UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549  Form 10-Q  (Mark One)  /X/

                        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
 THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2009  or  /

                        /

                        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
 THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to  Commission file number 333-39595-01  FelCor Lodging Limited Partnership (Exact name of registrant as specified in its charter)  Delaware

                        

                        75-2544994(State or other jurisdiction of

                        

                        (I.R.S. Employerincorporation or organization)

                        

                        Identification No.)
  545 E. John Carpenter Freeway, Suite 1300, Irving, Texas

                        

                        75062(Address of principal executive offices)

                        

                        (Zip Code)
  (972) 444-4900 (Registrant’s telephone number, including area code)  Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
            for the past 90 days.þYeso No  Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required
            to submit and post such files).o Yeso No  Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check
            one):  Large accelerated filero

                        

                        Accelerated fileroNon-accelerated filerþ (Do not check if a smaller reporting company)

                        

                        Smaller reporting companyo
  Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).o
            Yes                                                                           þ  No   
  FELCOR LODGING LIMITED PARTNERSHIP  INDEX   Page PART I. – FINANCIAL INFORMATION  Item I. Financial Statements

                        3
 Consolidated Balance Sheets June 30, 2009 and December31, 2008 (unaudited)

                        3***Consolidated Statements of Operations - For the Three and Six Months Ended June 30, 2009******and* *2008 (unaudited)***

                        **4*****Consolidated Statements of Comprehensive Income (Loss) - For the Three and Six Months******Ended June 30, 2009 and 2008 (unaudited)***

                        **5**Consolidated Statements of Partners' Capital For the Year Ended December 31, 2008***and the Six Months Ended June 30, 2009 (unaudited)***

                        **6*****Consolidated Statements of Cash Flows - For the Six Months Ended June 30, 2009******and* *2008 (unaudited)***

                        **7*****Notes to******Consolidated Financial Statements***

                        **8**
  Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

                        26
 General

                        26
 Financial Comparison

                        27
 Results of Operations

                        27
 Non-GAAP Financial Measures

                        30
 Pro Rata Share of Rooms Owned

                        33
 Hotel Portfolio Composition

                        34
 Hotel Operating Statistics

                        35
 Hotel Portfolio

                        37
 Liquidity and Capital Resources

                        39
 Inflation

                        42
 Seasonality

                        42
 Disclosure Regarding Forward-Looking Statements

                        42
 Item 3.Quantitative and Qualitative Disclosures about Market Risk

                        43
 Item 4.Controls and Procedures

                        43PART II. – OTHER INFORMATION
 Item 6. Exhibits

                        44
 SIGNATURE

                        45
    
 2
 
 PART I. -- FINANCIAL INFORMATION   Item I.

                        Financial Statements
  FELCOR LODGING LIMITED PARTNERSHIP  CONSOLIDATED BALANCE SHEETS (unaudited, in thousands)  June 30,

                            2009

                        

                        December 31, 2008ASSETSInvestment in hotels, net of accumulated depreciation of $885,794 at

                            June 30, 2009 and $816,271 at December 31, 2008

                        $

                        2,249,297

                        

                        

                        $

                        2,279,026Investment in unconsolidated entities

                        

                        87,536

                        

                        

                        

                        94,506Cash and cash equivalents

                        

                        118,508

                        

                        

                        

                        50,187Restricted cash

                        

                        17,610

                        

                        

                        

                        13,213Accounts receivable, net of allowance for doubtful accounts of $296 at

                            June 30, 2009 and $521 at December 31, 2008

                        

                        33,022

                        

                        

                        

                        35,240Deferred expenses, net of accumulated amortization of $11,443 at

                            June 30, 2009 and $13,087 at December 31, 2008

                        

                        11,006

                        

                        

                        

                        5,556Other assets

                        

                        40,356

                        

                        

                        

                        34,541Total assets

                        $

                        2,557,335

                        

                        

                        $

                        2,512,269LIABILITIES AND PARTNER’ CAPITALDebt, net of discount of $1,274 at June 30, 2009 and $1,544 at December 31, 2008

                        $

                        1,636,561

                        

                        

                        $

                        1,551,686Preferred distributions payable

                        

                        18,223

                        

                        

                        

                        8,545Accrued expenses and other liabilities

                        

                        130,220

                        

                        

                        

                        132,604Total liabilities

                        

                        1,785,004

                        

                        

                        

                        1,692,835Commitments and contingenciesRedeemable units at redemption value, 296 units issued and outstanding at

                            June 30, 2009 and December 31, 2008

                        

                        728

                        

                        

                        

                        545Partners’ capital:Preferred units, $0.01 par value, 20,000 units authorized:Series A Cumulative Convertible Preferred Units, 12,880 units issued and outstanding at June 30, 2009 and December 31, 2008

                        

                        309,362

                        

                        

                        

                        309,362Series C Cumulative Redeemable Preferred Units, 68 units issued and outstanding at June 30, 2009 and December 31, 2008

                        

                        169,412

                        

                        

                        

                        169,412Common units, 69,413 units issued and outstanding at June 30, 2009 and December 31, 2008

                        

                        251,264

                        

                        

                        

                        300,913Accumulated other comprehensive income

                        

                        17,868

                        

                        

                        

                        15,418Total FelCor LP partners’ capital

                        

                        747,906

                        

                        

                        

                        795,105Noncontrolling interests

                        

                        23,697

                        

                        

                        

                        23,784Total partners’ capital

                        

                        771,603

                        

                        

                        

                        818,889Total liabilities and partners’ capital

                        $

                        2,557,335

                        

                        

                        $

                        2,512,269
   The accompanying notes are an integral part of these consolidated financial statements.  
 3
 
  FELCOR LODGING LIMITED PARTNERSHIP  CONSOLIDATED STATEMENTS OF OPERATIONS For the Three and Six Months Ended June30, 2009 and 2008 (unaudited, in thousands, except for per unit data)  Three Months Ended

                            June 30,

                        

                        Six Months Ended

                            June 30,2009

                        

                        2008

                        

                        2009

                        

                        2008Revenues:Hotel operating revenue

                        $

                        241,580

                        

                        

                        $

                        305,237

                        

                        

                        $

                        475,582

                        

                        

                        $

                        596,784Other revenue

                        

                        988

                        

                        

                        

                        931

                        

                        

                        

                        1,274

                        

                        

                        

                        1,259Total revenues

                        

                        242,568

                        

                        

                        

                        306,168

                        

                        

                        

                        476,856

                        

                        

                        

                        598,043Expenses:Hotel departmental expenses

                        

                        83,858

                        

                        

                        

                        100,137

                        

                        

                        

                        165,436

                        

                        

                        

                        197,263Other property related costs

                        

                        65,912

                        

                        

                        

                        76,574

                        

                        

                        

                        133,219

                        

                        

                        

                        153,699Management and franchise fees

                        

                        11,410

                        

                        

                        

                        15,973

                        

                        

                        

                        22,917

                        

                        

                        

                        31,875Taxes, insurance and lease expense

                        

                        25,025

                        

                        

                        

                        28,862

                        

                        

                        

                        50,056

                        

                        

                        

                        58,166Corporate expenses

                        

                        5,236

                        

                        

                        

                        4,864

                        

                        

                        

                        11,358

                        

                        

                        

                        11,691Depreciation and amortization

                        

                        36,657

                        

                        

                        

                        35,072

                        

                        

                        

                        74,042

                        

                        

                        

                        68,840Impairment loss

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        1,368

                        

                        

                        

                        17,131Other expenses

                        

                        1,801

                        

                        

                        

                        900

                        

                        

                        

                        2,497

                        

                        

                        

                        1,833Total operating expenses

                        

                        229,899

                        

                        

                        

                        262,382

                        

                        

                        

                        460,893

                        

                        

                        

                        540,498Operating income

                        

                        12,669

                        

                        

                        

                        43,786

                        

                        

                        

                        15,963

                        

                        

                        

                        57,545Interest expense, net

                        

                        (22,782

                        )

                        

                        

                        (24,769

                        )

                        

                        

                        (44,074

                        )

                        

                        

                        (50,772

                        )Charges related to debt extinguishment

                        

                        (594

                        )

                        

                        

                        -

                        

                        

                        

                        (594

                        )

                        

                        

                        -Income (loss) before equity in income (loss) from unconsolidated entities

                        

                        (10,707

                        )

                        

                        

                        19,017

                        

                        

                        

                        (28,705

                        )

                        

                        

                        6,773Equity in income (loss) from unconsolidatedentities

                        

                        (261

                        )

                        

                        

                        2,331

                        

                        

                        

                        (3,685

                        )

                        

                        

                        1,709Gain on involuntary conversion

                        

                        -

                        

                        

                        

                        3,095

                        

                        

                        

                        -

                        

                        

                        

                        3,095Income (loss) from continuing operations

                        

                        (10,968

                        )

                        

                        

                        24,443

                        

                        

                        

                        (32,390

                        )

                        

                        

                        11,577Discontinued operations

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        (13

                        )Net income (loss)

                        

                        (10,968

                        )

                        

                        

                        24,443

                        

                        

                        

                        (32,390

                        )

                        

                        

                        11,564Net loss (income) attributable to noncontrolling

                            interests

                        

                        (324

                        )

                        

                        

                        (890

                        )

                        

                        

                        (108

                        )

                        

                        

                        (961

                        )Net income (loss) attributable to FelCor LP

                        

                        (11,292

                        )

                        

                        

                        23,553

                        

                        

                        

                        (32,498

                        )

                        

                        

                        10,603Preferred distributions

                        

                        (9,678

                        )

                        

                        

                        (9,678

                        )

                        

                        

                        (19,356

                        )

                        

                        

                        (19,356

                        )Net income (loss) applicable to FelCor LP common unitholders

                        $

                        (20,970

                        )

                        

                        $

                        13,875

                        

                        

                        $

                        (51,854

                        )

                        

                        $

                        (8,753

                        )Basic and diluted per common unit data:Net income (loss) from continuing operations attributable to FelCor LP common unitholders

                        $

                        (0.33

                        )

                        

                        $

                        0.21

                        

                        

                        $

                        (0.82

                        )

                        

                        $

                        (0.15

                        )Net income (loss) attributable to FelCor LP common unitholders

                        $

                        (0.33

                        )

                        

                        $

                        0.21

                        

                        

                        $

                        (0.82

                        )

                        

                        $

                        (0.15

                        )Basic and diluted weighted average common units outstanding

                        

                        63,397

                        

                        

                        

                        63,176

                        

                        

                        

                        63,428

                        

                        

                        

                        63,173Cash distributions declared on common units

                        $

                        -

                        

                        

                        $

                        0.35

                        

                        

                        $

                        -

                        

                        

                        $

                        0.70
   The accompanying notes are an integral part of these consolidated financial statements.  
 4
 
  FELCOR LODGING LIMITED PARTNERSHIP  CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) For the Three and Six Months Ended June 30, 2009 and 2008 (unaudited, in thousands)   Three Months Ended

                        

                        Six Months EndedJune 30,

                        

                        June 30,2009

                        

                        2008

                        

                        2009

                        

                        2008Net income (loss)

                        $

                        (10,968

                        )

                        

                        $

                        24,443

                        

                        

                        $

                        (32,390

                        )

                        

                        $

                        11,564Foreign currency translation adjustment

                        

                        4,159

                        

                        

                        

                        242

                        

                        

                        

                        2,450

                        

                        

                        

                        (1,488

                        )Comprehensive income (loss)

                        

                        (6,809

                        )

                        

                        

                        24,685

                        

                        

                        

                        (29,940

                        )

                        

                        

                        10,076Comprehensive loss (income) attributable to

                            noncontrolling interests

                        

                        (324

                        )

                        

                        

                        (890

                        )

                        

                        

                        (108

                        )

                        

                        

                        (961

                        )Comprehensive income (loss) attributable to FelCor LP

                        $

                        (7,133

                        )

                        

                        $

                        23,795

                        

                        

                        $

                        (30,048

                        )

                        

                        $

                        9,115
                   The accompanying notes are an integral part of these consolidated financial statements  
 5
 
   FELCOR LODGING LIMITED PARTNERSHIP  CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL For the Year Ended December31, 2008 and the Six Months Ended June 30, 2009 (unaudited, in thousands)    Preferred Units

                    

                    Partnership Units

                    

                    Accumulated Other Comprehensive Income (Loss)

                    

                    

                    Noncontrolling Interests

                    

                    Comprehensive Income (Loss)

                    Total Partners’ CapitalBalance at December 31, 2007

                    $

                    478,774

                    

                    

                    $

                    490,979

                    

                    

                    $

                    27,450

                    

                    

                    

                    $

                    25,264

                    

                    

                    

                    

                    

                    $

                    1,022,467FelCor restricted stock compensation

                    

                    -

                    

                    

                    

                    4,956

                    

                    

                    

                    -

                    

                    

                    

                    

                    -

                    

                    

                    

                    

                    

                    

                    4,956Contributions

                    

                    -

                    

                    

                    

                    -

                    

                    

                    

                    -

                    

                    

                    

                    

                    565

                    

                    

                    

                    

                    

                    

                    565Distributions

                    

                    -

                    

                    

                    

                    (93,868

                    )

                    

                    

                    -

                    

                    

                    

                    

                    (3,236

                    )

                    

                    

                    

                    

                    

                    (97,104

                    )Allocation to redeemable units

                    

                    -

                    

                    

                    

                    20,562

                    

                    

                    

                    -

                    

                    

                    

                    

                    -

                    

                    

                    

                    

                    

                    

                    20,562Costs related to FelCor’s shelf registration

                    

                    -

                    

                    

                    

                    (38

                    )

                    

                    

                    -

                    

                    

                    

                    

                    -

                    

                    

                    

                    

                    

                    

                    (38

                    )Comprehensive loss:Foreign exchange translation

                    

                    -

                    

                    

                    

                    -

                    

                    

                    

                    (12,032

                    )

                    

                    

                    

                    -

                    

                    

                    $

                    (12,032

                    )Net income (loss)

                    

                    -

                    

                    

                    

                    (121,678

                    )

                    

                    

                    -

                    

                    

                    

                    

                    1,191

                    

                    

                    

                    (120,487

                    )Comprehensive loss

                    

                    

                    

                    

                    

                    

                    

                    

                    

                    

                    

                    

                    

                    

                    

                    

                    

                    $

                    (132,519

                    )

                    

                    (132,519

                    )Balance at December 31, 2008

                    

                    478,774

                    

                    

                    

                    300,913

                    

                    

                    

                    15,418

                    

                    

                    

                    

                    23,784

                    

                    

                    

                    

                    

                    

                    818,889FelCor restricted stock compensation

                    

                    -

                    

                    

                    

                    2,596

                    

                    

                    

                    -

                    

                    

                    

                    

                    -

                    

                    

                    

                    

                    

                    

                    2,596Contributions

                    

                    -

                    

                    

                    

                    -

                    

                    

                    

                    -

                    

                    

                    

                    

                    362

                    

                    

                    

                    

                    

                    

                    362Distributions

                    

                    -

                    

                    

                    

                    (19,356

                    )

                    

                    

                    -

                    

                    

                    

                    

                    (725

                    )

                    

                    

                    

                    

                    

                    (20,081

                    )Allocation to redeemable units

                    

                    -

                    

                    

                    

                    (183

                    )

                    

                    

                    -

                    

                    

                    

                    

                    -

                    

                    

                    

                    

                    

                    

                    (183

                    )Other

                    

                    -

                    

                    

                    

                    (208

                    )

                    

                    

                    -

                    

                    

                    

                    

                    168

                    

                    

                    

                    

                    

                    

                    (40

                    )Comprehensive loss:Foreign exchange translation

                    

                    -

                    

                    

                    

                    -

                    

                    

                    

                    2,450

                    

                    

                    

                    

                    -

                    

                    

                    $

                    2,450Net income (loss)

                    

                    -

                    

                    

                    

                    (32,498

                    )

                    

                    

                    -

                    

                    

                    

                    

                    108

                    

                    

                    

                    (32,390

                    )Comprehensive loss

                    

                    

                    

                    

                    

                    

                    

                    

                    

                    

                    

                    

                    

                    

                    

                    

                    

                    $

                    (29,940

                    )

                    

                    (29,940

                    )Balance atJune 30, 2009

                    $

                    478,774

                    

                    

                    $

                    251,264

                    

                    

                    $

                    17,868

                    

                    

                    

                    $

                    23,697

                    

                    

                    

                    

                    

                    $

                    771,603             The accompanying notes are an integral part of these consolidated financial statements  
 6
 
  
 FELCOR LODGING LIMITED PARTNERSHIP  CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 2009 and 2008 (unaudited, in thousands)  Six Months Ended

                            June 30,2009

                        

                        2008Cash flows from operating activities:Net income (loss)

                        $

                        (32,390

                        )

                        

                        $

                        11,564Adjustments to reconcile net income (loss) to net cash provided by operating activities:Depreciation and amortization

                        

                        74,042

                        

                        

                        

                        68,840Gain on involuntary conversion

                        

                        -

                        

                        

                        

                        (3,095

                        )Amortization of deferred financing fees and debt discount

                        

                        1,722

                        

                        

                        

                        1,459Amortization of unearned officers’ and directors’ compensation

                        

                        2,802

                        

                        

                        

                        2,722Equity in loss (income) from unconsolidated entities

                        

                        3,685

                        

                        

                        

                        (1,709

                        )Distributions of income from unconsolidated entities

                        

                        1,388

                        

                        

                        

                        1,344Charges related to debt extinguishment

                        

                        594

                        

                        

                        

                        -Impairment loss on hotels

                        

                        1,368

                        

                        

                        

                        17,131Changes in assets and liabilities:Accounts receivable

                        

                        (751

                        )

                        

                        

                        (7,688

                        )Restricted cash – operations

                        

                        (676

                        )

                        

                        

                        (1,337

                        )Other assets

                        

                        (8,302

                        )

                        

                        

                        4,219Accrued expenses and other liabilities

                        

                        3,075

                        

                        

                        

                        4,103Net cash flow provided by operating activities

                        

                        46,557

                        

                        

                        

                        97,553Cash flows from investing activities:Improvements and additions to hotels

                        

                        (45,539

                        )

                        

                        

                        (73,625

                        )Additions to condominium project

                        

                        (88

                        )

                        

                        

                        (510

                        )Proceeds received from property damage insurance

                        

                        -

                        

                        

                        

                        2,005Decrease in restricted cash – investing

                        

                        (1,255

                        )

                        

                        

                        (1

                        )Redemption of investment securities

                        

                        632

                        

                        

                        

                        3,560Cash distributions from unconsolidated entities

                        

                        3,200

                        

                        

                        

                        21,608Capital contribution to unconsolidated entities

                        

                        (409

                        )

                        

                        

                        (5,995

                        )Net cash flow used in investing activities

                        

                        (43,459

                        )

                        

                        

                        (52,958

                        )Cash flows from financing activities:Proceeds from borrowings

                        

                        418,382

                        

                        

                        

                        103,258Repayment of borrowings

                        

                        (336,243

                        )

                        

                        

                        (68,599

                        )Payment of deferred financing fees

                        

                        (7,343

                        )

                        

                        

                        (7

                        )Distributions paid to noncontrolling interests

                        

                        (725

                        )

                        

                        

                        (1,944

                        )Contributions from noncontrolling interests

                        

                        362

                        

                        

                        

                        537Distributions paid to preferred unitholders

                        

                        (9,678

                        )

                        

                        

                        (19,356

                        )Distributions paid to common unitholders

                        

                        -

                        

                        

                        

                        (45,005

                        )Net cash flow provided by (used in) financing activities

                        

                        64,755

                        

                        

                        

                        (31,116

                        )Effect of exchange rate changes on cash

                        

                        468

                        

                        

                        

                        (226

                        )Net change in cash and cash equivalents

                        

                        68,321

                        

                        

                        

                        13,253Cash and cash equivalents at beginning of periods

                        

                        50,187

                        

                        

                        

                        57,609Cash and cash equivalents at end of periods

                        $

                        118,508

                        

                        

                        $

                        70,862Supplemental cash flow information – interest paid

                        $

                        43,187

                        

                        

                        $

                        52,426
   The accompanying notes are an integral part of these consolidated financial statements.   
 7
 
 FELCOR LODGING LIMITED PARTNERSHIP  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   1.

