0001628280-20-015704.txt : 20201105 0001628280-20-015704.hdr.sgml : 20201105 20201105151742 ACCESSION NUMBER: 0001628280-20-015704 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 59 CONFORMED PERIOD OF REPORT: 20200930 FILED AS OF DATE: 20201105 DATE AS OF CHANGE: 20201105 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Rangers Sub I, LLC CENTRAL INDEX KEY: 0001715629 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 000000000 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-220497 FILM NUMBER: 201290123 BUSINESS ADDRESS: STREET 1: 3 BETHESDA METRO CENTER, SUITE 1000 CITY: BETHESDA STATE: MD ZIP: 20814 BUSINESS PHONE: 301-280-7777 MAIL ADDRESS: STREET 1: 3 BETHESDA METRO CENTER, SUITE 1000 CITY: BETHESDA STATE: MD ZIP: 20814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FelCor Lodging LP CENTRAL INDEX KEY: 0001048789 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 752544994 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-39595-01 FILM NUMBER: 201290122 BUSINESS ADDRESS: STREET 1: 545 E. JOHN CARPENTER FREEWAY STREET 2: SUITE 1300 CITY: IRVING STATE: TX ZIP: 75062 BUSINESS PHONE: 9724444900 MAIL ADDRESS: STREET 1: 545 E. JOHN CARPENTER FREEWAY STREET 2: SUITE 1300 CITY: IRVING STATE: TX ZIP: 75062 FORMER COMPANY: FORMER CONFORMED NAME: FELCOR LODGING L P DATE OF NAME CHANGE: 19980814 FORMER COMPANY: FORMER CONFORMED NAME: FELCOR SUITES LP DATE OF NAME CHANGE: 19971030 10-Q 1 rlj-20200930.htm 10-Q rlj-20200930
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2020

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 333-220497 (Rangers Sub I, LLC)
Commission File Number 333-39595-01 (FelCor Lodging Limited Partnership)
  

RANGERS SUB I, LLC
FELCOR LODGING LIMITED PARTNERSHIP
(Exact Name of Registrant as Specified in Its Charter)


Maryland (Rangers Sub I, LLC) 30-1001580
Delaware (FelCor Lodging Limited Partnership)75-2544994
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)
c/o RLJ Lodging Trust
3 Bethesda Metro Center, Suite 1000 
Bethesda,Maryland20814
(Address of Principal Executive Offices)(Zip Code)
(301) 280-7777
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of Class Trading Symbol Name of Exchange on Which Registered
Not applicable (1)  
(1) Neither Rangers Sub I, LLC nor FelCor Lodging Limited Partnership has securities registered pursuant to Section 12(b) of the Act.
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.
Rangers Sub I, LLC (refer to the Note below)                             o Yes  ý No 
FelCor Lodging Limited Partnership (refer to the Note below)                     o Yes  ý No 


Note: As voluntary filers not subject to the filing requirements of the Securities Exchange Act of 1934, the registrants have filed all reports pursuant to Section 13 or 15(d) for the preceding 12 months as if they were subject to such filing requirements.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).  
Rangers Sub I, LLC                                      ý Yes  o No 
FelCor Lodging Limited Partnership                                  ý Yes  o No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Rangers Sub I, LLC:
Large accelerated filer o Accelerated filer o
Non-accelerated filer 
ý 
 Smaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
FelCor Lodging Limited Partnership:
Large accelerated filer o Accelerated filer o
Non-accelerated filer 
ý 
 Smaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   
Rangers Sub I, LLC                                      Yes ý No 
FelCor Lodging Limited Partnership                                  Yes  ý No 
As of November 5, 2020, RLJ Lodging Trust, L.P. owns 100% of the percentage interests of Rangers Sub I, LLC. As of November 5, 2020, FelCor Holdings Trust, a wholly-owned subsidiary of RLJ Lodging Trust, L.P., owns 99% of the percentage interests of FelCor Lodging Limited Partnership, and Rangers General Partner, LLC, a wholly-owned subsidiary of RLJ Lodging Trust, L.P., owns 1% of the percentage interests of FelCor Lodging Limited Partnership.



