728
    )
    
    
    
    
    
    
    
    
    
    
    (31,745
    )Issuance of common stock
(related to merger)
    
    
    3,600
    
    
    
    36
    
    
    
    71,964
    
    
    
    
    
    
    
    
    
    
    
    72,000Deferred stock compensation expense
    
    
    317
    
    
    
    3
    
    
    
    9,455
    
    
    
    
    
    
    
    
    
    
    
    9,458Stock issuance costs
    
    
    
    
    
    
    
    
    
    
    (1,185
    )
    
    
    
    
    
    
    
    
    
    
    (1,185
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,335
    )
    
    
    
    
    
    
    (3,335
    )
    
    $
    (3,3351
    )Current period adjustment to recognize change in
value of cash flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,579
    )
    
    
    (1,579
    )
    
    
    (1,579
    )Current period adjustment to recognize change in
value of foreign operations investment hedge
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    (1
    )
    
    
    (1
    )Translation adjustment from foreign operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (316
    )
    
    
    (316
    )
    
    
    (316
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (5,231
    )Distributions declared and paid ($1.00 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (154,704
    )
    
    
    
    
    
    
    (154,704
    )Balance at December 31, 2006
    
    
    157,116
    
    
    $
    1,572
    
    
    $
    2,829,304
    
    
    $
    (847,061
    )
    
    $
    3,896
    
    
    $
    1,987,711
  96




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##### Table of Contents



Years Ended December 31,2006
    
    
    2005
    
    
    2004Cash flows from operating activities:Net (loss) earnings
    
    $
    (3,335
    )
    
    $
    6,900
    
    
    $
    (87,113
    )Adjustments to reconcile net earnings to net
cash provided by operating activities:Depreciation
    
    
    210,456
    
    
    
    195,607
    
    
    
    174,214Amortization
    
    
    17,141
    
    
    
    27,056
    
    
    
    18,888Equity in losses (income) from investments in
unconsolidated entities, net of distributions
    
    
    295
    
    
    
    (24,925
    )
    
    
    22,552Loss on impairments
    
    
    
    
    
    
    344
    
    
    
    7,193Gain on sale of common stock
    
    
    
    
    
    
    
    
    
    
    (9,268
    )Gain on lease terminations
    
    
    
    
    
    
    (924
    )
    
    
    Gain on hedge termination
    
    
    
    
    
    
    
    
    
    
    (3,511
    )Gain on sale of hotel properties
    
    
    (154,837
    )
    
    
    (67,321
    )
    
    
    (645
    )Loss on extinguishment of debt
    
    
    27,006
    
    
    
    9,321
    
    
    
    1,707(Gain) loss on hedge termination
    
    
    (2,409
    )
    
    
    1,139
    
    
    
    Shares issued  Advisor acquisition
    
    
    77,626
    
    
    
    
    
    
    
    Shares issued  deferred compensation
    
    
    9,458
    
    
    
    
    
    
    
    Minority interest
    
    
    6,361
    
    
    
    7,199
    
    
    
    8,403Changes in operating assets and liabilities, net of effects of
business acquisitions:Receivables
    
    
    (17,250
    )
    
    
    (4,677
    )
    
    
    17,204Prepaid expenses and other assets
    
    
    39,780
    
    
    
    (14,357
    )
    
    
    11,741Deferred tax asset
    
    
    (1,134
    )
    
    
    
    
    
    
    25,828Accounts payable and accrued expenses
    
    
    (5,903
    )
    
    
    6,961
    
    
    
    12,749Accrued litigation expense
    
    
    (2,921
    )
    
    
    34,151
    
    
    
    Due to related parties
    
    
    616
    
    
    
    (5,885
    )
    
    
    (5,685
    )Other liabilities
    
    
    (4,826
    )
    
    
    (16,340
    )
    
    
    2,910Member deposits
    
    
    17,454
    
    
    
    15,564
    
    
    
    16,574Net cash provided by operating activities
    
    
    213,578
    
    
    
    169,813
    
    
    
    213,741Cash flows from investing activities:Cash paid in connection with acquisitions and
capital expenditures
    
    
    (159,669
    )
    
    
    (108,559
    )
    
    
    (118,213
    )KSL Acquisition
    
    
    
    
    
    
    
    
    
    
    (1,426,309
    )Acquisition of Grande Lakes
    
    
    (735,613
    )
    
    
    (15,000
    )
    
    
    Acquisition of joint venture interests
    
    
    (72,580
    )
    
    
    
    
    
    
    Investment in unconsolidated entities
    
    
    
    
    
    
    
    
    
    
    (2,192
    )Sale of investment in equity securities
    
    
    
    
    
    
    
    
    
    
    28,295Sale of or interests in hotel and resort Properties
    
    
    229,193
    
    
    
    595,300
    
    
    
    16,810Distribution from unconsolidated entity related to
sales proceeds
    
    
    
    
    
    
    47,529
    
    
    
    Deposit on property and other investments
    
    
    
    
    
    
    (1,725
    )
    
    
    Decrease (increase) in restricted cash
    
    
    29,940
    
    
    
    8,062
    
    
    
    (37,778
    )Increase in other assets
    
    
    
    
    
    
    (400
    )
    
    
    (37,655
    )Net cash (used in) provided by investing activities
    
    
    (708,729
    )
    
    
    525,207
    
    
    
    (1,577,042
    )
  97




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##### Table of Contents



Years Ended December 31,2006
    
    
    2005
    
    
    2004Cash flows from financing activities:Net borrowings (repayments) on lines of credit
    
    $
    108,000
    
    
    $
    
    
    
    $
    (24,073
    )Payment of loan costs
    
    
    (15,516
    )
    
    
    (8,004
    )
    
    
    (43,979
    )Proceeds from mortgage loans
    
    
    2,215,000
    
    
    
    400,000
    
    
    
    1,922,508Net payment to acquire/terminate cash flow hedges
    
    
    1,005
    
    
    
    (3,020
    )
    
    
    (4,899
    )Principal payments on mortgage loans
    
    
    (1,617,154
    )
    
    
    (903,980
    )
    
    
    (802,812
    )Proceeds from other notes payable, net of repayments
    
    
    4,892
    
    
    
    
    
    
    
    (63,593
    )Payment of capital lease obligation
    
    
    (805
    )
    
    
    (772
    )
    
    
    (1,823
    )Subscriptions received from stockholders
    
    
    37,745
    
    
    
    43,481
    
    
    
    658,578Distributions to stockholders
    
    
    (154,704
    )
    
    
    (168,132
    )
    
    
    (218,343
    )Distributions to minority interest, net of contributions
    
    
    (5,935
    )
    
    
    (33,418
    )
    
    
    (13,213
    )Redemption or retirement of common stock
    
    
    (31,745
    )
    
    
    (43,336
    )
    
    
    (24,636
    )(Payment) refund of stock issuance costs
    
    
    (1,185
    )
    
    
    2,497
    
    
    
    (59,430
    )Payment of due to related parties
    
    
    (10,998
    )
    
    
    
    
    
    
    Net cash provided by (used in) financing activities
    
    
    528,600
    
    
    
    (714,684
    )
    
    
    1,324,285Net increase (decrease) in cash and cash equivalents
    
    
    33,449
    
    
    
    (19,664
    )
    
    
    (39,016
    )Cash and cash equivalents at beginning of year
    
    
    81,656
    
    
    
    99,135
    
    
    
    147,694Net increase (decrease) in cash and cash equivalents
    
    
    33,449
    
    
    
    (19,664
    )
    
    
    (39,016
    )Net increase (decrease) in cash and cash equivalents of assets held for sale
    
    
    7,358
    
    
    
    2,185
    
    
    
    (9,543
    )Cash and cash equivalents at end of year
    
    $
    122,463
    
    
    $
    81,656
    
    
    $
    99,135
  98




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##### Table of Contents



Years Ended December 31,2006
    
    
    2005
    
    
    2004Cash paid during the year for interest
    
    $
    221,730
    
    
    $
    214,106
    
    
    $
    160,525Supplemental schedule of non-cash investing activities:activities:Advisor MergerPurchase accounting:Assets acquired:Property, plant and equipment
    
    $
    4,866
    
    
    $
    
    
    
    $
    Prepaid expenses and other assets
    
    
    415
    
    
    
    
    
    
    
    Total
    
    $
    5,281
    
    
    $
    
    
    
    $
    Liabilities assumed:Accrued expenses
    
    $
    3,245
    
    
    $
    
    
    
    $
    Other liabilities
    
    
    37
    
    
    
    
    
    
    
    Note payable
    
    
    7,625
    
    
    
    
    
    
    
    Total
    
    $
    10,907
    
    
    $
    
    
    
    $
    Net liabilities assumed
    
    $
    5,626
    
    
    $
    
    
    
    $
    Grande Lakes AcquisitionPurchase accounting:Assets acquired:Hotel and resort Properties
    
    $
    762,154
    
    
    $
    
    
    
    $
    Cash and cash equivalents
    
    
    6,657
    
    
    
    
    
    
    
    Restricted cash
    
    
    5,504
    
    
    
    
    
    
    
    Prepaid expenses and other assets
    
    
    2,974
    
    
    
    
    
    
    
    Receivables
    
    
    5,211
    
    
    
    
    
    
    
    Total
    
    $
    782,500
    
    
    $
    
    
    
    $
    Liabilities assumed:Accounts payable and accrued expenses
    
    $
    14,329
    
    
    $
    
    
    
    $
    Total
    
    $
    14,329
    
    
    $
    
    
    
    $
    Net assets acquired
    
    $
    768,171
    
    
    $
    
    
    
    $
    Net of cash
    
    $
    761,514
    
    
    $
    
    
    
    $
    
  99




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##### Table of Contents



Years Ended December 31,2006
    
    
    2005
    
    
    2004KSL AcquisitionPurchase accounting:Assets acquired:Cash and cash equivalents
    
    $
    
    
    
    $
    
    
    
    $
    18,895Restricted cash
    
    
    
    
    
    
    
    
    
    
    42,878Accounts receivable
    
    
    
    
    
    
    
    
    
    
    50,816Prepaid expenses and other assets
    
    
    
    
    
    
    
    
    
    
    36,866Hotel Properties
    
    
    
    
    
    
    
    
    
    
    1,650,597Goodwill
    
    
    
    
    
    
    
    
    
    
    491,736Intangible assets
    
    
    
    
    
    
    
    
    
    
    327,771Total
    
    $
    
    
    
    $
    
    
    
    $
    2,619,559Liabilities assumed:Accounts payable and accrued expenses
    
    $
    
    
    
    $
    
    
    
    $
    98,551Mortgages payable
    
    
    
    
    
    
    
    
    
    
    796,048Other liabilities
    
    
    
    
    
    
    
    
    
    
    28,719Member deposits
    
    
    
    
    
    
    
    
    
    
    197,672Total
    
    $
    
    
    
    $
    
    
    
    $
    1,120,990Net assets acquired
    
    $
    
    
    
    $
    
    
    
    $
    1,498,569Net of cash
    
    $
    
    
    
    $
    
    
    
    $
    1,479,674Amounts incurred but not paid for construction in progress
    
    $
    
    
    
    $
    
    
    
    $
    6,425Allocation of acquisition fees included in other assets to investment in
hotel Properties and unconsolidated entities
    
    $
    
    
    
    $
    4,067
    
    
    $
    1,481Allocation 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
    
    $
    
    
    
    $
    
    
    
    $
    9,522Assets purchased under capital leases acquired during the period
    
    $
    2,406
    
    
    $
    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
    
    
    $
    
  100




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##### Table of Contents



Years Ended December 31,2006
    
    
    2005
    
    
    2004Supplemental schedule of non-cash financing activities:Non-cash reduction in TIF Note
    
    $
    
    
    
    $
    
    
    
    $
    315Distributions declared not paid to minority interest at year end
    
    $
    4,311
    
    
    $
    4,067
    
    
    $
    2,919Loans assumed as a result of the acquisition of Properties
    
    $
    
    
    
    $
    
    
    
    $
    Obligations under capital leases acquired during the period
    
    $
    
    
    
    $
    
    
    
    $
    3,486Capital lease assumed by buyer in connection with sale of
Property
    
    $
    
    
    
    $
    11,695
    
    
    $
    Note payable related to insurance premium financing
    
    $
    10,383
    
    
    $
    14,124
    
    
    $
    Distribution of land and construction in process to minority interest
    
    $
    
    
    
    $
    8,195
    
    
    $
    
  101




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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. As of December 31, 2006, the Company owned 41
Properties directly and 18 Properties through equity investments (excluding 32 Properties held for
sale as of year end). As of December 31, 2006, the
Company leased 58 of its 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 Property (excluding
three held for sale as of year end) 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 January 18, 2007, the Company entered into an Agreement and Plan of Merger (the Merger
Agreement) by and among MS Resort Holdings LLC, a Delaware limited liability company (Parent),
MS Resort Acquisition LLC, a Delaware limited liability company and a wholly-owned subsidiary of
Parent (Merger Sub), MS Resort Purchaser LLC, a Delaware limited liability company and a
wholly-owned subsidiary of Parent (MS Purchaser Sub), and Ashford Sapphire Acquisition LLC, a
Delaware limited liability company (Sapphire and, together with Parent, Merger Sub and MS
Purchaser Sub, the Buyer Parties) pursuant to which each of the Companys issued and outstanding
common shares (other than dissenting shares and shares owned directly or indirectly by Parent) will
be canceled and entitled to receive a distribution and merger consideration in a total amount equal
to $20.50. Parent, Merger Sub and MS Purchaser Sub are affiliates of Morgan Stanley Real Estate
Fund V, U.S., L.P. (MSREF), and Sapphire is a wholly-owned subsidiary of Ashford Hospitality
Trust, Inc. (Ashford).Pursuant to the Merger Agreement and related agreements entered into in connection therewith,
following satisfaction of the conditions set forth in the Merger Agreement, the Company will sell
certain hotel assets directly to MS Purchaser Sub and Sapphire (the Asset Sales) and, on the day
immediately following consummation of the Asset Sales, Merger Sub will merge with and into the
Company (the Merger), with the Company continuing as the surviving entity.The Asset Sales and the Merger are subject to customary closing conditions including, among other
things, approval by the affirmative vote of holders of a majority of the outstanding shares of our
Common Stock. The closings of the transactions contemplated by the Merger Agreement are not subject
to a financing condition. MSREF and Ashford have jointly and severally guaranteed the payment and
performance obligations of the Buyer Parties under the Merger Agreement in an amount up to $300
million.On January 9, 2006, the Company, through certain of its affiliates, completed the sale of all of
its interests in CNL KSL Partners, LP, a partnership which owned the Hotel del Coronado in San
Diego, California (the Hotel Del), and in CNL KSL North Beach Development, LP, which was
developing property adjacent to the hotel (collectively, the Del Sale). The interests were sold
to KSL Recreation Holdings I, LLC and KSL Recreation Management Operations, LLC, affiliates of KSL
DC Operating LLC and Kohlberg Kravis Roberts & Co. As a result of the Del Sale and related
transactions, the Company received net proceeds of approximately $167 million with a net gain of
approximately $132.4 million and one of its consolidated subsidiaries was relieved of $400.0
million of debt.
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On February 24, 2006, the Company completed the purchase of the 500-acre Grande Lakes Orlando
resort, comprising 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) for
a purchase price of approximately $753 million in cash, plus transaction costs and the assumption
of certain liabilities. For additional information see Note 3. 2006 Acquisitions.On April 28, 2006, the Company completed the sale of its two Wyndham hotels to an affiliate of The
Blackstone Group for $42.5 million, resulting in a net gain of approximately $5.2 million. For
additional information see Note 8. Discontinued Operations.On May 19, 2006, a subsidiary of the Company completed the acquisition of Desert Ridge Resort,
Ltd.s (DRR Ltd.) 45.84 percent membership interest and Marriott Hotel Services, Inc.s (MHS)
10.16 percent membership interest (collectively, the DRR Purchase) in Desert Ridge Resort
Partners, LLC (DRR LLC), which owns all of the equity of Desert Ridge Resort, LLC (DR
Subsidiary), the owner of the JW Marriott Desert Ridge Resort & Spa located in Phoenix, Arizona
(the Desert Ridge Resort). The Company paid DRR Ltd. $53,449,440 and MHS $11,846,500 in cash, for
an aggregate cash purchase price of approximately $65,295,940, plus approximately $9.0 million in
closing price adjustments relating to working capital and cash flow of the Desert Ridge Resort
before closing. Upon closing, a subsidiary of the Company became liable for approximately $300
million of debt. For additional information see Note 3. 2006 Acquisitions and Note 7.
Investments in Unconsolidated Entities.On June 16, 2006, the Company acquired the remaining 51.85 percent interest in CY-SF Hotel Parent,
LP (the CY-SF Purchase), which owns all of the equity in the CY-SF Hotel Partnership, LP (CY-SF
LP), the owner of the Courtyard San Francisco Downtown hotel, from Marriott International, Inc.
(Marriott) for a purchase price of approximately $10 million. Upon closing, a subsidiary of the
Company became liable for approximately $54.5 million of debt. For additional information see Note
3. 2006 Acquisitions and Note 7. Investments in Unconsolidated Entities.On June 21, 2006, the Company completed the merger of the Company and CNL Hospitality Corp., the
Companys external advisor prior to the merger (the Former Advisor), whereby the Former Advisor
was merged with and into CNL Hotels & Resorts Acquisition, LLC (now known as CNL Hotels & Resorts,
LLC), all of the membership interests of which are owned by the Company (Acquisition Sub), with
Acquisition Sub being the surviving entity (the Advisor Merger), pursuant to the amended and
restated agreement and plan of merger, entered into as of April 3, 2006 (the Advisor Merger
Agreement), by and among the Company, the Former Advisor, CNL Real Estate Group, Inc. (CREG),
Five Arrows Realty Securities II L.L.C. (Five Arrows), the other stockholders of the Former
Advisor identified therein, Acquisition Sub, CNL Hospitality Properties Acquisition Corp. and CNL
Financial Group, Inc. (CFG). For additional information see Note 3. 2006 Acquisitions. and
Note 20. CNL Hospitality Corp. Merger and Other Matters.On September 29, 2006, the Company completed the sale of its 66.7 percent interest in the
partnership that owns the 144-room Hampton Inn Chelsea in New York to Hersha Hospitality Trust.
For additional information see Note 8. Discontinued Operations.On February 8, 2007, the Company completed the sale of 30 non-strategic hotels to W2005 New
Century Hotel Portfolio, L.P., an affiliate of Whitehall Street Global Real Estate Limited
Partnership 2005 (the Purchaser) for a sales price of approximately $369 million, resulting
in an estimated net gain to the Company of approximately $7.9 million (the Century Sale).
The Century Sale was completed pursuant to the terms of an Agreement
of Purchase and Sale, dated as of December 12, 2006, as amended,
between the Company and the Purchaser (the Purchase
Agreement). Pursuant to an amendment to the Purchase Agreement, the sale of two
additional hotels (the
Deferred Hotels) was deferred and those Properties are being held for
sale subject to the Purchase Agreement pending the satisfaction or
waiver of certain conditions related to those hotels. A dispute has
arisen regarding the
Purchasers obligation to complete the purchase of the Deferred
Hotels and there can be no assurance that such a sale will be
consummated. For
additional information see Note 8. Discontinued Operations.
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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, 33 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.Principles of Consolidation  The accompanying unaudited condensed consolidated financial
statements include the accounts of the Company and each of its wholly-owned subsidiaries and
entities in which the Company has (a) a controlling interest in accordance with the provisions of
Statement of Position 78-9 Accounting for Investments in Real Estate Ventures (SOP 78-9), (b)
is the primary beneficiary as defined in the Financial Accounting Standards Board (FASB)
Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities (FIN
46) or (c) satisfies the requirements of Emerging Issues Task Force (EITF) Issue No. 04-5,
Determining Whether a General Partner, or the General Partners as a Group, controls a Limited
Partnership or Similar Entity When the Limited Partners Have Certain Rights (EITF 04-5). 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, has less than a controlling interest due to the significance of rights
and obligations held by other parties under SOP 78-9 or the limited partners have the ability to
dissolve or liquidate the partnership or otherwise remove the general partner or have substantive
participating rights under EITF 04-5.Reclassification  Certain items in the prior years condensed consolidated financial
statements have been reclassified to conform with the 2006 presentation. In accordance with
Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, the Company has included the results of operations for the Properties sold
during 2004, 2005 and 2006 in discontinued operations in the consolidated statements of operations
for all periods presented. In addition, the December 31, 2006 and 2005 consolidated 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 (loss) income 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.
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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. During
the year ended December 31, 2006, the Company recognized an additional $3.3 million in
property tax expense related to a change in accounting estimate for real estate property taxes for
taxable years 2005/2006 and 2006/2007 resulting from rulings by the taxing authorities in
California during the second quarter of 2006 regarding the assessed value of one of the Companys
resorts acquired in April 2004.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):
 2006
    