                        Organization
  FelCor Lodging Limited Partnership, or FelCor LP, held ownership interests in 87 hotels with approximately 25,000 rooms and suites at June 30, 2009. The sole general partner of FelCor LP is FelCor Lodging Trust Incorporated (NYSE:FCH), or FelCor, a Maryland corporation operating as a real estate investment trust, or REIT. All of FelCor’s operations are conducted solely
            through FelCor LP and at June 30, 2009, FelCor owned a greater than 99% partnership interest in FelCor LP.  Of the 87 hotels in which we had an ownership interest at June 30, 2009, we owned a 100% interest in 66 hotels, a 90% or greater interest in entities owning four hotels, an 81% interest in an entity owning one hotel, a 60% interest in an entity owning one hotel and a 50% interest in entities owning 15 hotels. We leased 86 of our hotels to operating lessees and one 50%-owned hotel
            is operated without a lease.  We consolidate the operating lessees of 85 of our hotels (which we refer to as our Consolidated Hotels) in our statement of operations (i.e. we record 100% of hotel operating revenues and expenses before noncontrolling interests) because we have controlling interests in these operating lessees. Our Consolidated Hotels include lessees
            for 13 of the 15 hotels in which we had a 50% ownership interest at June 30, 2009 (because we own majority ownership interests in the operating lessees for these 13 hotels). We do not consolidate hotel operating revenues and expenses of our other two 50% owned hotels.  At June 30, 2009, we had an aggregate of 64,985,265 redeemable and common units of FelCor LP outstanding.  The following table illustrates the distribution of our 85 Consolidated Hotels among our various brands at June 30, 2009:  Brand

                        Hotels

                        

                        RoomsEmbassy Suites Hotels®

                        

                        47

                        

                        

                        12,132Holiday Inn®

                        

                        17

                        

                        

                        6,306Sheraton® and Westin®

                        

                        9

                        

                        

                        3,217Doubletree®

                        

                        7

                        

                        

                        1,471Marriott® and Renaissance®

                        

                        3

                        

                        

                        1,321Hilton®

                        

                        2

                        

                        

                        559Total hotels

                        

                        85
  At June 30, 2009, our Consolidated Hotels were located in the United States (83 hotels in 23 states) and Canada (two hotels in Ontario), with concentrations in California (15 hotels), Florida (14 hotels) and Texas (11 hotels). Approximately 52% of our hotel room revenues were generated from hotels in these
            three states during 2009.  At June 30, 2009, of our 85 Consolidated Hotels: (i) subsidiaries of Hilton Hotels Corporation, or Hilton, managed 54 hotels, (ii) subsidiaries of InterContinental Hotels Group, or IHG, managed 17 hotels, (iii) subsidiaries of Starwood Hotels & Resorts Worldwide Inc., or Starwood, managed nine
            hotels, (iv) subsidiaries of Marriott International Inc., or Marriott, managed three hotels, and (iv) independent management companies managed two hotels.  Our hotels managed by Marriott are accounted for on a fiscal year comprised of 52 or 53 weeks ending on the Friday closest to December 31. Our six-month period ended June 30, 2009 includes the results of operations for our Marriott-managed hotels for the twenty four-week period ended June 19, 2009.  
 8
 
 FELCOR LODGING LIMITED PARTNERSHIP  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   1.

                        Organization – (continued)
  The information in our consolidated financial statements for the three and six months ended June 30, 2009 and 2008 is unaudited. Preparing financial statements in conformity with accounting principles generally accepted in the United States of America, or GAAP, requires management to make estimates and assumptions that
            affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The accompanying financial statements for the three and six months ended June 30, 2009 and 2008, include adjustments based on management’s estimates (consisting of normal and recurring accruals), which we consider necessary for a fair presentation of the results for the periods. The financial information should be read in conjunction with the
            consolidated financial statements for the year ended December 31, 2008, included in our Annual Report on Form 10-K.  Operating results for the three and six months ended June 30, 2009 are not necessarily indicative of actual operating results for the entire year.  2.

                        Investment in Unconsolidated Entities
  We owned 50% interests in joint ventures that owned 15 hotels at June 30, 2009 and 17 hotels at December 31, 2008. We also own a 50% interest in joint ventures that own real estate in Myrtle Beach, South Carolina, provide condominium management services and lease one hotel. We account for our investments
            in these unconsolidated entities under the equity method. We do not have any majority-owned subsidiaries that are not consolidated in our financial statements. We make adjustments to our equity in income from unconsolidated entities related to the depreciation of our excess basis in investment in unconsolidated entities when compared to the historical basis of the assets recorded by the joint ventures.  The following table summarizes combined financial information for our unconsolidated entities (in thousands):  June 30,

                            2009

                        

                        December31, 2008Balance sheet information:Investment in hotels, net of accumulated depreciation

                        $

                        274,332

                        

                        $

                        290,504Total assets

                        $

                        293,146

                        

                        $

                        317,672Debt

                        $

                        200,478

                        

                        $

                        224,440Total liabilities

                        $

                        224,790

                        

                        $

                        233,296Equity

                        $

                        68,356

                        

                        $

                        84,376
  Our unconsolidated entities’ debt at June 30, 2009 and December 31, 2008 consisted entirely of non-recourse mortgage debt.   
 9
 
 FELCOR LODGING LIMITED PARTNERSHIP  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   2.

                        Investment in Unconsolidated Entities – (continued)
  The combined statement of operations information for our unconsolidated entities is summarized as follows (in thousands):  Three Months Ended

                        

                        Six Months EndedJune 30,

                        

                        June 30,2009

                        

                        2008

                        

                        2009

                        

                        2008Total revenues

                        $

                        18,182

                        

                        

                        $

                        27,010

                        

                        

                        $

                        32,920

                        

                        

                        $

                        45,953Net income (loss)

                        $

                        374

                        

                        

                        $

                        5,465

                        

                        

                        $

                        (1,425

                        )

                        

                        $

                        5,286Net income (loss) attributable to FelCor LP

                        $

                        187

                        

                        

                        $

                        2,798

                        

                        

                        $

                        (703

                        )

                        

                        $

                        2,643Impairment loss

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        (2,068

                        )(a)

                        

                        

                        -Depreciation of cost in excess of book value

                        

                        (448

                        )

                        

                        

                        (467

                        )

                        

                        

                        (914

                        )

                        

                        

                        (934

                        )Equity in income (loss) from unconsolidated entities

                        $

                        (261

                        )

                        

                        $

                        2,331

                        

                        

                        $

                        (3,685

                        )

                        

                        $

                        1,709
  (a)

                        In the first quarter of 2009, one of our unconsolidated investments recorded an impairment charge for one of its held-for-sale assets under the provisions of SFAS 144. The SFAS 144 impairment recorded by the unconsolidated entity was based on a sales contract for one of the entity’s assets (a Level 1 input under SFAS 157) which closed on April 23,
                            2009. As a result of this charge, the net book value of the joint venture’s assets no longer supported the recovery of our investment. Therefore, we recorded an additional impairment charge to reduce our investment in this joint venture to zero. We have no obligation to provide this joint venture with future funding.
  The components of our investment in unconsolidated entities are summarized as follows (in thousands):
  June30,

                            2009

                        

                        December 31, 2008Hotel-related investments

                        $

                        22,996

                        

                        

                        $

                        31,102Cost in excess of book value of hotel investments

                        

                        53,358

                        

                        

                        

                        51,933Land and condominium investments

                        

                        11,182

                        

                        

                        

                        11,471$

                        87,536

                        

                        

                        $

                        94,506
  The components of our equity in income (loss) from unconsolidated entities are summarized as follows (in thousands):  Three Months Ended

                            June 30,

                        

                        Six Months Ended

                            June 30,2009

                        

                        2008

                        

                        2009

                        

                        2008Hotel investments

                        $

                        (371

                        )

                        

                        $

                        2,071

                        

                        

                        $

                        (3,196

                        )

                        

                        $

                        2,103Other investments

                        

                        110

                        

                        

                        

                        260

                        

                        

                        

                        (489

                        )

                        

                        

                        (394

                        )Equity in income (loss) from unconsolidated entities

                        $

                        (261

                        )

                        

                        $

                        2,331

                        

                        

                        $

                        (3,685

                        )

                        

                        $

                        1,709
  In 2009, a 50%-owned joint venture entity sold the Ramada Hotel in Hays, Kansas and the Holiday Inn in Salina, Kansas, for aggregate gross proceeds of $5.3 million. All proceeds from these sales were used to repay the associated mortgage debt.  
 10
 
 FELCOR LODGING LIMITED PARTNERSHIP  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   3.

                        Debt
  Debt at June 30, 2009 and December 31, 2008 consisted of the following (in thousands):  Balance OutstandingEncumbered

                        

                        Interest Rate at

                        

                        

                        

                        June 30,

                        

                        December 31,Hotels

                        

                        June 30, 2009

                        

                        Maturity Date

                        

                        2009

                        

                        2008Senior term notes

                        none

                        

                        9.00%(a)

                        

                        June 2011

                        

                        $

                        299,539

                        

                        $

                        299,414Senior term notes

                        none

                        

                        L + 1.875

                        

                        December 2011

                        

                        

                        215,000

                        

                        

                        215,000Line of credit(b)

                        none

                        

                        -

                        

                        -

                        

                        

                        -

                        

                        

                        113,000Total line of credit

                            and senior debt

                        

                        

                        6.50(c)

                        

                        

                        

                        

                        514,539

                        

                        

                        627,414Mortgage debt

                        12 hotels

                        

                        L + 0.93(d)

                        

                        November 2011(e)

                        

                        

                        250,000

                        

                        

                        250,000Mortgage debt(f)

                        9 hotels

                        

                        L + 3.50(g)

                        

                        August 2011(h)

                        

                        

                        200,800

                        

                        

                        -Mortgage debt

                        2 hotels

                        

                        L + 1.55(i)

                        

                        May 2012(j)

                        

                        

                        176,411

                        

                        

                        176,267Mortgage debt

                        8 hotels

                        

                        8.70

                        

                        May 2010

                        

                        

                        160,217

                        

                        

                        162,250Mortgage debt(k)

                        7 hotels

                        

                        9.02

                        

                        April 2014

                        

                        

                        119,374

                        

                        

                        117,131Mortgage debt

                        6 hotels

                        

                        8.73

                        

                        May 2010

                        

                        

                        114,533

                        

                        

                        116,285Mortgage debt

                        5 hotels

                        

                        6.66

                        

                        June - August 2014

                        

                        

                        71,724

                        

                        

                        72,517Mortgage debt

                        2 hotels

                        

                        6.15

                        

                        June 2009(l)

                        

                        

                        14,399

                        

                        

                        14,641Mortgage debt

                        1 hotel

                        

                        5.81

                        

                        July 2016

                        

                        

                        11,941

                        

                        

                        12,137Capital lease and other

                        1 hotel

                        

                        9.70

                        

                        various

                        

                        

                        2,623

                        

                        

                        3,044Total mortgage debt

                        53 hotels

                        

                        5.23(c)

                        

                        

                        

                        

                        1,122,022

                        

                        

                        924,272Total

                        

                        

                        5.63%(c)

                        

                        

                        

                        $

                        1,636,561

                        

                        $

                        1,551,686
  (a)

                        Our senior notes are currently rated B2 and B by Moody’s Investor Service and Standard & Poor’s Rating Services, respectively. As a result of rating downgrading of our senior notes, the interest rate on our fixed-rate senior notes was increased by 50 basis points to 9.0%, effective February 13, 2009. If either Moody’s or Standard
                            & Poor’s increases our senior note ratings to Ba3 or BB-, respectively, the interest rate would decrease to 8.5%.
 (b)

                        We terminated and repaid all outstanding obligations under our line of credit in the second quarter of 2009.
 (c)

                        Interest rates are calculated based on the weighted average debt outstanding at June 30, 2009.
 (d)

                        We have purchased an interest rate cap that caps LIBOR at 7.8% and expires in November 2009 for this notional amount.
 (e)

                        The maturity date assumes that we will exercise the remaining two one-year extension options that permit, at our sole discretion, the current November 2009 maturity to be extended to 2011.
 (f)

                        In June 2009, we entered into an agreement providing for a $200 million non-recourse term loan secured by nine hotels.
 (g)

                        LIBOR for this loan is subject to a 2% floor.
 (h)

                        This loan can be extended for as many as two years, subject to satisfying certain conditions that we expect to satisfy.
 (i)

                        We have purchased interest rate caps (aggregate notional amounts of $177 million) that cap LIBOR at 6.5% and expire in May 2010.
 (j)

                        We have exercised the first of three successive one-year extension options that extend, at our sole discretion, the maturity to 2012.
 (k)

                        This debt was refinanced in March 2009.
 (l)

                        These loans matured in June 2009 but remain unpaid and are in default. We have begun discussions with the special servicer to extend the maturity.
  
 11
 
 FELCOR LODGING LIMITED PARTNERSHIP  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   3.

                        Debt – (continued)
  We reported interest expense of $22.8 million and $24.8 million for the three months ended June 30, 2009 and 2008, respectively, which is net of: (i) interest income of $0.1 million and $0.4 million, respectively, and (ii) capitalized interest of $0.2 million and $0.3 million,
            respectively. We reported interest expense of $44.1 million and $50.8 million for the six months ended June 30, 2009 and 2008, respectively, which is net of: (i) interest income of $0.3 million and $1.0 million, respectively, and (ii) capitalized interest of $0.4 million and $0.7 million, respectively.  In June 2009, we obtained a $200 million non-recourse term loan secured by nine hotels. This loan bears interest at LIBOR (subject to a 2% floor) plus 350 basis points and matures in 2011. This loan can be extended for as many as two years, subject to satisfying certain conditions that we expect to satisfy. We have the right to prepay the loan and/or obtain partial release of one
            or more of the mortgages, subject to certain conditions. The proceeds from this new loan will be used for general corporate purposes.  In June 2009, we repaid the $128 million balance under our line of credit, which was then terminated. By terminating our line of credit, we eliminated certain restrictive corporate debt covenants. We wrote off loan costs of $594,000 associated with this facility.  In March 2009, we entered into a loan agreement with The Prudential Insurance Company of America secured by seven hotels.  The proceeds of the loan were used to repay the balance of an existing loan secured by the same properties that would have matured on April 1, 2009.  The new loan matures in 2014 and bears interest at 9.02%. We have the right to prepay the loan
            and/or obtain partial release of one or more of the mortgages, subject to certain conditions.  We have two non-recourse mortgage loans with an aggregate principal amount of $14 million (each secured by one hotel) that matured in June 2009 but remain unpaid and are in default. Although we have sufficient liquidity to repay these loans, we believe that using our available cash, under current circumstances, to repay these loans may not be prudent. These loans are serviced by
            a third-party servicer on behalf of the investors in a larger pool of loans that includes these loans. That servicer would not engage in discussions with us to extend the maturity dates unless and until the loans were in default; consequently, we withheld payment and permitted the loans to go into default. We have now begun negotiations with the special servicer to extend the maturity of these loans. We can provide no assurances that we will be able to extend the maturity of these
            loans on acceptable terms. If we are unsuccessful in our efforts to extend the maturity of these loans, we have the right to repay the amounts outstanding under either or both loans (in which case, we could then sell or refinance the hotels now or in the future) or, in the alternative, allow the lenders to foreclose on either hotel or both hotels.  4.

                        Hotel Operating Revenue, Departmental Expenses and Other Property Operating Costs
  Hotel operating revenue was comprised of the following (in thousands):
  Three Months Ended

                            June 30,

                        

                        Six Months Ended

                            June 30,2009

                        

                        2008

                        

                        2009

                        

                        2008Room revenue

                        $

                        190,388

                        

                        

                        $

                        239,689

                        

                        

                        $

                        373,388

                        

                        

                        $

                        469,821Food and beverage revenue

                        

                        36,303

                        

                        

                        

                        49,010

                        

                        

                        

                        73,416

                        

                        

                        

                        95,518Other operating departments

                        

                        14,889

                        

                        

                        

                        16,538

                        

                        

                        

                        28,778

                        

                        

                        

                        31,445Total hotel operating revenue

                        $

                        241,580

                        

                        

                        $

                        305,237

                        

                        

                        $

                        475,582

                        

                        

                        $

                        596,784
   
 12
 
 FELCOR LODGING LIMITED PARTNERSHIP  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   4.