EXPLANATORY NOTE
 
On August 31, 2017 (the "Acquisition Date"), RLJ Lodging Trust ("RLJ"), RLJ Lodging Trust, L.P. ("RLJ LP"), Rangers Sub I, LLC, a wholly owned subsidiary of RLJ LP ("Rangers"), and Rangers Sub II, LP, a wholly owned subsidiary of RLJ LP ("Partnership Merger Sub") consummated the transactions contemplated by the Agreement and Plan of Merger (the "Merger Agreement") dated as of April 23, 2017 with FelCor Lodging Trust Incorporated ("FelCor") and FelCor Lodging Limited Partnership ("FelCor LP"), pursuant to which Partnership Merger Sub merged with and into FelCor LP, with FelCor LP surviving as a wholly owned subsidiary of RLJ LP (the "Partnership Merger"), and, immediately thereafter, FelCor merged with and into Rangers, with Rangers surviving as a wholly owned subsidiary of RLJ LP (the "REIT Merger" and, together with the Partnership Merger, the "Mergers").

Where it is important to distinguish between the entities, we either refer specifically to Rangers or to FelCor LP. Otherwise, we use the terms "we" or "our" to refer to Rangers and FelCor LP, collectively (including their consolidated subsidiaries).

This quarterly report on Form 10-Q for the quarter ended September 30, 2020 combines the filings for Rangers and FelCor LP. Rangers indirectly owns a 99% partnership interest in FelCor LP. Through FelCor LP, Rangers owns hotel properties and conducts other business.

We believe combining the periodic reports for Rangers and FelCor LP into a single combined report results in the following benefits:

presents the business as a whole (the same way management views and operates the business);

eliminates duplicative disclosure and provides a more streamlined presentation (a substantial portion of our disclosure applies to both Rangers and FelCor LP); and

saves time and cost by preparing combined reports instead of separate reports.

Rangers consolidates FelCor LP for financial reporting purposes. Rangers has no assets other than its indirect investment in FelCor LP and no liabilities separate from FelCor LP. Therefore, the reported assets and liabilities for Rangers and FelCor LP are substantially identical.

RLJ LP owns 100% of Rangers. Rangers indirectly owns 99% of FelCor LP. A wholly-owned subsidiary of RLJ LP owns the remaining 1% of FelCor LP, which is a noncontrolling interest that is reflected within the equity section of the consolidated balance sheets and in the consolidated statements of equity. Apart from the different equity treatment, the consolidated financial statements for Rangers and FelCor LP are nearly identical, except that net income (loss) attributable to the 1% noncontrolling interest in FelCor LP is deducted from Rangers' net income (loss) in order to arrive at net income (loss) attributable to Rangers.

We present the sections in this report combined unless separate disclosure is required for clarity.

i



TABLE OF CONTENTS
 
  Page
   
 
   
 Rangers Sub I, LLC
 Consolidated Financial Statements (unaudited) 
 
 
 
 
FelCor Lodging Limited Partnership
Consolidated Financial Statements (unaudited) 
 
   
   
   
 