    
    2005Furniture, fixtures and equipment reserves
    
    $
    59,194
    
    
    $
    50,534Renovations
    
    
    2,248
    
    
    
    38,240Taxes and insurance escrow
    
    
    10,027
    
    
    
    6,899Deposits
    
    
    18,570
    
    
    
    12,104Reserve funds required by lenders
    
    
    6,768
    
    
    
    5,899Deferred compensation
    
    
    509
    
    
    
    247$
    97,316
    
    
    $
    113,923
 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
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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.
 Fair Value of Financial Instruments  The estimated fair value of cash and cash
equivalents, accounts receivable, accounts payable, accrued expenses, and variable rate debt
approximates carrying value as of December 31, 2006 and 2005, because of the liquid nature of the
asset and/or relatively short maturities of the obligations. The fair value of fixed rate long-term
debt is determined based on market prices.Goodwill and Intangible Assets  The Company follows Statement of Financial Accounting
Standards No. 141, Business Combinations (SFAS 141) and Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible Assets (SFAS 142) as it pertains to the
recognition and accounting for goodwill and intangible assets. SFAS 141 requires business
combinations initiated after June 30, 2001 to be accounted for using the purchase method of
accounting. It also specifies the types of acquired intangible assets that are required to be
recognized and reported separate from goodwill. SFAS 142 requires that goodwill and certain
intangible assets with indefinite lives no longer be amortized, but instead be tested for
impairment at least annually.Loan Costs  Loan costs incurred in connection with securing financing have been
capitalized and are being amortized over the terms of the loans including term extensions if such
extension is at the discretion of the Company without requirement of a significant financial
obligation using the straight-line method, which approximates the effective interest method.Income Taxes  Under the provisions of the Internal Revenue Code and applicable state laws,
each TRS Lessee is subject to taxation of income on the profits and losses from its tenant
operations. The Company does not file a consolidated return for all of its TRS Lessees.The Company accounts for federal and state income taxes with respect to its TRS Lessees 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.Derivative Instruments and Hedging Activities  The Company utilizes derivative instruments
to partially offset the effect of fluctuating interest rates and foreign currency exchange rates on
the cash flows associated with its variable-rate debt and its net investment in a foreign
subsidiary. The Company follows established risk management policies and procedures in its use of
derivatives. The Company does not enter into or hold derivatives for trading or speculative
purposes. The Company records all derivative instruments on the balance sheet at fair value. On
the date the Company enters into a derivative contract, the derivative is designated a hedge of the
exposure to variable cash flows of a forecasted transaction, when the Company hedges variability of
cash flows related to a variable-rate asset or liability or its net investment in a foreign
subsidiary. The effective portion of the derivatives gain or loss is
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initially reported as a
component of other comprehensive income (loss) and subsequently recognized in operations in the
periods in which earnings are impacted by the variability of the cash flows of the hedged item.
The ineffective portion of the gain or loss is reflected in operating results.Membership Deposits  Membership deposits represent liabilities for the required deposits
for certain membership plans which entitle the member to various golf, tennis and spa facilities
and related services at some of our Properties. Under the Companys primary membership program,
deposits generally become refundable upon:
 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.
 Under the Four-for-One program, a member is eligible, upon notification to the Company, to cause
the Company to repurchase his or her membership and refund the related deposit. However, the
Companys obligation to repurchase a membership and refund the deposit occurs only after the
Company has sold four of the Companys new memberships for each member who has requested a refund
under this program. Certain of the Companys Properties recently implemented a One-for One
program applicable in limited circumstances whereby a member can, upon notification to the Company
cause it to repurchase his or her membership and refund the related deposit which the Company would
be obligated to repurchase after it has sold one new membership.Hotel Management Agreements  The Companys Properties are managed and operated by
third-party management companies pursuant to management agreements entered into by its TRS Lessees
and the third-party management companies.The term of each management agreement generally ranges between 10 and 20 years, with up to two,
ten-year renewal options. Typically, under the management agreements, the third-party management
company receives a base management fee expressed as a percentage of gross revenues of the subject
Property for each fiscal year and an incentive management fee expressed as a percentage of
operating profit above a specified level of the subject Property for each fiscal year.Each third-party management company is responsible for payment, on the Companys behalf, of real
estate and property taxes, repairs and maintenance, utilities and insurance. Each third-party
management company is obligated to maintain the Property in good repair and condition and to make
or cause to be made routine maintenance, repairs and minor alterations as it determines to be
necessary or as required pursuant to the terms of the management agreement. The third-party
management company is also responsible for payment on the Companys behalf of routine renovations
permitted under the management agreement. The Company is required to establish reserves to fund
such renovations and for the replenishment of furniture, fixtures and equipment. The third-party
management company may, with the Companys prior written approval, make more extensive improvements
to the Property.The management agreements generally require the third-party management company to furnish chain
services that are generally made available to other hotels and resorts managed by the third-party
management company, including installment and operation of computer systems and reservation
services, management and administrative services, marketing and sales services, human resources
training services, and such additional services as may from time to time be more efficiently
performed on a national, regional or group level. During the term of the management agreements, the
service marks, symbols and logos currently used by the third-party management company may be used
in the operation of the Property.Some of the management agreements provide that the Companys TRS Lessee has the right to terminate
the management agreement if specified financial and other objectives relating to the Property are
not obtained. In
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addition, most of the management agreements limit the Companys ability to sell,
lease or otherwise transfer the Properties unless the transferee is not a competitor of the
third-party management company and unless the transferee assumes the related management agreement
and meets specified other conditions.
 The management agreements generally do not allow the third-party management company to assign its
interest in the management agreement other than to an affiliate without our prior written consent.
In some cases, the management agreement provides that the third-party management company has a
right to assign the management agreement in connection with the sale of substantially all of the
assets of such third-party management company. In addition, some management agreements prohibit the
third-party management company or its affiliates from operating another hotel or resort of the same
or similar type as the Companys Property that is or will be located within a specified distance of
the Companys Property. Also, some management agreements prohibit the transfer of the Property for
a specified initial term of years or provide that if the Company desires to sell a Property, it
must first offer to the third-party management company an opportunity to buy it. The Company also
may have to pay a termination fee in some cases upon termination of the management agreement.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.
 Self-Insurance The Company is self-insured for certain losses relating to workers
compensation and general liability claims acquired in the KSL Acquisition. The Company also
maintains aggregate stop loss coverage to limit the exposure arising from such claims.
Self-insurance losses for claims filed and claims incurred but not reported are accrued based upon
the Companys estimates of the aggregate liability for uninsured claims. To the extent the
projected future development of the losses resulting from workers compensation and general
liability claims incurred as of December 31, 2006 differs from the actual development of such
losses in future periods, the Companys insurance reserves could differ significantly, resulting in
either higher or lower future operating expense.Credit Enhancements  The following summary describes the various types of credit
enhancements:
 Limited Rent Guarantees Limited rent guarantees (LRG) are provided by third-party hotel
and resort managers to unrelated third-party tenants for certain Properties which the
Company leases on a triple-net basis. These credit enhancements guarantee the full,
complete and timely payment of specified rental payments to the Company relating to these
Properties. This form of credit enhancement results in rental revenues being recorded by
the Company which otherwise may not have been recorded based on rent paid by the tenant.
The Company is not obligated to repay amounts funded under LRGs.Threshold Guarantees Threshold guarantees (TG) are provided by third-party hotel and
resort managers to the Company in order to guarantee a certain minimum return for each of
the Properties covered by the TG. Generally, each TG is available for a specific Property
or pool of Properties generally for a specified period of time and/or specified aggregate
value of guarantee. Funding under these guarantees is recorded as a reduction in operating
expenses, a reduction in hotel and resort management fees or as a liability by the Company,
depending upon the nature of each agreement and whether the funded amounts are required to
be repaid by the Company.Liquidity Facility Loans Liquidity facility loans (LFL) are provided by third-party
hotel and resort managers to the Company or its unconsolidated entities in order to
guarantee a minimum distribution for each of the Properties covered by the LFL. Funding
under an LFL is recorded as a liability when the amounts funded may be required to be
repaid.
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Senior Loan Guarantees Senior loan guarantees (SLG) are provided by third-party hotel
and resort managers to the Company or its unconsolidated entities in order to guarantee the
payment of senior debt service for each of the Properties covered by the SLG. Funding under
an SLG is recorded as a liability because the amounts funded may be required to be repaid in
the future.
 Revenue Recognition  The Properties revenues are derived from their operations and
include, but are not limited to, revenues from rental of rooms, food and beverage sales, golf
course and spa operations, telephone usage, membership dues and other service revenues. Revenues,
excluding membership dues, are recognized when rooms are occupied, when services have been
performed, and when products are delivered. Membership dues are recognized ratably over the term of
the membership period. Cash received from customers, for events occurring in the future, are
recorded as deposits and included in accounts payable and accrued expenses in the accompanying
consolidated financial statements until the event occurs or is cancelled.Lease Accounting  Certain Properties are leased to, and operated by, unrelated third-party
tenants on a triple-net basis, whereby the tenant is generally responsible for all Property
operating expenses, including Property taxes, insurance, and maintenance and repairs. These
third-party Property leases are accounted for as operating leases. When minimum lease payments
vary during the lease term, income is recognized on a straight-line basis so as to produce a
constant periodic amount of rent revenues over the lease term. Accrued rental income, included in
other assets, represents the aggregate amount of income recognized on a straight-line basis in
excess of scheduled payments to date.Advertising and Promotional Costs  The costs of advertising, promotional and marketing
programs are charged to
operations in the year incurred and are included in hotel and resort expense in the accompanying
consolidated statement of operations. Advertising, promotional and marketing costs totaled $93.9
million, $71.2 million and $58.5 million for the years ended December 31, 2006, 2005 and 2004,
excluding $10.2 million, $9.5 million and $8.4 million, respectively, of advertising and
promotional costs included in discontinued operations.
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Earnings Per Share  Basic and diluted net (loss) income per share is calculated based on
the requirements of Statement of Financial Accounting Standards No. 128, Earnings Per Share. The
following table sets forth the computation of basic and diluted earnings per common share (in
thousands, except per share data):
 Year
    
    
    Year
    
    
    YearEnded
    
    
    Ended
    
    
    EndedDecember
    
    
    December
    
    
    December31, 2006
    
    
    31, 2005
    
    
    31, 2004Numerator:Loss from continuing operations
    
    $
    (167,838
    )
    
    $
    (69,110
    )
    
    $
    (121,412
    )Discontinued operations, net of
income taxes
    
    
    164,503
    
    
    
    76,010
    
    
    
    34,299Net (loss) income available to
common shareholders
    
    
    (3,335
    )
    
    
    6,900
    
    
    
    (87,113
    )Denominator:Basic and diluted weighted
average number of common shares
(1)(2)
    
    
    154,806
    
    
    
    152,874
    
    
    
    148,059(Loss) income per share data:Basic and diluted loss from
continuing operations
    
    $
    (1.08
    )
    
    $
    (0.45
    )
    
    $
    (0.82
    )Basic and diluted income from
discontinued operations
    
    $
    1.06
    
    
    $
    0.50
    
    
    $
    0.23Basic and diluted net (loss) income
    
    $
    (0.02
    )
    
    $
    0.05
    
    
    $
    (0.59
    )
 
 (1)
    
    For the year ended December 31, 2006, the potential dilution from the Companys
outstanding common stock equivalents was anti-dilutive to the loss from continuing
operations per share calculation, and consequently the Company
excluded 0.3 million
deferred shares that vested and were issued as of December 31,
2006 from the computation of diluted earnings per share.(2)
    
    For the years ended December 31, 2005 and 2004, the Company did not have any Common
Stock Equivalents. Stock-Based Compensation  In 2004, the Companys stockholders approved and the Company
adopted a long-term incentive plan and reserved 5,000,000 shares (after giving effect to the
Reverse Stock Split) of its common stock for issuance as equity awards pursuant to the terms of its
2004 omnibus long-term incentive plan (the Long-Term Incentive Plan). The Long-Term Incentive
Plan is administered by the Companys Compensation Committee (the Compensation Committee) of the
Board of Directors (the Board). During the year ended December 31, 2006, there was no readily
determinable fair market price since the Companys common stock is not actively traded on an open
market or stock exchange. As a result, the Company established a deemed price of $20.00 per share.
 The Company accounts for stock-based employee and non-employee director compensation in accordance
with the provisions of Statement of Financial Accounting Standards No. 123 (revised 2004),
Share-Based Payment(SFAS No. 123R). For deferred share awards and stock grants, the Company
measures compensation expense based on its estimated fair value of its common stock at the date of
grant, adjusted for estimated forfeitures. Compensation expense is recognized using the
straight-line method over the vesting period. For additional information, see Note 21. Stock-Based
Compensation for Directors and Note 22. Stock-Based Compensation for Employees.
 Recent Accounting Pronouncements  In September 2006, the Financial Accounting Standards
Board (the FASB) issued Statement No. 158, Employers Accounting for Defined Benefit Pension and
Other Postretirement Plans, an
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amendment of FASB Statements No. 87, 88, 106, and 132R (SFAS No.
158). SFAS No. 158 requires an entity to recognize in its statement of financial condition the
funded status of its defined benefit postretirement plans, measured as the difference between the
fair value of the plan assets and the benefit obligation. SFAS No. 158 also requires an entity to
recognize changes in the funded status of a defined benefit postretirement plan within
accumulated other comprehensive income, net of tax, to the extent such changes are not recognized
in earnings as components of periodic net benefit cost. SFAS No. 158 is effective as of the end of
the fiscal year ending after December 15, 2006. The Company does not anticipate that the adoption
of this statement will have a material effect on its financial position or results of operations.
 Also in September 2006, the FASB issued Statement No. 157, Fair Value Measurements (SFAS No.
157). SFAS No. 157 defines fair value, establishes a framework for measuring fair value in
accordance with generally accepted accounting principles, and expands disclosures about fair value
measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning
after November 15, 2007, and interim periods within those fiscal years. The Company will adopt the
provisions of this statement beginning in the first quarter of 2008. The cumulative effect, if any,
of applying the provisions of SFAS 157 will be reported as an adjustment to the opening balance of
retained earnings on January 1, 2008. The Company is currently assessing the impact of the adoption
of this statement.
 In July 2006, the FASB issued FASB Interpretation Number 48, Accounting for Uncertainty in Income
Taxes, an interpretation of FASB Statement No. 109 (FIN 48). FIN 48 prescribes a recognition
threshold and measurement attribute for the financial statement recognition and measurement of a
tax position taken in a tax return. The Company must determine whether it is more-likely-than-not
that a tax position will be sustained upon examination, including resolution of any related appeals
or litigation processes, based on the technical merits of the position. Once it is determined that
a position meets the more-likely-than-not recognition threshold, the position is measured to
determine the amount of benefit to recognize in the financial statements. FIN 48 applies to all tax
positions related to income taxes subject to FASB Statement No. 109, Accounting for Income Taxes.
The interpretation clearly scopes out income tax positions related to FASB Statement No. 5,
Accounting for Contingencies.The Company will adopt the provisions of this statement beginning
in the first quarter of 2007. The cumulative effect of applying the provisions of FIN 48 will be
reported as an adjustment to the opening balance of retained earnings on January 1, 2007. The
Company does not anticipate that the adoption of this statement will have a material effect on its
financial position or results of operations.
 In February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial
Instruments  an amendment of FASB Statements No. 133 and 140. This Statement, among other things,
allows a preparer to elect fair value measurement of instruments in cases in which a derivative
would otherwise have to be bifurcated. The provisions of this Statement are effective for all
financial instruments acquired or issued in fiscal years beginning after September 15, 2006. The
Company does not believe that the adoption of this Statement in fiscal 2007 will have a material
impact on the Companys consolidated financial position or results of operations. As of December
31, 2006 the Company does not have any hedges designated as fair value hedges.
 111




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3.
    