                        Hotel Operating Revenue, Departmental Expenses and Other Property Operating Costs – (continued)
  For the three and six-month periods ended June 30, 2009 and 2008, nearly all of our revenue was comprised of hotel operating revenue, which included room revenue, food and beverage revenue, and revenue from other hotel operating departments (such as telephones, parking and business centers). These revenues are recorded net of any sales or occupancy taxes collected from our guests. All
            rebates or discounts are recorded, when allowed, as a reduction in revenue, and there are no material contingent obligations with respect to rebates or discounts offered by us. All revenues are recorded on an accrual basis, as earned. Appropriate allowances are made for doubtful accounts, which are recorded as a bad debt expense. The remainder of our revenue was derived from other sources.  Hotel departmental expenses were comprised of the following (in thousands):  Three Months Ended June 30,2009

                        

                        2008Amount

                        

                        % of Total Hotel

                            Operating Revenue

                        

                        Amount

                        

                        % of Total Hotel

                            Operating RevenueRoom

                        $

                        49,039

                        

                        

                        20.3

                        %

                        

                        $

                        56,871

                        

                        

                        18.6

                        %Food and beverage

                        

                        28,534

                        

                        

                        11.8

                        

                        

                        

                        36,096

                        

                        

                        11.8Other operating departments

                        

                        6,285

                        

                        

                        2.6

                        

                        

                        

                        7,170

                        

                        

                        2.4Total hotel departmental expenses

                        $

                        83,858

                        

                        

                        34.7

                        %

                        

                        $

                        100,137

                        

                        

                        32.8

                        %
  Six Months Ended June 30,2009

                        

                        2008Amount

                        

                        % of Total Hotel

                            Operating Revenue

                        

                        Amount

                        

                        % of Total Hotel

                            Operating RevenueRoom

                        $

                        95,539

                        

                        

                        20.1

                        %

                        

                        $

                        111,523

                        

                        

                        18.7

                        %Food and beverage

                        

                        57,405

                        

                        

                        12.1

                        

                        

                        

                        71,542

                        

                        

                        12.0Other operating departments

                        

                        12,492

                        

                        

                        2.6

                        

                        

                        

                        14,198

                        

                        

                        2.4Total hotel departmental expenses

                        $

                        165,436

                        

                        

                        34.8

                        %

                        

                        $

                        197,263

                        

                        

                        33.1

                        %
   Other property operating costs were comprised of the following (in thousands):  Three Months Ended June30,2009

                        

                        2008Amount

                        

                        % of Total Hotel

                            Operating Revenue

                        

                        Amount

                        

                        % of Total Hotel

                            Operating RevenueHotel general and administrative expense

                        $

                        20,998

                        

                        

                        8.7

                        %

                        

                        $

                        24,887

                        

                        

                        8.2

                        %Marketing

                        

                        20,032

                        

                        

                        8.3

                        

                        

                        

                        24,052

                        

                        

                        7.9Repair and maintenance

                        

                        12,484

                        

                        

                        5.2

                        

                        

                        

                        14,390

                        

                        

                        4.7Utilities

                        

                        12,398

                        

                        

                        5.1

                        

                        

                        

                        13,245

                        

                        

                        4.3Total other property operating costs

                        $

                        65,912

                        

                        

                        27.3

                        %

                        

                        $

                        76,574

                        

                        

                        25.1

                        %
   
 13
 
 FELCOR LODGING LIMITED PARTNERSHIP  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   4.

                        Hotel Operating Revenue, Departmental Expenses and Other Property Operating Costs – (continued)
  Six Months Ended June30,2009

                        

                        2008Amount

                        

                        % of Total Hotel

                            Operating Revenue

                        

                        Amount

                        

                        % of Total Hotel

                            Operating RevenueHotel general and administrative expense

                        $

                        42,616

                        

                        

                        9.0

                        %

                        

                        $

                        50,148

                        

                        

                        8.4

                        %Marketing

                        

                        39,957

                        

                        

                        8.4

                        

                        

                        

                        47,990

                        

                        

                        8.1Repair and maintenance

                        

                        25,468

                        

                        

                        5.3

                        

                        

                        

                        29,151

                        

                        

                        4.9Utilities

                        

                        25,178

                        

                        

                        5.3

                        

                        

                        

                        26,410

                        

                        

                        4.4Total other property operating costs

                        $

                        133,219

                        

                        

                        28.0

                        %

                        

                        $

                        153,699

                        

                        

                        25.8

                        %
  Hotel departmental expenses and other property operating costs include hotel employee compensation and benefit expenses of $73.6 million and $86.1 million for the three months ended June 30, 2009 and 2008, respectively, and $147.7 million and $170.8 million for the six months ended June 30, 2009
            and 2008, respectively.  5.

                        Taxes, Insurance and Lease Expense
  Taxes, insurance and lease expense were comprised of the following (in thousands):
  Three Months Ended

                            June 30,

                        

                        Six Months Ended

                            June 30,2009

                        

                        2008

                        

                        2009

                        

                        2008Operating lease expense(a)

                        $

                        13,291

                        

                        

                        $

                        18,718

                        

                        

                        $

                        25,538

                        

                        

                        $

                        33,553Real estate and other taxes

                        

                        8,684

                        

                        

                        

                        6,133

                        

                        

                        

                        17,887

                        

                        

                        

                        17,008Property insurance, general liability insurance and other

                        

                        3,050

                        

                        

                        

                        4,011

                        

                        

                        

                        6,631

                        

                        

                        

                        7,605Total taxes, insurance and lease expense

                        $

                        25,025

                        

                        

                        $

                        28,862

                        

                        

                        $

                        50,056

                        

                        

                        $

                        58,166
  (a)

                        Includes 100% of the lease expense related to 13 of our 50% owned unconsolidated hotels (because we own majority ownership interests in their operating lessees) of $10.9 million and $15.7 million (paid to 13 of our unconsolidated, 50%-owned ventures) and $2.4 million and $3.0 million of ground lease expense for the three months ended
                            June 30, 2009 and 2008, respectively, and lease expense related to our 51%-owned operating lessees of $21.0 million and $27.9 million (paid to 13 of our unconsolidated, 50%-owned ventures) and $4.6 million and $5.6 million of ground lease expense for the six months ended June 30, 2009 and 2008, respectively. Operating lease expense includes percentage rent (based on operating results) of $5.5 million and $10.8 million for the
                            three months ended June 30, 2009 and 2008, respectively, and $9.9 million and $17.6 million, respectively, for the six months ended June 30, 2009 and 2008.
  
 14
 
 FELCOR LODGING LIMITED PARTNERSHIP  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   6.

                        Impairment Charge
  Our hotels comprise operations and cash flows that can clearly be distinguished, operationally and for financial reporting purposes, from the remainder of our operations. Accordingly, we consider our hotels to be components as defined by SFAS No. 144 for purposes of determining impairment charges and reporting discontinued operations.  During 2008, we identified eight hotels as candidates to be sold and tested them for impairment (three no longer are identified as candidates for sale and five hotels remain sale candidates). Of the hotels tested, two failed the test under SFAS No. 144. Accordingly, we wrote down these hotel assets to our then current
            estimate of their fair market value before selling expenses, which resulted in a $17.1 million impairment charge in the quarter ended March 31, 2008. During the quarter ended March 31, 2009, we recorded a $1.4 million impairment charge on one of the five remaining sale candidates based on a third-party offer to purchase (a Level 2 input under SFAS 157) at a price less than our previously estimated fair value. Under current market conditions, we do not consider a
            sale to be probable within the next twelve months (for purposes of determining whether a hotel is held for sale under SFAS 144) until a buyer has completed its due diligence review of the asset, we have an executed contract for sale, and we have received a substantial non-refundable deposit. The hotels identified as sale candidates continue to be depreciated over their remaining useful lives.  We may be subject to additional impairment charges in the event that operating results of individual hotels are materially different from our forecasts, or the economy or lodging industry weakens, or if we shorten our contemplated holding period for certain of our hotels.  7.

                        Gain on Involuntary Conversion
  During the second quarter of 2008, we reached a final settlement of insurance claims related to 2005 hurricane losses and realized a $3.1 million gain from involuntary conversion, as the final proceeds received exceeded our estimated basis in the assets requiring replacement.  8.

                        Income (Loss) Per Unit
  For 2009, we adopted FASB Staff Position No. EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” (“FSP EITF 03-6-1”). FSP EITF 03-6-1 addresses whether instruments granted in share-based payment awards are participating securities
            prior to vesting, and therefore, need to be included in the earnings allocation when computing earnings per share under the two-class method as described in FASB Statement No. 128, “Earnings per Share” (“FAS 128”). In accordance with FSP EITF 03-6-1, unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of
            earnings per share pursuant to the two-class method. FelCor’s unvested restricted shares under its stock compensation program are participating securities under FSP EITF 03-6-1. As such, all prior-period earnings per unit data presented below are adjusted retrospectively with no material impact.   
 15
 
 FELCOR LODGING LIMITED PARTNERSHIP  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   8.

                        Income (Loss) Per Unit – (continued)
  The computation of basic and diluted income (loss) per unit is as follows (in thousands, except per unit data):  Three Months Ended

                            June 30,

                        

                        Six Months Ended

                            June30,2009

                        

                        2008

                        

                        2009

                        

                        2008Numerator:Income (loss) from continuing operations

                        $

                        (10,968

                        )

                        

                        $

                        24,443

                        

                        

                        $

                        (32,390

                        )

                        

                        $

                        11,577Net income attributable to noncontrolling interests in

                            other partnerships

                        

                        (324

                        )

                        

                        

                        (890

                        )

                        

                        

                        (108

                        )

                        

                        

                        (961

                        )Income (loss) from continuing operations attributable to FelCor LP

                        

                        (11,292

                        )

                        

                        

                        23,553

                        

                        

                        

                        (32,498

                        )

                        

                        

                        10,616Less: Preferred distributions

                        

                        (9,678

                        )

                        

                        

                        (9,678

                        )

                        

                        

                        (19,356

                        )

                        

                        

                        (19,356

                        )Income (loss) from continuing operations applicable

                            to FelCor LP common unitholders

                        

                        (20,970

                        )

                        

                        

                        13,875

                        

                        

                        

                        (51,854

                        )

                        

                        

                        (8,740

                        )Discontinued operations

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        (13

                        )Net income (loss) applicable to FelCor LP common unitholders

                        

                        (20,970

                        )

                        

                        

                        13,875

                        

                        

                        

                        (51,854

                        )

                        

                        

                        (8,753

                        )Less: Dividends paid on FelCor’s unvested restricted stock compensation

                        

                        -

                        

                        

                        

                        (457

                        )

                        

                        

                        -

                        

                        

                        

                        (943

                        )Numerator for basic and diluted income (loss) attributable to FelCor LP common unitholders

                        $

                        (20,970

                        )

                        

                        $

                        13,418

                        

                        

                        $

                        (51,854

                        )

                        

                        $

                        (9,696

                        )Denominator:Denominator for basic and diluted income

                        

                        63,397

                        

                        

                        

                        63,176

                        

                        

                        

                        63,428

                        

                        

                        

                        63,173Basic and diluted income (loss) per unit data:Income (loss) from continuing operations attributable to FelCor LP

                        $

                        (0.33

                        )

                        

                        $

                        0.21

                        

                        

                        $

                        (0.82

                        )

                        

                        $

                        (0.15

                        )Discontinued operations

                        $

                        -

                        

                        

                        $

                        -

                        

                        

                        $

                        -

                        

                        

                        $

                        -Net income (loss) attributable to FelCor LP

                        $

                        (0.33

                        )

                        

                        $

                        0.21

                        

                        

                        $

                        (0.82

                        )

                        

                        $

                        (0.15

                        )
  The following securities, which could potentially dilute basic earnings per unit in the future, were not included in the computation of diluted income (loss) per unit because they would have been antidilutive for the periods presented (in thousands):  Three Months Ended

                        

                        Six Months EndedJune 30,

                        

                        June30,2009

                        

                        2008

                        

                        2009

                        

                        2008Series A convertible preferred units

                        9,985

                        

                        

                        9,985

                        

                        

                        

                        9,985

                        

                        

                        

                        9,985
  Series A preferred distributions that would be excluded from net loss applicable to FelCor LP common unitholders, if these Series A preferred units were dilutive, were $6.3 million for the three months ended both June 30, 2009 and 2008, and $12.6 million for the six months ended June 30, 2009 and
            2008.  
 16
 
 FELCOR LODGING LIMITED PARTNERSHIP  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   9.

                        Suspension of Distributions
  We suspended our common distributions in December 2008 and our preferred distributions in March 2009. Although distributions are not paid unless declared by FelCor’s Board of Directors, unpaid preferred distributions continue to accrue, and accrued and current preferred distributions must be paid in full prior to payment of any common distributions. FelCor’s Board of
            Directors will determine whether to declare future distributions based upon various factors, including operating results, economic conditions, other operating trends, its financial condition and capital requirements, as well as FelCor’s minimum REIT distribution requirements.  10.

                        Noncontrolling Interests
  Effective January 1, 2009, we adopted the provisions of SFAS 160, “Noncontrolling Interests in Consolidated Financial Statements,” which establishes and expands accounting and reporting standards for minority interests (which are recharacterized as noncontrolling interests) in a subsidiary and the deconsolidation of a subsidiary. As a result of our adoption of this
            standard, amounts previously reported as minority interests in other partnerships on our balance sheets are now presented as noncontrolling interests within partners’ capital. The revised presentation and measurement required by SFAS 160 has been adopted retrospectively.  Also effective with the adoption of SFAS 160, previously reported minority interests have been recharacterized on the accompanying statement of operations to noncontrolling interests and placed below net income (loss) before arriving at net income (loss) attributable to FelCor LP.  11.

                        Fair Value of Financial Instruments
  In April 2009, the FASB issued FASB Staff Position 107-1 and APB 28-1 which requires disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. We adopted this FSP in the second quarter of 2009. The disclosures about the fair
            value of all financial instruments are required whether or not recognized for financial statement purposes. Disclosures about fair value of financial instruments are based on pertinent information available to management as of June 30, 2009. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that we could realize on disposition of the financial
            instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.  Our estimates of the fair value of (i) accounts receivable, accounts payable and accrued expenses approximate carrying value due to the relatively short maturity of these instruments; and (ii) our publicly traded debt is based on observable market data, and our debt that is not traded publicly is based on estimated effective
            borrowing rates for debt with similar terms, loan to estimated fair value, and remaining maturities (the estimated fair value of our debt was $1.5 billion at June 30, 2009).  
 17
 
 FELCOR LODGING LIMITED PARTNERSHIP  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   12.

                        Recently Issued Statements of Financial Accounting Standards
  In April 2009, the FASB issued FASB Staff Position 157-4 which provides guidance on estimating fair values when the volume and level of activity for the asset and liability have significantly decreased. It also includes guidance on identifying circumstances that indicate a transaction is not orderly. If the weight of evidence indicates that the transaction is not orderly, a reporting
            entity shall place little, if any, weight on that transaction price when estimating fair value. We adopted this FSP in the second quarter of 2009 without any material impact on our financial position. This Staff Position could have a material effect on our financial position to the extent we are estimating fair values to be recorded in the financial statements for assets or liabilities in markets where the volume and activity for the asset or liability has significantly
            decreased.  In June 2009, the FASB issued Statement of Financial Accounting Standards No. 167, “Amendments to FASB Interpretation No. 46R.” SFAS 167 amends FIN 46R to require an enterprise to qualitatively assess the determination of the primary beneficiary of a variable interest entity (“VIE”) based on whether
            the entity (i) has the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (ii) has the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. Also, SFAS 167 requires an ongoing reconsideration of the primary beneficiary, and amends the events that trigger a reassessment of whether an entity is a VIE. Enhanced disclosures are also
            required to provide information about an enterprise’s involvement in a VIE. This statement is effective for us on January 1, 2010. Earlier application is prohibited. We are currently evaluating the effect that adoption of this standard will have on our consolidated financial position and results of operations.  13.

                        Subsequent Events
  We have performed an evaluation of subsequent events through August 6, 2009 (which is the date the financial statements were issued), and the results of this evaluation are appropriately reflected in these financial statements.  14.

                        Consolidating Financial Information
  Certain of our wholly-owned subsidiaries (FelCor/CSS Holdings, L.P.; FelCor Pennsylvania Company, L.L.C.; FelCor Lodging Holding Company, L.L.C.; Myrtle Beach Hotels, L.L.C.; FelCor TRS Borrower 1, L.P.; FelCor TRS Borrower 3, L.P.; FelCor TRS Borrower 4, L.L.C.; FelCor TRS Guarantor, L.P.; Center City Hotel Associates; FelCor Lodging Company, L.L.C.; FelCor TRS Holdings, L.P.; FHAC
            Texas Holdings, L.P.; FelCor Omaha Hotel Company, L.L.C.; FelCor Canada Co.; FelCor/St. Paul Holdings, L.P. and FelCor Hotel Asset Company, L.L.C., collectively, “Subsidiary Guarantors”), together with FelCor, guarantee, fully and unconditionally, and jointly and severally, our senior debt. The following tables present consolidating information for the Subsidiary Guarantors.  
 18
 
 FELCOR LODGING LIMITED PARTNERSHIP  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   14.

                        Consolidating Financial Information – (continued)
  CONSOLIDATING BALANCE SHEET June 30, 2009 (in thousands)  ASSETSFelCor LP

                        

                        Subsidiary Guarantors

                        

                        Non-Guarantor Subsidiaries

                        

                        Eliminations

                        

                        Total ConsolidatedNet investment in hotel properties

                        $

                        68,302

                        

                        

                        $

                        491,699

                        

                        $

                        1,689,296

                        

                        

                        $

                        -

                        

                        

                        $

                        2,249,297Equity investment in consolidated entities

                        

                        1,074,883

                        

                        

                        

                        -

                        

                        

                        -

                        

                        

                        

                        (1,074,883

                        )

                        

                        

                        -Investment in unconsolidated entities

                        

                        71,708

                        

                        

                        

                        15,828

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        87,536Cash and cash equivalents

                        

                        70,670

                        

                        

                        

                        46,428

                        

                        

                        1,410

                        

                        

                        

                        -

                        

                        

                        

                        118,508Restricted cash

                        

                        -

                        

                        

                        

                        2,637

                        

                        

                        14,973

                        

                        

                        

                        -

                        

                        

                        

                        17,610Accounts receivable

                        

                        1,402

                        

                        

                        

                        31,620

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        33,022Deferred expenses

                        

                        1,445

                        

                        

                        

                        -

                        

                        

                        9,561

                        

                        

                        

                        -

                        

                        

                        

                        11,006Other assets

                        

                        10,710

                        

                        

                        

                        27,566

                        

                        

                        2,080

                        

                        

                        

                        -

                        

                        

                        

                        40,356Total assets

                        $

                        1,299,120

                        

                        

                        $

                        615,778

                        

                        $

                        1,717,320

                        

                        

                        $

                        (1,074,883

                        )

                        

                        $

                        2,557,335LIABILITES AND PARTNERS’ CAPITALDebt

                        $

                        514,539

                        

                        

                        $

                        2,624

                        

                        $

                        1,119,398

                        

                        

                        $

                        -

                        

                        

                        $

                        1,636,561Distributions payable

                        

                        18,223

                        

                        

                        

                        -

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        18,223Accrued expenses and other liabilities

                        

                        17,724

                        

                        

                        

                        99,725

                        

                        

                        12,771

                        

                        

                        

                        -

                        

                        

                        

                        130,220Total liabilities

                        

                        550,486

                        

                        

                        

                        102,349

                        

                        

                        1,132,169

                        

                        

                        

                        -

                        

                        

                        

                        1,785,004Redeemable units, at redemption value

                        

                        728

                        

                        

                        

                        -

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        728Preferred units

                        

                        478,774

                        

                        

                        

                        -

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        478,774Common units

                        

                        269,132

                        

                        

                        

                        494,582

                        

                        

                        562,433

                        

                        

                        

                        (1,074,883

                        )

                        

                        

                        251,264Accumulated other comprehensive income

                        

                        -

                        

                        

                        

                        17,868

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        17,868Total FelCor partners’ capital

                        

                        747,906

                        

                        

                        

                        512,450

                        

                        

                        562,433

                        

                        

                        

                        (1,074,883

                        )

                        

                        

                        747,906Noncontrolling interests

                        

                        -

                        

                        

                        

                        979

                        

                        

                        22,718

                        

                        

                        

                        -

                        

                        

                        

                        23,697Total partners’ capital

                        

                        747,906

                        

                        

                        

                        513,429

                        

                        

                        585,151

                        

                        

                        

                        (1,074,883

                        )

                        

                        

                        771,603Total liabilities, redeemable units and partners' capital

                        $

                        1,299,120

                        

                        

                        $

                        615,778

                        

                        $

                        1,717,320

                        

                        

                        $

                        (1,074,883

                        )

                        

                        $

                        2,557,335
   
 19
 
 FELCOR LODGING LIMITED PARTNERSHIP  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   14.