 
ii

PART I. FINANCIAL INFORMATION
 
Item 1.         Financial Statements
Rangers Sub I, LLC
Consolidated Balance Sheets
(Amounts in thousands)
(unaudited)
September 30, 2020December 31, 2019
Assets  
Investment in hotel properties, net$1,912,564 $1,946,826 
Investment in unconsolidated joint ventures7,056 15,171 
Cash and cash equivalents64,740 19,572 
Restricted cash reserves6,072 4,147 
Related party rent receivable 49,181 
Advance to Lessee - related party506  
Lease right-of-use assets77,361 80,635 
Prepaid expense and other assets4,840 7,543 
Total assets$2,073,139 $2,123,075 
Liabilities and Equity  
Debt, net$707,834 $713,727 
Related party debt85,000 85,000 
Accounts payable and other liabilities37,705 32,676 
Lease liabilities46,994 48,200 
Related party rent payable2,855  
Accrued interest9,586 2,463 
Related party accrued interest119 190 
Total liabilities890,093 882,256 
Commitments and Contingencies (Note 9)
Equity 
Member's equity: 
Member's equity1,159,674 1,119,913 
Retained earnings3,287 99,996 
Total member's equity1,162,961 1,219,909 
Noncontrolling interest:  
Noncontrolling interest in consolidated joint ventures8,338 8,588 
Noncontrolling interest in FelCor LP11,747 12,322 
Total noncontrolling interest20,085 20,910 
Total equity1,183,046 1,240,819 
Total liabilities and equity$2,073,139 $2,123,075 

 
The accompanying notes are an integral part of these consolidated financial statements.
1

Rangers Sub I, LLC
Consolidated Statements of Operations and Comprehensive (Loss) Income
(Amounts in thousands)
(unaudited)
 For the three months ended September 30,For the nine months ended September 30,
 2020201920202019
Revenues
Operating revenues
Related party lease revenue$468 $46,392 $20,904 $152,534 
Total revenues468 46,392 20,904 152,534 
Expenses 
Operating expenses 
Depreciation and amortization18,882 17,696 56,166 54,284 
Property tax, insurance and other9,806 10,327 29,325 31,416 
General and administrative(1,555)278 (571)961 
Transaction costs(154)105 (144)215 
Total operating expenses26,979 28,406 84,776 86,876 
Other income 8 1 59 
Interest income6 79 119 239 
Interest expense(7,718)(8,201)(23,526)(23,706)
Related party interest expense(688)(1,138)(2,401)(3,475)
Loss on sale of hotel properties, net (91)(42)(21,474)
(Loss) income before equity in (loss) income from unconsolidated joint ventures(34,911)8,643 (89,721)17,301 
Equity in (loss) income from unconsolidated joint ventures(7,806)30 (8,215)565 
Net (loss) income and comprehensive (loss) income(42,717)8,673 (97,936)17,866 
Net loss (income) attributable to noncontrolling interests: 
Noncontrolling interest in consolidated joint ventures99 (82)250 (78)
Noncontrolling interest in FelCor LP426 (85)977 (164)
Preferred distributions - consolidated joint venture   (186)
Redemption of preferred equity - consolidated joint venture   (1,153)
Net (loss) income and comprehensive (loss) income attributable to Rangers$(42,192)$8,506 $(96,709)$16,285 
 

The accompanying notes are an integral part of these consolidated financial statements.
2


Rangers Sub I, LLC
Consolidated Statements of Changes in Equity
(Amounts in thousands)
(unaudited)


 Member's EquityNoncontrolling Interest 
 EquityRetained EarningsFelCor LPConsolidated
Joint 
Ventures
Total 
Equity
Balance at December 31, 2019$1,119,913 $99,996 $12,322 $8,588 $1,240,819 
Net loss and comprehensive loss— (96,709)(977)(250)(97,936)
Contributions115,108 — 1,163 — 116,271 
Distributions(75,347)— (761)— (76,108)
Balance at September 30, 2020$1,159,674 $3,287 $11,747 $8,338 $1,183,046 

Member's EquityNoncontrolling Interest
EquityRetained EarningsFelCor LPConsolidated Joint VenturesTotal Equity
Balance at June 30, 2020$1,148,756 $45,479 $12,062 $8,437 $1,214,734 
Net loss and comprehensive loss— (42,192)(426)(99)(42,717)
Contributions12,131 — 123 — 12,254 
Distributions(1,213)— (12)— (1,225)
Balance at September 30, 2020$1,159,674 $3,287 $11,747 $8,338 $1,183,046 


The accompanying notes are an integral part of these consolidated financial statements.
  