    2006 Acquisitions:
 Grande Lakes- The Company completed the acquisition of the Grande Lakes Resort on February 24,
2006, for a purchase price of approximately $753 million in cash, plus transaction costs and the
assumption of certain liabilities. In connection therewith, and as part of the acquisition, the
sellers interest in the existing management agreements for the two Grande Lakes Resort properties
and the golf operation was assigned to a newly formed TRS Lessee.
 The Company financed this transaction, including closing costs and transaction fees of
approximately $9.5 million, by using approximately $198.5 million in cash and by obtaining a $570
million loan (the GL Loan) with an annual interest rate of (a) 5.71 percent fixed on $335 million
and (b) one-month LIBOR plus 2.76 percent (one-month LIBOR was equal to 5.32 percent as of December
31, 2006) on the remaining $235 million. For additional information see Note 13. Indebtedness.
 Fair values of assets acquired and liabilities assumed at the date of acquisition of the Grande
Lakes Resort were based on appraisals and valuation studies from independent third-party
consultants, the latter of which was finalized during the third quarter of 2006. The values of
assets acquired and liabilities assumed are as follows (in thousands):
 ASSETSHotel and resort properties
    
    $
    762,154Cash and cash equivalents
    
    
    6,657Restricted cash
    
    
    5,504Prepaid expenses and other assets
    
    
    2,974Receivables
    
    
    5,211Total assets acquired
    
    
    782,500LIABILITIESAccounts payable and accrued expenses
    
    
    14,329Total liabilities assumed
    
    
    14,329Net assets acquired
    
    $
    768,171Net of cash
    
    $
    761,514
 112




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\

CNL Hospitality Corp. Merger On June 21, 2006, the Company completed the Advisor Merger of the
Company and the Former Advisor, whereby the Former Advisor was merged with and into Acquisition
Sub, with Acquisition Sub being the surviving entity. The following summarizes the fair values of
the assets acquired and liabilities assumed which have been allocated based on the historical
financial statements of the Former Advisor and the initial estimates of fair value which have been
determined by the Company (in thousands):
 ASSETSHotel and resort properties
    
    $
    4,866Prepaid expenses and other assets
    
    
    415Total assets acquired
    
    
    5,281LIABILITIESAccrued expenses
    
    
    3,245Other liabilities
    
    
    37Note payable
    
    
    7,625Total liabilities assumed
    
    
    10,907Net liabilities assumed
    
    $
    5,626
 The difference between the purchase price and the net assets acquired, of approximately $84.8
million has been treated as the cost to terminate a contract and is recorded as advisor acquisition
expense in the accompanying consolidated statement of operations for the year ended December 31,
2006. The Company has not completed its determination of whether any of the purchase price should
be allocated to identifiable intangible assets. The Company has engaged a consultant to conduct a
valuation study of such intangible assets to determine fair values, if any, attributable to these
items. Consequently, this allocation is preliminary and may not be indicative of the final
allocation by the Company. A change in the final allocation from what is presented here may result
in a decrease in contract termination expense and additional amortization expense related to
identified intangible assets in future periods.
 Other acquisitions On May 19, 2006, a subsidiary of the Company completed the DRR Purchase. The
purchase price approximated the fair value of the net assets acquired. Upon closing, this subsidiary of
the Company became liable for approximately $300.0 million of debt. The resulting purchase price
adjustment (fair value adjustment), pertaining to acquiring the remaining partnership interests, of
approximately $102.7 million has been reflected as an increase to hotel and resort properties in
the accompanying consolidated balance sheet as of
December 31, 2006.On June 16, 2006, the Company completed the CY-SF
Purchase. The purchase price approximated the fair value of the net
assets acquired. Upon closing, a subsidiary of the Company became
liable for approximately $54.5 million of debt. The resulting
purchase price adjustment (fair value adjustment), pertaining to
acquiring the remaining partnership interests, of approximately
$0.2 million has been reflected as a decrease to hotel and
resort properties in the accompanying consolidated balance sheet as
of December 31, 2006.The following summarizes the fair values of
the assets acquired and liabilities assumed in connection with these
acquisitions which have been allocated
based on the historical financial statements of DRR and CY-SF and the initial
estimates of fair value which have been determined by the Company (in
thousands):
 113




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ASSETSHotel and resort properties
    
    $
    404,518Receivables
    
    
    22,424Prepaid expenses and other assets
    
    
    12,038Restricted cash
    
    
    7,771Total assets acquired
    
    
    446,751LIABILITIESMortgages payable
    
    
    (354,492
    )Accounts payable and accrued expenses
    
    
    (12,577
    )Other liabilities
    
    
    (9,997
    )Total liabilities assumed
    
    
    (377,066
    )Distributions
and losses in excess of investment in unconsolidated entity
    
    
    2,895Net assets acquired
    
    $
    72,580
 The consolidated financial statements include the operating results of the Grande Lakes Resort, DRR
LLC and CY-SF LP from their respective dates of acquisition; and include the operating results
(after elimination of the Former Advisors revenues and the costs incurred by the Company to the
Former Advisor) of the Companys wholly-owned subsidiary after its merger with the Former Advisor
from June 21, 2006, the completion date of the Advisor Merger. The following presents the
unaudited consolidated pro forma results of operations of the Company assuming the Grande Lakes
Resort, DRR LLC and CY-SF LP acquisitions and the Advisor Merger had
occurred at the beginning of each year presented (in thousands, except per share data):
 114




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Years Ended December 31,2006
    
    2005Revenues (1)
    
    $
    1,641,890
    
    
    $
    1,538,009Net (loss) income
    
    
    (41,264
    )
    
    
    (42,020
    )Net (loss) income per share:Basic
    
    $
    (0.26
    )
    
    $
    (0.27
    )Diluted
    
    $
    (0.26
    )
    
    $
    (0.27
    )Weighted average shares:Basic
    
    
    156,477
    
    
    
    156,464Diluted
    
    
    156,477
    
    
    
    156,464
 
 (1)
    
    Revenues are generated solely from hotel operations. 4.
    
    Acquisitions Prior to 2006:
 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 13, 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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Fair values of assets acquired and liabilities assumed at the date of the KSL Acquisition are based
on independent appraisals and valuation studies from independent third-party consultants, which
were finalized during the fourth quarter of 2004. The final allocation resulted in $153.0 million
being allocated from goodwill to land, buildings and equipment. During the fourth quarter of 2004,
a catch-up adjustment of $8.4 million was recorded to true-up depreciation expense for the second
and third quarters of 2004 as a result of the final purchase price allocation. The following
summarizes the fair values of assets acquired and liabilities assumed at the date of the KSL
Acquisition (in thousands):
 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
    
    
    28,719Membership deposits
    
    
    197,672Total liabilities assumed
    
    
    1,120,990Net assets acquired
    
    $
    1,498,569Net of cash
    
    $
    1,479,674
 The consolidated financial statements include the operating results of the Properties acquired from
KSL from the date of the KSL Acquisition. Concurrent with the closing of the KSL Acquisition, the
Company entered into interim management agreements for all six Properties with an affiliate of the
former parent company of KSL. In August 2004, the Company entered into long-term management
agreements for four of these Properties (three with an affiliate of the former KSL parent and one
with a subsidiary of Marriott International, Inc. (Marriott)). The Property subject to the fifth
interim management agreement was sold on August 30, 2005. The remaining interim management
agreement expired on July 31, 2005. Effective as of July 31, 2005, the Company entered into a
management agreement with Interstate Hotels & Resorts, Inc. to operate this Property.
 The Company entered into an agreement with Marriott, relating to the Doral Golf Resort and Spa
Property. The agreement provides for a minimum return guarantee, which guarantees a certain level
of operating income from this Property. The guarantee is subject to expiration and/or burn-off
provisions over time and has a maximum funding limit of $10 million. Funding of shortfalls from
minimum returns of $0 and $0.4 million under this guarantee have been recognized as a reduction in
operating expenses during the years ended December 31, 2006 and 2005, respectively. As of December
31, 2006, funding under this guarantee has been fully utilized. After the later of December 31,
2006, or the completion of the ballroom renovation at the Property, the manager agreed to waive
certain management fees by the amount of the shortfall between hotel operating profit and the
Companys minimum return up to an aggregate amount of $5 million, or a period of 39 months,
whichever occurred first; the ballroom renovation was completed and was operational as of
December 31, 2006.
 116




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2004Revenues
    
    $
    1,489,890Loss from continuing operations
    
    
    (95,908
    )Net loss
    
    
    (98,728
    )Basic and diluted earnings per share
    
    
    (0.65
    )Weighted average number of common
shares outstanding  basic and diluted
    
    
    152,334
 5.
    
    Hotel and Resort Properties
  2006
    
    
    2005Land
    
    $
    1,043,336
    
    
    $
    749,247Buildings
    
    
    3,662,817
    
    
    
    2,811,360Equipment
    
    
    487,092
    
    
    
    347,4715,193,245
    
    
    
    3,908,078Less accumulated depreciation
    
    
    (559,965
    )
    
    
    (370,350
    )Construction in progress
    
    
    29,557
    
    
    
    34,005$
    4,662,837
    
    
    $
    3,571,733
    117




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##### Table of Contents



6.
    
    Rentals Under Operating Leases:
        118




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time, the
lease modifications are expected to be made unless they have previously occurred.As of December 31, 2006, the Company leases two Properties to third-parties (excluding the other
two properties held for sale as of year end). The following is a
schedule of future minimum lease payments to be received on the noncancellable operating leases
with third-parties at December 31, 2006 (in thousands):
 2007
    
    $
    6,9202008
    
    
    6,5352009
    
    
    6,5002010
    
    
    6,5002011
    
    
    6,5002012 and thereafter
    
    
    18,500$
    51,455
 Investments in Unconsolidated Entities
 As of December 31, 2006, the Company had no investments in unconsolidated entities.
 On October 31, 2006, the Company completed the sale of its partnership interests in CNL Plaza, Ltd.
and in CNL Plaza Venture, Ltd., two affiliated entities that own an office building in which the
Company was formerly a tenant. There was no gain or loss on the sale. Prior to the sale, CNL Plaza,
Ltd. and CNL Plaza Venture, Ltd. were unconsolidated entities of the Company. For additional
information, see Note 16. Related Party Transactions.
 On May 19, 2006 and June 16, 2006, the Company completed the DRR Purchase and the CY-SF Purchase,
respectively, and accordingly, the operating results for DRR LLC and CY-SF LP have been included in
the Companys consolidated statement of earnings since their respective dates of acquisition. Prior
to their respective acquisition dates, each of these equity method investments was unconsolidated.
 No unaudited condensed balance sheets are presented as of December 31, 2006, since, as discussed
above, the Company had no remaining unconsolidated entities as of December 31, 2006.
 The following presents unaudited condensed balance sheets for the Companys unconsolidated entities
as of December 31, 2005 (dollars in thousands):
 DesertRidge
    
    WB
    
    CY-SFResort
    
    Resort
    
    HotelPartners,
    
    Partners,
    
    Parent,
    
    Other JointLLC(i)
    
    LP(ii)
    
    LP(iii)
    
    Ventures(a)
    
    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 (deficit) capital
    
    
    (49,897
    )
    
    
    726
    
    
    
    5,752
    
    
    
    10,997
    
    
    
    (32,422
    )Carrying amount of investment
    
    
    (15,672
    )
    
    
    605
    
    
    
    4,545
    
    
    
    7,922
    
    
    
    (2,600
    )Total amount invested
    
    
    25,100
    
    
    
    
    
    
    
    13,000
    
    
    
    8,500
    
    
    
    46,600Companys ownership
interest at end of period
    
    
    44.00
    %
    
    
    49.00
    %
    
    
    48.15
    %
    
    9.90% and 50.00%
 119




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120




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DesertRidge
    
    
    CY-
    
    
    OtherResort
    
    
    SF Hotel
    
    
    JointPartners,
    
    
    Parent,
    
    
    VenturesLLC (i)
    
    
    LP (iv)
    
    
    (iv)(v)(a)
    
    
    TotalRevenues
    
    $
    56,373
    
    
    $
    11,367
    
    
    $
    9,388
    
    
    $
    77,128Cost of sales
    
    
    (20,625
    )
    
    
    (3,930
    )
    
    
    (7,417
    )
    
    
    (31,972
    )Expenses
    
    
    (29,032
    )
    
    
    (8,738
    )
    
    
    (4,316
    )
    
    
    (42,086
    )Net income (loss)
    
    $
    6,716
    
    
    $
    (1,301
    )
    
    $
    (2,345
    )
    
    $
    3,070Income (loss)
allocable to the
Company
    
    $
    2,955
    
    
    $
    (639
    )
    
    $
    4,284
    
    
    $
    6,600Other comprehensive
income adjustment
allocable to the
Company
    
    $
    738
    
    
    $
    
    
    
    $
    
    
    
    $
    738
  DesertRidge
    
    
    WB
    
    
    CY-SF
    
    
    OtherResort
    
    
    Resort
    
    
    Hotel
    
    
    JointPartners,
    
    
    Partners,
    
    
    Parent,
    
    
    VenturesLLC (i)
    
    
    LP (ii)
    
    
    LP (iv)
    
    
    (iv)(v)(a)
    
    
    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 extinguishment 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
adjustment allocable to the
Company
    
    $
    (1,273
    )
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (1,273
    )Companys ownership interest
at end of period
    
    
    44.00
    %
    
    
    49.00
    %
    
    
    48.15
    %
    
    
    9.90
    %
  121




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Desert
    
    
    WB
    
    
    CY-SF
    
    
    OtherRidge
    
    
    Resort
    
    
    Hotel
    
    
    JointResort
    
    
    Partners,
    
    
    Parent,
    
    
    VenturesPartners, LLC (i)
    
    
    LP (ii)
    
    
    LP (iv)
    
    
    (iv)(v)(a)
    
    
    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
adjustment 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%
 
 (a)
    
    For the year ended December 31, 2006, Other Joint Ventures includes the results of operations
of CNL Plaza, Ltd. and CNL Plaza Venture, Ltd. 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 year ended December 31, 2004, 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 31,2006
    
    
    2005Desert Ridge Resort Partners, LLC
    
    $
    713
    
    
    $
    2,883WB Resort Partners, LP
    
    
    
    
    
    
    50,653
    (1)CY-SF Hotel Parent, LP
    
    
    
    
    
    
    1,624CNL Plaza, Ltd.
    
    
    361
    
    
    
    218$
    1,074
    
    
    $
    55,378
 
 (1)
    
    Of this distribution, $47.5 million relates to the WBR Sale. 122




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Discontinued Operations:
 On February 8, 2007, the Company completed the Century Sale for a sales price of approximately $369
million, resulting in an estimated net gain to the Company of approximately $7.9 million. As a
result of the Century Sale, net proceeds to the Company were approximately $351 million. The Company intends to use the net proceeds from the sale for
general corporate purposes including the retirement of long-term debt. In March 2007, the Company
utilized approximately $108 million of the proceeds to pay down the outstanding balance on the
Companys senior secured revolving credit facility (the Revolver). Pursuant to an amendment to
the Purchase Agreement, the sale of the Deferred Hotels was deferred
and those Properties are being held for sale subject to the Purchase Agreement pending the satisfaction or
waiver of certain conditions related to those hotels. A dispute was arisen regarding the Purchasers obligation to complete the purchase of the
Deferred Hotels and there can be no assurance that such a sale will be consummated.
 On September 29, 2006, the Company completed the sale of its 66.7 percent interest in the
partnership that owned the 144-room Hampton Inn Chelsea in New York (the Chelsea Sale). The sale
price was based on a valuation of $54.0 million for the property, or approximately $375,000 per
key, resulting in total proceeds of $26.3 million and a net gain to the Company of approximately
$17 million.
 On April 28, 2006, the Company completed the sale of its two Wyndham hotels to an affiliate of The
Blackstone Group for $42.5 million, resulting in a net gain of approximately $5.2 million (the
Wyndham Sale). The two propertiesWyndham Denver Tech Center (Denver) and Wyndham Billerica
(Billerica, Mass.)were previously leased by the Company to an affiliate of The Blackstone Group.
 On January 9, 2006, the Company, through certain of its affiliates, completed the Del Sale. The
interests were sold to KSL Recreation Holdings I, LLC and KSL Recreation Management Operations,
LLC, affiliates of KSL DC Operating LLC and Kohlberg Kravis Roberts & Co. The results of operations
for the Hotel Del have been classified as discontinued operations in the accompanying consolidated
statements of operations for the years ended December 31, 2006, 2005 and 2004. As a result of the
Del Sale and related transactions, the Company received net proceeds of approximately $167 million
with a net gain of approximately $132.4 million.
 On September 1, 2005, the Company, through various wholly-owned subsidiaries, completed the sale
(the Pyramid Sale) of five non-strategic Properties to Pyramid Hotel Opportunity Venture LLC
(Pyramid). The Properties were sold for $109 million in cash, with a gain of approximately $3.0
million, net of a loss on extinguishment of debt of $2.3 million. The proceeds from the Pyramid
Sale were used to repay a portion of long-term debt. The Pyramid Sale was completed pursuant to the
terms of the Agreement of Purchase and Sale, dated July 5, 2005, between various wholly-owned
subsidiaries of the Company and Pyramid.
 On August 30, 2005, the Company completed the sale of the Lake Lanier Islands Resort to LLI
Management Company, LLC for a purchase price of $24.5 million, resulting in a net gain of
approximately $12.0 million (the LLIR Sale). The purchase price included $13 million in cash
proceeds and the assumption of an $11.5 million leasehold obligation. In connection with the LLIR
Sale, the Company terminated a sub-lease with Marriott. The consideration for such termination
included cash and the conveyance of Marriotts interests in the Renaissance PineIsle Resort and
Golf Club. As a result, the Company recognized termination fee income of approximately $6.0 million
which is reflected in discontinued operations in the accompanying consolidated statement of
operations for the year ended December 31, 2005. The proceeds from the LLIR Sale were used to repay
a portion of long-term debt.
 On June 17, 2005, the Company, through various wholly-owned subsidiaries, completed the sale of 30
non-strategic Properties, including six Courtyard® by Marriott
hotels, thirteen Residence Inn® by
Marriott hotels, seven TownePlace Suites®  by Marriott hotels, and four SpringHill Suites® by
Marriott hotels, to Ashford Hospitality
 123




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##### Table of Contents



Limited Partnership, an affiliate of Ashford Hospitality
Trust, Inc. (NYSE: AHT) (the Ashford Sale), for total gross proceeds of $465 million in cash,
resulting in a net gain of approximately $41.5 million, net of a loss on extinguishment of debt of
$7.7 million. Included in the gain on sale is a $1.9 million gain related to the settlement of
amounts owed to hotel managers for liquidity facility loans for less than their carrying amounts.
Upon closing, $302.7 million of outstanding debt as well as $107.9 million in additional debt pursuant to the
release provisions of two of the Companys debt agreements was repaid with a portion of the
proceeds from the Ashford Sale.
 On June 9, 2005, the Company completed the sale of the Holiday Inn Express located in Austin, TX
for total gross proceeds of $2.8 million in cash, resulting in a net loss of $0.1 million. During
the first three months of 2005, the Company recorded an impairment charge of $0.3 million in order
to write down the value of this Property to its expected sales value less estimated costs to sell.
The proceeds from the sale were used to repay a portion of long-term debt.
 On March 10, 2005, the Company sold the Holiday Inn Express located in Bloomington, MN for
approximately $5.5 million in cash which resulted in a net gain of $0.7 million. The proceeds from
the sale were used to repay a portion of the Companys long-term debt.
 During the second half of 2004, the Company sold four Properties  the Hampton Inn in Omaha,
Nebraska, the Comfort Inn in Marietta, Georgia, the Hampton Inn in Denver, Colorado, and the
Residence Inn in Charlotte, North Carolina  to unaffiliated third parties for total gross proceeds
of $18.1 million resulting in a loss of $1.3 million including a previous write-down of $2.0
million to estimated sales value less cost to sell for these Properties. The majority of the
proceeds from these sales were used to pay down outstanding debt.
 The results of operations for the Century Sale, the Chelsea Sale, the Wyndham Sale, the Del Sale,
the Pyramid Sale, the LLIR Sale, the Ashford Sale, the Holiday Inn Express located in Austin, TX
and the Holiday Inn Express located in Bloomington, MN have been classified as discontinued
operations in the accompanying consolidated statements of operations for the years ended December
31, 2006, 2005 and 2004 to the extent and for the periods such Properties were owned by the
Company. In addition, the results of operations of the four Properties the Company sold in 2004
have been classified as discontinued operations in the accompanying consolidated statements of
operations for the year ended December 31, 2004. The accompanying consolidated balance sheets as of
December 31, 2006 and 2005 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.
 Results from discontinued operations were as follows (in thousands):
 Year Ended December 31,2006
    