                        Consolidating Financial Information – (continued)
  CONDENSED CONSOLIDATING BALANCE SHEET December 31, 2008 (in thousands)  ASSETSFelCor LP

                        

                        Subsidiary Guarantors

                        

                        Non-Guarantor Subsidiaries

                        

                        Eliminations

                        

                        Total ConsolidatedNet investment in hotel properties

                        $

                        124,752

                        

                        

                        $

                        888,925

                        

                        $

                        1,265,349

                        

                        

                        $

                        -

                        

                        

                        $

                        2,279,026Equity investment in consolidated entities

                        

                        1,230,038

                        

                        

                        

                        -

                        

                        

                        -

                        

                        

                        

                        (1,230,038

                        )

                        

                        

                        -Investment in unconsolidated entities

                        

                        77,106

                        

                        

                        

                        17,400

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        94,506Cash and cash equivalents

                        

                        7,719

                        

                        

                        

                        40,018

                        

                        

                        2,450

                        

                        

                        

                        -

                        

                        

                        

                        50,187Restricted cash

                        

                        -

                        

                        

                        

                        2,104

                        

                        

                        11,109

                        

                        

                        

                        -

                        

                        

                        

                        13,213Accounts receivable

                        

                        4,576

                        

                        

                        

                        30,664

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        35,240Deferred expenses

                        

                        2,660

                        

                        

                        

                        49

                        

                        

                        2,847

                        

                        

                        

                        -

                        

                        

                        

                        5,556Other assets

                        

                        9,061

                        

                        

                        

                        24,588

                        

                        

                        892

                        

                        

                        

                        -

                        

                        

                        

                        34,541Total assets

                        $

                        1,455,912

                        

                        

                        $

                        1,003,748

                        

                        $

                        1,282,647

                        

                        

                        $

                        (1,230,038

                        )

                        

                        $

                        2,512,269LIABILITES AND PARTNERS’ CAPITALDebt

                        $

                        627,414

                        

                        

                        $

                        120,175

                        

                        $

                        804,097

                        

                        

                        $

                        -

                        

                        

                        $

                        1,551,686Distributions payable

                        

                        8,545

                        

                        

                        

                        -

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        8,545Accrued expenses and other liabilities

                        

                        24,303

                        

                        

                        

                        95,221

                        

                        

                        13,080

                        

                        

                        

                        -

                        

                        

                        

                        132,604Total liabilities

                        

                        660,262

                        

                        

                        

                        215,396

                        

                        

                        817,177

                        

                        

                        

                        -

                        

                        

                        

                        1,692,835Redeemable units, at redemption value

                        

                        545

                        

                        

                        

                        -

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        545Preferred units

                        

                        478,774

                        

                        

                        

                        -

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        478,774Common units

                        

                        316,331

                        

                        

                        

                        772,383

                        

                        

                        442,237

                        

                        

                        

                        (1,230,038

                        )

                        

                        

                        300,913Accumulated other comprehensive income

                        

                        -

                        

                        

                        

                        15,418

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        15,418Total FelCor partners’ capital

                        

                        795,105

                        

                        

                        

                        787,801

                        

                        

                        442,237

                        

                        

                        

                        (1,230,038

                        )

                        

                        

                        795,105Noncontrolling interests

                        

                        -

                        

                        

                        

                        551

                        

                        

                        23,233

                        

                        

                        

                        -

                        

                        

                        

                        23,784Total partners’ capital

                        

                        795,105

                        

                        

                        

                        788,352

                        

                        

                        465,470

                        

                        

                        

                        (1,230,038

                        )

                        

                        

                        818,889Total liabilities, redeemable units

                            and partners' capital

                        $

                        1,455,912

                        

                        

                        $

                        1,003,748

                        

                        $

                        1,282,647

                        

                        

                        $

                        (1,230,038

                        )

                        

                        $

                        2,512,269
   
 20
 
 FELCOR LODGING LIMITED PARTNERSHIP  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   14.

                        Consolidating Financial Information – (continued)
  CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS For the Three Months Ended June 30, 2009 (in thousands)  FelCor LP

                        

                        Subsidiary Guarantors

                        

                        Non-Guarantor Subsidiaries

                        

                        Eliminations

                        

                        Total ConsolidatedRevenues:Hotel operating revenue

                        $

                        -

                        

                        

                        $

                        241,580

                        

                        

                        $

                        -

                        

                        

                        $

                        -

                        

                        

                        $

                        241,580Percentage lease revenue

                        

                        4,625

                        

                        

                        

                        -

                        

                        

                        

                        45,849

                        

                        

                        

                        (50,474

                        )

                        

                        

                        -Other revenue

                        

                        -

                        

                        

                        

                        999

                        

                        

                        

                        (11

                        )

                        

                        

                        -

                        

                        

                        

                        988Total revenue

                        

                        4,625

                        

                        

                        

                        242,579

                        

                        

                        

                        45,838

                        

                        

                        

                        (50,474

                        )

                        

                        

                        242,568Expenses:Hotel operating expenses

                        

                        -

                        

                        

                        

                        161,180

                        

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        161,180Taxes, insurance and lease expense

                        

                        999

                        

                        

                        

                        67,577

                        

                        

                        

                        6,923

                        

                        

                        

                        (50,474

                        )

                        

                        

                        25,025Corporate expenses

                        

                        199

                        

                        

                        

                        3,051

                        

                        

                        

                        1,986

                        

                        

                        

                        -

                        

                        

                        

                        5,236Depreciation and amortization

                        

                        2,698

                        

                        

                        

                        10,182

                        

                        

                        

                        23,777

                        

                        

                        

                        -

                        

                        

                        

                        36,657Other expenses

                        

                        23

                        

                        

                        

                        1,760

                        

                        

                        

                        18

                        

                        

                        

                        -

                        

                        

                        

                        1,801Total operating expenses

                        

                        3,919

                        

                        

                        

                        243,750

                        

                        

                        

                        32,704

                        

                        

                        

                        (50,474

                        )

                        

                        

                        229,899Operating income

                        

                        706

                        

                        

                        

                        (1,171

                        )

                        

                        

                        13,134

                        

                        

                        

                        -

                        

                        

                        

                        12,669Interest expense, net

                        

                        (8,911

                        )

                        

                        

                        (188

                        )

                        

                        

                        (13,683

                        )

                        

                        

                        -

                        

                        

                        

                        (22,782

                        )Charges related to debt extinguishment

                        

                        (594

                        )

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        (594

                        )Loss before equity in income from

                            unconsolidated entities and

                            noncontrolling interests

                        

                        (8,799

                        )

                        

                        

                        (1,359

                        )

                        

                        

                        (549

                        )

                        

                        

                        -

                        

                        

                        

                        (10,707

                        )Equity in loss from consolidated entities

                        

                        (2,084

                        )

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        2,084

                        

                        

                        

                        -Equity in income (loss) from

                            unconsolidated entities

                        

                        (409

                        )

                        

                        

                        148

                        

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        (261

                        )Net loss

                        

                        (11,292

                        )

                        

                        

                        (1,211

                        )

                        

                        

                        (549

                        )

                        

                        

                        2,084

                        

                        

                        

                        (10,968

                        )Net (income) loss attributable to noncontrolling interests

                        

                        -

                        

                        

                        

                        (511

                        )

                        

                        

                        187

                        

                        

                        

                        -

                        

                        

                        

                        (324

                        )Net loss attributable to FelCor LP

                        

                        (11,292

                        )

                        

                        

                        (1,722

                        )

                        

                        

                        (362

                        )

                        

                        

                        2,084

                        

                        

                        

                        (11,292

                        )Preferred distributions

                        

                        (9,678

                        )

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        (9,678

                        )Net loss applicable to FelCor LP unitholders

                        $

                        (20,970

                        )

                        

                        $

                        (1,722

                        )

                        

                        $

                        (362

                        )

                        

                        $

                        2,084

                        

                        

                        

                        (20,970

                        )
    
 21
 
 FELCOR LODGING LIMITED PARTNERSHIP  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   14.

                        Consolidating Financial Information – (continued)
  CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS For the Three Months Ended June 30, 2008 (in thousands)  FelCor L.P.

                        

                        Subsidiary Guarantors

                        

                        Non-Guarantor Subsidiaries

                        

                        Eliminations

                        

                        Total ConsolidatedRevenues:Hotel operating revenue

                        $

                        -

                        

                        

                        $

                        305,237

                        

                        

                        $

                        -

                        

                        

                        $

                        -

                        

                        

                        $

                        305,237Percentage lease revenue

                        

                        7,258

                        

                        

                        

                        -

                        

                        

                        

                        47,916

                        

                        

                        

                        (55,174

                        )

                        

                        

                        -Other revenue

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        931

                        

                        

                        

                        -

                        

                        

                        

                        931Total revenue

                        

                        7,258

                        

                        

                        

                        305,237

                        

                        

                        

                        48,847

                        

                        

                        

                        (55,174

                        )

                        

                        

                        306,168Expenses:Hotel operating expenses

                        

                        -

                        

                        

                        

                        192,684

                        

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        192,684Taxes, insurance and lease expense

                        

                        1,133

                        

                        

                        

                        76,631

                        

                        

                        

                        6,272

                        

                        

                        

                        (55,174

                        )

                        

                        

                        28,862Corporate expenses

                        

                        259

                        

                        

                        

                        2,997

                        

                        

                        

                        1,608

                        

                        

                        

                        -

                        

                        

                        

                        4,864Depreciation and amortization

                        

                        2,679

                        

                        

                        

                        15,029

                        

                        

                        

                        17,364

                        

                        

                        

                        -

                        

                        

                        

                        35,072Other expenses

                        

                        -

                        

                        

                        

                        103

                        

                        

                        

                        797

                        

                        

                        

                        -

                        

                        

                        

                        900Total operating expenses

                        

                        4,071

                        

                        

                        

                        287,444

                        

                        

                        

                        26,041

                        

                        

                        

                        (55,174

                        )

                        

                        

                        262,382Operating income

                        

                        3,187

                        

                        

                        

                        17,793

                        

                        

                        

                        22,806

                        

                        

                        

                        -

                        

                        

                        

                        43,786Interest expense, net

                        

                        (9,744

                        )

                        

                        

                        (2,825

                        )

                        

                        

                        (12,200

                        )

                        

                        

                        -

                        

                        

                        

                        (24,769

                        )Income (loss) before equity in income

                            from unconsolidated entities and

                            noncontrolling interests

                        

                        (6,557

                        )

                        

                        

                        14,968

                        

                        

                        

                        10,606

                        

                        

                        

                        -

                        

                        

                        

                        19,017Equity in income from

                            consolidated entities

                        

                        26,018

                        

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        (26,018

                        )

                        

                        

                        -Equity in income (loss) from

                            unconsolidated entities

                        

                        2,087

                        

                        

                        

                        262

                        

                        

                        

                        (18

                        )

                        

                        

                        -

                        

                        

                        

                        2,331Gain on involuntary conversion

                        

                        2,005

                        

                        

                        

                        145

                        

                        

                        

                        945

                        

                        

                        

                        -

                        

                        

                        

                        3,095Net income

                        

                        23,553

                        

                        

                        

                        15,375

                        

                        

                        

                        11,533

                        

                        

                        

                        (26,018

                        )

                        

                        

                        24,443Net income attributable to

                            noncontrolling interests

                        

                        -

                        

                        

                        

                        (626

                        )

                        

                        

                        (264

                        )

                        

                        

                        -

                        

                        

                        

                        (890

                        )Net income attributable to FelCor LP

                        

                        23,553

                        

                        

                        

                        14,749

                        

                        

                        

                        11,269

                        

                        

                        

                        (26,018

                        )

                        

                        

                        23,553Preferred distributions

                        

                        (9,678

                        )

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        (9,678

                        )Net income applicable to FelCor LP unitholders

                        $

                        13,875

                        

                        

                        $

                        14,749

                        

                        

                        $

                        11,269

                        

                        

                        $

                        (26,018

                        )

                        

                        $

                        13,875
   
 22
 
 FELCOR LODGING LIMITED PARTNERSHIP  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   14.

                        Consolidating Financial Information – (continued)
  CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS For the Six Months Ended June 30, 2009 (in thousands)  FelCor LP

                        

                        Subsidiary Guarantors

                        

                        Non-Guarantor Subsidiaries

                        

                        Eliminations

                        

                        Total ConsolidatedRevenues:Hotel operating revenue

                        $

                        -

                        

                        

                        $

                        475,582

                        

                        

                        $

                        -

                        

                        

                        $

                        -

                        

                        

                        $

                        475,582Percentage lease revenue

                        

                        9,104

                        

                        

                        

                        -

                        

                        

                        

                        83,987

                        

                        

                        

                        (93,091

                        )

                        

                        

                        -Other revenue

                        

                        4

                        

                        

                        

                        1,264

                        

                        

                        

                        6

                        

                        

                        

                        -

                        

                        

                        

                        1,274Total revenue

                        

                        9,108

                        

                        

                        

                        476,846

                        

                        

                        

                        83,993

                        

                        

                        

                        (93,091

                        )

                        

                        

                        476,856Expenses:Hotel operating expenses

                        

                        -

                        

                        

                        

                        321,572

                        

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        321,572Taxes, insurance and lease expense

                        

                        1,557

                        

                        

                        

                        128,187

                        

                        

                        

                        13,403

                        

                        

                        

                        (93,091

                        )

                        

                        

                        50,056Corporate expenses

                        

                        441

                        

                        

                        

                        6,926

                        

                        

                        

                        3,991

                        

                        

                        

                        -

                        

                        

                        

                        11,358Depreciation and amortization

                        

                        5,665

                        

                        

                        

                        26,037

                        

                        

                        

                        42,340

                        

                        

                        

                        -

                        

                        

                        

                        74,042Impairment loss

                        

                        -

                        

                        

                        

                        1,368

                        

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        1,368Other expenses

                        

                        12

                        

                        

                        

                        2,458

                        

                        

                        

                        27

                        

                        

                        

                        -

                        

                        

                        

                        2,497Total operating expenses

                        

                        7,675

                        

                        

                        

                        486,548

                        

                        

                        

                        59,761

                        

                        

                        

                        (93,091

                        )

                        

                        

                        460,893Operating income

                        

                        1,433

                        

                        

                        

                        (9,702

                        )

                        

                        

                        24,232

                        

                        

                        

                        -

                        

                        

                        

                        15,963Interest expense, net

                        

                        (18,124

                        )

                        

                        

                        (2,485

                        )

                        

                        

                        (23,465

                        )

                        

                        

                        -

                        

                        

                        

                        (44,074

                        )Charges related to debt extinguishment

                        

                        (594

                        )

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        (594

                        )Income (loss) before equity in income

                            from unconsolidated entities and

                            noncontrolling interests

                        

                        (17,285

                        )

                        

                        

                        (12,187

                        )

                        

                        

                        767

                        

                        

                        

                        -

                        

                        

                        

                        (28,705

                        )Equity in loss from consolidated entities

                        

                        (14,194

                        )

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        14,194

                        

                        

                        

                        -Equity in loss from unconsolidated entities

                        

                        (1,019

                        )

                        

                        

                        (2,666

                        )

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        (3,685

                        )Net income (loss)

                        

                        (32,498

                        )

                        

                        

                        (14,853

                        )

                        

                        

                        767

                        

                        

                        

                        14,194

                        

                        

                        

                        (32,390

                        )Net (income) loss attributable to

                            noncontrolling interests

                        

                        -

                        

                        

                        

                        (333

                        )

                        

                        

                        225

                        

                        

                        

                        -

                        

                        

                        

                        (108

                        )Net income (loss) attributable to FelCor LP

                        

                        (32,498

                        )

                        

                        

                        (15,186

                        )

                        

                        

                        992

                        

                        

                        

                        14,194

                        

                        

                        

                        (32,498

                        )Preferred distributions

                        

                        (19,356

                        )

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        (19,356

                        )Net income (loss) applicable to unitholders

                        $

                        (51,854

                        )

                        

                        $

                        (15,186

                        )

                        

                        $

                        992

                        

                        

                        $

                        14,194

                        

                        

                        $

                        (51,854

                        )
   
 23
 
 FELCOR LODGING LIMITED PARTNERSHIP  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   14.

                        Consolidating Financial Information – (continued)
  CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS For the Six Months Ended June 30, 2008 (in thousands)   FelCor L.P.