3

Rangers Sub I, LLC
Consolidated Statements of Changes in Equity
(Amounts in thousands)
(unaudited)


 Member's EquityNoncontrolling Interest 
 EquityRetained EarningsFelCor LPConsolidated
Joint 
Ventures
Preferred Equity in a Consolidated Joint VentureTotal 
Equity
Balance at December 31, 2018$1,334,154 $76,695 $14,250 $6,059 $44,430 $1,475,588 
Net income and comprehensive income— 16,285 164 78 1,339 17,866 
Contributions134,581 — 1,360 — — 135,941 
Distributions(340,898)— (3,443)— — (344,341)
Preferred distributions - consolidated joint venture— — — — (186)(186)
Redemption of preferred equity - consolidated joint venture— — — — (45,583)(45,583)
Contributions from consolidated joint venture partners— — — 2,281 — 2,281 
Balance at September 30, 2019$1,127,837 $92,980 $12,331 $8,418 $ $1,241,566 


 Member's EquityNoncontrolling Interest 
EquityRetained EarningsFelCor LPConsolidated
Joint 
Ventures
Preferred Equity in a Consolidated Joint VentureTotal 
Equity
Balance at June 30, 2019$1,113,358 $84,474 $12,099 $8,336 $ $1,218,267 
Net income and comprehensive income — 8,506 85 82  8,673 
Contributions20,610 — 208 — — 20,818 
Distributions(6,131)— (61)— — (6,192)
Balance at September 30, 2019$1,127,837 $92,980 $12,331 $8,418 $ $1,241,566 


The accompanying notes are an integral part of these consolidated financial statements.
4

Rangers Sub I, LLC
Consolidated Statements of Cash Flows
(Amounts in thousands)
(unaudited)
 For the nine months ended September 30,
 20202019
Cash flows from operating activities 
Net (loss) income$(97,936)$17,866 
Adjustments to reconcile net (loss) income to cash flow provided by operating activities:  
Loss on sale of hotel properties, net42 21,474 
Depreciation and amortization56,166 54,284 
Amortization of deferred financing costs148 99 
Other amortization(2,062)(1,950)
Equity in loss (income) from unconsolidated joint ventures8,215 (565)
Distributions of income from unconsolidated joint ventures 1,295 
Changes in assets and liabilities:
Related party rent receivable49,181 (54,879)
Advance to Lessee - related party(506) 
Prepaid expense and other assets2,284 1,383 
Related party prepaid interest 180 
Related party rent payable2,855  
Accounts payable and other liabilities6,967 4,723 
Accrued interest7,123 7,125 
Related party accrued interest(71)190 
Net cash flow provided by operating activities32,406 51,225 
Cash flows from investing activities 
Proceeds from the sale of hotel properties, net(42)145,159 
Improvements and additions to hotel properties(23,328)(42,663)
Contributions to unconsolidated joint ventures(100)(603)
Net cash flow (used in) provided by investing activities(23,470)101,893 
Cash flows from financing activities 
Proceeds from borrowings 96,000 
Repayments of borrowings(2,006)(1,925)
Contributions from members116,271 135,941 
Distributions to members(76,108)(344,341)
Payments of deferred financing costs (990)
Preferred distributions - consolidated joint venture (312)
Redemption of preferred equity - consolidated joint venture (45,583)
Contributions from consolidated joint venture partners 2,281 
Net cash flow provided by (used in) financing activities38,157 (158,929)
Net change in cash, cash equivalents, and restricted cash reserves47,093 (5,811)
Cash, cash equivalents, and restricted cash reserves, beginning of year23,719 24,562 
Cash, cash equivalents, and restricted cash reserves, end of period$70,812 $18,751 

The accompanying notes are an integral part of these consolidated financial statements.
5

FelCor Lodging Limited Partnership
Consolidated Balance Sheets
(Amounts in thousands)
(unaudited)