    
    2005
    
    
    2004Revenues
    
    $
    135,831
    
    
    $
    354,359
    
    
    $
    406,007Income from lease termination
    
    
    
    
    
    
    5,982
    
    
    
    Expenses
    
    
    (94,873
    )
    
    
    (237,190
    )
    
    
    (267,902
    )Depreciation and amortization
    
    
    (15,544
    )
    
    
    (43,973
    )
    
    
    (54,720
    )Write-down of assets
    
    
    
    
    
    
    (345
    )
    
    
    (5,920
    )Interest and loan cost amortization
    
    
    (11,737
    )
    
    
    (50,331
    )
    
    
    (37,277
    )Income from discontinued operations
    
    
    13,677
    
    
    
    28,502
    
    
    
    40,188Gain on sale of assets
    
    
    153,523
    
    
    
    67,321
    
    
    
    645Gain on hedge termination
    
    
    946
    
    
    
    
    
    
    
    Transaction costs
    
    
    (171
    )
    
    
    
    
    
    
    Loss on extinguishment of debt
    
    
    (4,296
    )
    
    
    (13,469
    )
    
    
    Minority interests
    
    
    570
    
    
    
    (2,008
    )
    
    
    (5,424
    )Income tax (expense) benefit
    
    
    254
    
    
    
    (4,336
    )
    
    
    (1,110
    )$
    164,503
    
    
    $
    76,010
    
    
    $
    34,299
 124




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Prepaid Expenses and Other Assets:
  Investments:
   Goodwill and Intangible Assets:
  2006
    
    
    2005Goodwill
    
    $
    511,004
    
    
    $
    509,174Intangibles
    
    
    327,087
    
    
    
    336,723$
    838,091
    
    
    $
    845,897
  Goodwill and
    
    Weighted
    
    
    Gross Carrying
    
    
    Accumulated
    
    
    NetIntangible Assets
    
    Average Life
    
    
    Amount
    
    
    Amortization
    
    
    Book ValueGoodwill
    
    Indefinite
    
    $
    511,004
    
    
    
    n/a
    
    
    $
    511,004Tradenames
    
    Indefinite
    
    
    199,757
    
    
    
    n/a
    
    
    
    199,757Rental pool operating rights
    
    Indefinite
    
    
    15,900
    
    
    
    n/a
    
    
    
    15,900Goodwill and other intangible
assets with indefinite lives
    
    
    
    
    
    
    726,661
    
    
    
    n/a
    
    
    
    726,661Beneficial operating rights
    
    29.7 years
    
    
    43,900
    
    
    
    (4,478
    )
    
    
    39,422Advanced bookings
    
    7.0 years
    
    
    16,442
    
    
    
    (7,254
    )
    
    
    9,188Membership contracts
    
    13.7 years
    
    
    50,842
    
    
    
    (13,313
    )
    
    
    37,529Favorable ground lease
    
    39.0 years
    
    
    27,431
    
    
    
    (2,140
    )
    
    
    25,291Intangible assets with finite lives
    
    
    
    
    
    
    138,615
    
    
    
    (27,185
    )
    
    
    111,430Total goodwill and intangible assets
    
    
    
    
    
    $
    865,276
    
    
    $
    (27,185
    )
    
    $
    838,091
 125




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2007
    
    $
    9,7002008
    
    
    9,7002009
    
    
    9,7002010
    
    
    9,7002011
    
    
    9,700Thereafter
    
    
    62,930Total
    
    $
    111,430
 Income Taxes:
     126




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##### Table of Contents



2006
    
    
    2005
    
    
    2004Current:Federal
    
    $
    (1,142
    )
    
    $
    (687
    )
    
    $
    (1,757
    )State
    
    
    (359
    )
    
    
    458
    
    
    
    (954(1,502
    )
    
    
    (229
    )
    
    
    (2,711
    )Deferred:Federal
    
    
    902
    
    
    
    (897
    )
    
    
    (21,749
    )State
    
    
    233
    
    
    
    (231
    )
    
    
    (4,079
    )1,135
    
    
    
    (1,128
    )
    
    
    (25,828
    )Total income tax (expense)
    
    $
    (367
    )
    
    $
    (1,357
    )
    
    $
    (28,539
    )
  2006
    
    
    2005
    
    
    2004Continuing operations
    
    $
    (621
    )
    
    $
    2,979
    
    
    $
    (27,429
    )Discontinued operations
    
    
    254
    
    
    
    (4,336
    )
    
    
    (1,110
    )Total income tax (expense) benefit
    
    $
    (367
    )
    
    $
    (1,357
    )
    
    $
    (28,539
    )
  2006
    
    
    2005Deferred tax assets:Net operating loss
    
    $
    127,470
    
    
    $
    87,736Lease termination
    
    
    5,898
    
    
    
    7,760Other
    
    
    (58
    )
    
    
    (3,094
    )Valuation allowance
    
    
    (133,304
    )
    
    
    (93,530
    )$
    6
    
    
    $
    (1,128
    )
  2021
    
    $
    7,7332022
    
    
    25,0712023
    
    
    46,4102024
    
    
    98,0972025
    
    
    73,4652026
    
    
    82,164Total
    
    $
    332,940
 Indebtedness:
  127




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2006
    
    
    2005Mortgages payable
    
    $
    3,632,007
    
    
    $
    2,564,359Tax incremental financing note
    
    
    7,783
    
    
    
    7,783Indebtedness collateralized by Properties
    
    
    3,639,790
    
    
    
    2,572,142Unsecured notes
    
    
    21,976
    
    
    
    11,592$
    3,661,766
    
    
    $
    2,583,734
        128




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129




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130




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2006
    
    
    2005Collateral (1)
    
    
    Interest Rate (2)
    
    
    Maturity Date
    
    
    Balance
    
    
    BalanceFloating rate debt:CMBS loan
    
    5 hotels
    
    LIBOR + 332.5 bps
    (3)
    
    September 2009
    
    $
    
    
    
    $
    1,500,000CMBS loan  floating rate
portion
    
    5 hotels
    
    LIBOR + 272.5 bps
    (3)
    
    February 2011
    
    
    525,000
    
    
    
    Mortgage debt 
floating rate portion
    
    2 hotels
    
    LIBOR + 276 bps
    (3)
    
    March 2011
    
    
    235,000
    
    
    
    Mortgage debt
    
    1 hotel
    
    LIBOR + 225 bps
    (3)
    
    July 2007
    
    
    300,000
    
    
    
    Mortgage debt
    
    1 hotel
    
    CDOR + 375 bps
    (5)
    
    April 2009
    
    
    37,757
    
    
    
    37,752Mortgage debt
    
    1 hotel
    
    LIBOR + 425 bps
    (3)
    
    July 2007
    
    
    54,166
    
    
    
    Mortgage debt
    
    4 hotels
    
    LIBOR + 230 bps
    (4)
    
    October 2006
    
    
    
    
    
    
    94,919Secured revolver
    
    6 hotels
    
    LIBOR + 225 bps
    
    
    September 2008
    
    
    108,000
    
    
    
    Total floating rate debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,259,923
    
    
    
    1,632,671Fixed rate debt:CMBS loan  fixed rate
portion
    
    5 hotels
    
    
    5.57
    %
    
    February 2011
    
    
    1,000,000
    
    
    
    Mortgage debt  fixed rate
portion
    
    2 hotels
    
    
    5.71
    %
    
    March 2011
    
    
    335,000
    
    
    
    Mortgage debt
    
    8 hotels
    
    
    6.53
    %
    
    November  2007
    
    
    85,779
    
    
    
    88,225Mortgage debt
    
    3 hotels
    
    
    8.34
    %
    
    December  2007
    
    
    50,000
    
    
    
    50,000Mortgage debt
    
    2 hotels
    
    
    5.67
    %
    
    January 2008
    
    
    75,490
    
    
    
    77,053Mortgage debt
    
    1 hotel
    
    
    5.84
    %
    
    December  2007
    
    
    29,836
    
    
    
    30,435Mortgage 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
    
    
    84,037
    
    
    
    86,371Mortgage debt
    
    8 hotels
    
    
    8.00
    %
    
    August  2010
    
    
    47,724
    
    
    
    48,843Mortgage debt
    
    1 hotel
    
    
    5.60
    %
    
    April  2009
    
    
    30,858
    
    
    
    31,504Mortgage debt
    
    7 hotels
    
    
    7.67
    %(6)
    
    July  2009
    
    
    76,796
    
    
    
    78,836Mortgage debt
    
    5 hotels
    
    
    5.95
    %
    
    March  2010
    
    
    145,000
    
    
    
    145,000Mortgage debt
    
    1 hotel
    
    
    8.08
    %
    
    August  2010
    
    
    44,351
    
    
    
    45,062Mortgage debt
    
    1 hotel
    
    
    8.32
    %
    
    January  2011
    
    
    6,229
    
    
    
    6,345Mortgage debt
    
    1 hotel
    
    
    8.11
    %
    
    February  2011
    
    
    26,602
    
    
    
    27,355Mortgage debt
    
    4 hotels
    
    
    5.47
    %
    
    April 2011
    
    
    118,474
    
    
    
    Mortgage debt
    
    1 hotel
    
    
    7.78
    %
    
    January  2023
    
    
    8,439
    
    
    
    8,672Mortgage debt
    
    1 hotel
    
    
    8.29
    %
    
    December  2025
    
    
    30,270
    
    
    
    30,787Insurance financing note
    
    
    n/a
    
    
    
    5.78
    %
    
    October 2007
    
    
    20,975
    
    
    
    10,592Tax incremental financing
note
    
    1 hotel
    
    
    12.85
    %(7)
    
    June 2018
    
    
    7,783
    
    
    
    7,783Publicly-traded term notes
    
    
    n/a
    
    
    
    9.75
    %
    
    March 2012
    
    
    1,000
    
    
    
    1,000Total fixed rate debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,401,843
    
    
    
    951,063Total debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    3,661,766
    
    
    $
    2,583,734
 
 1.
    
    As of December 31, 2006, 98 percent of the Properties the Company directly owned were
pledged as collateral under the Companys financing arrangements.2.
    
    As of December 31, 2006 and 2005, LIBOR was 5.32 percent and 4.39 percent, respectively,
and CDOR was 4.34 percent and 3.37 percent.3.
    
    Blended interest rate4.
    
    Interest rate floor of 4.96%5.
    
    Interest rate floor of 6.25% 131




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##### Table of Contents



6.
    
    Average interest rate as the loans bear interest ranging from 7.5% to 7.75%7.
    
    This note is paid down with incremental real estate taxes bearing an interest rate of 12.85%  2007
    
    $
    253,5202008
    
    
    323,2062009 (i)
    
    
    273,5572010
    
    
    536,0342011
    
    
    2,232,7242012 and thereafter
    
    
    42,725Total
    
    $
    3,661,766
 
 (i)
    
    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:
 
    132




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Index
    
    
    
    
    
    Fair ValueIndex at
    
    Cap
    
    
    
    
    
    (inNotional Amount
    
    Index
    
    12/31/06
    
    Strike
    
    Cap Maturity
    
    thousands)$270 million
    
    LIBOR
    
    
    5.32
    %
    
    
    4.50
    %
    
    July 2007
    
    $
    1,052$31.5 million
    
    LIBOR
    
    
    5.32
    %
    
    
    4.50
    %
    
    July 2007
    
    
    123$115 million
    
    LIBOR
    
    
    5.32
    %
    
    
    4.75
    %
    
    January 2008
    
    
    536$110 million
    
    LIBOR
    
    
    5.32
    %
    
    
    4.75
    %
    
    January 2008
    
    
    513$250 million
    
    LIBOR
    
    
    5.32
    %
    
    
    4.75
    %
    
    January 2008
    
    
    1,165$50 million
    
    LIBOR
    
    
    5.32
    %
    
    
    4.75
    %
    
    January 2008
    
    
    233$85 million
    
    LIBOR
    
    
    5.32
    %
    
    
    5.00
    %
    
    March 2008
    
    
    260$50 million
    
    LIBOR
    
    
    5.32
    %
    
    
    5.00
    %
    
    March 2008
    
    
    153$50 million
    
    LIBOR
    
    
    5.32
    %
    
    
    5.00
    %
    
    March 2008
    
    
    153$50 million
    
    LIBOR
    
    
    5.32
    %
    
    
    5.00
    %
    
    March 2008
    
    
    153$40 million
    
    CDOR
    
    
    4.34
    %
    
    
    7.00
    %
    
    April 2007
    
    
    0
 Distributions:
  133




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##### Table of Contents



Related Party Transactions:
    2006
    
    
    2005CNL Securities Corp.:Selling commissions refund, net
    
    $
    (290
    )
    
    $
    (2,103
    )Marketing support fee and due diligence expense refund, net
    
    
    
    
    
    
    (394
    )(290
    )
    
    
    (2,497
    )The Former Advisor and its former affiliates:Acquisition fees
    
    
    
    
    
    
    23,000Development fees
    
    
    856
    
    
    
    3,001Asset management fees
    
    
    13,728
    
    
    
    27,86814,584
    
    
    
    53,869$
    14,294
    
    
    $
    51,372
    134




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##### Table of Contents



2006
    
    
    2005
    
    
    2004Stock issuance costs
    
    $
    
    
    
    $
    
    
    
    $
    8,188General operating and administrative
expenses
    
    
    2,504
    
    
    
    4,515
    
    
    
    4,328$
    2,504
    
    
    $
    4,515
    
    
    $
    12,516
    135




---



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136




---



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137




---



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Concentration of Risk:
  138




---



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Stockholders Equity:
    Commitments and Contingencies:
  139




---



##### Table of Contents



140




---



##### Table of Contents



141




---



##### Table of Contents



th th
    142




---



##### Table of Contents



CNL Hospitality Corp. Merger and Other Matters:
 143




---



##### Table of Contents



Original Merger Agreement
  Amended and Restated Merger Agreement
   144




---



##### Table of Contents



Transition Services Agreement
  Brand License Agreement
  
    
    Mr. Seneff is involuntarily removed as a member of our Board by the Companys
stockholders or the Board;
    
    the Company terminates the Tower II Lease (as defined below), provided that, if
the Companys termination of the Tower II Lease is the result of a material breach
by the other party, and CFG or its affiliates terminate the Brand License
Agreement, CFG is obligated to pay the Company a $2 million termination fee;
    
    the Company is involved in certain extraordinary corporate transactions, such as
a merger, a dissolution, or sale of all or substantially all of its assets; or
    
    a majority of the Board are persons other than persons for whose election
proxies have been solicited by the Board.
 Registration Rights Agreement; Lock-Up Letters
  145




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##### Table of Contents



Pledge and Security Agreement
  Tower II Lease
  146




---



##### Table of Contents



Five Arrows Note
  CHP Note
  Employment Agreements
   147




---



##### Table of Contents



Deferred Share Grants
  Bonus Payments
  Stock-Based Compensation for Directors:
     148




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##### Table of Contents



Stock-Based Compensation for Employees:
  Executive Officer Deferred Share Grants
   Number ofName
    
    Deferred SharesThomas J. Hutchison III
    
    
    850,500John A. Griswold
    
    
    662,900C. Brian Strickland
    
    
    465,000Barry A. N. Bloom
    
    
    175,000Greerson G. McMullen
    
    
    131,250
   st st th th st
 149




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##### Table of Contents



Other Deferred Share Grants
 Executive Officer
Deferred Share Grants Executive Officer Deferred Share Grants
 Terms Applicable to All Deferred Share Grants
   150




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##### Table of Contents



Defined Contribution Plan:
  Credit Enhancements:
  151




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##### Table of Contents



ThresholdLimited
    
    
    Guarantees/
    
    
    LiquidityRent
    
    
    Reimbursement
    
    
    FacilityGuarantees
    
    
    Guarantees
    
    
    LoansAmount available as of January 1, 2005
    
    $
    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
    
    
    
    3,954New credit enhancements obtained
    
    
    
    
    
    
    70,710
    
    
    
    8,100Utilization of credit enhancements
    
    
    (395
    )
    
    
    (6,256
    )
    
    
    (633
    )Expiration of credit enhancements
    
    
    (16,849
    )
    
    
    
    
    
    
    Amount available as of December 31, 2006
    
    $
    
    
    
    $
    67,682
    
    
    $
    11,421
   2006
    
    
    2005Threshold guarantees
    
    $
    1,324
    
    
    $
    2,055Liquidity facility loan
    
    
    
    
    
    
    $
    1,324
    
    
    $
    2,055
 152




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##### Table of Contents



2005Liquidity facility loan
    
    $
    13,759Senior loan guarantees
    
    
    $
    13,759
      ®
 153




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##### Table of Contents



Selected Quarterly Financial Data (unaudited):
  2006 Quarter*
    
    First
    
    Second
    
    Third
    
    FourthContinuing operations:Revenues
    
    $
    373,179
    
    
    $
    431,405
    
    
    $
    328,941
    
    
    $
    271,172Loss from continuing
operations
    
    
    (15,711
    )
    
    
    (79,548
    )
    
    
    (66,466
    )
    
    
    (6,113
    )Discontinued operations:Revenues
    
    
    35,226
    
    
    
    5,311
    
    
    
    34,667
    
    
    
    60,627Income from discontinued
operations
    
    
    135,475
    
    
    
    6,778
    
    
    
    23,252
    
    
    
    (1,002
    )Net income (loss)
    
    
    119,764
    
    
    
    (72,770
    )
    
    
    (43,214
    )
    
    
    (7,115
    )Earnings (loss) per share,Basic and diluted:Continuing operations
    
    
    (0.10
    )
    
    
    (0.52
    )
    
    
    (0.43
    )
    
    
    (0.04
    )Discontinued operations
    
    
    0.88
    
    
    
    0.04
    
    
    
    0.15
    
    
    
    (0.01
    )Net earnings (loss)
    
    
    0.78
    
    
    
    (0.48
    )
    
    
    (0.28
    )
    