                        

                        Subsidiary Guarantors

                        

                        Non-Guarantor Subsidiaries

                        

                        Eliminations

                        

                        Total ConsolidatedRevenues:Hotel operating revenue

                        $

                        -

                        

                        

                        $

                        596,784

                        

                        

                        $

                        -

                        

                        

                        $

                        -

                        

                        

                        $

                        596,784Percentage lease revenue

                        

                        13,312

                        

                        

                        

                        -

                        

                        

                        

                        100,288

                        

                        

                        

                        (113,600

                        )

                        

                        

                        -Other revenue

                        

                        -

                        

                        

                        

                        4

                        

                        

                        

                        1,255

                        

                        

                        

                        -

                        

                        

                        

                        1,259Total revenue

                        

                        13,312

                        

                        

                        

                        596,788

                        

                        

                        

                        101,543

                        

                        

                        

                        (113,600

                        )

                        

                        

                        598,043Expenses:Hotel operating expenses

                        

                        -

                        

                        

                        

                        382,837

                        

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        382,837Taxes, insurance and lease expense

                        

                        2,488

                        

                        

                        

                        155,519

                        

                        

                        

                        13,759

                        

                        

                        

                        (113,600

                        )

                        

                        

                        58,166Corporate expenses

                        

                        567

                        

                        

                        

                        6,853

                        

                        

                        

                        4,271

                        

                        

                        

                        -

                        

                        

                        

                        11,691Depreciation and amortization

                        

                        5,219

                        

                        

                        

                        29,585

                        

                        

                        

                        34,036

                        

                        

                        

                        -

                        

                        

                        

                        68,840Impairment loss

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        17,131

                        

                        

                        

                        -

                        

                        

                        

                        17,131Other expenses

                        

                        1

                        

                        

                        

                        368

                        

                        

                        

                        1,464

                        

                        

                        

                        -

                        

                        

                        

                        1,833Total operating expenses

                        

                        8,275

                        

                        

                        

                        575,162

                        

                        

                        

                        70,661

                        

                        

                        

                        (113,600

                        )

                        

                        

                        540,498Operating income

                        

                        5,037

                        

                        

                        

                        21,626

                        

                        

                        

                        30,882

                        

                        

                        

                        -

                        

                        

                        

                        57,545Interest expense, net

                        

                        (19,630

                        )

                        

                        

                        (5,574

                        )

                        

                        

                        (25,568

                        )

                        

                        

                        -

                        

                        

                        

                        (50,772

                        )Income (loss) before equity in income

                            from unconsolidated entities and

                            noncontrolling interests

                        

                        (14,593

                        )

                        

                        

                        16,052

                        

                        

                        

                        5,314

                        

                        

                        

                        -

                        

                        

                        

                        6,773Equity in income from consolidated entities

                        

                        21,029

                        

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        (21,029

                        )

                        

                        

                        -Equity in income (loss) from unconsolidated

                            entities

                        

                        2,162

                        

                        

                        

                        (417

                        )

                        

                        

                        (36

                        )

                        

                        

                        -

                        

                        

                        

                        1,709Gain on involuntary conversion

                        

                        2,005

                        

                        

                        

                        145

                        

                        

                        

                        945

                        

                        

                        

                        -

                        

                        

                        

                        3,095Income from continuing operations

                        

                        10,603

                        

                        

                        

                        15,780

                        

                        

                        

                        6,223

                        

                        

                        

                        (21,029

                        )

                        

                        

                        11,577Discontinued operations from consolidated

                            entities

                        

                        -

                        

                        

                        

                        (13

                        )

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        (13

                        )Net income

                        

                        10,603

                        

                        

                        

                        15,767

                        

                        

                        

                        6,223

                        

                        

                        

                        (21,029

                        )

                        

                        

                        11,564Net income attributable to noncontrolling interests

                        

                        -

                        

                        

                        

                        (483

                        )

                        

                        

                        (478

                        )

                        

                        

                        -

                        

                        

                        

                        (961

                        )Net income attributable to FelCor LP

                        

                        10,603

                        

                        

                        

                        15,284

                        

                        

                        

                        5,745

                        

                        

                        

                        (21,029

                        )

                        

                        

                        10,603Preferred distributions

                        

                        (19,356

                        )

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        (19,356

                        )Net income (loss) applicable to FelCor unitholders

                        $

                        (8,753

                        )

                        

                        $

                        15,284

                        

                        

                        $

                        5,745

                        

                        

                        $

                        (21,029

                        )

                        

                        $

                        (8,753

                        )
   
 24
 
 FELCOR LODGING LIMITED PARTNERSHIP  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   14.

                        Consolidating Financial Information – (continued)
  CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS For the Six Months Ended June 30, 2009 (in thousands)   FelCor LP

                        

                        Subsidiary Guarantors

                        

                        Non-Guarantor Subsidiaries

                        

                        Total ConsolidatedCash flows from (used in) operating activities

                        $

                        (14,765

                        )

                        

                        $

                        15,896

                        

                        

                        $

                        45,426

                        

                        

                        $

                        46,557Cash flows from (used in) investing activities

                        

                        1,020

                        

                        

                        

                        (26,148

                        )

                        

                        

                        (18,331

                        )

                        

                        

                        (43,459

                        )Cash flows from (used in) financing activities

                        

                        76,696

                        

                        

                        

                        16,194

                        

                        

                        

                        (28,135

                        )

                        

                        

                        64,755Effect of exchange rates changes on cash

                        

                        -

                        

                        

                        

                        468

                        

                        

                        

                        -

                        

                        

                        

                        468Change in cash and cash equivalents

                        

                        62,951

                        

                        

                        

                        6,410

                        

                        

                        

                        (1,040

                        )

                        

                        

                        68,321Cash and cash equivalents at beginning of period

                        

                        7,719

                        

                        

                        

                        40,018

                        

                        

                        

                        2,450

                        

                        

                        

                        50,187Cash and equivalents at end of period

                        $

                        70,670

                        

                        

                        $

                        46,428

                        

                        

                        $

                        1,410

                        

                        

                        $

                        118,508
   CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS For the Six Months Ended June 30, 2008 (in thousands)  FelCor L.P.

                        

                        Subsidiary Guarantors

                        

                        Non-Guarantor Subsidiaries

                        

                        Total ConsolidatedCash flows from (used in) operating activities

                        $

                        (7,197

                        )

                        

                        $

                        46,716

                        

                        

                        $

                        58,034

                        

                        

                        $

                        97,553Cash flows from (used in) investing activities

                        

                        18,812

                        

                        

                        

                        (37,526

                        )

                        

                        

                        (34,244

                        )

                        

                        

                        (52,958

                        )Cash flows from (used in) financing activities

                        

                        (2,699

                        )

                        

                        

                        (494

                        )

                        

                        

                        (27,923

                        )

                        

                        

                        (31,116

                        )Effect of exchange rates changes on cash

                        

                        -

                        

                        

                        

                        (226

                        )

                        

                        

                        -

                        

                        

                        

                        (226

                        )Change in cash and cash equivalents

                        

                        8,916

                        

                        

                        

                        8,470

                        

                        

                        

                        (4,133

                        )

                        

                        

                        13,253Cash and cash equivalents at beginning of period

                        

                        7,889

                        

                        

                        

                        43,305

                        

                        

                        

                        6,415

                        

                        

                        

                        57,609Cash and equivalents at end of period

                        $

                        16,805

                        

                        

                        $

                        51,775

                        

                        

                        $

                        2,282

                        

                        

                        $

                        70,862
       
 25
 
  Item 2.

                        Management’s Discussion and Analysis of Financial Condition and Results of Operations
  General  We entered 2009 in the midst of a recession that is continuing. In the first six months of 2009, the lodging industry continued to experience nationwide decreases in revenue per available room, or RevPAR (U.S. average RevPAR decreased 18.7% in the first six months of 2009). However, in spite of reduced RevPAR, our hotels increased portfolio market share by 2% in the second quarter of
            2009. We believe the increase in market share is largely attributable to our recently completed comprehensive hotel renovation program, asset management and strong brand affiliations.  As lodging demand continues to slow in 2009, we continue to work closely with our brand-managers to implement extensive cost containment initiatives in the lower RevPAR environment. Many of our hotels have been able to reduce labor costs permanently, and all of our hotels have trimmed non-critical functions. These cost reductions have enabled us to minimize margin erosion at our
            hotels despite reduced hotel revenues.  We are focused on maintaining market share, protecting average daily rate, or ADR, preserving margins and managing our balance sheet.  •

                        In March 2009, we refinanced our $116 million Prudential loan maturing in 2009, with a new non-recourse term loan secured by the same seven hotels that matures in 2014.
 •

                        In June 2009, we obtained a $200 million non-recourse term loan secured by nine hotels that matures in 2011. This loan can be extended for up to two years subject to satisfying certain conditions that we expect to satisfy.
 •

                        In June 2009, we repaid and terminated our line of credit. By terminating our line of credit, we eliminated certain restrictive corporate debt covenants.
 •

                        We have two non-recourse mortgage loans with an aggregate principal amount of $14 million (each secured by one hotel) that matured in June 2009 but remain unpaid. We have begun negotiations with the special servicer to extend the maturity of these loans. We can provide no assurances that we will be able to extend the maturity of these loans on
                            acceptable terms. If we are unsuccessful in our efforts to extend the maturity of these loans, we have the right to repay the amounts outstanding under either or both loans (in which case, we could then sell or refinance the hotels now or in the future) or, in the alternative, allow the lenders to foreclose on either hotel or both hotels.
 •

                        We are in preliminary discussions with current and potential lenders to modify and/or refinance all of our debt that will mature in 2010 and 2011.
  On April 1, 2009, our renovated San Francisco Marriott Union Square hotel began operating as a Marriott hotel, which had been operating as Hotel 480 during renovations that began in 2007. The renovations were comprehensive and included guest rooms, guest baths, guest corridors, meeting space, food and beverage outlets,
            public areas and building exterior. Second quarter RevPAR (under the Marriott flag) increased more than 21% at this hotel, compared to the prior year, and its market share increased by 82%, exceeding expectations. The market share index at this hotel was 109% in the second quarter compared to 79% in 2006 (prior to its renovation).  We suspended our common distributions in December 2008 and our preferred distributions in March 2009. Although distributions are not paid unless declared by FelCor’s Board of Directors, unpaid preferred distributions continue to accrue, and accrued and current preferred distributions must be paid in full prior to payment of any common distributions. FelCor’s Board of
            Directors will determine whether to declare future distributions based upon various factors, including operating results, economic conditions, other operating trends, its financial condition and capital requirements, as well as FelCor’s minimum REIT distribution requirements.   
 26
 
 Financial Comparison (in thousands of dollars, except RevPAR and Hotel EBITDA margin)  Three Months Ended

                            June 30,

                        

                        % Change

                        

                        Six Months Ended

                            June 30,

                        

                        % Change2009

                        

                        2008

                        

                        2009-2008

                        

                        2009

                        

                        2008

                        

                        2009-2008RevPAR

                        $

                        84.01

                        

                        

                        $

                        105.76

                        

                        

                        

                        (20.6

                        )

                        %

                        

                        $

                        82.81

                        

                        

                        $

                        103.66

                        

                        

                        

                        (20.1

                        )

                        %Hotel EBITDA(a)

                        $

                        64,144

                        

                        

                        $

                        97,353

                        

                        

                        

                        (34.1

                        )

                        %

                        

                        $

                        120,849

                        

                        

                        $

                        179,517

                        

                        

                        

                        (32.7

                        )

                        %Hotel EBITDA margin(a)

                        

                        26.6

                        %

                        

                        

                        31.9

                        %

                        

                        

                        (16.6

                        )

                        %

                        

                        

                        25.4

                        %

                        

                        

                        30.1

                        %

                        

                        

                        (15.6

                        )

                        %Net income (loss) attributable to FelCor LP(b)

                        $

                        (11,292

                        )

                        

                        $

                        23,553

                        

                        

                        

                        (147.9

                        )

                        %

                        

                        $

                        (32,498

                        )

                        

                        $

                        10,603

                        

                        

                        

                        (406.5

                        )

                        %
  ____________ (a)

                        Hotel EBITDA and Hotel EBITDA margin are non-GAAP financial measures. A discussion of the use, limitations and importance of these non-GAAP financial measures and detailed reconciliations to the most comparable GAAP measure are found elsewhere in Management’s Discussion and Analysis of Financial Condition and Results of Operations under the
                            section “Non-GAAP Financial Measures.”
  (b)

                        The following amounts are included in net income (loss) attributable to FelCor LP (in thousands):
  Three Months Ended

                        

                        Six Months EndedJune 30,

                        

                        June 30,2009

                        

                        2008

                        

                        2009

                        

                        2008Impairment loss

                        $

                        -

                        

                        

                        $

                        -

                        

                        

                        $

                        (1,368

                        )

                        

                        $

                        (17,131

                        )Impairment loss on unconsolidated hotels

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        (2,068

                        )

                        

                        

                        -Charges related to debt extinguishment

                        

                        (594

                        )

                        

                        

                        -

                        

                        

                        

                        (594

                        )

                        

                        

                        -Gain on involuntary conversion

                        

                        -

                        

                        

                        

                        3,095

                        

                        

                        

                        -

                        

                        

                        

                        3,095Conversion costs

                        

                        (292

                        )

                        

                        

                        (103

                        )

                        

                        

                        (330

                        )

                        

                        

                        (362

                        )Severance costs

                        

                        (381

                        )

                        

                        

                        -

                        

                        

                        

                        (526

                        )

                        

                        

                        -Lease termination costs

                        

                        (352

                        )

                        

                        

                        -

                        

                        

                        

                        (352

                        )

                        

                        

                        -
  Results of Operations  Comparison of the Three Months Ended June 30, 2009 and 2008  For the three months ended June 30, 2009, we recorded a net loss applicable to common unitholders of $21.0 million, or $0.33 per unit, compared to net income applicable to common unitholders of $13.9 million, or $0.21 per unit, for the same period in 2008. The current year loss is attributable primarily to a 20.8% decrease in revenue compared to the same period in 2008. We
            were able to limit our margin loss in the second quarter of 2009 compared to the same period in 2008, primarily by reducing hotel labor costs by $12.6 million and reducing other costs associated with non-critical functions. Our hotel expenses decreased by 14.6% compared to second quarter 2008. Our 2008 net income also included a $3.1 million gain related to involuntary conversions from the final settlement of 2005 hurricane claims.  In the second quarter of 2009:  •

                        Total revenue was $242.6 million, a 20.8% decrease compared to the same period in 2008. The decrease in revenue is attributed principally to a 20.6% decrease in RevPAR, which was driven by a 10.1% decrease in occupancy and an 11.6% decrease in ADR.
  •

                        Hotel departmental expenses decreased $16.3 million (16.3%) compared to the same period in 2008. As a percentage of total revenue, hotel departmental expenses increased from 32.7% to 34.6% compared to the same period in 2008. The $16.3 million expense reduction reflected: (i) the 10.1% decrease in occupancy; (ii) an
                            $8.8 million decrease in labor costs, which included permanent reductions related to a decrease in hotel employees; (iii) a decrease in non-critical room expenses, such as guest transportation, in-room amenities, bath linen quantities, and newspaper service; and (iv) menu modifications in food and beverage.
  
 27
 
 •

                        Other property related costs decreased $10.7 million (13.9%) compared to the same period in 2008. As a percentage of total revenue, other property related costs increased from 25.0% to 27.2% compared to the same period in 2008. The $10.7 million expense reduction included: (i) a $3.7 million decrease in
                            labor costs; (ii) a $3.3 million decrease in marketing assessments, credit card commissions and frequent guest expense (all of which reflect the decrease in revenue); (iii) a $1.9 million decrease in repairs and maintenance, partially attributed to our recently completed renovation program; and (iv) reductions in other non-critical expenses.
  •

                        Management and franchise fees decreased $4.6 million compared to the same period in 2008, due to the decrease in revenues. As a percent of total revenue, franchise fees and base management fees remained essentially unchanged from 2008 to 2009 (both fees are based on a percentage of revenue). Incentive management fee
                            expense decreased $1.7 million compared to the prior year. Incentive management fees are based on the profitability of the hotel operations, which significantly decreased from 2008 to 2009.
  •

                        Taxes, insurance and lease expense decreased $3.8 million compared to the same period in 2008. This decrease was primarily related to a $4.9 million decrease in percentage rent, attributed to decreased revenue; a $1.0 million decrease in property and general liability insurance, attributed to improved
                            insurance rates and claims experience; and a $1.1 million decrease in state franchise taxes and land leases, attributed to decreased revenue. This decrease was partially offset by a $3.1 million increase in real estate and other taxes, attributed to reduced property tax accruals in 2008. Taxes, insurance and lease expense increased as a percentage of total revenue from 9.4% to 10.3% compared to the same period in 2008.
  •

                        Depreciation and amortization expenseincreased $1.6 million, compared to the same period in 2008, attributed to increased depreciation related to the $142.9 million of consolidated hotel capital expenditures incurred in 2008.
  •

                        Other expenses increased $901,000, compared to the same period in 2008, primarily due to $381,000 of severance expenses from a reduction in the number of employees at our hotels and lease termination costs related to a $352,000 settlement to terminate one of our third-party restaurant lessees.
  •

                        Net interest expense decreased $2.0 million compared to the same period in 2008. This decrease is primarily attributable to an 81 basis point decrease in the average interest rate for our floating rate debt, partially offset by a $50 million increase in our average debt outstanding, due in part to our new term
                            loan.
  •

                        Charges related to debt extinguishment. We repaid the $128 million balance under our line of credit and terminated this facility. In the second quarter of 2009, we wrote off deferred loan costs of $594,000 associated with the termination of this facility.
  •

                        Equity in loss of unconsolidated entities was $261,000, compared to $2.3 million of equity in income from unconsolidated entities from the second quarter of 2008. This shift is primarily attributed to decreases in revenue at our unconsolidated hotels.
  Comparison of the Six Months Ended June 30, 2009 and 2008  For the six months ended June 30, 2009, we recorded a $51.9 million net loss applicable to common unitholders, or $0.82 per unit, compared to an $8.8 million net loss applicable to common unitholders, or $0.15 per unit, for the same period in 2008. The increase in current year loss is attributable primarily to a 20.3% decrease in revenue compared to the same period in 2008.
            We were able to limit our margin loss in the first six months of 2009 compared to the first six months of 2008, primarily by reducing hotel labor costs by $23.0 million and reducing other costs associated with non-critical functions. Hotel expenses decreased 15.0% compared to first six months of 2008. The current year loss included impairment charges of $3.5 million ($1.4 million related to a consolidated hotel and $2.1 million related to an unconsolidated
            entity), while the prior year loss included a $17.1 million impairment charge on two consolidated hotels and a $3.1 million gain related to involuntary conversions from the final settlement of 2005 hurricane claims.  
 28
 
  In the first six months of 2009:  •

                        Total revenue was $476.9 million, a 20.3% decrease compared to the same period in 2008. The decrease in revenue is attributed principally to a 20.1% decrease in RevPAR, which was driven by a 10.8% decrease in occupancy and a 10.4% decrease in ADR.
  •

                        Hotel departmental expenses decreased $31.8 million (16.1%) compared to the same period in 2008. As a percentage of total revenue, hotel departmental expenses increased from 33.0% to 34.7% compared to the same period in 2008. The $31.8 million expense reduction reflects: (i) the 10.8% decrease in occupancy; (ii) a
                            $16.5 million decrease in labor costs, which included permanent reductions related to a decrease in hotel employees; (iii) a decrease in non-critical room expenses, such as guest transportation, in-room amenities, bath linen quantities, and newspaper service; and (iv) menu modifications in food and beverage.
  •

                        Other property related costs decreased $20.5 million (13.3%) compared to the same period in 2008, due to the decrease in revenues. As a percentage of total revenue, other property related costs increased from 25.7% to 27.9% compared to the same period in 2008. The $20.5 million expense reduction includes:
                            (i) a $6.5 million decrease in labor costs; (ii) a $6.1 million decrease in marketing assessments, credit card commissions and frequent guest expense (all of which reflect the decrease in revenue); (iii) a $3.7 million decrease in repairs and maintenance, partially attributable to our recently completed renovation program; and (iv) reductions in other non-critical expenses.
  •

                        Management and franchise feesdecreased $9.0 million compared to the same period in 2008. As a percent of total revenue, franchise fees and base management fees remained essentially unchanged from 2008 to 2009 (both fees are based on a percentage of revenue). Incentive management fees decreased $3.7 million.
  •

                        Taxes, insurance and lease expense decreased $8.1 million compared to the same period in 2008. This decrease was primarily related to a $7.0 million decrease in percentage rent, attributed to decreased revenue at our consolidated hotel lessees; a $975,000 decrease in property and general liability insurance,
                            attributed to improved insurance rates and liability claims experience; and a $2.6 million decrease in state franchise taxes and land leases, attributed to decreases in revenue. This was partially offset by a $2.5 million increase in real estate and other taxes, attributed to reduced property tax accruals in 2008. Taxes, insurance and lease expense increased as a percentage of total revenue from 9.7% to 10.5% compared to the same period in 2008.
  •

                        Depreciation and amortization expense increased $5.2 million, compared to the same period in 2008, attributed to increased depreciation related to the $142.9 million of consolidated hotel capital expenditures incurred in 2008.
  •

                        Impairment charge. In 2008 we identified eight hotels as candidates to be sold. We recorded an impairment charge of $1.4 million for one of these hotels in the first quarter of 2009 and $17.1 million for two of these hotels in the first quarter of 2008 under the provisions of SFAS 144.
  •

                        Other expensesincreased $664,000, compared to the same period in 2008, primarily due to $526,000 of severance expenses from a reduction in the number of employees at our hotels and lease termination costs related to a $352,000 settlement to terminate one of our third-party restaurant lessees.
  •

                        Net interest expense decreased $6.7 million compared to the same period in 2008. This decrease is primarily attributable to a 127 basis point decrease in our average interest rate for our floating rate debt, offset by a $71 million increase in our average debt outstanding, due in part to our new term
                            loan.
  •

                        Charges related to debt extinguishment. We repaid the $128 million balance under our line of credit and terminated this facility. In the second quarter of 2009, we wrote off deferred loan costs of $594,000 associated with the termination of this facility.
  