September 30, 2020December 31, 2019
Assets  
Investment in hotel properties, net$1,912,564 $1,946,826 
Investment in unconsolidated joint ventures7,056 15,171 
Cash and cash equivalents64,740 19,572 
Restricted cash reserves6,072 4,147 
Related party rent receivable 49,181 
Advance to Lessee - related party506  
Lease right-of-use assets77,361 80,635 
Prepaid expense and other assets4,840 7,543 
Total assets$2,073,139 $2,123,075 
Liabilities and Partners' Capital  
Debt, net$707,834 $713,727 
Related party debt85,000 85,000 
Accounts payable and other liabilities37,705 32,676 
Lease liabilities46,994 48,200 
Related party rent payable2,855  
Accrued interest9,586 2,463 
Related party accrued interest119 190 
Total liabilities890,093 882,256 
Commitments and Contingencies (Note 9)
Partners' Capital 
Partners’ capital: 
Partners’ capital1,171,389 1,131,226 
Retained earnings3,319 101,005 
Total partners’ capital, excluding noncontrolling interest1,174,708 1,232,231 
Noncontrolling interest in consolidated joint ventures8,338 8,588 
Total partners' capital1,183,046 1,240,819 
Total liabilities and partners' capital$2,073,139 $2,123,075 
 

The accompanying notes are an integral part of these consolidated financial statements.

6

FelCor Lodging Limited Partnership
Consolidated Statements of Operations and Comprehensive (Loss) Income
(Amounts in thousands)
(unaudited)
 For the three months ended September 30,For the nine months ended September 30,
 2020201920202019
Revenues
Operating revenues
Related party lease revenue$468 $46,392 $20,904 $152,534 
Total revenues468 46,392 20,904 152,534 
Expenses 
Operating expenses 
Depreciation and amortization18,882 17,696 56,166 54,284 
Property tax, insurance and other9,806 10,327 29,325 31,416 
General and administrative(1,555)278 (571)961 
Transaction costs(154)105 (144)215 
Total operating expenses26,979 28,406 84,776 86,876 
Other income 8 1 59 
Interest income6 79 119 239 
Interest expense(7,718)(8,201)(23,526)(23,706)
Related party interest expense(688)(1,138)(2,401)(3,475)
Loss on sale of hotel properties, net (91)(42)(21,474)
(Loss) income before equity in (loss) income from unconsolidated joint ventures(34,911)8,643 (89,721)17,301 
Equity in (loss) income from unconsolidated joint ventures(7,806)30 (8,215)565 
Net (loss) income and comprehensive (loss) income(42,717)8,673 (97,936)17,866 
Net loss (income) attributable to noncontrolling interests: 
Noncontrolling interest in consolidated joint ventures99 (82)250 (78)
Preferred distributions - consolidated joint venture   (186)
Redemption of preferred capital - consolidated joint venture   (1,153)
Net (loss) income and comprehensive (loss) income attributable to FelCor LP$(42,618)$8,591 $(97,686)$16,449 
 

The accompanying notes are an integral part of these consolidated financial statements.

7


FelCor Lodging Limited Partnership
Consolidated Statements of Partners' Capital
(Amounts in thousands)
(unaudited)

 Partners' CapitalNoncontrolling Interest 
 CapitalRetained EarningsConsolidated
Joint 
Ventures
Total 
Partners' Capital
Balance at December 31, 2019$1,131,226 $101,005 $8,588 $1,240,819 
Net loss and comprehensive loss— (97,686)(250)(97,936)
Contributions116,271 — — 116,271 
Distributions(76,108)— — (76,108)
Balance at September 30, 2020$1,171,389 $3,319 $8,338 $1,183,046 

Partners' CapitalNoncontrolling Interest
CapitalRetained EarningsConsolidated Joint VenturesTotal Partners' Capital
Balance at June 30, 2020$1,160,360 $45,937 $8,437 $1,214,734 
Net loss and comprehensive loss— (42,618)(99)(42,717)
Contributions12,254 — — 12,254 
Distributions(1,225)— — (1,225)
Balance at September 30, 2020$1,171,389 $3,319 $8,338 $1,183,046 


The accompanying notes are an integral part of these consolidated financial statements.