    
    (0.05
    )Weighted average number of
shares of common stock
outstanding:Basic and diluted
    
    
    152,883
    
    
    
    153,083
    
    
    
    154,226
    
    
    
    156,484
 154




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##### Table of Contents



2005 Quarter*
    
    First
    
    Second
    
    Third
    
    FourthContinuing operations:Revenues
    
    $
    332,740
    
    
    $
    333,153
    
    
    $
    262,669
    
    
    $
    288,227Income (loss) from
continuing operations
    
    
    11,305
    
    
    
    (17,175
    )
    
    
    (52,808
    )
    
    
    (10,446
    )Discontinued operations:Revenues
    
    
    96,141
    
    
    
    89,332
    
    
    
    86,469
    
    
    
    82,417(Loss) income from
discontinued operations
    
    
    (2,339
    )
    
    
    50,049
    
    
    
    34,194
    
    
    
    (5,880
    )Net income (loss)
    
    
    8,966
    
    
    
    32,874
    
    
    
    (18,614
    )
    
    
    (16,326
    )Earnings (loss) per share,Basic and diluted:Continuing operations
    
    
    0.07
    
    
    
    (0.11
    )
    
    
    (0.35
    )
    
    
    (0.07
    )Discontinued operations
    
    
    (0.01
    )
    
    
    0.33
    
    
    
    0.23
    
    
    
    (0.04
    )Net earnings (loss)
    
    
    0.06
    
    
    
    0.22
    
    
    
    (0.12
    )
    
    
    (0.11
    )Weighted average number of
shares of common stock
outstanding:Basic and diluted
    
    
    152,913
    
    
    
    152,830
    
    
    
    152,876
    
    
    
    152,877
 
 *
    
    Each quarter reflects the reclassification of results of operations for the 35 and 39
Properties sold, or identified as held for sale during 2006 and 2005, respectively, from
continuing operations to discontinued operations. Assets Held For Sale:
  2006
    
    2005Assets:Hotel and resort properties, net
    
    $
    369,936
    
    
    $
    735,079Cash and cash equivalents
    
    
    
    
    
    
    7,359Restricted cash
    
    
    
    
    
    
    18,776Receivables, net
    
    
    
    
    
    
    5,960Goodwill
    
    
    
    
    
    
    23,401Intangibles, net
    
    
    
    
    
    
    49,533Prepaid expenses and other assets
    
    
    
    
    
    
    11,669Loan costs, net
    
    
    
    
    
    
    3,437$
    369,936
    
    
    $
    855,214
 155




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##### Table of Contents



2006
    
    
    2005Liabilities:Mortgages payable and accrued interest
    
    $
    
    
    
    $
    415,720Accounts payable and accrued expenses
    
    
    
    
    
    
    17,291Other liabilities
    
    
    
    
    
    
    3,546$
    
    
    
    $
    436,557
   Subsequent Events:
      156




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157




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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
  158




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##### Table of Contents



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
  159




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##### Table of Contents



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, 2006 and 2005Consolidated Statements of Operations for the years ended December 31, 2006, 2005 and 2004Consolidated Statements of Stockholders Equity and Other Comprehensive Income (Loss) for
the years ended December 31, 2006, 2005 and 2004Consolidated Statements of Cash Flows for the years ended December 31, 2006, 2005 and 2004Notes to Consolidated Financial Statements2.
    
    Financial Statement SchedulesSchedule II  Valuation and Qualifying Accounts for the years ended December 31, 2006,
2005 and 2004Schedule III  Real Estate and Accumulated Depreciation at December 31, 2006Notes to Schedule III  Real Estate and Accumulated Depreciation at December 31, 2006All other Schedules are omitted as the required information is inapplicable or is
presented in the financial statements or notes thereto.
 (b)
    
    Exhibits
 2.1
    
    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.)2.2
    
    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.)2.3
    
    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.)
 160




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##### Table of Contents



2.4
    
    Amended and Restated
Agreement and Plan of
Merger dated as of
April 3, 2006 by and
among CNL Hotels &
Resorts, Inc., CNL
Hospitality Corp., CNL
Real Estate Group,
Inc., Five Arrows
Realty Securities II
L.L.C., the other
stockholders of CNL
Hospitality Corp.
listed on the signature
page thereto under the
heading Stockholders,
CNL Financial Group,
Inc., CNL Hotels &
Resorts Acquisition,
LLC, and CNL
Hospitality Properties
Acquisition Corp. and
exhibits thereto
(Previously filed as
Appendix A to the
Registrants Definitive
Proxy Statement filed
May 12, 2006 and
incorporated herein by
reference.)2.5
    
    Agreement and Plan of
Merger dated as of
January 18, 2007, by
and among CNL Hotels &
Resorts, Inc., MS
Resort Holdings LLC, MS
Resort Acquisition LLC,
MS Resort Purchaser LLC
and Ashford Sapphire
Acquisition LLC
(Previously filed as
Exhibit 2.1 to the
Registrants Current
Report on Form 8-K
filed January 19, 2007
and incorporated herein
by reference.)2.6
    
    Amendment No. 1 to the
Agreement and Plan of
Merger, dated as of
February 21, 2007, by
and among CNL Hotels &
Resorts, Inc., MS
Resort Holding LLC, MS
Resort Acquisition LLC,
MS Resort Purchaser LLC
and Ashford Sapphire
Acquisition LLC
(Previously filed as
Exhibit 2.1 to the
Registrants Current
Report on Form 8-K
filed February 21, 2007
and incorporated herein
by reference.)3.1
    
    Articles of Amendment
and Restatement of CNL
Hotels & Resorts, Inc.
dated August 7, 2006
(Previously filed as
Exhibit 3.1 to the
Registrants Current
Report on Form 8-K
filed August 11, 2006
and incorporated herein
by reference.)3.2
    
    Amended and Restated
Bylaws of CNL Hotels &
Resorts, Inc., dated
August 30, 2006
(Previously filed as
Exhibit 3.1 to the
Registrants Current
Report on Form 8-K
filed September 6, 2006
and incorporated herein
by reference.)4.1
    
    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.)4.2
    
    Amended and Restated
Reinvestment Plan
(Included as Appendix A
to the Registrants
Post-Effective
Amendment No. 1 to Form
S-3 Registration
Statement on Form S-11
filed with the SEC on
June 8, 2006 and
incorporated herein by
reference.)4.3
    
    Registration Rights
Agreement, dated as of
June 21, 2006, by and
among CNL Real Estate
Group, Inc., Five
Arrows Realty
Securities II L.L.C.,
James M. Seneff, Jr.,
Robert A. Bourne, C.
Brian Strickland,
Thomas J. Hutchison
III, John A. Griswold,
Barry A.N. Bloom,
Marcel Verbaas and CNL
Hotels & Resorts, Inc.
(Previously filed as
Exhibit 4.1 to the
Registrants Current
Report on Form 8-K
filed June 23, 2006 and
incorporated herein by
reference.)4.4
    
    Pledge and Security
Agreement, dated as of
June 21, 2006, by and
among CNL Real Estate
Group, Inc., James M.
Seneff, Jr., Robert A.
Bourne, C. Brian
Strickland, Thomas J.
Hutchison III, John A.
Griswold, Barry A.N.
Bloom, Marcel Verbaas,
CNL Hotels & Resorts,
Inc., CNL Hotels &
Resorts Acquisition,
LLC (Previously filed
as Exhibit 4.2 to the
Registrants Current
Report on Form 8-K
filed June 23, 2006 and
incorporated herein by
reference.)
 161




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##### Table of Contents



10.1
    
    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.)10.2
    
    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
on Form S-11 filed
January 26, 2004 and
incorporated herein by
reference.)10.3
    
    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.)10.4
    
    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.)10.5
    
    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.)10.6
    
    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.)10.7
    
    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.)
 162




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##### Table of Contents



10.8
    
    $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.)10.9
    
    $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.)10.10
    
    $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.)10.11
    
    $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.)10.12
    
    $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.)10.13
    
    $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.)10.14
    
    $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.)10.15
    
    $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.)10.16
    
    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.)10.17
    
    $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.)
 163




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##### Table of Contents



10.18
    
    $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.)10.19
    
    $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.)10.20
    
    $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.)10.21
    
    $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.)10.22
    
    $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.)10.23 *
    
    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.)10.24
    
    Second Amendment to Loan and Security Agreement by
and among CNL Hospitality Partners, LP (as Borrower),
CNL Hotels & 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.)10.25 *
    
    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.)10.26 *
    
    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.)10.27 *
    
    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.)10.28
    
    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.)
 164




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##### Table of Contents



10.29
    
    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.)10.30
    
    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.)10.31
    
    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.)10.32
    
    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.)10.33
    
    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.)10.34
    
    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.)10.35
    
    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.)10.36
    
    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.)10.37
    
    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.)
 165




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10.38
    
    $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.)10.39
    
    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.)10.40
    
    $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.)10.41
    
    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.)10.42
    
    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.)10.43
    
    $200,000,000 Credit Agreement dated as of September
30, 2005 between CNL Hospitality Partners, LP, as
Borrower, CNL Hotels & 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
refernce.)10.44
    
    $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 (Previously filed as Exhibit 10.89 to the Registrants Annual Report on
Form 10-K filed March 31, 2006 and incorporated herein by reference.)10.45
    
    $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 (Previously filed as Exhibit 10.90 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.46
    
    $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 (Previously filed as Exhibit 10.91 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.47
    
    $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 (Previously filed as Exhibit 10.92 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)
 166




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10.48
    
    $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 (Previously filed as Exhibit 10.93 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.49
    
    $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 (Previously filed as Exhibit 10.94 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.50
    
    $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 (Previously filed as Exhibit 10.95 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.51
    
    $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 (Previously filed as Exhibit 10.96 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.52
    
    $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 (Previously filed as Exhibit 10.97 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.53
    
    $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 (Previously filed as Exhibit 10.98 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.54
    
    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 (Previously filed as Exhibit 10.99 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.55
    
    Purchase and Sale Agreement by and between THI III GL
Investments, L.L.C., as Seller, and CNL Hotels &
Resorts, Inc., as Purchaser (Previously filed as Exhibit 10.100 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.56
    
    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.)10.57
    
    $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 (Previously filed as Exhibit 10.104 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.58
    
    $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 (Previously filed as Exhibit 10.105 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.59
    
    $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 (Previously filed as Exhibit 10.106 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.60
    
    $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 (Previously filed as Exhibit 10.107 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.61
    
    $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 (Previously filed as Exhibit 10.108 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)
 167




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10.62
    
    $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 (Previously filed as Exhibit 10.109 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.63
    
    $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 (Previously filed as Exhibit 10.110 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.64
    
    $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 (Previously filed as Exhibit 10.111 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.65
    
    $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 (Previously filed as Exhibit 10.112 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.66
    
    $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 (Previously filed as Exhibit 10.113 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.67
    
    Amended and Restated Agreement and Plan of Merger
dated April 3, 2006 (Previously filed as Exhibit 10.1
to the Registrants Current Report on Form 8-K filed
April 7, 2006 and incorporated herein by reference.)10.68
    
    Form of Registration Rights Agreement (Previously
filed as Exhibit 10.4 to the Registrants Current
Report on Form 8-K filed April 7, 2006 and
incorporated herein by reference.)10.69
    
    Form of Pledge and Security Agreement (Previously
filed as Exhibit 10.5 to the Registrants Current
Report on Form 8-K filed April 7, 2006 and
incorporated herein by reference.)10.70
    
    $120,000,000 Promissory Note dated as of April 3,
2006 by AH Hotel Partners, LP, PH Hotel Partners, LP,
HMA Hotel Partners, LP and CM Hotel Partners, LP (as
Borrowers) issued to The Prudential Insurance Company
of America (as Lender) (Previously filed as Exhibit
10.121 to the Registrants Quarterly Report on Form
10-Q filed May 15, 2006 and incorporated herein by
reference.)10.71
    
    $120,000,000 Mortgage dated as of April 3, 2006 by AH
Hotel Partners, LP (as Borrower) to The Prudential
Insurance Company of America (as Lender) (Previously
filed as Exhibit 10.122 to the Registrants Quarterly
Report on Form 10-Q filed May 15, 2006 and
incorporated herein by reference.)10.72
    
    $120,000,000 Deed of Trust, Security Agreement and
Fixture Filing dated as of April 3, 2006 by CM Hotel
Partners, LP (as Borrower) to The Prudential
Insurance Company of America (as Lender) (Previously
filed as Exhibit 10.123 to the Registrants Quarterly
Report on Form 10-Q filed May 15, 2006 and
incorporated herein by reference.)10.73
    
    $120,000,000 Multi-state Mortgage and Security
Agreement dated as of April 3, 2006 by HMA Hotel
Partners, LP, PH Hotel Partners, LP, AH Hotel
Partners, LP and CM Hotel Partners, LP (as Borrower)
to The Prudential Insurance Company of America (as
Lender) (Previously filed as Exhibit 10.124 to the
Registrants Quarterly Report on Form 10-Q filed May
15, 2006 and incorporated herein by reference.)
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10.74
    
    $120,000,000 Deed of Trust, Security Agreement and
Fixture Filing dated as of April 3, 2006 by PH Hotel
Partners, LP (as Borrower) to The Prudential
Insurance Company of America (as Lender) (Previously
filed as Exhibit 10.125 to the Registrants Quarterly
Report on Form 10-Q filed May 15, 2006 and
incorporated herein by reference.)10.75
    
    Renewal Agreement dated March 30, 2006 between CNL
Hotels & Resorts, Inc. and CNL Hospitality Corp.
(Previously filed as Exhibit 10.126 to the
Registrants Quarterly Report on Form 10-Q filed May
15, 2006 and incorporated herein by reference.)10.76
    
    Memorandum of Understanding In re CNL Hotels &
Resorts, Inc. Securities Litigation, Case No.
6:04-cv-1231-Orl-31KRS (Previously filed as Exhibit
10.127 to the Registrants Quarterly Report on Form
10-Q filed May 15, 2006 and incorporated herein by
reference.)10.77 *
    
    Amended and Restated Employment Agreement between CNL
Hotels & Resorts, Inc. and Thomas J. Hutchison III,
dated as of May 19, 2006, amending the Employment
Agreement dated as of April 3, 2006 (Previously filed
as Exhibit 10.128 to the Registrants Post-Effective
Amendment No. 1 to Form S-3 Registration Statement on
Form S-11 filed June 8, 2006 and incorporated herein
by reference.)10.78 *
    
    Amended and Restated Employment Agreement between CNL
Hotels & Resorts, Inc. and John A. Griswold, dated as
of May 19, 2006, amending the Employment Agreement
dated as of April 3, 2006 (Previously filed as
Exhibit 10.129 to the Registrants Post-Effective
Amendment No. 1 to Form S-3 Registration Statement on
Form S-11 filed June 8, 2006 and incorporated herein
by reference.)10.79 *
    
    Amended and Restated Employment Agreement between CNL
Hotels & Resorts, Inc. and C. Brian Strickland, dated
as of May 23, 2006, amending the Employment Agreement
dated as of April 3, 2006 (Previously filed as
Exhibit 10.130 to the Registrants Post-Effective
Amendment No. 1 to Form S-3 Registration Statement on
Form S-11 filed June 8, 2006 and incorporated herein
by reference.)10.80 *
    
    Amended and Restated Employment Agreement between CNL
Hotels & Resorts, Inc. and Barry A. N. Bloom, dated
as of May 23, 2006, amending the Employment Agreement
dated as of April 3, 2006 (Previously filed as
Exhibit 10.131 to the Registrants Post-Effective
Amendment No. 1 to Form S-3 Registration Statement on
Form S-11 filed June 8, 2006 and incorporated herein
by reference.)10.81
    
    Purchase and Sale Agreement between Marriott Hotel
Services, Inc. and CNL DRR Investor, LP, dated as of
April 3, 2006 (Previously filed as Exhibit 10.132 to
the Registrants Post-Effective Amendment No. 1 to
Form S-3 Registration Statement on Form S-11 filed
June 8, 2006 and incorporated herein by reference.)10.82
    
    Purchase and Sale Agreement between Desert Ridge
Resort, Ltd. and CNL DRR Investor, LP, dated as of
April 3, 2006 (Previously filed as Exhibit 10.133 to
the Registrants Post-Effective Amendment No. 1 to
Form S-3 Registration Statement on Form S-11 filed
June 8, 2006 and incorporated herein by reference.)10.83
    
    Stipulation of Settlement In re CNL Hotels & Resorts,
Inc. Securities Litigation, Case No.
6:04-cv-1231-Orl-31KRS (Previously filed as Exhibit
10.134 to the Registrants Post-Effective Amendment
No. 1 to Form S-3 Registration Statement on Form S-11
filed June 8, 2006 and incorporated herein by
reference.)
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10.84 *
    
    Employment Letter between CNL Hotels & Resorts, Inc.
and Greerson G. McMullen, dated May 19, 2006
(Previously filed as Exhibit 10.135 to the
Registrants Post-Effective Amendment No. 1 to Form
S-3 Registration Statement on Form S-11 filed June 8,
2006 and incorporated herein by reference.)10.85 *
    
    Employment Agreement between CNL Hotels & Resorts,
Inc. and Greerson G. McMullen, dated as of June 1,
2006 (Previously filed as Exhibit 10.136 to the
Registrants Post-Effective Amendment No. 1 to Form
S-3 Registration Statement on Form S-11 filed June 8,
2006 and incorporated herein by reference.)10.86 *
    
    Employment Agreement between CNL Hotels & Resorts,
Inc. and Mark E. Patten, dated as of June 15, 2006
(Previously filed as Exhibit 10.15 to the
Registrants Quarterly Report on Form 10-Q filed
August 14, 2006 and incorporated herein by
reference.)10.87 *
    
    Employment Agreement between CNL Hotels & Resorts,
Inc. and Marcel Verbaas, dated as of June 15, 2006
(Previously filed as Exhibit 10.16 to the
Registrants Quarterly Report on Form 10-Q filed
August 14, 2006 and incorporated herein by
reference.)10.88
    
    Transition Services Agreement, dated as of June 21,
2006, between CNL Hotels & Resorts, Inc. and CNL
Financial Group, Inc. (Previously filed as Exhibit
10.1 to the Registrants Current Report on Form 8-K
filed June 23, 2006 and incorporated herein by
reference.)10.89
    
    Brand License Agreement, dated as of June 21, 2006,
between CNL Hotels & Resorts, Inc. and CNL
Intellectual Properties, Inc. (Previously filed as
Exhibit 10.2 to the Registrants Current Report on
Form 8-K filed June 23, 2006 and incorporated herein
by reference.)10.90
    
    Third Amendment to $200,000,000 Credit Agreement
dated as of September 30, 2005 between CNL
Hospitality Partners, LP, as Borrower, CNL Hotels &
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 10.19
to the Registrants Quarterly Report on Form 10-Q
filed August 14, 2006 and incorporated herein by
reference.)10.91
    