 29
 
   •

                        Equity in loss of unconsolidated entitieswas $3.7 million compared to $1.7 million of equity in income from unconsolidated entities from the second quarter of 2008. This shift is primarily attributed to $2.1 million impairment charge on one of our unconsolidated investments and decreased revenue at our
                            unconsolidated hotels.
  Non-GAAP Financial Measures  We refer in this report to certain “non-GAAP financial measures.” These measures, including Hotel EBITDA and Hotel EBITDA margin, are measures of our financial performance that are not calculated and presented in accordance with GAAP. The following tables reconcile these non-GAAP measures to the most comparable GAAP financial measure. Immediately following the
            reconciliations, we include a discussion of why we believe these measures are useful supplemental measures of our performance and the limitations of such measures.  The following tables detail our computation of Hotel EBITDA, Hotel EBITDA margin, hotel operating expenses and the reconciliation of hotel operating expenses to total operating expenses with respect to our Consolidated Hotels at the dates presented.  Hotel EBITDA and Hotel EBITDA Margin (dollars in thousands)  Three Months Ended

                            June 30,

                        

                        Six Months Ended

                            June,2009

                        

                        2008

                        

                        2009

                        

                        2008Total revenues

                        $

                        242,568

                        

                        

                        $

                        306,168

                        

                        

                        $

                        476,856

                        

                        

                        $

                        598,043Other revenue

                        

                        (988

                        )

                        

                        

                        (931

                        )

                        

                        

                        (1,274

                        )

                        

                        

                        (1,259

                        )Hotel operating revenue

                        

                        241,580

                        

                        

                        

                        305,237

                        

                        

                        

                        475,582

                        

                        

                        

                        596,784Hotel operating expenses

                        

                        177,436

                        

                        

                        

                        207,884

                        

                        

                        

                        354,733

                        

                        

                        

                        417,267Hotel EBITDA

                        $

                        64,144

                        

                        

                        $

                        97,353

                        

                        

                        $

                        120,849

                        

                        

                        $

                        179,517Hotel EBITDA margin(a)

                        

                        26.6%

                        

                        

                        

                        31.9%

                        

                        

                        

                        25.4%

                        

                        

                        

                        30.1%
  (a)

                        Hotel EBITDA as a percentage of hotel operating revenue.
  Reconciliation of Total Operating Expenses to Hotel Operating Expenses (dollars in thousands)  Three Months Ended

                        

                        Six Months EndedJune 30,

                        

                        June 30,2009

                        

                        2008

                        

                        2009

                        

                        2008Total operating expenses

                        $

                        229,899

                        

                        

                        $

                        262,382

                        

                        

                        $

                        460,893

                        

                        

                        $

                        540,498Unconsolidated taxes, insurance and lease

                            expense

                        

                        2,084

                        

                        

                        

                        2,075

                        

                        

                        

                        4,018

                        

                        

                        

                        4,197Consolidated hotel lease expense

                        

                        (10,853

                        )

                        

                        

                        (15,737

                        )

                        

                        

                        (20,913

                        )

                        

                        

                        (27,933

                        )Corporate expenses

                        

                        (5,236

                        )

                        

                        

                        (4,864

                        )

                        

                        

                        (11,358

                        )

                        

                        

                        (11,691

                        )Depreciation and amortization

                        

                        (36,657

                        )

                        

                        

                        (35,072

                        )

                        

                        

                        (74,042

                        )

                        

                        

                        (68,840

                        )Impairment loss

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        (1,368

                        )

                        

                        

                        (17,131

                        )Other expenses

                        

                        (1,801

                        )

                        

                        

                        (900

                        )

                        

                        

                        (2,497

                        )

                        

                        

                        (1,833

                        )Hotel operating expenses

                        $

                        177,436

                        

                        

                        $

                        207,884

                        

                        

                        $

                        354,733

                        

                        

                        $

                        417,267
   
 30
 
   The following tables reconcile net income (loss) attributable to FelCor LP, to Hotel EBITDA and the ratio of operating income to total revenue to Hotel EBITDA margin.  Reconciliation of Net Income (Loss) Attributable to FelCor LP to Hotel EBITDA (in thousands)  Three Months Ended

                            June 30,

                        

                        Six Months EndedJune 30,2009

                        

                        2008

                        

                        2009

                        

                        2008Net income (loss) attributable to FelCor LP

                        $

                        (11,292

                        )

                        

                        $

                        23,553

                        

                        

                        $

                        (32,498

                        )

                        

                        $

                        10,603Discontinued operations

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        13Equity in loss (income) from unconsolidated entities

                        

                        261

                        

                        

                        

                        (2,331

                        )

                        

                        

                        3,685

                        

                        

                        

                        (1,709

                        )Net income (loss) attributable to noncontrolling interests in other partnerships

                        

                        324

                        

                        

                        

                        890

                        

                        

                        

                        108

                        

                        

                        

                        961Consolidated hotel lease expense

                        

                        10,853

                        

                        

                        

                        15,737

                        

                        

                        

                        20,913

                        

                        

                        

                        27,933Unconsolidated taxes, insurance and lease expense

                        

                        (2,084

                        )

                        

                        

                        (2,075

                        )

                        

                        

                        (4,018

                        )

                        

                        

                        (4,197

                        )Interest expense, net

                        

                        22,782

                        

                        

                        

                        24,769

                        

                        

                        

                        44,074

                        

                        

                        

                        50,772Charges related to debt extinguishment

                        

                        594

                        

                        

                        

                        -

                        

                        

                        

                        594

                        

                        

                        

                        -Corporate expenses

                        

                        5,236

                        

                        

                        

                        4,864

                        

                        

                        

                        11,358

                        

                        

                        

                        11,691Depreciation and amortization

                        

                        36,657

                        

                        

                        

                        35,072

                        

                        

                        

                        74,042

                        

                        

                        

                        68,840Impairment loss

                        

                        -

                        

                        

                        

                        -

                        

                        

                        

                        1,368

                        

                        

                        

                        17,131Gain on involuntary conversion

                        

                        -

                        

                        

                        

                        (3,095

                        )

                        

                        

                        -

                        

                        

                        

                        (3,095

                        )Other expenses

                        

                        1,801

                        

                        

                        

                        900

                        

                        

                        

                        2,497

                        

                        

                        

                        1,833Other revenue

                        

                        (988

                        )

                        

                        

                        (931

                        )

                        

                        

                        (1,274

                        )

                        

                        

                        (1,259

                        )Hotel EBITDA

                        $

                        64,144

                        

                        

                        $

                        97,353

                        

                        

                        $

                        120,849

                        

                        

                        $

                        179,517
   Reconciliation of Ratio of Operating Income to Total Revenues to Hotel EBITDA Margin  Three Months Ended June 30,

                        

                        Six Months Ended

                            June 30,2009

                        

                        2008

                        

                        2009

                        

                        2008Ratio of operating income to total revenues

                        

                        5.2

                        %

                        

                        

                        14.3

                        %

                        

                        3.4

                        %

                        

                        9.6

                        %Other revenue

                        

                        (0.4

                        )

                        

                        

                        (0.3

                        )

                        

                        (0.3

                        )

                        

                        (0.2

                        )Unconsolidated taxes, insurance and lease expense

                        

                        (0.8

                        )

                        

                        

                        (0.7

                        )

                        

                        (0.8

                        )

                        

                        (0.7

                        )Consolidated hotel lease expense

                        

                        4.5

                        

                        

                        

                        5.2

                        

                        

                        4.4

                        

                        

                        4.7Other expenses

                        

                        0.8

                        

                        

                        

                        0.3

                        

                        

                        0.5

                        

                        

                        0.3Corporate expenses

                        

                        2.2

                        

                        

                        

                        1.6

                        

                        

                        2.4

                        

                        

                        2.0Depreciation and amortization

                        

                        15.1

                        

                        

                        

                        11.5

                        

                        

                        15.5

                        

                        

                        11.5Impairment loss

                        

                        -

                        

                        

                        

                        -

                        

                        

                        0.3

                        

                        

                        2.9Hotel EBITDA margin

                        

                        26.6

                        %

                        

                        

                        31.9

                        %

                        

                        25.4

                        %

                        

                        30.1

                        %
   
 31
 
  Hotel EBITDA and Hotel EBITDA Margin  Hotel EBITDA and Hotel EBITDA margin are commonly used measures of performance in the hotel industry and give investors a more complete understanding of the operating results over which our individual hotels and operating managers have direct control. We believe that Hotel EBITDA and Hotel EBITDA margin are useful to investors by providing greater transparency with respect to two
            significant measures used by us in our financial and operational decision-making. Additionally, using these measures facilitates comparisons with other hotel REITs and hotel owners. We present Hotel EBITDA and Hotel EBITDA margin by eliminating from continuing operations all revenues and expenses not directly associated with hotel operations including corporate-level expenses, depreciation and amortization and expenses related to our capital structure. We eliminate corporate-level
            costs and expenses because we believe property-level results provide investors with supplemental information into the ongoing operational performance of our hotels and the effectiveness of management on a property-level basis. We eliminate depreciation and amortization because, even though depreciation and amortization are property-level expenses, we do not believe that these non-cash expenses, which are based on historical cost accounting for real estate assets and implicitly assume that the value of real estate assets diminishes predictably over time, accurately reflect an adjustment in the value of our assets. We also
            eliminate consolidated percentage rent paid to unconsolidated entities, which is effectively eliminated by noncontrolling interests and equity in income from unconsolidated subsidiaries, and include the cost of unconsolidated taxes, insurance and lease expense, to reflect the entire operating costs applicable to our hotels.  Limitations of Non-GAAP Measures  FelCor’s management and Board of Directors use Hotel EBITDA and Hotel EBITDA margin to evaluate the performance of our hotels and to facilitate comparisons between us and other hotel owners, in evaluating hotel-level performance and the operating efficiency of our hotel managers.  The use of these non-GAAP financial measures has certain limitations. Hotel EBITDA and Hotel EBITDA margin, as presented by us, may not be comparable to Hotel EBITDA and Hotel EBITDA margin as calculated by other companies. These measures do not reflect certain expenses that we incurred and will incur, such as depreciation and amortization, interest and capital expenditures.
            FelCor’s management compensates for these limitations by separately considering the impact of these excluded items to the extent they are material to operating decisions or assessments of our operating performance. Our reconciliations to the most comparable GAAP financial measures, and our consolidated statements of operations and cash flows, include interest expense, capital expenditures, and other excluded items, all of which should be considered when evaluating our
            performance, as well as the usefulness of our non-GAAP financial measures.  These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP. They should not be considered as alternatives to operating profit, cash flow from operations, or any other operating performance measure prescribed by GAAP. Hotel EBITDA and Hotel EBITDA margin reflect additional ways of viewing our operations that we believe,
            when viewed with our GAAP results and the reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. We strongly encourage investors to review our financial information in its entirety and not to rely on a single financial measure.   
 32
 
  Pro Rata Share of Rooms Owned  The following table sets forth, as of June 30, 2009, the pro rata share of hotel rooms owned by us after giving consideration to the portion of rooms owned by our partners in our consolidated and unconsolidated joint ventures:  Hotels

                        

                        Room Countat

                            June 30, 2009Consolidated Hotels

                        85

                        

                        

                        

                        25,006Unconsolidated hotel operations

                        2

                        

                        

                        

                        264Total hotels

                        87

                        

                        

                        

                        25,27050% joint ventures

                        15

                        

                        

                        

                        (1,842

                        )60% joint venture

                        1

                        

                        

                        

                        (214

                        )81% joint venture

                        1

                        

                        

                        

                        (55

                        )90% joint ventures

                        3

                        

                        

                        

                        (68

                        )97% joint venture

                        1

                        

                        

                        

                        (10

                        )Total rooms owned by joint venture partners

                        

                        

                        

                        

                        (2,189

                        )Pro rata share of rooms owned

                        

                        

                        

                        

                        23,081
   
 33
 
 Hotel Portfolio Composition  The following tables set forth, as of June 30, 2009, for 85 Consolidated Hotels distribution by brand, by our top markets and by type of location.  Brand

                        Hotels

                        

                        Rooms

                        

                        % of

                            Total Rooms

                        

                        % of 2008

                            HotelEBITDA(a)Embassy Suites Hotels

                        47

                        

                        12,132

                        

                        49

                        

                        55Holiday Inn

                        17

                        

                        6,306

                        

                        25

                        

                        19Sheraton and Westin

                        9

                        

                        3,217

                        

                        13

                        

                        12Doubletree

                        7

                        

                        1,471

                        

                        6

                        

                        7Renaissance and Marriott

                        3

                        

                        1,321

                        

                        5

                        

                        5Hilton

                        2

                        

                        559

                        

                        2

                        

                        2Top MarketsSouth Florida

                        5

                        

                        1,439

                        

                        6

                        

                        7San Francisco area

                        6

                        

                        2,138

                        

                        8

                        

                        6Atlanta

                        5

                        

                        1,462

                        

                        6

                        

                        6Los Angeles area

                        4

                        

                        899

                        

                        4

                        

                        6Orlando

                        5

                        

                        1,690

                        

                        7

                        

                        5Dallas

                        4

                        

                        1,333

                        

                        5

                        

                        4Philadelphia

                        2

                        

                        729

                        

                        3

                        

                        4Northern New Jersey

                        3

                        

                        756

                        

                        3

                        

                        4Minneapolis

                        3

                        

                        736

                        

                        3

                        

                        4San Diego

                        1

                        

                        600

                        

                        2

                        

                        4Phoenix

                        3

                        

                        798

                        

                        3

                        

                        3San Antonio

                        3

                        

                        874

                        

                        4

                        

                        3Chicago

                        3

                        

                        795

                        

                        3

                        

                        3Boston

                        2

                        

                        532

                        

                        2

                        

                        3Washington, D.C.

                        1

                        

                        443

                        

                        2

                        

                        2LocationSuburban

                        35

                        

                        8,781

                        

                        35

                        

                        34Urban

                        20

                        

                        6,358

                        

                        25

                        

                        26Airport

                        18

                        

                        5,788

                        

                        24

                        

                        24Resort

                        12

                        

                        4,079

                        

                        16

                        

                        16
   (a)

                        Hotel EBITDA is a non-GAAP financial measure. A detailed reconciliation and further discussion of Hotel EBITDA is contained in the “Non-GAAP Financial Measures” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 2 of this Quarterly Report on Form 10-Q.
  