  









8


FelCor Lodging Limited Partnership
Consolidated Statements of Partners' Capital
(Amounts in thousands)
(unaudited)


 Partners' CapitalNoncontrolling Interest 
 CapitalRetained EarningsConsolidated
Joint 
Ventures
Preferred Capital in a Consolidated Joint VentureTotal 
Partners' Capital
Balance at December 31, 2018$1,347,630 $77,469 $6,059 $44,430 $1,475,588 
Net income and comprehensive income 16,449 78 1,339 17,866 
Contributions135,941 — — — 135,941 
Distributions(344,341)— — — (344,341)
Preferred distributions - consolidated joint venture— — — (186)(186)
Redemption of preferred equity - consolidated joint venture— — — (45,583)(45,583)
Contributions from consolidated joint venture partners— — 2,281 — 2,281 
Balance at September 30, 2019$1,139,230 $93,918 $8,418 $ $1,241,566 

Partners' CapitalNoncontrolling Interest
CapitalRetained EarningsConsolidated Joint VenturesPreferred Capital in a Consolidated Joint VentureTotal Partners' Capital
Balance at June 30, 2019$1,124,604 $85,327 $8,336 $ $1,218,267 
Net income and comprehensive income 8,591 82  8,673 
Contributions20,818 — — — 20,818 
Distributions(6,192)— — — (6,192)
Balance at September 30, 2019$1,139,230 $93,918 $8,418 $ $1,241,566 


The accompanying notes are an integral part of these consolidated financial statements.
  

9

FelCor Lodging Limited Partnership
Consolidated Statements of Cash Flows
(Amounts in thousands)
(unaudited)
 For the nine months ended September 30,
 20202019
Cash flows from operating activities 
Net (loss) income$(97,936)$17,866 
Adjustments to reconcile net (loss) income to cash flow provided by operating activities:  
Loss on sale of hotel properties, net42 21,474 
Depreciation and amortization56,166 54,284 
Amortization of deferred financing costs148 99 
Other amortization(2,062)(1,950)
Equity in loss (income) from unconsolidated joint ventures8,215 (565)
Distributions of income from unconsolidated joint ventures 1,295 
Changes in assets and liabilities:
Related party rent receivable49,181 (54,879)
Advance to Lessee - related party(506) 
Prepaid expense and other assets2,284 1,383 
Related party prepaid interest 180 
Related party rent payable2,855  
Accounts payable and other liabilities6,967 4,723 
Accrued interest7,123 7,125 
Related party accrued interest(71)190 
Net cash flow provided by operating activities32,406 51,225 
Cash flows from investing activities 
Proceeds from the sale of hotel properties, net(42)145,159 
Improvements and additions to hotel properties(23,328)(42,663)
Contributions to unconsolidated joint ventures(100)(603)
Net cash flow (used in) provided by investing activities(23,470)101,893 
Cash flows from financing activities 
Proceeds from borrowings 96,000 
Repayments of borrowings(2,006)(1,925)
Contributions from partners116,271 135,941 
Distributions to partners(76,108)(344,341)
Payments of deferred financing costs (990)
Preferred distributions - consolidated joint venture (312)
Redemption of preferred capital - consolidated joint venture (45,583)
Contributions from consolidated joint venture partners 2,281 
Net cash flow provided by (used in) financing activities38,157 (158,929)
Net change in cash, cash equivalents, and restricted cash reserves47,093 (5,811)
Cash, cash equivalents, and restricted cash reserves, beginning of year23,719 24,562 
Cash, cash equivalents, and restricted cash reserves, end of period$70,812 $18,751 

The accompanying notes are an integral part of these consolidated financial statements.
10

Rangers Sub I, LLC and FelCor Lodging Limited Partnership
Notes to the Consolidated Financial Statements
(unaudited)