    Form of Indemnification Agreement between CNL Hotels
& Resorts, Inc. and its directors and officers
effective June 22, 2006. Each of the following
directors and/or officers has signed a substantially
similar agreement as follows: James M. Seneff, Jr.,
Robert A. Bourne, J. Douglas Holladay, Jack F. Kemp,
Robert E. Parsons, Jr., Dianna F. Morgan, Craig A.
McAllaster, Thomas J. Hutchison III, John A.
Griswold, C. Brian Strickland, Mark E. Patten, Barry
A. N. Bloom, Marcel Verbaas, Greerson G. McMullen,
and Stephanie J. Thomas. (Previously filed as Exhibit
10.20 to the Registrants Quarterly Report on Form
10-Q filed August 14, 2006 and incorporated herein by
reference.)10.92
    
    CNL Center Tower II Office Lease Agreement, dated as
of November 23, 2005, by and between CNL Plaza II,
Ltd. and CNL Hospitality Corp., assumed by the
Registrant on June 21, 2006 in connection with the
merger of CNL Hospitality Corp. with and into a
wholly-owned subsidiary of the Registrant (Previously
filed as Exhibit 10.21 to the Registrants Quarterly
Report on Form 10-Q filed August 14, 2006 and
incorporated herein by reference.)
 170




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10.93 *
    
    Form of Executive Deferred Share Grant Notice
(Previously filed as Exhibit 10.1 to the Registrants
Current Report on Form 8-K filed October 6, 2006 and
incorporated herein by reference.)10.94 *
    
    Form of Executive Deferred Share Award Agreement
(Previously filed as Exhibit 10.2 to the Registrants
Current Report on Form 8-K filed October 6, 2006 and
incorporated herein by reference.)10.95
    
    CNL Plaza Venture, Ltd. Purchase and Sale Agreement
by and between CNL Hotels & Resorts, Inc. and CNL
Corporate Investors, Ltd. dated October 3, 2006
(Previously filed as Exhibit 10.3 to the Registrants
Quarterly Report on Form 10-Q filed November 14, 2006
and incorporated herein by reference.)10.96
    
    CNL Plaza, Ltd. Purchase and Sale Agreement by and
between CNL Hotels & Resorts, Inc. and CNL Corporate
Investors, Ltd. dated October 3, 2006 (Previously
filed as Exhibit 10.4 to the Registrants Quarterly
Report on Form 10-Q filed November 14, 2006 and
incorporated herein by reference.)10.97 *
    
    Amendment dated February 21, 2007 to the Amended and
Restated Employment Agreement dated as of May 19,
2006 between CNL Hotels & Resorts, Inc. and Thomas J.
Hutchison III (Previously filed as Exhibit 10.1 to
the Registrants Current Report on Form 8-K filed on
February 26, 2007 and incorporated herein by
reference.)10.98 *
    
    Amendment dated February 21, 2007 to the Amended and
Restated Employment Agreement dated as of May 19,
2006 between CNL Hotels & Resorts, Inc. and John A.
Griswold (Previously filed as Exhibit 10.2 to the
Registrants Current Report on Form 8-K filed on
February 26, 2007 and incorporated herein by
reference.)10.99 *
    
    Amendment dated February 21, 2007 to the Amended and
Restated Employment Agreement dated as of May 19,
2006 between CNL Hotels & Resorts, Inc. and C. Brian
Strickland (Previously filed as Exhibit 10.3 to the
Registrants Current Report on Form 8-K filed on
February 26, 2007 and incorporated herein by
reference.)10.100 *
    
    Amendment dated February 21, 2007 to the Executive
Deferred Share Grant Notice dated as of June 21, 2006
between CNL Hotels & Resorts, Inc. and Thomas J.
Hutchison III (Previously filed as Exhibit 10.4 to
the Registrants Current Report on Form 8-K filed on
February 26, 2007 and incorporated herein by
reference.)10.101 *
    
    Amendment dated February 21, 2007 to the Executive
Deferred Share Grant Notice dated as of June 21, 2006
between CNL Hotels & Resorts, Inc. and John A.
Griswold (Previously filed as Exhibit 10.5 to the
Registrants Current Report on Form 8-K filed on
February 26, 2007 and incorporated herein by
reference.)10.102 *
    
    Amendment dated February 21, 2007 to the Executive
Deferred Share Grant Notice dated as of June 21, 2006
between CNL Hotels & Resorts, Inc. and C. Brian
Strickland (Previously filed as Exhibit 10.6 to the
Registrants Current Report on Form 8-K filed on
February 26, 2007 and incorporated herein by
reference.)14.1
    
    CNL Hotels & Resorts, Inc. Code of Business Conduct
and Ethics (adopted July 28, 2006) (Previously filed
as Exhibit 14.1 to the Registrants Current Report on
Form 8-K filed August 4, 2006 and incorporated herein
by reference.)21
    
    Subsidiaries of the Registrant (Filed herewith.)
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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.)
 
 *
    
    Indicates management contract or compensatory plan or arrangement. 172




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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
 173




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##### Table of Contents



Report of Independent Registered Certified Public Accounting Firm
    /s/
 
 174




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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
  175




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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
    )
  176




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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
    
    
    $
    725,998
  177




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##### Table of Contents



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 invest
ing 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
    )Net 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
  178




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##### Table of Contents



WB Resort Partners, L.P. and Subsidiaries
Notes to Consolidated Financial Statements
For the years ended December 31, 2005, 2004 and 2003
 1. Business
 Organization
     Partner
    
    Percentage InterestGeneral Partner
    
    
    0.1
    %CNL WBR Investor, L.P.
    
    
    48.9
    %Waikiki Beach Resort, Ltd.
    
    
    36.0
    %Marriott
    
    
    15.0
    %
  Allocations and Distributions
  179




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##### Table of Contents



WB Resort Partners, L.P. and Subsidiaries
Notes to Consolidated Financial Statements
For the years ended December 31, 2005, 2004 and 2003
   2. Summary of Significant Accounting Policies
  Basis of Financial Statement Presentation
  Principles of Consolidation
  Cash and Cash Equivalents
   Revenue Recognition
  180




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##### Table of Contents



WB Resort Partners, L.P. and Subsidiaries
Notes to Consolidated Financial Statements  Continued
For the years ended December 31, 2005, 2004 and 2003
  Advertising and Promotion Costs
  Reclassification
  Leases
  181




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##### Table of Contents



Income Taxes
   182




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##### Table of Contents



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, Net
  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
  4. Mortgage Note Payable
  5. Other Notes Payable
  183




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##### Table of Contents



WB Resort Partners, L.P. and Subsidiaries
Notes to Consolidated Financial Statements  Continued
For the years ended December 31, 2005, 2004 and 2003
  MaximumLoan
    
    Purpose of Loan
    
    Funding
    
    Maturity
    
    Interest RateMezz Loan A
    
    Fund priority
shortfalls from the
operations of the
Property
    
    $
    20,000,000
    
    
    07/2006
    
    LIBOR plus 700
basis points (not
to exceed 13.5%)Mezz Loan B
    
    Fund any deficiency
in the payment of
monthly debt
service payments
under the Mortgage
Loan
    
    $
    20,000,000
    
    
    07/2006
    
    LIBOR plus 700
basis points (not
to exceed 13.5%)Mezz Loan C
    
    Fund renovation
costs in excess of
project budget
    
    $
    10,000,000
    
    
    07/2006
    
    LIBOR plus 700
basis points (not
to exceed 13.5%)
  6. Leases
  184




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##### Table of Contents



WB Resort Partners, L.P. and Subsidiaries
Notes to Consolidated Financial Statements  Continued
For the years ended December 31, 2005, 2004 and 2003
  7. Transactions with Related Parties
 Hotel Management Agreement
  Other
  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
  185




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##### Table of Contents



WB Resort Partners, L.P. and Subsidiaries
Notes to Consolidated Financial Statements  Continued
For the years ended December 31, 2005, 2004 and 2003
   Marriott Rewards Reimbursement
  8. Income Taxes
  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
    )$
    
    
    
    $
    
 186




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##### Table of Contents



WB Resort Partners, L.P. and Subsidiaries
Notes to Consolidated Financial Statements  Continued
For the years ended December 31, 2005, 2004 and 2003
  9. Commitments and Contingencies
   187




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##### Table of Contents



Consolidated Balance Sheets Data
 December 29,
    
    December 30,
    
    December 31,2006
    
    2005
    
    2004Current Assets
    
    $
    1,909
    
    
    $
    2,089
    
    
    $
    1,106Noncurrent Assets
    
    
    14,572
    
    
    
    6,654
    
    
    
    7,136Current Liabilities
    
    
    2,467
    
    
    
    864
    
    
    
    629Noncurrent Liabilities
    
    
    10,287
    
    
    
    5,068
    
    
    
    5,045Stockholders Equity
    
    
    3,727
    
    
    
    2,811
    
    
    
    2,568
 Consolidated Statements of Income Data
 Fiscal Year
    
    
    Fiscal Year
    
    
    Fiscal YearEnded,
    
    
    Ended,
    
    
    Ended,December 29,
    
    
    December 30,
    
    
    December 31,2006
    
    
    2005
    
    
    2004Gross revenues
    
    $
    8,162
    
    
    $
    4,437
    
    
    $
    4,146Costs and expenses (including income tax expense)
    
    
    6,945
    
    
    
    3,676
    
    
    
    3,537Net income
    
    $
    572
    
    
    $
    460
    
    
    $
    238Basic earnings per share
    
    $
    1.49
    
    
    $
    1.20
    
    
    $
    0.62Diluted earnings per share
    
    $
    1.39
    
    
    $
    1.13
    
    
    $
    0.60
 188




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##### Table of Contents



Consolidated Balance Sheets Data
 December 29,
    
    December 30,
    
    December 31,2006
    
    2005
    
    2004Current Assets
    
    $
    3,314
    
    
    $
    3,390
    
    
    $
    1,946Noncurrent Assets
    
    
    5,274
    
    
    
    5,140
    
    
    
    6,722Current Liabilities
    
    
    2,522
    
    
    
    2,133
    
    
    
    2,356Noncurrent Liabilities
    
    
    3,448
    
    
    
    3,145
    
    
    
    2,231Stockholders Equity
    
    
    2,618
    
    
    
    3,252
    
    
    
    4,081
 Consolidated Statements of Income Data
 Fiscal Year
    
    
    Fiscal Year
    
    
    Fiscal YearEnded,
    
    
    Ended,
    
    
    Ended,December 29,
    
    
    December 30,
    
    
    December 31,2006
    
    
    2005
    
    
    2004Gross revenues
    
    $
    12,160
    
    
    $
    11,550
    
    
    $
    10,099Costs and expenses (including income tax expense)
    
    
    11,552
    
    
    
    10,881
    
    
    
    9,503Net income
    
    $
    608
    
    
    $
    669
    
    
    $
    596Basic earnings per share
    
    $
    1.50
    
    
    $
    1.55
    
    
    $
    1.31Diluted earnings per share
    
    $
    1.41
    
    
    $
    1.45
    
    
    $
    1.24
 189




---



##### Table of Contents



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)




---



##### Table of Contents



Signature
    
    Title
    
    Date/s/ James M. Seneff, Jr.
    
    Chairman of the Board
    
    April 2, 2007James M. Seneff, Jr./s/ Robert A. Bourne
    
    Vice Chairman of the Board
    
    April 2, 2007Robert A. Bourne/s/ John A. Griswold
    
    President, Chief Operating
    
    April 2, 2007John A. Griswold
    
    Officer
and Director/s/ Craig M. McAllaster
    
    Director
    
    April 2, 2007Craig M. McAllaster/s/ Robert E. Parsons, Jr.
    
    Director
    
    April 2, 2007Robert E. Parsons, Jr./s/ James Douglas Holladay
    
    Director
    
    April 2, 2007James Douglas Holladay/s/ Jack Kemp
    
    Director
    
    April 2, 2007Jack Kemp/s/ Dianna F. Morgan
    
    Director
    
    April 2, 2007Dianna F. Morgan/s/ Thomas J. Hutchison III
    
    Chief Executive Officer and Director
    
    April 2, 2007Thomas J. Hutchison III/s/ C. Brian Strickland
    
    Executive Vice President, Chief
    
    April 2, 2007C. Brian Strickland
    
    Financial
Officer,and Treasurer/s/ Mark E. Patten
    
    Senior Vice President and Chief
    
    April 2, 2007Mark E. Patten
    
    Accounting
Officer




---



##### Table of Contents



AdditionsChargedBalance
    
    to
    
    Charged
    
    Deductionsat
    
    Costs
    
    to
    
    
    
    
    
    BalanceBeginning
    
    and
    
    Other
    
    
    
    
    
    at EndYear
    
    Description
    
    of Year
    
    Expenses
    
    Accounts
    
    Utilized
    
    of Year2004
    
    Deferred tax asset valuation allowance
    
    $
    10,098
    
    
    $
    
    
    
    $
    63,872
    
    
    $
    
    
    
    $
    73,9702005
    
    Deferred tax asset valuation allowance
    
    $
    73,970
    
    
    $
    
    
    
    $
    19,560
    
    
    $
    
    
    
    $
    93,5302006
    
    Deferred tax asset valuation allowance
    
    $
    93,530
    
    
    $
    
    
    
    $
    39,774
    
    
    $
    
    
    
    $
    133,304




---



##### Table of Contents



CNL Hotels Resorts, Inc
Schedule III  Real Estate and Accumulated Depreciation (in thousands)
December 31, 2006
 Costs CapitalizedSubsequent
    
    
    Gross Amounts at Which CarriedInitial Costs
    
    
    to Acquisition
    
    
    at Close of Period
    
    
    
    
    
    
    Accumulated
    
    
    Date of
    
    
    Date ofLand
    
    
    Building
    
    
    Equipment
    
    
    Improvements
    
    
    Carrying Cost
    
    
    Land
    
    
    Building
    
    
    Equipment
    
    
    Total
    
    
    Depreciation
    
    
    Construction
    
    
    AcquisitionGrand Wailea Resort
Maui, HI
    
    $
    81,343
    
    
    $
    515,080
    
    
    $
    19,916
    
    
    $
    18,138
    
    
    $
    
    
    
    $
    81,862
    
    
    $
    519,771
    
    
    $
    32,844
    
    
    $
    634,477
    
    
    $
    (53,041
    )
    
    
    1991
    
    
    4/2004La Quinta Resort
LaQuinta, CA
    
    
    239,309
    
    
    
    171,993
    
    
    
    15,693
    
    
    
    14,819
    
    
    
    
    
    
    
    240,081
    
    
    
    175,132
    
    
    
    26,601
    
    
    
    441,814
    
    
    
    (50,095
    )
    
    
    1926
    
    
    4/2004Ritz Carlton  Grande Lakes
Orlando, FL
    
    
    128,831
    
    
    
    233,815
    
    
    
    24,291
    
    
    
    9,212
    
    
    
    
    
    
    
    128,845
    
    
    
    243,111
    
    
    
    24,192
    
    
    
    396,148
    
    
    
    (11,130
    )
    
    
    2003
    
    
    1/2006JW Marriott  Grande Lakes
Orlando, FL
    
    
    81,517
    
    
    
    267,448
    
    
    
    26,252
    
    
    
    2,297
    
    
    
    
    
    
    
    81,517
    
    
    
    267,510
    
    
    
    28,487
    
    
    
    377,514
    
    
    
    (10,904
    )
    
    
    2003
    
    
    1/2006Marriott Desert Ridge Resort
Phoenix, AZ
    
    
    6,715
    
    
    
    169,000
    
    
    
    51,773
    
    
    
    94,518
    
    
    
    
    
    
    
    70,131
    
    
    
    218,505
    
    
    
    33,370
    
    
    
    322,006
    
    
    
    (1,518
    )
    
    
    2002
    
    
    5/2006Doral Golf Resort
Miami, FL
    
    
    109,669
    
    
    
    122,723
    
    
    
    17,344
    
    
    
    51,243
    
    
    
    
    
    
    
    114,625
    
    
    
    162,327
    
    
    
    24,027
    
    
    
    300,979
    
    
    
    (38,551
    )
    
    
    1962
    
    
    4/2004Arizona Biltmore
Phoenix, AZ
    
    
    53,341
    
    
    
    191,582
    
    
    
    11,801
    
    
    
    11,093
    
    
    
    
    
    
    
    53,657
    
    
    
    195,921
    
    
    
    18,239
    
    
    
    267,817
    
    
    
    (27,223
    )
    
    
    1929
    
    
    4/2004Capital Hilton
Washington, DC
    
    
    11,807
    
    
    
    83,488
    
    
    
    9,934
    
    
    
    12,102
    
    
    
    
    
    
    
    11,811
    
    
    
    93,002
    
    
    
    12,518
    
    
    
    117,331
    
    
    
    (12,303
    )
    
    
    1943
    
    
    12/2003JW Marriott  Le Meridien
New Orleans, LA
    
    
    
    
    
    
    78,607
    
    
    
    13,893
    
    
    
    20,170
    
    
    
    
    
    
    
    
    
    
    
    91,301
    
    
    
    21,369
    
    
    
    112,670
    
    
    
    (17,348
    )
    
    
    1984
    
    
    4/2003Marriott  Seattle Waterfront
Seattle, WA
    
    
    12,039
    
    
    
    74,016
    
    
    
    7,242
    
    
    
    517
    
    
    
    
    
    
    
    12,045
    
    
    
    74,046
    
    
    
    7,723
    
    
    
    93,814
    
    
    
    (10,592
    )
    
    
    2003
    
    
    5/2003Hilton
Rye Town, NY
    
    
    7,428
    
    
    
    58,659
    
    
    
    7,912
    
    
    
    19,229
    
    
    
    
    
    
    
    7,555
    
    
    
    74,017
    
    
    
    11,657
    
    
    
    93,229
    
    
    
    (11,665
    )
    
    
    1973
    
    
    2/2003Hilton
Miami, FL
    
    
    12,309
    
    
    
    58,797
    
    
    
    7,395
    
    
    
    12,094
    
    
    
    
    
    
    
    12,241
    
    
    
    66,196
    
    
    
    12,157
    
    
    
    90,594
    
    
    
    (16,021
    )
    
    
    1987
    
    
    9/2001Doubletree
Crystal City, VA
    
    
    7,854
    
    
    
    57,979
    
    
    
    4,509
    
    
    
    19,506
    
    
    
    
    
    
    
    7,880
    
    
    
    71,182
    
    
    
    10,786
    
    
    
    89,848
    
    
    
    (10,449
    )
    
    
    1973
    
    
    12/2002Hilton Torrey Pines
La Jolla, CA
    
    
    
    
    
    
    71,667
    
    
    
    9,193
    
    
    
    7,080
    
    
    
    
    
    
    
    25
    
    
    
    76,965
    
    
    
    10,950
    
    
    
    87,940
    
    
    
    (10,230
    )
    