 34
 
 Hotel Operating Statistics  The following tables set forth occupancy, ADR and RevPAR for the quarter and the six months ended June 30, 2009 and 2008, and the percentage changes thereto between the periods presented, for our Consolidated Hotels.  Operating Statistics by Brand  Occupancy (%)Three Months Ended June 30,

                        

                        

                        

                        

                        Six Months Ended

                            June 30,2009

                        

                        2008

                        

                        %Variance

                        

                        

                        2009

                        

                        2008

                        

                        %VarianceEmbassy Suites Hotels

                        70.1

                        

                        78.2

                        

                        (10.4

                        )

                        

                        

                        68.3

                        

                        75.6

                        

                        (9.6

                        )Holiday Inn

                        70.1

                        

                        78.0

                        

                        (10.1

                        )

                        

                        

                        66.0

                        

                        74.0

                        

                        (10.8

                        )Sheraton and Westin

                        64.2

                        

                        70.1

                        

                        (8.4

                        )

                        

                        

                        59.6

                        

                        68.1

                        

                        (12.4

                        )Doubletree

                        67.5

                        

                        79.9

                        

                        (15.5

                        )

                        

                        

                        65.5

                        

                        77.7

                        

                        (15.7

                        )Renaissance and Marriott

                        62.0

                        

                        68.2

                        

                        (9.0

                        )

                        

                        

                        59.2

                        

                        69.4

                        

                        (14.8

                        )Hilton

                        70.6

                        

                        70.4

                        

                        0.3

                        

                        

                        

                        59.0

                        

                        61.3

                        

                        (3.8

                        )Total hotels

                        68.8

                        

                        76.5

                        

                        (10.1

                        )

                        

                        

                        65.8

                        

                        73.7

                        

                        (10.8

                        )ADR ($)Three Months Ended June 30,

                        

                        

                        

                        

                        Six Months Ended

                            June 30,2009

                        

                        2008

                        

                        %Variance

                        

                        

                        2009

                        

                        2008

                        

                        %VarianceEmbassy Suites Hotels

                        127.79

                        

                        142.90

                        

                        (10.6

                        )

                        

                        

                        133.05

                        

                        147.40

                        

                        (9.7

                        )Holiday Inn

                        108.31

                        

                        123.67

                        

                        (12.4

                        )

                        

                        

                        106.84

                        

                        120.94

                        

                        (11.7

                        )Sheraton and Westin

                        110.54

                        

                        128.04

                        

                        (13.7

                        )

                        

                        

                        114.01

                        

                        129.06

                        

                        (11.7

                        )Doubletree

                        125.47

                        

                        145.53

                        

                        (13.8

                        )

                        

                        

                        132.08

                        

                        149.64

                        

                        (11.7

                        )Renaissance and Marriott

                        168.11

                        

                        187.30

                        

                        (10.2

                        )

                        

                        

                        184.08

                        

                        199.33

                        

                        (7.6

                        )Hilton

                        119.80

                        

                        139.77

                        

                        (14.3

                        )

                        

                        

                        110.95

                        

                        125.53

                        

                        (11.6

                        )Total hotels

                        122.14

                        

                        138.22

                        

                        (11.6

                        )

                        

                        

                        125.92

                        

                        140.62

                        

                        (10.4

                        )RevPAR ($)Three Months Ended June 30,

                        

                        

                        

                        

                        Six Months Ended

                            June 30,2009

                        

                        2008

                        

                        %Variance

                        

                        

                        2009

                        

                        2008

                        

                        %VarianceEmbassy Suites Hotels

                        89.52

                        

                        111.71

                        

                        (19.9

                        )

                        

                        

                        90.86

                        

                        111.40

                        

                        (18.4

                        )Holiday Inn

                        75.93

                        

                        96.44

                        

                        (21.3

                        )

                        

                        

                        70.46

                        

                        89.47

                        

                        (21.2

                        )Sheraton and Westin

                        70.98

                        

                        89.76

                        

                        (20.9

                        )

                        

                        

                        68.01

                        

                        87.91

                        

                        (22.6

                        )Doubletree

                        84.66

                        

                        116.21

                        

                        (27.2

                        )

                        

                        

                        86.55

                        

                        116.32

                        

                        (25.6

                        )Renaissance and Marriott

                        104.23

                        

                        127.67

                        

                        (18.4

                        )

                        

                        

                        108.89

                        

                        138.36

                        

                        (21.3

                        )Hilton

                        84.62

                        

                        98.38

                        

                        (14.0

                        )

                        

                        

                        65.48

                        

                        77.00

                        

                        (15.0

                        )Total hotels

                        84.01

                        

                        105.76

                        

                        (20.6

                        )

                        

                        

                        82.81

                        

                        103.66

                        

                        (20.1

                        )
   
 35
 
 Operating Statistics for Our Top Markets  Occupancy (%)Three Months Ended

                            June 30,

                        

                        

                        

                        Six Months Ended

                            June 30,2009

                        

                        2008

                        

                        % Variance

                        

                        2009

                        

                        2008

                        

                        %VarianceSouth Florida

                        73.5

                        

                        78.3

                        

                        (6.2

                        )

                        

                        76.4

                        

                        82.7

                        

                        (7.7

                        )San Francisco area

                        70.8

                        

                        79.7

                        

                        (11.2

                        )

                        

                        63.4

                        

                        75.3

                        

                        (15.9

                        )Atlanta

                        73.7

                        

                        75.9

                        

                        (2.9

                        )

                        

                        69.7

                        

                        76.1

                        

                        (8.4

                        )Los Angeles area

                        74.2

                        

                        78.1

                        

                        (5.1

                        )

                        

                        71.4

                        

                        75.8

                        

                        (5.8

                        )Orlando

                        70.7

                        

                        80.8

                        

                        (12.5

                        )

                        

                        69.4

                        

                        81.4

                        

                        (14.7

                        )Dallas

                        60.8

                        

                        68.6

                        

                        (11.4

                        )

                        

                        60.1

                        

                        69.2

                        

                        (13.2

                        )Philadelphia

                        74.5

                        

                        82.0

                        

                        (9.2

                        )

                        

                        62.0

                        

                        72.3

                        

                        (14.1

                        )Northern New Jersey

                        62.7

                        

                        75.6

                        

                        (17.1

                        )

                        

                        61.2

                        

                        71.0

                        

                        (13.8

                        )Minneapolis

                        65.6

                        

                        76.1

                        

                        (13.7

                        )

                        

                        63.2

                        

                        71.5

                        

                        (11.6

                        )San Diego

                        74.1

                        

                        83.0

                        

                        (10.8

                        )

                        

                        69.1

                        

                        81.8

                        

                        (15.5

                        )Phoenix

                        52.6

                        

                        66.8

                        

                        (21.3

                        )

                        

                        58.3

                        

                        71.4

                        

                        (18.3

                        )San Antonio

                        73.9

                        

                        83.1

                        

                        (11.0

                        )

                        

                        71.8

                        

                        80.1

                        

                        (10.4

                        )Chicago

                        69.6

                        

                        81.7

                        

                        (14.8

                        )

                        

                        61.1

                        

                        73.3

                        

                        (16.8

                        )Boston

                        80.0

                        

                        85.3

                        

                        (6.2

                        )

                        

                        75.3

                        

                        77.2

                        

                        (2.4

                        )Washington, D.C.

                        64.6

                        

                        70.6

                        

                        (8.4

                        )

                        

                        54.9

                        

                        57.2

                        

                        (4.1

                        )ADR ($)Three Months Ended

                            June 30,

                        

                        

                        

                        Six Months Ended

                            June 30,2009

                        

                        2008

                        

                        % Variance

                        

                        2009

                        

                        2008

                        

                        %VarianceSouth Florida

                        121.55

                        

                        137.88

                        

                        (11.8

                        )

                        

                        146.86

                        

                        170.13

                        

                        (13.7

                        )San Francisco area

                        126.45

                        

                        142.68

                        

                        (11.4

                        )

                        

                        123.90

                        

                        139.64

                        

                        (11.3

                        )Atlanta

                        105.19

                        

                        120.70

                        

                        (12.8

                        )

                        

                        108.01

                        

                        123.89

                        

                        (12.8

                        )Los Angeles area

                        133.85

                        

                        158.73

                        

                        (15.7

                        )

                        

                        136.06

                        

                        157.87

                        

                        (13.8

                        )Orlando

                        97.52

                        

                        104.66

                        

                        (6.8

                        )

                        

                        105.02

                        

                        114.67

                        

                        (8.4

                        )Dallas

                        115.04

                        

                        124.23

                        

                        (7.4

                        )

                        

                        120.89

                        

                        127.23

                        

                        (5.0

                        )Philadelphia

                        143.10

                        

                        158.99

                        

                        (10.0

                        )

                        

                        137.76

                        

                        149.20

                        

                        (7.7

                        )Northern New Jersey

                        144.27

                        

                        165.94

                        

                        (13.1

                        )

                        

                        147.86

                        

                        164.09

                        

                        (9.9

                        )Minneapolis

                        127.91

                        

                        141.76

                        

                        (9.8

                        )

                        

                        129.45

                        

                        143.28

                        

                        (9.7

                        )San Diego

                        127.62

                        

                        169.35

                        

                        (24.6

                        )

                        

                        129.78

                        

                        161.20

                        

                        (19.5

                        )Phoenix

                        115.53

                        

                        134.74

                        

                        (14.3

                        )

                        

                        138.37

                        

                        162.11

                        

                        (14.6

                        )San Antonio

                        106.08

                        

                        115.80

                        

                        (8.4

                        )

                        

                        105.87

                        

                        114.83

                        

                        (7.8

                        )Chicago

                        107.42

                        

                        132.15

                        

                        (18.7

                        )

                        

                        109.49

                        

                        127.09

                        

                        (13.9

                        )Boston

                        137.63

                        

                        167.10

                        

                        (17.6

                        )

                        

                        132.21

                        

                        153.37

                        

                        (13.8

                        )Washington, D.C.

                        136.98

                        

                        162.52

                        

                        (15.7

                        )

                        

                        144.22

                        

                        162.57

                        

                        (11.3

                        )RevPAR ($)Three Months Ended

                            June 30,

                        

                        

                        

                        Six Months Ended

                            June 30,2009

                        

                        2008

                        

                        % Variance

                        

                        2009

                        

                        2008

                        

                        %VarianceSouth Florida

                        89.30

                        

                        107.99

                        

                        (17.3

                        )

                        

                        112.15

                        

                        140.68

                        

                        (20.3

                        )San Francisco area

                        89.51

                        

                        113.71

                        

                        (21.3

                        )

                        

                        78.52

                        

                        105.19

                        

                        (25.4

                        )Atlanta

                        77.55

                        

                        91.61

                        

                        (15.3

                        )

                        

                        75.28

                        

                        94.25

                        

                        (20.1

                        )Los Angeles area

                        99.26

                        

                        123.99

                        

                        (19.9

                        )

                        

                        97.16

                        

                        119.72

                        

                        (18.8

                        )Orlando

                        68.92

                        

                        84.56

                        

                        (18.5

                        )

                        

                        72.93

                        

                        93.31

                        

                        (21.8

                        )Dallas

                        69.89

                        

                        85.22

                        

                        (18.0

                        )

                        

                        72.65

                        

                        88.09

                        

                        (17.5

                        )Philadelphia

                        106.65

                        

                        130.44

                        

                        (18.2

                        )

                        

                        85.47

                        

                        107.80

                        

                        (20.7

                        )Northern New Jersey

                        90.50

                        

                        125.50

                        

                        (27.9

                        )

                        

                        90.43

                        

                        116.49

                        

                        (22.4

                        )Minneapolis

                        83.93

                        

                        107.82

                        

                        (22.2

                        )

                        

                        81.88

                        

                        102.48

                        

                        (20.1

                        )San Diego

                        94.51

                        

                        140.60

                        

                        (32.8

                        )

                        

                        89.65

                        

                        131.81

                        

                        (32.0

                        )Phoenix

                        60.73

                        

                        90.01

                        

                        (32.5

                        )

                        

                        80.70

                        

                        115.68

                        

                        (30.2

                        )San Antonio

                        78.43

                        

                        96.25

                        

                        (18.5

                        )

                        

                        75.97

                        

                        92.00

                        

                        (17.4

                        )Chicago

                        74.72

                        

                        107.90

                        

                        (30.8

                        )

                        

                        66.85

                        

                        93.22

                        

                        (28.3

                        )Boston

                        110.15

                        

                        142.60

                        

                        (22.8

                        )

                        

                        99.61

                        

                        118.35

                        

                        (15.8

                        )Washington, D.C.

                        88.51

                        

                        114.67

                        

                        (22.8

                        )

                        

                        79.21

                        

                        93.06

                        

                        (14.9

                        )
   
 36
 
 Hotel Portfolio  The following table provides the name, location, number of rooms, our ownership interest and brand names of each of our hotels.  Brand

                        State

                        Rooms

                        % Owned(a)Consolidated HotelsBirmingham(b)

                        Embassy Suites Hotel

                        AL

                        242Phoenix – Biltmore(b)

                        Embassy Suites Hotel

                        AZ

                        232Phoenix – Crescent(b)

                        Sheraton

                        AZ

                        342Phoenix – Tempe(b)

                        Embassy Suites Hotel

                        AZ

                        224Anaheim – North(b)

                        Embassy Suites Hotel

                        CA

                        222Dana Point – Doheny Beach

                        Doubletree Guest Suites

                        CA

                        196Indian Wells – Esmeralda Resort & Spa(b)

                        Renaissance Resort

                        CA

                        560Los Angeles – International Airport –South

                        Embassy Suites Hotel

                        CA

                        349

                        97%Milpitas – Silicon Valley(b)

                        Embassy Suites Hotel

                        CA

                        266Napa Valley(b)

                        Embassy Suites Hotel

                        CA

                        205Oxnard – Mandalay Beach – Hotel & Resort(b)

                        Embassy Suites Hotel

                        CA

                        248San Diego – On the Bay

                        Holiday Inn

                        CA

                        600San Francisco – Airport/Burlingame

                        Embassy Suites Hotel

                        CA

                        340San Francisco – Airport/South San Francisco (b)

                        Embassy Suites Hotel

                        CA

                        312San Francisco – Fisherman’s Wharf

                        Holiday Inn

                        CA

                        585San Francisco Union Square

                        Marriott(c)

                        CA

                        400San Rafael – Marin County(b)

                        Embassy Suites Hotel

                        CA

                        235

                        50%Santa Barbara – Goleta(b)

                        Holiday Inn

                        CA

                        160Santa Monica Beach – at the Pier(b)

                        Holiday Inn

                        CA

                        132Wilmington(b)

                        Doubletree

                        DE

                        244

                        90%Boca Raton(b)

                        Embassy Suites Hotel

                        FL

                        263Cocoa Beach – Oceanfront

                        Holiday Inn

                        FL

                        500Deerfield Beach – Resort & Spa(b)

                        Embassy Suites Hotel

                        FL

                        244Ft. Lauderdale – 17th Street(b)

                        Embassy Suites Hotel

                        FL

                        361Ft. Lauderdale – Cypress Creek(b)

                        Sheraton Suites

                        FL

                        253Jacksonville – Baymeadows(b)

                        Embassy Suites Hotel

                        FL

                        277Miami – International Airport(b)

                        Embassy Suites Hotel

                        FL

                        318Orlando – International Airport(b)

                        Holiday Inn

                        FL

                        288Orlando – International Drive Resort

                        Holiday Inn

                        FL

                        652Orlando – International Drive South/Convention(b)

                        Embassy Suites Hotel

                        FL

                        244Orlando– North

                        Embassy Suites Hotel

                        FL

                        277Orlando – Walt Disney World Resort

                        Doubletree Guest Suites

                        FL

                        229St. Petersburg – Vinoy Resort & Golf Club(b)

                        Renaissance Resort

                        FL

                        361Tampa – Tampa Bay(b)

                        Doubletree Guest Suites

                        FL

                        203Atlanta – Airport(b)

                        Embassy Suites Hotel

                        GA

                        232Atlanta – Buckhead(b)

                        Embassy Suites Hotel

                        GA

                        316Atlanta – Galleria(b)

                        Sheraton Suites

                        GA

                        278Atlanta – Gateway – Atlanta Airport

                        Sheraton

                        GA

                        395Atlanta – Perimeter Center(b)

                        Embassy Suites Hotel

                        GA

                        241

                        50%Chicago – Lombard/Oak Brook(b)

                        Embassy Suites Hotel

                        IL

                        262

                        50%Chicago – North Shore/Deerfield (Northbrook) (b)

                        Embassy Suites Hotel

                        IL

                        237Chicago – Gateway – O’Hare(b)

                        Sheraton Suites

                        IL

                        296Indianapolis – North(b)

                        Embassy Suites Hotel

                        IN

                        221

                        81%Kansas City – Overland Park(b)

                        Embassy Suites Hotel

                        KS

                        199

                        50%Lexington – Lexington Green(b)

                        Hilton Suites

                        KY

                        174Baton Rouge(b)

                        Embassy Suites Hotel

                        LA

                        223
   
 37
 
 Hotel Portfolio (continued)   Brand

                        State

                        Rooms

                        % Owned(a)New Orleans – Convention Center(b)

                        Embassy Suites Hotel

                        LA

                        370New Orleans – French Quarter

                        Holiday Inn

                        LA

                        374Boston – at Beacon Hill

                        Holiday Inn

                        MA

                        303Boston – Marlborough(b)

                        Embassy Suites Hotel

                        MA

                        229Baltimore – at BWI Airport(b)

                        Embassy Suites Hotel

                        MD

                        251

                        90%Bloomington(b)

                        Embassy Suites Hotel

                        MN

                        218Minneapolis – Airport(b)

                        Embassy Suites Hotel

                        MN

                        310St. Paul – Downtown(b)

                        Embassy Suites Hotel

                        MN

                        208Kansas City – Plaza

                        Embassy Suites Hotel

                        MO

                        266

                        50%Charlotte(b)

                        Embassy Suites Hotel

                        NC

                        274

                        50%Charlotte – SouthPark(b)

                        Doubletree Guest Suites

                        NC

                        208Raleigh/Durham(b)

                        Doubletree Guest Suites

                        NC

                        203Raleigh – Crabtree(b)

                        Embassy Suites Hotel

                        NC

                        225

                        50%Parsippany(b)

                        Embassy Suites Hotel

                        NJ

                        274

                        50%Piscataway – Somerset(b)

                        Embassy Suites Hotel

                        NJ

                        221Secaucus – Meadowlands(b)

                        Embassy Suites Hotel

                        NJ

                        261

                        50%Philadelphia – Historic District(b)

                        Holiday Inn

                        PA

                        364Philadelphia – Society Hill(b)

                        Sheraton

                        PA

                        365Pittsburgh – at University Center (Oakland)(b)

                        Holiday Inn

                        PA

                        251Charleston – Mills House(b)

                        Holiday Inn

                        SC

                        214Myrtle Beach – Oceanfront Resort

                        Embassy Suites Hotel

                        SC

                        255Myrtle Beach Resort(b)

                        Hilton

                        SC

                        385Nashville – Airport – Opryland Area(b)

                        Embassy Suites Hotel

                        TN

                        296Nashville – Opryland – Airport (Briley Parkway)

                        Holiday Inn

                        TN

                        383Austin(b)

                        Doubletree Guest Suites

                        TX

                        188

                        90%Austin – Central(b)

                        Embassy Suites Hotel

                        TX

                        260

                        50%Corpus Christi(b)

                        Embassy Suites Hotel

                        TX

                        150Dallas – DFW International Airport South(b)

                        Embassy Suites Hotel

                        TX

                        305Dallas – Love Field(b)

                        Embassy Suites Hotel

                        TX

                        248Dallas – Market Center

                        Embassy Suites Hotel

                        TX

                        244Dallas – Park Central

                        Westin

                        TX

                        536

                        60%Houston – Medical Center(b)

                        Holiday Inn

                        TX

                        287San Antonio – International Airport(b)

                        Embassy Suites Hotel

                        TX

                        261

                        50%San Antonio – International Airport(b)

                        Holiday Inn

                        TX

                        397San Antonio – NW I-10(b)

                        Embassy Suites Hotel

                        TX

                        216

                        50%Burlington Hotel & Conference Center(b)

                        Sheraton

                        VT

                        309Vienna – Premiere at Tysons Corner(b)

                        Sheraton

                        VA

                        443

                        50%CanadaToronto – Airport

                        Holiday Inn

                        Ontario

                        446Toronto – Yorkdale

                        Holiday Inn

                        Ontario

                        370Unconsolidated OperationsSalina – I-70(b)

                        Holiday Inn Express

                        KS

                        93

                        50%New Orleans – French Quarter – Chateau LeMoyne(b)

                        Holiday Inn

                        LA

                        171

                        50%
  (a)

                        We own 100% of the real estate interests unless otherwise noted.
 (b)

                        This hotel was encumbered by mortgage debt or a capital lease obligation at June 30, 2009.
 (c)

                        On April 1, 2009, this hotel was rebranded as a Marriott.
  