1.              General
 
Organization

Rangers Sub I, LLC ("Rangers") is a Maryland limited liability company and a wholly-owned subsidiary of RLJ Lodging Trust, L.P. ("RLJ LP"). Rangers owns an indirect 99% partnership interest in FelCor Lodging Limited Partnership ("FelCor LP"). Rangers General Partner, LLC, also a wholly-owned subsidiary of RLJ LP, owns the remaining 1% partnership interest and is the sole general partner of FelCor LP. Rangers and FelCor LP are collectively referred to as the "Company." Substantially all of the Company’s assets and liabilities are held by, and all of its operations are conducted through FelCor LP. The Company owns primarily premium-branded, compact full-service hotels located in major markets and resort locations.

As of September 30, 2020, the Company owned 28 hotel properties with approximately 8,100 rooms, located in 13 states.  The Company, through wholly-owned subsidiaries, owned a 100% interest in 25 hotel properties, a 95% controlling interest in The Knickerbocker, and 50% interests in entities owning two hotel properties. The Company consolidates its real estate interests in the 26 hotel properties in which it holds a controlling financial interest, and the Company records the real estate interests in the two hotels in which it holds an indirect 50% interest using the equity method of accounting. The Company leases 27 of its 28 hotel properties to subsidiaries of RLJ LP.

Liquidity and Management's Plans

The Company's hotel property-owning subsidiaries (the “Lessors”) lease the hotel properties to property-operating lessees owned by TRS subsidiaries of RLJ (the “Lessees”). The Company receives related party lease revenue from these lease agreements, including percentage rent. The percentage rent amounts are calculated based on a percentage of room revenues, food and beverage revenues and other revenues at the hotel properties. In response to the near elimination of travel and hotel demand resulting from the spread of the novel strain of coronavirus (COVID-19) and the related government mandates, the Company had previously announced RLJ's suspension of operations at 13 of the Company's hotel properties. As government mandated stay-in-place restrictions were lifted, RLJ, for itself and on behalf of the Company, developed a framework to open the suspended hotel properties. RLJ had reopened eight of the Company's hotel properties as of September 30, 2020 and subsequent to the end of the quarter has reopened an additional two of the Company's hotel properties. RLJ continues to evaluate reopening the remaining three suspended hotel properties based on market conditions. The remaining suspended hotel properties are located within the central business districts of New York City and San Francisco. In the event stay-in-place restrictions are reinstated, RLJ would consider temporarily suspending hotel operations where demand is inadequate.

The ongoing effects of the COVID-19 pandemic on the hotel properties' operations continue to have a material adverse impact on the Company's financial results and liquidity, and such adverse impact may continue well beyond the containment of such outbreak. Since the extent to which the COVID-19 pandemic impacts our operations will depend on future developments that are highly uncertain, the Company cannot estimate the impact on its business, financial condition or near- or longer-term financial or operational results with reasonable certainty. In addition, as a result of the COVID-19 pandemic, the Lessees negotiated for and were granted an abatement on base rent of $17.5 million for the three months ended June 30, 2020, as well as an abatement on base rent of $17.5 million for the three months ended September 30, 2020. The Lessees have received a total abatement on base rent of $35.0 million during the nine months ended September 30, 2020. The Company owes the Lessees $2.9 million for reimbursement of rent as of September 30, 2020, which is included in related party rent payable on the consolidated balance sheet.

During the nine months ended September 30, 2020, RLJ LP contributed $50.0 million to the Company to ensure that the Company can service its debt and maintain its operations. In addition, given the impact on lodging demand, the Company has taken various actions to help mitigate the effects of the COVID-19 pandemic on its operating results and to preserve liquidity. Measures the Company has taken include:

Capital Investment Reduction:  The Company reduced its 2020 capital expenditure program by deferring all capital investments, other than completing projects that are substantially underway and nearing completion.

Return on Investment ("ROI") Project Suspensions:  The Company suspended most of the 2020 ROI projects.