    
    1989
    
    
    12/2003San Francisco Courtyard
San Francisco, CA
    
    
    8,698
    
    
    
    64,482
    
    
    
    9,807
    
    
    
    217
    
    
    
    
    
    
    
    8,698
    
    
    
    64,417
    
    
    
    10,090
    
    
    
    83,205
    
    
    
    (13,594
    )
    
    
    2001
    
    
    6/2006El Conquistador
Tucson, AZ
    
    
    3,712
    
    
    
    57,705
    
    
    
    7,583
    
    
    
    13,083
    
    
    
    
    
    
    
    5,351
    
    
    
    65,045
    
    
    
    11,687
    
    
    
    82,083
    
    
    
    (12,725
    )
    
    
    1982
    
    
    12/2002Marriott  BWI Airport
Baltimore, MD
    
    
    3,893
    
    
    
    63,689
    
    
    
    6,200
    
    
    
    7,179
    
    
    
    
    
    
    
    3,919
    
    
    
    68,212
    
    
    
    8,830
    
    
    
    80,961
    
    
    
    (9,177
    )
    
    
    1988
    
    
    8/2003Hyatt
Montreal, Quebec, Canada
    
    
    6,083
    
    
    
    39,163
    
    
    
    6,554
    
    
    
    28,038
    
    
    
    
    
    
    
    7,591
    
    
    
    56,464
    
    
    
    15,783
    
    
    
    79,838
    
    
    
    (10,533
    )
    
    
    1976
    
    
    12/2003Hilton
Costa Mesa, CA
    
    
    7,670
    
    
    
    43,558
    
    
    
    6,880
    
    
    
    19,596
    
    
    
    
    
    
    
    7,882
    
    
    
    55,156
    
    
    
    14,666
    
    
    
    77,704
    
    
    
    (15,840
    )
    
    
    1983
    
    
    9/2001Claremont Resort
Berkeley, CA
    
    
    15,119
    
    
    
    47,408
    
    
    
    7,177
    
    
    
    3,778
    
    
    
    
    
    
    
    15,135
    
    
    
    49,950
    
    
    
    8,397
    
    
    
    73,482
    
    
    
    (10,511
    )
    
    
    1915
    
    
    4/2004Hyatt
Dearborn, MI
    
    
    3,353
    
    
    
    43,150
    
    
    
    5,748
    
    
    
    20,825
    
    
    
    
    
    
    
    4,762
    
    
    
    58,719
    
    
    
    9,594
    
    
    
    73,075
    
    
    
    (11,767
    )
    
    
    1976
    
    
    8/2003Courtyard
Philadelphia, PA
    
    
    7,409
    
    
    
    55,820
    
    
    
    5,160
    
    
    
    2,250
    
    
    
    
    
    
    
    7,479
    
    
    
    56,712
    
    
    
    6,448
    
    
    
    70,639
    
    
    
    (16,342
    )
    
    
    1999
    
    
    11/1999Marriott
Bridgewater, NJ
    
    
    3,821
    
    
    
    55,247
    
    
    
    5,207
    
    
    
    1,368
    
    
    
    
    
    
    
    3,881
    
    
    
    55,621
    
    
    
    6,141
    
    
    
    65,643
    
    
    
    (10,165
    )
    
    
    2002
    
    
    6/2002Marriott
Plano, TX
    
    
    5,927
    
    
    
    45,567
    
    
    
    7,272
    
    
    
    2,542
    
    
    
    
    
    
    
    5,954
    
    
    
    46,008
    
    
    
    9,346
    
    
    
    61,308
    
    
    
    (8,079
    )
    
    
    2001
    
    
    8/2003Hilton Lincoln Centre
Dallas, TX
    
    
    5,483
    
    
    
    41,137
    
    
    
    5,380
    
    
    
    8,047
    
    
    
    
    
    
    
    5,445
    
    
    
    46,195
    
    
    
    8,407
    
    
    
    60,047
    
    
    
    (8,580
    )
    
    
    1976
    
    
    12/2002Embassy Suites
Crystal City, VA
    
    
    5,348
    
    
    
    35,664
    
    
    
    4,488
    
    
    
    6,819
    
    
    
    
    
    
    
    5,426
    
    
    
    39,958
    
    
    
    6,935
    
    
    
    52,319
    
    
    
    (6,979
    )
    
    
    1985
    
    
    2/2003Embassy Suites
Santa Clara, CA
    
    
    6,800
    
    
    
    35,118
    
    
    
    4,582
    
    
    
    4,754
    
    
    
    
    
    
    
    6,945
    
    
    
    38,581
    
    
    
    5,728
    
    
    
    51,254
    
    
    
    (6,654
    )
    
    
    1985
    
    
    2/2003Embassy Suites
Portland, OR
    
    
    7,957
    
    
    
    33,757
    
    
    
    4,707
    
    
    
    4,103
    
    
    
    
    
    
    
    8,057
    
    
    
    35,510
    
    
    
    6,957
    
    
    
    50,524
    
    
    
    (9,166
    )
    
    
    1997
    
    
    9/2001Courtyard
Seattle, WA
    
    
    7,552
    
    
    
    27,621
    
    
    
    1,145
    
    
    
    6,557
    
    
    
    
    
    
    
    11,928
    
    
    
    28,517
    
    
    
    2,430
    
    
    
    42,875
    
    
    
    (7,488
    )
    
    
    1999
    
    
    6/1999Renaissance
Tampa, FL
    
    
    
    
    
    
    34,557
    
    
    
    6,206
    
    
    
    1,384
    
    
    
    
    
    
    
    
    
    
    
    35,470
    
    
    
    6,677
    
    
    
    42,147
    
    
    
    (4,691
    )
    
    
    2004
    
    
    8/2004




---



##### Table of Contents



CNL Hotels Resorts, Inc.
Schedule III  Real Estate and Accumulated Depreciation (in thousands)
December 31, 2006
 Costs CapitalizedSubsequent
    
    
    Gross Amounts at Which CarriedInitial Costs
    
    
    to Acquisition
    
    
    at Close of Period
    
    
    
    
    
    
    Accumulated
    
    
    Date of
    
    
    Date ofLand
    
    
    Building
    
    
    Equipment
    
    
    Improvements
    
    
    Carrying Cost
    
    
    Land
    
    
    Building
    
    
    Equipment
    
    
    Total
    
    
    Depreciation
    
    
    Construction
    
    
    AcquisitionHyatt
Coral Gables, FL
    
    
    4,843
    
    
    
    27,619
    
    
    
    3,338
    
    
    
    6,268
    
    
    
    
    
    
    
    5,190
    
    
    
    30,781
    
    
    
    6,097
    
    
    
    42,068
    
    
    
    (5,767
    )
    
    
    1987
    
    
    2/2003SpringHill Suites
Orlando, FL
    
    
    8,750
    
    
    
    26,381
    
    
    
    3,717
    
    
    
    1,190
    
    
    
    
    
    
    
    8,750
    
    
    
    26,406
    
    
    
    4,882
    
    
    
    40,038
    
    
    
    (7,361
    )
    
    
    2000
    
    
    12/2000Residence Inn
Las Vegas, NV
    
    
    3,784
    
    
    
    27,651
    
    
    
    954
    
    
    
    6,999
    
    
    
    
    
    
    
    7,965
    
    
    
    29,112
    
    
    
    2,311
    
    
    
    39,388
    
    
    
    (7,679
    )
    
    
    1998
    
    
    2/19999Courtyard
Orlando, FL
    
    
    9,025
    
    
    
    24,583
    
    
    
    4,285
    
    
    
    875
    
    
    
    
    
    
    
    9,025
    
    
    
    24,588
    
    
    
    5,155
    
    
    
    38,768
    
    
    
    (7,744
    )
    
    
    2000
    
    
    11/2000Marriott Suites
Dallas, TX
    
    
    2,778
    
    
    
    27,739
    
    
    
    1,404
    
    
    
    6,587
    
    
    
    
    
    
    
    6,911
    
    
    
    28,148
    
    
    
    3,449
    
    
    
    38,508
    
    
    
    (9,031
    )
    
    
    1998
    
    
    2/1999Courtyard
Basking Ridge, NJ
    
    
    3,946
    
    
    
    31,987
    
    
    
    1,892
    
    
    
    433
    
    
    
    
    
    
    
    3,959
    
    
    
    32,093
    
    
    
    2,206
    
    
    
    38,258
    
    
    
    (5,291
    )
    
    
    2001
    
    
    3/2002Residence Inn
Torrance, CA
    
    
    3,189
    
    
    
    28,701
    
    
    
    898
    
    
    
    4,707
    
    
    
    
    
    
    
    3,307
    
    
    
    31,946
    
    
    
    2,243
    
    
    
    37,496
    
    
    
    (3,704
    )
    
    
    1984
    
    
    7/2003Hilton
Auburn Hills, MI
    
    
    3,846
    
    
    
    25,513
    
    
    
    2,612
    
    
    
    2,573
    
    
    
    
    
    
    
    3,928
    
    
    
    26,724
    
    
    
    3,892
    
    
    
    34,544
    
    
    
    (6,099
    )
    
    
    1991
    
    
    9/2001Fairfield Inn
Orlando, FL
    
    
    9,077
    
    
    
    20,318
    
    
    
    3,366
    
    
    
    1,411
    
    
    
    
    
    
    
    9,077
    
    
    
    20,415
    
    
    
    4,680
    
    
    
    34,172
    
    
    
    (6,174
    )
    
    
    2000
    
    
    11/2000SpringHill Suites
Plymouth,ME
    
    
    3,606
    
    
    
    23,874
    
    
    
    1,237
    
    
    
    290
    
    
    
    
    
    
    
    3,647
    
    
    
    23,878
    
    
    
    1,482
    
    
    
    29,007
    
    
    
    (3,908
    )
    
    
    2001
    
    
    1/2002Residence Inn
Newark, CA
    
    
    3,871
    
    
    
    23,883
    
    
    
    1,034
    
    
    
    209
    
    
    
    
    
    
    
    3,871
    
    
    
    23,916
    
    
    
    1,210
    
    
    
    28,997
    
    
    
    (3,106
    )
    
    
    2002
    
    
    11/2002Courtyard
Newark, CA
    
    
    3,787
    
    
    
    21,273
    
    
    
    1,878
    
    
    
    265
    
    
    
    
    
    
    
    3,824
    
    
    
    21,283
    
    
    
    2,096
    
    
    
    27,203
    
    
    
    (3,389
    )
    
    
    2002
    
    
    10/2002Hilton
Birmingham, AL
    
    
    1,887
    
    
    
    16,985
    
    
    
    2,998
    
    
    
    3,112
    
    
    
    
    
    
    
    1,942
    
    
    
    18,391
    
    
    
    4,649
    
    
    
    24,982
    
    
    
    (4,700
    )
    
    
    1984
    
    
    7/2003Residence Inn
Phoenix, AZ
    
    
    2,215
    
    
    
    18,061
    
    
    
    852
    
    
    
    3,719
    
    
    
    
    
    
    
    4,865
    
    
    
    18,552
    
    
    
    1,430
    
    
    
    24,847
    
    
    
    (4,744
    )
    
    
    1999
    
    
    6/1999Courtyard
Scottsdale, AZ
    
    
    2,869
    
    
    
    15,936
    
    
    
    745
    
    
    
    3,102
    
    
    
    
    
    
    
    5,227
    
    
    
    15,914
    
    
    
    1,511
    
    
    
    22,652
    
    
    
    (4,586
    )
    
    
    1999
    
    
    6/1999Courtyard
Oakland, CA
    
    
    3,239
    
    
    
    17,471
    
    
    
    1,125
    
    
    
    529
    
    
    
    
    
    
    
    3,245
    
    
    
    17,495
    
    
    
    1,624
    
    
    
    22,364
    
    
    
    (3,109
    )
    
    
    2001
    
    
    12/2001SpringHill Suites
Manhattan Beach, CA
    
    
    3,889
    
    
    
    16,288
    
    
    
    998
    
    
    
    328
    
    
    
    
    
    
    
    3,889
    
    
    
    16,334
    
    
    
    1,280
    
    
    
    21,503
    
    
    
    (2,808
    )
    
    
    2001
    
    
    1/2002Residence Inn
Buckhead, GA
    
    
    1,907
    
    
    
    13,459
    
    
    
    1,270
    
    
    
    3,028
    
    
    
    
    
    
    
    1,914
    
    
    
    15,760
    
    
    
    1,990
    
    
    
    19,664
    
    
    
    (4,537
    )
    
    
    1997
    
    
    7/1998Courtyard
Edison, NJ
    
    
    2,770
    
    
    
    
    
    
    
    
    
    
    
    14,859
    
    
    
    
    
    
    
    3,977
    
    
    
    11,946
    
    
    
    1,706
    
    
    
    17,629
    
    
    
    (2,478
    )
    
    
    2002
    
    
    11/2002Hampton Inn
Houston, TX
    
    
    2,382
    
    
    
    10,569
    
    
    
    1,348
    
    
    
    2,145
    
    
    
    
    
    
    
    2,439
    
    
    
    11,884
    
    
    
    2,122
    
    
    
    16,445
    
    
    
    (2,396
    )
    
    
    1995
    
    
    9/2002TownePlace Suites
Manhattan Beach, CA
    
    
    3,399
    
    
    
    11,831
    
    
    
    621
    
    
    
    228
    
    
    
    
    
    
    
    3,399
    
    
    
    11,838
    
    
    
    842
    
    
    
    16,079
    
    
    
    (1,957
    )
    
    
    2001
    
    
    1/2002Courtyard
Plano, TX
    
    
    1,687
    
    
    
    10,088
    
    
    
    552
    
    
    
    2,750
    
    
    
    
    
    
    
    3,273
    
    
    
    10,681
    
    
    
    1,123
    
    
    
    15,077
    
    
    
    (2,971
    )
    
    
    36,152
    
    
    
    36,215Embassy Suites Lee Vista
Orlando, FL
    
    
    1,341
    
    
    
    9,930
    
    
    
    1,228
    
    
    
    1,952
    
    
    
    
    
    
    
    1,385
    
    
    
    10,948
    
    
    
    2,119
    
    
    
    14,452
    
    
    
    (1,905
    )
    
    
    1999
    
    
    2/2003Residence Inn
Plano, TX
    
    
    1,409
    
    
    
    9,478
    
    
    
    494
    
    
    
    2,473
    
    
    
    
    
    
    
    2,870
    
    
    
    9,988
    
    
    
    996
    
    
    
    13,854
    
    
    
    (2,816
    )
    
    
    1998
    
    
    2/1999Residence Inn
Manchester, CT
    
    
    1,187
    
    
    
    8,980
    
    
    
    482
    
    
    
    1,776
    
    
    
    
    
    
    
    1,249
    
    
    
    10,211
    
    
    
    966
    
    
    
    12,426
    
    
    
    (1,714
    )
    
    
    2000
    
    
    11/2001SpringHill Suites
Richmond, V
    
    
    845
    
    
    
    9,368
    
    
    
    831
    
    
    
    150
    
    
    
    
    
    
    
    845
    
    
    
    9,353
    
    
    
    996
    
    
    
    11,194
    
    
    
    (1,832
    )
    
    
    2001
    
    
    12/2001Courtyard
Manchester, CT
    
    
    1,103
    
    
    
    8,316
    
    
    
    281
    
    
    
    1,387
    
    
    
    
    
    
    
    1,118
    
    
    
    9,223
    
    
    
    746
    
    
    
    11,087
    
    
    
    (1,477
    )
    
    
    1999
    
    
    11/2001Residence Inn
Atlanta, GA
    
    
    788
    
    
    
    7,091
    
    
    
    554
    
    
    
    1,785
    
    
    
    
    
    
    
    879
    
    
    
    7,806
    
    
    
    1,533
    
    
    
    10,218
    
    
    
    (1,523
    )
    
    
    1987
    
    
    7/2003Residence Inn
Kansas City, MO
    
    
    623
    
    
    
    5,607
    
    
    
    450
    
    
    
    950
    
    
    
    
    
    
    
    639
    
    
    
    6,412
    
    
    
    579
    
    
    
    7,630
    
    
    
    (1,016
    )
    
    
    1987
    
    
    7/2003Miscellaneous corporate assets
    
    
    
    
    
    
    1,271
    
    
    
    4,516
    
    
    
    3,625
    
    
    
    
    
    
    
    
    
    
    
    1,271
    
    
    
    8,141
    
    
    
    9,412
    
    
    
    (782
    )Total
    
    $
    945,029
    
    
    $
    3,378,751
    
    
    $
    367,205
    
    
    $
    502,260
    
    
    $
    
    
    
    $
    1,043,336
    
    
    $
    3,662,817
    
    
    $
    487,092
    
    
    $
    5,193,245
    
    
    $
    (559,965
    )




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##### Table of Contents



(1)
    
    Transactions in real estate and accumulated depreciation during 2006,
2005 and 2004 are summarized as follows:
 AccumulatedCost (2)(4)
    
    
    DepreciationHotel and Resort PropertiesBalance, 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
    
    
    $
    439,404Acquisitions
    
    
    1,044,891
    
    
    
    Dispositions
    
    
    (75,044
    )
    
    
    (10,630
    )Depreciation Expense (3)
    
    
    
    
    
    
    255,134Balance, December 31, 2006
    
    $
    5,716,681
    
    
    $
    683,908
 (2)
    
    As of December 31, 2006, 2005 and 2004, the aggregate cost of the
Properties owned by the Company and its subsidiaries for federal
income tax purposes was $5.7 billion, $4.7 billion, and $5.3
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, 2006, 2005 and 2004, the Company
incurred acquisition fees totaling $0, $23.0 million, and $30.2
million, respectively, paid to the Former Advisor. Acquisition fees
are included in land and buildings at December 31, 2006, 2005 and
2004.




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##### Table of Contents



EXHIBIT INDEX
 2.1
    
    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.)2.2
    
    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.)2.3
    
    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.)2.4
    
    Amended and Restated
Agreement and Plan of Merger
dated as of April 3, 2006 by
and among CNL Hotels &
Resorts, Inc., CNL
Hospitality Corp., CNL Real
Estate Group, Inc., Five
Arrows Realty Securities II
L.L.C., the other
stockholders of CNL
Hospitality Corp. listed on
the signature page thereto
under the heading
Stockholders, CNL
Financial Group, Inc., CNL
Hotels & Resorts
Acquisition, LLC, and CNL
Hospitality Properties
Acquisition Corp. and
exhibits thereto (Previously
filed as Appendix A to the
Registrants Definitive
Proxy Statement filed May
12, 2006 and incorporated
herein by reference.)2.5
    
    Agreement and Plan of Merger
dated as of January 18,
2007, by and among CNL
Hotels & Resorts, Inc., MS
Resort Holdings LLC, MS
Resort Acquisition LLC, MS
Resort Purchaser LLC and
Ashford Sapphire Acquisition
LLC (Previously filed as
Exhibit 2.1 to the
Registrants Current Report
on Form 8-K filed January
19, 2007 and incorporated
herein by reference.)2.6
    
    Amendment No. 1 to the
Agreement and Plan of
Merger, dated as of February
21, 2007, by and among CNL
Hotels & Resorts, Inc., MS
Resort Holding LLC, MS
Resort Acquisition LLC, MS
Resort Purchaser LLC and
Ashford Sapphire Acquisition
LLC (Previously filed as
Exhibit 2.1 to the
Registrants Current Report
on Form 8-K filed February
21, 2007 and incorporated
herein by reference.)3.1
    
    Articles of Amendment and
Restatement of CNL Hotels &
Resorts, Inc. dated August
7, 2006 (Previously filed as
Exhibit 3.1 to the
Registrants Current Report
on Form 8-K filed August 11,
2006 and incorporated herein
by reference.)3.2
    
    Amended and Restated Bylaws
of CNL Hotels & Resorts,
Inc., dated August 30, 2006
(Previously filed as Exhibit
3.1 to the Registrants
Current Report on Form 8-K
filed September 6, 2006 and
incorporated herein by
reference.)4.1
    
    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.)