 38
 
 Liquidity and Capital Resources  Operating Activities  During 2009, hotel operations have provided most of the cash needed to meet our cash requirements including paying normal-course, capital expenditures. For the six months ended June 30, 2009, cash provided by operating activities, consisting primarily of hotel operations, was $46.6 million. Cash provided by operating activities for the six months ended June 30, 2009
            decreased by $51.0 million, compared to the same period in 2008, due primarily to declines in operations at our hotels. At June 30, 2009, we had $118.5 million of cash on hand, including approximately $44 million held under management agreements to meet working capital needs.  The overall weakness in the U.S. economy, particularly the turmoil in the credit markets, has resulted in considerable negative pressure on travel spending. As a result, lodging demand continued to be weak in the second quarter and contributed to further reductions of our Consolidated Hotel RevPAR. We anticipate that lodging
            demand will not improve, and may weaken further, until economic trends (e.g., employment, consumer confidence, manufacturing production and illiquid credit markets) improve. As a result, we expect RevPAR in 2009 to decline by 15% to 17% compared to 2008, and we expect approximately $97 to $105 million of cash provided by operating activities for 2009. We are subject to increases in hotel operating expenses, including wage and benefit costs, repair and maintenance expenses,
            utilities and insurance expenses that can fluctuate disproportionately to revenues. Some of these operating expenses are difficult to predict and control, which lends volatility in our operating results. As a result of the current year decline in RevPAR and weak travel demand, we have implemented extensive cost containment initiatives at our hotels, including reducing headcount and improving productivity and energy efficiency. If RevPAR continues to decrease and/or Hotel EBITDA
            margins shrink, our operations, earnings and/or cash flow could suffer a material adverse effect.  Investing Activities  For the six months ended June 30, 2009, cash used in investing activities decreased $9.5 million, compared to the same period in 2008, due primarily to reduced spending on hotel capital expenditures.  We made extensive capital investments in our hotels from 2006 to 2008, and now nearly all of our hotels are renovated. We expect to spend a normal amount of capital going forward to maintain the quality of our hotels. As a result, we have significantly curtailed capital spending for 2009. In 2009 we plan to complete
            approximately $84 million of capital improvements at our hotels. During the six months ended June 30, 2009, we spent approximately $45.5 million on capital improvements at our hotels (of which $25 million was spent on renovation and redevelopment projects).  Our liquidity-preservation efforts also extend to acquisitions and redevelopment projects. We have not acquired any hotels during 2008 and 2009 and do not expect to acquire any hotels during the remainder of this year. We have also postponed spending on redevelopment projects, other than to advance ongoing approval and
            entitlement processes.  In order to enhance long-term unitholder value, as part of our strategic plan (as in the past and as market conditions allow), we sell lower-growth hotels that no longer meet our investment criteria, thereby freeing our capital for redeployment (e.g., reduce overall leverage, acquire other hotels or invest in other existing
            FelCor properties). We currently have five Consolidated Hotels identified for sale, but do not expect to sell these hotels during 2009. We expect to identify additional hotels for sale as the hotel transaction market improves. Among other factors, we evaluate demand and supply trends for each hotel, portfolio concentration risk and future capital needs.  
 39
 
  Financing Activities  **   For the six months ended June 30, 2009, cash provided by financing activities increased by $95.9 million compared to the same period in 2008, due primarily to our new $200 million secured term loan. During 2009, we will pay $15 million in normally occurring principal payments, which have
            been and will be funded from operating cash flow and borrowings.  We suspended payment of our common distribution in December 2008 and our preferred distributions in March 2009 (we paid approximately $10 million in aggregate preferred distributions in January 2009). We do not expect to make any further common or preferred distribution payments during 2009. Distributions are not paid unless declared by FelCor’s Board of Directors; however,
            unpaid preferred distributions continue to accrue, and accrued and current preferred distributions must be paid in full prior to reinstatement of our common distribution. FelCor’s Board of Directors will determine whether to declare future distributions based upon various factors, including operating results, economic conditions, other operating trends, its financial condition including the outcome of refinancing our 2010 and 2011 debt maturities and capital requirements, as
            well as FelCor’s minimum REIT distribution requirements.  We expect 2009 cash flow to be between $48 million and $56 million, after accounting for preferred distributions paid in January 2009, 2009 capital expenditures, repayment and termination of our line of credit, our recently-funded $200 million secured term loan, and after paying normally occurring principal payments.  The capital markets, and our access to financing on reasonably acceptable terms or not at all, have historically been affected by external events and circumstances, such as recessions, major bank failures, rising unemployment, shrinking GDP, acts of terrorism, etc. Events, or circumstances of similar magnitude or impact, could adversely affect the availability and cost of our capital
            going forward. In addition, if the current economic recession continues, our operating cash flow and the availability and cost of capital for our business will be adversely affected.  Line of Credit.In June 2009, we repaid the $128 million balance under our line of credit, which was then terminated. By terminating our line of credit, we eliminated certain restrictive corporate debt covenants.  Mortgage Debt.At June 30, 2009, we had a total of $1.1 billion of mortgage debt, secured by 53 of our consolidated hotels with an aggregate net book value of $1.6 billion. Our mortgage debt is recourse solely to the specific hotels securing the debt, except in the case of fraud, misapplication of funds and other customary recourse carve-out
            provisions. Much of our hotel mortgage debt contains provisions allowing for the substitution of collateral upon satisfaction of certain conditions. Most of our mortgage debt is prepayable, subject to various prepayment, yield maintenance or defeasance obligations.  Loans secured by certain of our hotels provide for lock-box arrangements under certain circumstances. We generally are permitted to retain an amount required to cover our budgeted hotel operating expenses, taxes, insurance and capital expenditure reserves but the remaining revenues would become subject to a lock-box arrangement if a specified debt service coverage ratio is not met.
            These hotels currently exceed the applicable minimum debt service coverage ratios; however, the lock-box provisions remain in place until the loans are repaid.  Recent Financings.  •

                        In June 2009, we obtained a $200 million non-recourse term loan secured by nine hotels. This loan bears interest at LIBOR (subject to a 2% floor) plus 350 basis points, and initially matures in 2011, but can extended for as many as two years, subject to satisfying certain conditions that we expect to satisfy. The proceeds from this new loan will be
                            used for general corporate purposes.
  
 40
 
   •

                        In March 2009, we entered into a $120 million loan agreement with The Prudential Insurance Company of America secured by seven hotels.  The proceeds of the loan were used to repay the balance of an existing loan secured by the same properties that would have matured on April 1, 2009.  The new loan matures in 2014 and bears interest
                            at 9.02%.
  Maturing Debt.We have two non-recourse mortgage loans with an aggregate principal amount of $14 million (each secured by one hotel) that matured in June 2009 but remain unpaid and are in default. Although we have sufficient liquidity to repay these loans, we believe that using our available cash, under current circumstances, to repay these loans may
            not be prudent. These loans are serviced by a third-party servicer on behalf of the investors in a larger pool of loans that includes these loans. That servicer would not engage in discussions with us to extend the maturity dates unless and until the loans were in default; consequently, we withheld payment and permitted the loans to go into default. We have now begun negotiations with the special servicer to extend the maturity of these loans. We can provide no assurances that we
            will be able to extend the maturity of these loans on acceptable terms. If we are unsuccessful in our efforts to extend the maturity of these loans, we have the right to repay the amounts outstanding under either or both loans (in which case, we could then sell or refinance the hotels now or in the future) or, in the alternative, allow the lenders to foreclose on either hotel or both hotels.  We have also begun preliminary discussions with various lenders to modify and/or refinance all of our debt that will mature in 2010 and 2011. Two pools of non-recourse mortgage loans, with a combined current balance of $275 million and secured by 14 of our hotels (eight of which are not cross-collateralized), are scheduled to mature in May 2010. With regard to these two loans, we
            believe that extending the maturity dates to align with the economic recovery, stabilized cash flows and an improved hotel transaction market is in the best interests of the lenders and FelCor LP. As a consequence, we intend to seek such extensions. In addition, we intend to discuss other loan modification options, as well as explore other refinancing opportunities and potential asset sales as a means of satisfying our obligations as they mature. There is no assurance that we will
            be successful in such negotiations or be able to obtain extensions or other modifications on acceptable terms.  Senior Notes.Our publicly-traded senior notes require that we satisfy total leverage, secured leverage and interest coverage tests and maintain a minimum amount of unencumbered assets in order to: (i) incur additional indebtedness except to refinance maturing debt with
            replacement debt, as defined under our indentures; (ii) pay distributions in excess of the minimum distributions required to meet FelCor’s REIT qualification test; (iii) repurchase FelCor’s capital stock; or (iv) merge. We remain in compliance with those tests. Under the terms of one of our indentures, we are prohibited from repurchasing any of FelCor’s capital stock, whether common or preferred, subject to certain exceptions, so long as our debt-to-EBITDA ratio,
            as defined in the indentures, exceeds 4.85 to 1, which it does at the date of this filing. In addition, if we were unable to continue to satisfy the debt incurrence test under the indentures governing our senior notes, we may be prohibited from, among other things, incurring any additional indebtedness, except under certain specific exceptions,or paying distributions on our preferred or common units, except to the extent necessary to satisfy FelCor’s REIT qualification
            requirement that it distribute currently at least 90% of its taxable income. Twenty of our hotels are currently unsecured by mortgage debt; these hotels account for $1.1 billion in gross asset value. Our senior notes are guaranteed by us, and payment of those obligations is currently secured by a pledge of FelCor’s limited partnership interest in us.  We have engaged in preliminary discussions with bankers regarding our options to refinance our publicly-traded notes, which mature in 2011 and represent $515 million of indebtedness, in the aggregate. These options may include repurchasing or replacing some or all of our outstanding notes through cash purchases in the open market, issuing new notes or exchanging existing notes
            for new debt securities in privately negotiated transactions or otherwise.  There is no assurance that we will be successful in such negotiations or be able to refinance our notes on acceptable terms. Such transactions, if any, will depend on prevailing market conditions, our liquidity requirements, the resolution of our 2010 debt maturities, contractual restrictions and other factors.  The amounts involved may be material.  
 41
 
   Interest Rate Caps.To fulfill requirements under certain loans, we entered into interest rate cap agreements with aggregate notional amounts of $427.2 million at June 30, 2009 and December 31, 2008. These interest rate caps were not designated as hedges and had insignificant fair values at both June 30, 2009 and December 31, 2008,
            resulting in no significant net earnings impact.  Inflation  Operators of hotels, in general, possess the ability to adjust room rates daily to reflect the effects of inflation. Competition may, however, require us to reduce room rates in the near term and may limit our ability to raise room rates in the future. We are also subject to the risk that inflation will cause increases in
            hotel operating expenses disproportionately to revenues. If competition requires us to reduce room rates or limits our ability to raise room rates in the future, we may not be able to adjust our room rates to reflect the effects of inflation in full, in which case our operating results and liquidity could be adversely affected.  Seasonality  The lodging business is seasonal in nature. Generally, hotel revenues are greater in the second and third calendar quarters than in the first and fourth calendar quarters, although this may not be true for hotels in major tourist destinations. Revenues for hotels in tourist areas generally are substantially greater during
            tourist season than other times of the year. Seasonal variations in revenue at our hotels can be expected to cause quarterly fluctuations in our revenues. Quarterly earnings also may be adversely affected by events beyond our control, such as extreme weather conditions, economic factors and other considerations affecting travel. To the extent that cash flow from operations is insufficient during any quarter, due to temporary or seasonal fluctuations in revenues, we may utilize cash
            on hand or borrowings to satisfy our obligations.  Disclosure Regarding Forward-Looking Statements  This report and the documents incorporated by reference in this report include forward-looking statements that involve a number of risks and uncertainties. Forward-looking statements can be identified by the use of forward-looking terminology, such as “believes,” “expects,” “anticipates,”
            “may,” “will,” “should,” “seeks”, or other variations of these terms (including their use in the negative), or by discussions of strategies, plans or intentions. A number of factors could cause actual results to differ materially from those anticipated by these forward-looking statements. Certain of these risks and uncertainties are described in greater detail under “Risk Factors” in our Annual Report on Form 10-K or in our
            other filings with the Securities and Exchange Commission, or the SEC.  These forward-looking statements are necessarily dependent upon assumptions and estimates that may prove to be incorrect. Accordingly, while we believe that the plans, intentions and expectations reflected in these forward-looking statements are reasonable, we cannot assure you that deviations from these plans, intentions or
            expectations will not be material. The forward-looking statements included in this report, and all subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf, are expressly qualified in their entirety by the risk factors and cautionary statements discussed in our filings to the SEC. We undertake no obligation to publicly update any forward-looking statements to reflect future circumstances or changes in our expectations.  
 42
 
 Item 3. Quantitative and Qualitative Disclosures about Market Risk  Quantitative and Qualitative Disclosures About Market Risk  At June 30, 2009, approximately 49% of our consolidated debt had fixed interest rates.
  The following table provides information about our financial instruments that are sensitive to changes in interest rates. For debt obligations, the table presents scheduled maturities and weighted average interest rates, by maturity dates. The fair value debt indicates the estimated principal amount of debt having the same
            debt service requirements that could have been borrowed at the date presented, at then current market interest rates.  Expected Maturity Date at June30, 2009 (dollars in thousands)  Expected Maturity Date2009

                        

                        2010

                        

                        2011

                        

                        2012

                        

                        2013

                        

                        Thereafter

                        

                        Total

                        

                        Fair ValueLiabilitiesFixed rate:Debt

                        $

                        21,682

                        

                        $

                        277,976

                        

                        $

                        306,754

                        

                        $

                        4,528

                        

                        $

                        4,902

                        

                        $

                        178,635

                        

                        $

                        794,477

                        

                        

                        749,741Average interest rate

                        

                        6.97%

                        

                        

                        8.71%

                        

                        

                        8.99%

                        

                        

                        7.67%

                        

                        

                        7.69%

                        

                        

                        8.00%

                        

                        

                        8.60%Floating rate:Debt

                        

                        750

                        

                        

                        2,084

                        

                        

                        663,300

                        

                        

                        177,225

                        

                        

                        -

                        

                        

                        -

                        

                        

                        843,359

                        

                        

                        722,990Average interest rate(a)

                        

                        5.50%

                        

                        

                        5.30%

                        

                        

                        4.54%

                        

                        

                        5.36%

                        

                        

                        -

                        

                        

                        -

                        

                        

                        4.72%Total debt

                        $

                        22,432

                        

                        $

                        280,060

                        

                        $

                        970,054

                        

                        $

                        181,753

                        

                        $

                        4,902

                        

                        $

                        178,635

                        

                        $

                        1,637,836Average interest rate

                        

                        6.92%

                        

                        

                        8.68%

                        

                        

                        5.95%

                        

                        

                        5.42%

                        

                        

                        7.69%

                        

                        

                        8.00%

                        

                        

                        6.60%Net discount

                        

                        

                        

                        

                        

                        

                        

                        

                        

                        

                        

                        

                        

                        

                        

                        

                        

                        

                        

                        (1,275

                        )Total debt

                        

                        

                        

                        

                        

                        

                        

                        

                        

                        

                        

                        

                        

                        

                        

                        

                        

                        

                        $

                        1,636,561
  (a)

                        The average floating interest rate represents the implied forward rates in the yield curve at June 30, 2009.
  Item 4. Controls and Procedures  (a)

                        Evaluation of disclosure controls and procedures.
 We have no employees as FelCor, as our sole general partner, performs our management functions. Under the supervision and with the participation of FelCor’s management, including its chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of the design and operation of our
            disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934) as of the end of the period covered by this report (the “Evaluation Date”). Based on this evaluation, FelCor’s chief executive officer and chief financial officer concluded, as of the Evaluation Date, that our disclosure controls and procedures were effective, such that the information relating to us required to be disclosed in our reports is
            recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to FelCor’s management, including its chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosures.  (b)

                        Changes in internal control over financial reporting.
  There have not been any changes in our internal control over financial reporting (as defined in Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934) during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.  
 43
 
 PART II. -- OTHER INFORMATION   Item 6.

                        Exhibits
  The following exhibits are furnished in accordance with the provisions of Item 601 of Regulation S-K:
  Exhibit Number

                        Description of Exhibit10.1

                        Term Loan Agreement, dated as of June 12, 2009, among FelCor/JPM Hospitality (SPE), L.L.C. and DJONT/JPM Hospitality Leasing (SPE), L.L.C., as borrowers, JPMorgan Chase Bank, N.A., as administrative agent, and the other lenders party hereto (filed as Exhibit 10.1 to FelCor’s 10-Q for the quarter ended June 30, 2009, and incorporated herein by
                            reference).10.2

                        Form of Mortgage/Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated as of June 12, 2009, granted by FelCor/JPM Hospitality (SPE), L.L.C. and DJONT/JPM Hospitality Leasing (SPE), L.L.C. for the benefit of JPMorgan Chase Bank, N.A., as administrative agent (filed as Exhibit 10.2 to FelCor’s 10-Q for the
                            quarter ended June 30, 2009, and incorporated herein by reference).10.3

                        Form of Note, dated as of June 12, 2009, executed by FelCor/JPM Hospitality (SPE), L.L.C. and DJONT/JPM Hospitality Leasing (SPE), L.L.C. for the benefit of the lenders (filed as Exhibit 10.3 to FelCor’s 10-Q for the quarter ended June 30, 2009, and incorporated herein by reference).10.4

                        Form of Carve Out Guaranty, dated as of June 12, 2009, by FelCor Lodging Trust Incorporated in favor of JPMorgan Chase Bank, N.A., as administrative agent (filed as Exhibit 10.4 to FelCor’s 10-Q for the quarter ended June 30, 2009, and incorporated herein by reference).10.5

                        Form of Recourse Guaranty, dated as of June 12, 2009, by FelCor Lodging Trust Incorporated in favor of JPMorgan Chase Bank, N.A., as administrative agent (filed as Exhibit 10.5 to FelCor’s 10-Q for the quarter ended June 30, 2009, and incorporated herein by reference).31.1

                        Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2

                        Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1

                        Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2

                        Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   
 44
 
  SIGNATURE  Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.   FELCOR LODGING LIMITED PARTNERSHIPa Delaware limited partnershipBy:

                        FelCor Lodging Trust IncorporatedIts general partnerDate: August 6, 2009

                        By:

                        /s/ Lester C. JohnsonName: Lester C. Johnson

                            Title:    Senior Vice President, Chief Accounting Officer
   
  45