11

2.              Summary of Significant Accounting Policies
 
The combined Annual Report on Form 10-K for the year ended December 31, 2019 of Rangers and FelCor LP contains a discussion of the Company's significant accounting policies. Other than noted below, there have been no significant changes to the Company's significant accounting policies since December 31, 2019.

Basis of Presentation and Principles of Consolidation
 
The unaudited consolidated financial statements and related notes have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America ("GAAP") and in conformity with the rules and regulations of the Securities and Exchange Commission ("SEC") applicable to financial information. The unaudited financial statements include all adjustments that are necessary, in the opinion of management, to fairly state the consolidated balance sheets, statements of operations and comprehensive (loss) income, statements of changes in equity (partners' capital) and statements of cash flows.

The unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of and for the year ended December 31, 2019, included in the combined Annual Report on Form 10-K of Rangers and FelCor LP filed with the SEC on February 26, 2020.

The consolidated financial statements include the accounts of Rangers, FelCor LP and its wholly-owned subsidiaries, and joint ventures in which the Company has a majority voting interest and control. For the controlled subsidiaries that are not wholly-owned, the third-party ownership interest represents a noncontrolling interest, which is presented separately in the consolidated financial statements. The Company also records the real estate interests in two joint ventures in which it holds an indirect 50% interest using the equity method of accounting. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates
 
The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and the amounts of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Given the additional and unforeseen effects from the COVID-19 pandemic, these estimates have become more challenging, and actual results could differ from those estimates.

Leases

On April 10, 2020, the Financial Accounting Standards Board (the "FASB") issued a Staff Q&A to respond to some frequently asked questions about accounting for lease concessions related to the effects of the COVID-19 pandemic. Consequently, for concessions related to the effects of the COVID-19 pandemic, an entity will not have to analyze each contract to determine whether enforceable rights and obligations for concessions exist in the contract and can elect to apply or not apply the lease modification guidance to those contracts. Entities may make the elections for any lessor-provided concessions related to the effects of the COVID-19 pandemic (e.g., deferrals of lease payments, cash payments made to the lessee, reduced future lease payments) as long as the concession does not result in a substantial increase in the rights of the lessor or the obligations of the lessee.

As a result of the impact of the COVID-19 pandemic on the Lessees, the Company made the determination to abate base rent of $17.5 million for the three months ended June 30, 2020, as well as to abate base rent of $17.5 million for the three months ended September 30, 2020. The Lessees have received a total abatement on base rent of $35.0 million during the nine months ended September 30, 2020. The Company owes the Lessees $2.9 million for reimbursement of rent as of September 30, 2020, which is included in related party rent payable on the consolidated balance sheet. The Company has elected to not evaluate whether these rent abatements are lease modifications. The Company has elected to not apply the lease modification guidance to the rent abatements, and, as such, the Company has recognized the rent abatements as negative variable lease revenue of $17.5 million during the three months ended June 30, 2020 and $17.5 million during the three months ended September 30, 2020. The Company will continue to evaluate the impact of lease concessions and/or abatements and the appropriate accounting.

12

Recently Issued Accounting Pronouncements
 
In June 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which modifies the measurement approach for credit losses on financial assets measured on an amortized cost basis from an "incurred loss" method to an "expected loss" method. In November 2019, the FASB issued ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments – Credit Losses. The Company adopted this new standard on January 1, 2020. The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The guidance modifies the disclosure requirements for fair value measurements by removing or modifying some of the disclosures, while also adding new disclosures. The Company adopted this new standard on January 1, 2020. The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The guidance provides optional expedients for applying GAAP to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued at the end of 2021 because of reference rate reform. The guidance is effective immediately and expires on December 31, 2022. Based on the Company's assessment, the adoption of this standard is not expected to have a material impact on the Company's consolidated financial statements.
3.              Investment in Hotel Properties
 
Investment in hotel properties consisted of the following (in thousands):
September 30, 2020