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##### Table of Contents



4.2
    
    Amended and Restated
Reinvestment Plan (Included
as Appendix A to the
Registrants Post-Effective
Amendment No. 1 to Form S-3
Registration Statement on
Form S-11 filed with the SEC
on June 8, 2006 and
incorporated herein by
reference.)4.3
    
    Registration Rights
Agreement, dated as of June
21, 2006, by and among CNL
Real Estate Group, Inc.,
Five Arrows Realty
Securities II L.L.C., James
M. Seneff, Jr., Robert A.
Bourne, C. Brian Strickland,
Thomas J. Hutchison III,
John A. Griswold, Barry A.N.
Bloom, Marcel Verbaas and
CNL Hotels & Resorts, Inc.
(Previously filed as Exhibit
4.1 to the Registrants
Current Report on Form 8-K
filed June 23, 2006 and
incorporated herein by
reference.)4.4
    
    Pledge and Security
Agreement, dated as of June
21, 2006, by and among CNL
Real Estate Group, Inc.,
James M. Seneff, Jr., Robert
A. Bourne, C. Brian
Strickland, Thomas J.
Hutchison III, John A.
Griswold, Barry A.N. Bloom,
Marcel Verbaas, CNL Hotels &
Resorts, Inc., CNL Hotels &
Resorts Acquisition, LLC
(Previously filed as Exhibit
4.2 to the Registrants
Current Report on Form 8-K
filed June 23, 2006 and
incorporated herein by
reference.)10.1
    
    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.)10.2
    
    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 on
Form S-11 filed January 26,
2004 and incorporated herein
by reference.)10.3
    
    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.)10.4
    
    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.)10.5
    
    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.)10.6
    
    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.)




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##### Table of Contents



10.7
    
    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.)10.8
    
    $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.)10.9
    
    $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.)10.10
    
    $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.)10.11
    
    $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.)10.12
    
    $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.)10.13
    
    $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.)10.14
    
    $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.)10.15
    
    $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.)10.16
    
    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.)10.17
    
    $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.)




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##### Table of Contents



10.18
    
    $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.)10.19
    
    $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.)10.20
    
    $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.)10.21
    
    $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.)10.22
    
    $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.)10.23*
    
    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.)10.24
    
    Second Amendment to Loan and Security Agreement by and
among CNL Hospitality Partners, LP (as Borrower), CNL
Hotels & 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.)10.25*
    
    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.)10.26*
    
    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.)10.27*
    
    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.)10.28
    
    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.)10.29
    
    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.)




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##### Table of Contents



10.30
    
    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.)10.31
    
    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.)10.32
    
    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.)10.33
    
    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.)10.34
    
    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.)10.35
    
    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.)10.36
    
    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.)10.37
    
    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.)10.38
    
    $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.)10.39
    
    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.)10.40
    
    $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.)




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##### Table of Contents



10.41
    
    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.)10.42
    
    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.)10.43
    
    $200,000,000 Credit Agreement dated as of September 30,
2005 between CNL Hospitality Partners, LP, as Borrower,
CNL Hotels & 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.)10.44
    
    $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 (Previously filed as Exhibit 10.89 to the Registrants Annual Report on
Form 10-K filed March 31, 2006 and incorporated herein by reference.)10.45
    
    $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 (Previously filed as Exhibit 10.90 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.46
    
    $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 (Previously filed as Exhibit 10.91 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.47
    
    $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 (Previously filed as Exhibit 10.92 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.48
    
    $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 (Previously filed as Exhibit 10.93 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.49
    
    $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 (Previously filed as Exhibit 10.94 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.50
    
    $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 (Previously filed as Exhibit 10.95 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.51
    
    $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 (Previously filed as Exhibit 10.96 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.52
    
    $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
(Previously filed as Exhibit 10.97 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)




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##### Table of Contents



10.53
    
    $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 (Previously filed as Exhibit 10.98 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.54
    
    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 (Previously filed as Exhibit 10.99 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.55
    
    Purchase and Sale Agreement by and between THI III GL
Investments, L.L.C., as Seller, and CNL Hotels & Resorts,
Inc., as Purchaser (Previously filed as Exhibit 10.100 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.56
    
    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.)10.57
    
    $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 (Previously filed as Exhibit 10.104 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.58
    
    $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 (Previously filed as Exhibit 10.105 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.59
    
    $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 (Previously filed as Exhibit 10.106 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.60
    
    $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 (Previously filed as Exhibit 10.107 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.61
    
    $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 (Previously filed as Exhibit 10.108 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.62
    
    $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 (Previously filed as Exhibit 10.109 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.63
    
    $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 (Previously filed as Exhibit 10.110 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.64
    
    $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 (Previously filed as Exhibit 10.111 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.65
    
    $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 (Previously filed as Exhibit 10.112 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.66
    
    $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 (Previously filed as Exhibit 10.113 to the Registrants Annual Report on Form
10-K filed March 31, 2006 and incorporated herein by reference.)10.67
    
    Amended and Restated Agreement and Plan of Merger dated
April 3, 2006 (Previously filed as Exhibit 10.1 to the
Registrants Current Report on Form 8-K filed April 7,
2006 and incorporated herein by reference.)




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##### Table of Contents



10.68
    
    Form of Registration Rights Agreement (Previously filed as
Exhibit 10.4 to the Registrants Current Report on Form
8-K filed April 7, 2006 and incorporated herein by
reference.)10.69
    
    Form of Pledge and Security Agreement (Previously filed as
Exhibit 10.5 to the Registrants Current Report on Form
8-K filed April 7, 2006 and incorporated herein by
reference.)10.70
    
    $120,000,000 Promissory Note dated as of April 3, 2006 by
AH Hotel Partners, LP, PH Hotel Partners, LP, HMA Hotel
Partners, LP and CM Hotel Partners, LP (as Borrowers)
issued to The Prudential Insurance Company of America (as
Lender) (Previously filed as Exhibit 10.121 to the
Registrants Quarterly Report on Form 10-Q filed May 15,
2006 and incorporated herein by reference.)10.71
    
    $120,000,000 Mortgage dated as of April 3, 2006 by AH
Hotel Partners, LP (as Borrower) to The Prudential
Insurance Company of America (as Lender) (Previously filed
as Exhibit 10.122 to the Registrants Quarterly Report on
Form 10-Q filed May 15, 2006 and incorporated herein by
reference.)10.72
    
    $120,000,000 Deed of Trust, Security Agreement and Fixture
Filing dated as of April 3, 2006 by CM Hotel Partners, LP
(as Borrower) to The Prudential Insurance Company of
America (as Lender) (Previously filed as Exhibit 10.123 to
the Registrants Quarterly Report on Form 10-Q filed May
15, 2006 and incorporated herein by reference.)10.73
    
    $120,000,000 Multi-state Mortgage and Security Agreement
dated as of April 3, 2006 by HMA Hotel Partners, LP, PH
Hotel Partners, LP, AH Hotel Partners, LP and CM Hotel
Partners, LP (as Borrower) to The Prudential Insurance
Company of America (as Lender) (Previously filed as
Exhibit 10.124 to the Registrants Quarterly Report on
Form 10-Q filed May 15, 2006 and incorporated herein by
reference.)10.74
    
    $120,000,000 Deed of Trust, Security Agreement and Fixture
Filing dated as of April 3, 2006 by PH Hotel Partners, LP
(as Borrower) to The Prudential Insurance Company of
America (as Lender) (Previously filed as Exhibit 10.125 to
the Registrants Quarterly Report on Form 10-Q filed May
15, 2006 and incorporated herein by reference.)10.75
    
    Renewal Agreement dated March 30, 2006 between CNL Hotels
& Resorts, Inc. and CNL Hospitality Corp. (Previously
filed as Exhibit 10.126 to the Registrants Quarterly
Report on Form 10-Q filed May 15, 2006 and incorporated
herein by reference.)10.76
    
    Memorandum of Understanding In re CNL Hotels & Resorts,
Inc. Securities Litigation, Case No.
6:04-cv-1231-Orl-31KRS (Previously filed as Exhibit 10.127
to the Registrants Quarterly Report on Form 10-Q filed
May 15, 2006 and incorporated herein by reference.)10.77*
    
    Amended and Restated Employment Agreement between CNL
Hotels & Resorts, Inc. and Thomas J. Hutchison III, dated
as of May 19, 2006, amending the Employment Agreement
dated as of April 3, 2006 (Previously filed as Exhibit
10.128 to the Registrants Post-Effective Amendment No. 1
to Form S-3 Registration Statement on Form S-11 filed June
8, 2006 and incorporated herein by reference.)10.78*
    
    Amended and Restated Employment Agreement between CNL
Hotels & Resorts, Inc. and John A. Griswold, dated as of
May 19, 2006, amending the Employment Agreement dated as
of April 3, 2006 (Previously filed as Exhibit 10.129 to
the Registrants Post-Effective Amendment No. 1 to Form
S-3 Registration Statement on Form S-11 filed June 8, 2006
and incorporated herein by reference.)10.79*
    
    Amended and Restated Employment Agreement between CNL
Hotels & Resorts, Inc. and C. Brian Strickland, dated as
of May 23, 2006, amending the Employment Agreement dated
as of April 3, 2006 (Previously filed as Exhibit 10.130 to
the Registrants Post-Effective Amendment No. 1 to Form
S-3 Registration Statement on Form S-11 filed June 8, 2006
and incorporated herein by reference.)




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##### Table of Contents



10.80*
    
    Amended and Restated Employment Agreement between CNL
Hotels & Resorts, Inc. and Barry A. N. Bloom, dated as of
May 23, 2006, amending the Employment Agreement dated as
of April 3, 2006 (Previously filed as Exhibit 10.131 to
the Registrants Post-Effective Amendment No. 1 to Form
S-3 Registration Statement on Form S-11 filed June 8, 2006
and incorporated herein by reference.)10.81
    
    Purchase and Sale Agreement between Marriott Hotel
Services, Inc. and CNL DRR Investor, LP, dated as of April
3, 2006 (Previously filed as Exhibit 10.132 to the
Registrants Post-Effective Amendment No. 1 to Form S-3
Registration Statement on Form S-11 filed June 8, 2006 and
incorporated herein by reference.)10.82
    
    Purchase and Sale Agreement between Desert Ridge Resort,
Ltd. and CNL DRR Investor, LP, dated as of April 3, 2006
(Previously filed as Exhibit 10.133 to the Registrants
Post-Effective Amendment No. 1 to Form S-3 Registration
Statement on Form S-11 filed June 8, 2006 and incorporated
herein by reference.)10.83
    
    Stipulation of Settlement In re CNL Hotels & Resorts, Inc.
Securities Litigation, Case No. 6:04-cv-1231-Orl-31KRS
(Previously filed as Exhibit 10.134 to the Registrants
Post-Effective Amendment No. 1 to Form S-3 Registration
Statement on Form S-11 filed June 8, 2006 and incorporated
herein by reference.)10.84*
    
    Employment Letter between CNL Hotels & Resorts, Inc. and
Greerson G. McMullen, dated May 19, 2006 (Previously filed
as Exhibit 10.135 to the Registrants Post-Effective
Amendment No. 1 to Form S-3 Registration Statement on Form
S-11 filed June 8, 2006 and incorporated herein by
reference.)10.85*
    
    Employment Agreement between CNL Hotels & Resorts, Inc.
and Greerson G. McMullen, dated as of June 1, 2006
(Previously filed as Exhibit 10.136 to the Registrants
Post-Effective Amendment No. 1 to Form S-3 Registration
Statement on Form S-11 filed June 8, 2006 and incorporated
herein by reference.)10.86*
    
    Employment Agreement between CNL Hotels & Resorts, Inc.
and Mark E. Patten, dated as of June 15, 2006 (Previously
filed as Exhibit 10.15 to the Registrants Quarterly
Report on Form 10-Q filed August 14, 2006 and incorporated
herein by reference.)10.87*
    
    Employment Agreement between CNL Hotels & Resorts, Inc.
and Marcel Verbaas, dated as of June 15, 2006 (Previously
filed as Exhibit 10.16 to the Registrants Quarterly
Report on Form 10-Q filed August 14, 2006 and incorporated
herein by reference.)10.88
    
    Transition Services Agreement, dated as of June 21, 2006,
between CNL Hotels & Resorts, Inc. and CNL Financial
Group, Inc. (Previously filed as Exhibit 10.1 to the
Registrants Current Report on Form 8-K filed June 23,
2006 and incorporated herein by reference.)10.89
    
    Brand License Agreement, dated as of June 21, 2006,
between CNL Hotels & Resorts, Inc. and CNL Intellectual
Properties, Inc. (Previously filed as Exhibit 10.2 to the
Registrants Current Report on Form 8-K filed June 23,
2006 and incorporated herein by reference.)10.90
    
    Third Amendment to $200,000,000 Credit Agreement dated as
of September 30, 2005 between CNL Hospitality Partners,
LP, as Borrower, CNL Hotels & 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 10.19 to the
Registrants Quarterly Report on Form 10-Q filed August
14, 2006 and incorporated herein by reference.)




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##### Table of Contents



10.91
    
    Form of Indemnification Agreement between CNL Hotels &
Resorts, Inc. and its directors and officers effective
June 22, 2006. Each of the following directors and/or
officers has signed a substantially similar agreement as
follows: James M. Seneff, Jr., Robert A. Bourne, J.
Douglas Holladay, Jack F. Kemp, Robert E. Parsons, Jr.,
Dianna F. Morgan, Craig A. McAllaster, Thomas J. Hutchison
III, John A. Griswold, C. Brian Strickland, Mark E.
Patten, Barry A. N. Bloom, Marcel Verbaas, Greerson G.
McMullen, and Stephanie J. Thomas. (Previously filed as
Exhibit 10.20 to the Registrants Quarterly Report on Form
10-Q filed August 14, 2006 and incorporated herein by
reference.)10.92
    
    CNL Center Tower II Office Lease Agreement, dated as of
November 23, 2005, by and between CNL Plaza II, Ltd. and
CNL Hospitality Corp., assumed by the Registrant on June
21, 2006 in connection with the merger of CNL Hospitality
Corp. with and into a wholly-owned subsidiary of the
Registrant (Previously filed as Exhibit 10.21 to the
Registrants Quarterly Report on Form 10-Q filed August
14, 2006 and incorporated herein by reference.)10.93*
    
    Form of Executive Deferred Share Grant Notice (Previously
filed as Exhibit 10.1 to the Registrants Current Report
on Form 8-K filed October 6, 2006 and incorporated herein
by reference.)10.94*
    
    Form of Executive Deferred Share Award Agreement
(Previously filed as Exhibit 10.2 to the Registrants
Current Report on Form 8-K filed October 6, 2006 and
incorporated herein by reference.)10.95
    
    CNL Plaza Venture, Ltd. Purchase and Sale Agreement by and
between CNL Hotels & Resorts, Inc. and CNL Corporate
Investors, Ltd. dated October 3, 2006 (Previously filed as
Exhibit 10.3 to the Registrants Quarterly Report on Form
10-Q filed November 14, 2006 and incorporated herein by
reference.)10.96
    
    CNL Plaza, Ltd. Purchase and Sale Agreement by and between
CNL Hotels & Resorts, Inc. and CNL Corporate Investors,
Ltd. dated October 3, 2006 (Previously filed as Exhibit
10.4 to the Registrants Quarterly Report on Form 10-Q
filed November 14, 2006 and incorporated herein by
reference.)10.97*
    
    Amendment dated February 21, 2007 to the Amended and
Restated Employment Agreement dated as of May 19, 2006
between CNL Hotels & Resorts, Inc. and Thomas J. Hutchison
III (Previously filed as Exhibit 10.1 to the Registrants
Current Report on Form 8-K filed on February 26, 2007 and
incorporated herein by reference.)10.98*
    
    Amendment dated February 21, 2007 to the Amended and
Restated Employment Agreement dated as of May 19, 2006
between CNL Hotels & Resorts, Inc. and John A. Griswold
(Previously filed as Exhibit 10.2 to the Registrants
Current Report on Form 8-K filed on February 26, 2007 and
incorporated herein by reference.)10.99*
    
    Amendment dated February 21, 2007 to the Amended and
Restated Employment Agreement dated as of May 19, 2006
between CNL Hotels & Resorts, Inc. and C. Brian Strickland
(Previously filed as Exhibit 10.3 to the Registrants
Current Report on Form 8-K filed on February 26, 2007 and
incorporated herein by reference.)10.100*
    
    Amendment dated February 21, 2007 to the Executive
Deferred Share Grant Notice dated as of June 21, 2006
between CNL Hotels & Resorts, Inc. and Thomas J. Hutchison
III (Previously filed as Exhibit 10.4 to the Registrants
Current Report on Form 8-K filed on February 26, 2007 and
incorporated herein by reference.)10.101*
    
    Amendment dated February 21, 2007 to the Executive
Deferred Share Grant Notice dated as of June 21, 2006
between CNL Hotels & Resorts, Inc. and John A. Griswold
(Previously filed as Exhibit 10.5 to the Registrants
Current Report on Form 8-K filed on February 26, 2007 and
incorporated herein by reference.)




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##### Table of Contents



10.102*
    
    Amendment dated February 21, 2007 to the Executive
Deferred Share Grant Notice dated as of June 21, 2006
between CNL Hotels & Resorts, Inc. and C. Brian Strickland
(Previously filed as Exhibit 10.6 to the Registrants
Current Report on Form 8-K filed on February 26, 2007 and
incorporated herein by reference.)14.1
    
    CNL Hotels & Resorts, Inc. Code of Business Conduct and
Ethics (adopted July 28, 2006) (Previously filed as
Exhibit 14.1 to the Registrants Current Report on Form
8-K filed August 4, 2006 and incorporated herein by
reference.)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.)
 
 *
    
    Indicates management contract or compensatory plan or arrangement.